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How to Start an Amazon FBA Store on a Tight Budget: 6+ Powerful Tips

August 19, 2022

Here’s how to start an Amazon FBA store on a tight budget:

  • Choose the right model for your home business. Amazon FBA private label will be more expensive than dropshipping on Amazon.
  • Consider an Individual Amazon Seller account. It may help you remain in budget.
  • Conduct research for inexpensive, yet profitable products. Consider the cost of the product, Amazon fees, and low competition items. Use free tools to assist you.
  • Focus on product sourcing that will maximize your profits. For arbitrage, always buy clearance items. For wholesale and private label, find a supplier with a low minimum order quantity.
  • Optimize your Amazon marketplace product listing with cost-effective tricks, like adding keywords with a smaller search volume.
  • Don’t run an auto Amazon PPC campaign during product launch.
  • Consider a business model with a lower startup cost and scale your business from there. Reinvest profits.
  • Take an Amazon course, like the Theo McArthur Udemy course “How to Start an Amazon Store on a Tight Budget”.

How Much Money Do You Need to Start Selling on Amazon?

Amazon FBA startup costs range from $3,500 to $13,000. There are ways to start a store even lower, but spending less than $3500 affects your chance of Amazon FBA success

JungleScout says existing sellers spend @ $3836 to start. Here’s their breakdown:

start-up budget breakdown

Stats courtesy of: JungleScout

Note: You could use a credit card. Many Amazon automation agencies suggest this while waiting for Amazon’s 2 week payout. But this can build debt fast and destroy your credit score, especially if Amazon suspends your account.

Does the Amount of Capital You Have Directly Impact Your Level of Success as an Amazon Seller?

Yes. The more you invest in your new Amazon FBA business, the greater your chance of success. But also, the more you invest also heightens your risk.

There is a free Individual Amazon Seller Central account. You’ll pay $0.99/ listing with a limit of 40. Then, you could sell things you don’t need, paying only shipping costs (which is Amazon FBM, not FBA.) Eventually, you’ll run out of profitable items to sell. You won’t be able to scale much higher, even if you reinvest what you made. 

So, while you could start with very little, you won’t make millions off of a strategy like this.

Necessary Costs for Starting Your Own Amazon Business

  • $39.99/month for a Professional Amazon Seller Central account.
  • Depending on the business model you choose, inventory may cost $0- $2 per pound. The bulk of your investment will go here. I recommend at least $3,000.
  • 15% of your product’s selling price to Amazon.
  • $0.75/cubic foot (January to September) $2.40/ cubic foot (October-December) for Amazon FBA storage fees.
  • 6% to 20% for referral fees.
  • $2.35 to $138.11/product for fulfillment fees (packaging and shipping)
  • $250 for barcodes

Additional Costs that Will Help Your Chances of Success

  • $200-$1000 on test products.
  • $300- $1300 for product photography.
  • $200-$400 Design work like logos and packaging.
  • $0.89 CPC for Amazon PPC. Expect to spend hundreds to make an impression.
  • $350 to $600 for trademarks and business licenses.
  • $25-$75/month for accounting software.
  • $100-$5,000 for an Amazon FBA course.
  • $0+ for a product research tool. Start with a free tool, like Amazon’s Product Opportunity Explorer.
  • $0+ for automated repricing. Amazon’s repricing tool is free, but something with more features, like BQOOL, starts at $25/month. Repricing tools are helpful for Amazon dropshipping and any other model where you don’t automatically have the buy box.
  • $0-$44/month for an Amazon Seller scanner app like ScoutIQ, if you are doing retail arbitrage or liquidations.

How to Start Your Amazon FBA Store on a Tight Budget

1. Choose the Amazon Business Model that Fits with Your Budget

There are many Amazon FBA business models, and some may allow you to at least start on a smaller budget.

