The ultimate Amazon FBA guide: Step by step to your own business! [Incl. checklist]
For many, self-employment is a dream of a lifetime: being your own boss, guiding employees, bringing the dream product to market… But the start is often difficult, not only financially but also organizationally. Read here how to get your Amazon FBA business on the way step by step. The to-do list piles up like a mountain, and the day could easily be a few hours longer. Especially merchants who have not had their own business before can sing a song about it. In addition, there are several things to consider when deciding on an Amazon FBA business. Beginners can find instructions on the Seller Central help pages, but these are not exactly clear.
Therefore, we would like to briefly highlight in this blog post how newcomers can register for Amazon FBA and what they need to consider before and after.
What is Amazon FBA? A detailed explanation of the shipping service has already been compiled for you here: Amazon FBA for beginners and advanced users.
Start with Amazon FBA: Guide for everyone
There are a whole range of points that merchants need to consider when they want to start their business on Amazon. Participating in Fulfillment by Amazon simplifies the start and especially reduces the financial expenses that need to be incurred – nevertheless, an Amazon FBA business is also subject to conditions, both from the e-commerce giant’s side and from a legal perspective.
Therefore, the following list does not claim to be exhaustive. Depending on personal circumstances, additional steps may be required or others may be omitted. For example, those who sell cosmetics from Spain have different requirements to fulfill than merchants who want to import toys from China. In case of doubt, a professional such as a specialized lawyer should always be consulted.
Even before the Amazon FBA start: Preparation of the business
At the forefront should be a concrete product idea. However, before creating an Amazon FBA account and ordering the first batch, there are primarily some legal and organizational questions to consider.
1. To-do: Business registration
The first point of our Amazon FBA guide involves the establishment of a business. Only in this way is it possible to open a professional seller account on Amazon, as the business license or commercial register is requested during registration. Many successful merchants started as sole proprietors and eventually grew into a GmbH. This has the advantage, especially at the beginning when revenues are still low, that entrepreneurs can rely on significant tax benefits.
However, there are at least two other business models that new entrepreneurs can choose from. Which legal form or business model is suitable can be found here: The right company form for your FBA business.
2. To-do: Opening a business account
Sounds trivial, but it is by no means. While a separate account is not mandatory for sole proprietors, it can quickly become uncomfortable when the personal checking account is used as a business account.
For these reasons, the recommendation to open a business account can be found in most guides and also in this Amazon FBA guide.
3. To-do: Application for tax numbers
Even if the small business regulation may still apply at the beginning of the “Amazon” adventure, this will not last forever, which is why it is still important to have a VAT identification number already. Otherwise, sellers may end up paying taxes twice. Normally, merchants receive gross invoices with specified VAT. However, since Amazon is based in Luxembourg, sellers receive net invoices, on the basis of which the merchant pays their VAT.
However, if no tax ID is registered in Seller Central, the trading company plays it safe and pays the VAT itself. This does not exempt the merchant from their obligation to ensure the payment of the tax, provided the small business regulation no longer applies. To avoid being suspected of tax evasion, the merchant would also pay the VAT – thus paying twice. Ideally, sole proprietors should also seek a tax advisor for tax matters.
4. To-do: Application for the EORI number
Point number 4 of this Amazon FBA guide applies only during import, but still affects a large portion of marketplace sellers. The Economic Operators’ Registration and Identification is an identification number without which commercial import into the European Union for commercial entities is not possible.
Thus, the EORI number serves as a unique identifier of the responsible importer and can, for example, be applied for at the German customs.
The actual Amazon FBA business: Step-by-step guide
Now we come to the actual core: the Amazon FBA business. For example, how many products should merchants have in their assortment and what does a good listing actually look like? It is also true here that this Amazon FBA guide does not claim to be exhaustive, and depending on the product category or Amazon marketplace, there may be additional steps to consider. The creation of the account with Amazon can, for example, also take place later.
5. To-do: Registration with Amazon
Without a seller account, it is not possible to sell on Amazon. Registration is relatively simple through this page. Newcomers should especially note to uncheck the option to sell on all marketplaces simultaneously. Especially at the beginning, it makes sense to sell exclusively on Amazon DE first. When selling across Europe, several additional points would need to be added to this Amazon FBA guide. For example, a VAT ID is required in each country where goods are stored. Those who focus on Germany, on the other hand, can first get to know Amazon and gain initial experience as a seller.
In addition, Amazon asks during registration whether it should be a basic account or a professional account. The professional version costs 39 euros per month and is worthwhile from about 40 sold items per month. Normally, this value is reached quickly, and merchants can confidently start directly with a professional seller account. However, since the switch is relatively easy, it is also possible to register first for the basic account if it is foreseeable that the launch of the first product will still take a few months.
6. To-do: Research of the first product
It is one of the most important tasks: product research. Whether a business thrives or