  • Wholesale: Almost half of sellers spend less than $2500 to start a wholesale business, according to JungleScout.
  • Retail arbitrage: One third of sellers spend less than $500 to get started. 49% of existing Amazon sellers spend less than $1,000.
  • Online arbitrage: Over half of sellers spend less than $2,500 to start, and 29% didn’t break $500.
  • Liquidations: One pallet is typically in the low hundreds. A pack of allergy medication may contain around 100 items at about $3. Often, sellers buy a few packs in case a product (or two) flops.
  • Private label: This business model is arguably the most expensive to start. Some sellers start with $500. Others invest $15K.
  • Passion product: $3K- $5K to start. Crowdfunding on Kickstarter or Indiegogo covers these costs.
  • Amazon Handmade: 53% spend less than $2500 to start.
  • Merch by Amazon: This invite-only business model is $0, but don’t expect to start soon. You will need an established selling history to make the 6 month waiting list.
  • Kindle Direct Publishing: KDP is also $0. But, spend at least $3 in PPC for any chance of high sales volume.
  • Dropshipping: $0- until an Amazon shopper orders a product. Then, you must have the money to order the product and ship it to them directly from your supplier.

2. Getting Set Up with the Best Amazon Seller Account for Your Pocket

A Professional account costs $39.99/month for unlimited listings. Normally, this is the best choice at the start of your Amazon business.

But, if you have a tight budget, an individual Amazon FBA seller account might work best. After all, you shouldn’t have a large inventory of listings if you can’t pay for it. You can save some cash by listing fewer than 40 products on the Amazon platform. And you’ll save on both inventory costs and Amazon FBA fees.

3. How to Find a Profitable Product to Sell on Amazon

  • Choose a product with the least Amazon FBA fees. Often, products with the fewest fees are the products that weigh the least. The heavier the product, the more it will cost to store and ship.
  • Research gated vs. ungated products. It’s cheaper to sell ungated products because gated products often require additional documentation. (Baby items are one of the most notoriously gated items.)
  • Choose something with low competition. These items are easier to rank, and you won’t have to keep as much inventory. While many sellers will choose products with search volumes in the tens of thousands, you can’t offer many products on a small budget. So, choose a product that is in less demand so that you do not run out of stock.
  • Look at the Amazon most gifted list. This highlights unique, popular items that customers have purchased often.
  • Do not choose products that have poor ratings. Instead, look at reviews and find a product that fixes the stated issues.
  • Learn all you can about product research on YouTube. Be sure to study videos from within the last year as Amazon’s Terms of Service often change.
  • Use a tool like ZonBase ($37 or $67/month if you buy upfront) to conduct product research.
  • You can also look at the Best Sellers Rank. You want products that have a BSR of less than 100,000. This shows that the product will sell better.
bsr

For a more in-depth breakdown, look at our full Amazon FBA product research tutorial.

4. Source Your Products and Make Deals with Suppliers

With retail and online arbitrage, search the clearance sections of your retailer, or their website. Selling clearance items at maximum price will make your profit margins much heftier. 

If you’re selling on Amazon using wholesale or private label, order inventory with a low minimum order quantity, or MOQ. 

Some suppliers will allow you to order just a few hundred items. If not, you might cut a deal. However, this can be difficult because suppliers won’t make a lot of money from fulfilling such a small order. Plus, they may not take you seriously or consider you a good investment for the future. 

To combat this, get a sourcing agent from UpWork for $10-$20/hr. They’ll complete about  5-10 hours of work, making your investment significantly cheaper than purchasing an unnecessarily large quantity of product. If you’re sourcing from China, an agent that lives there will understand the language and customs. Also, a sourcing agent will have other clients that they can bring to the manufacturer, making a more lucrative deal.

5. Set Up Your Amazon Product Listing

If you are selling someone else’s product, you won’t have to worry about Amazon product listing optimization. But, if you created a private label product, you will need to make a listing that sells. (Click that link to see an in-depth guide to this strategy)

Here are a few cost-effective strategies to optimize your listing:

  • Set up your product listing with keywords that have a small search volume, from 300 to 2000. This way, your product’s search volume matches the inventory you can purchase.
  • Try DIY product photography. While professional photography has better results, it’s expensive. Meanwhile, you can get free Adobe Lightroom presets online, follow YouTube tutorials, or snatch product photography from other listings.
  • Don’t worry about Amazon A+ Content. This feature is free, but only for registered brands. If you’re on a tight budget, a registered brand is a great goal for down the road.

Do You Need a Business License to Sell on Amazon?

No, but some suppliers will only work with wholesalers that have a business license and/or resale certificate. To keep costs low, search for suppliers that do not have these requirements. Aliexpress, Tradegala, and others do not require a seller’s permit. Some states require this regardless, so research your location.

6. Test Your Product’s Popularity and Boost Traffic

Do not start your product launch with an auto Amazon PPC campaign. This can drive your ad spend into the thousands while pushing Amazon visitors from keywords that make no sense with your product.

Instead, start with your own keyword research. Choose keywords based on search volume and buyer intent (much like when you optimized your listing). Then, pick 5 high-relevance keywords to focus on, and at least 60 long tail keywords. Finally, 2-4 weeks into your product launch generate an auto campaign. That way, Amazon’s auto campaign will take in the sales data you have already collected.

On a budget, you can’t throw thousands of dollars into PPC. But, that doesn’t mean you can’t use this feature at all. Set a budget of $5 to test your ad campaigns. You won’t see much growth, but you will see which ads work the best.

Other cheap ways to boost traffic to your Amazon product listing include:

  • Find hidden traffic online. Search through Reddit boards and YouTube comments. Message interested people to gain awareness, but don’t be spammy. 
  • Start an Instagram account to promote your product. Use TikTok to share demonstrations.
  • Build a community for your product (think Passion Product) on social media.

The Course: How to Start an Amazon Store on a Tight Budget

“How to Start an Amazon Store on a Tight Budget” is a very popular Udemy course. This bestseller has over 95,678 students. Total, Theo McArthur teaches 156,073 students.

theo mcarthur

Theo McArthur's Presentation

The course is a complete guide to every step of setting up an Amazon wholesale or private label business. From finding Amazon account support, to understanding the BSR, to figuring out new requirements for product approval, it’s in this complete Amazon selling blueprint.

Price:

$109.99 or lower, if you have a Udemy coupon

Course Started:

2015, most recently updated in March 2022. She adds new content often.

Coach:

Theo McArthur started selling on Amazon in 2013, but began her online career in 1995. She has marketed e-learning products, still works as an affiliate, and scaled her Amazon business onto an independent eCommerce store. She created this course to help newbies avoid common Amazon FBA mistakes.

Group:

Yes, there is an active Q&A board within the course.

Training:

Aimed at complete beginners or those who need to revamp their store from the ground up. If you are a veteran seller, you will still find value in this online course. But there will definitely be some surface level parts you can skip.

Lives:

No.

Some other things we liked:

This course covers over 11 hours of content in bite-sized pieces. You can easily return to content you wish to review.

Course content includes multiple handouts.

Some things we didn't like:

At times, there seemed to be a little too much fluff.

There’s no real video of the presenter.

She could include the use of more tools that automate some processes.

What are Some Potential Alternatives to How to Start an Amazon FBA Store on a Tight Budget?

How to Start an Amazon Store on a Tight Budget is a great course. But, when you’re ready to invest a little more, consider Private Label Masters. It’s taught by Tim Sanders, who is an 8-figure Amazon seller. This is just one reason it made it on our list of Best Amazon FBA course. The course is $5K, so plan to take this course when you have a larger budget. It’s a much better choice than the Amazing Selling Machine (which lacks real-world examples).

Conclusion: My Recommendation for Starting an Amazon Store on a Tight Budget

If you have a tight budget, it’s not probable that you will make a lot of money with Amazon FBA at first. But it is possible to stick to your budget while gaining experience, seasoning your account, and bringing in your first dollars from making money online. Follow the steps above and invest your earnings back into your business so that you can scale as you learn more.

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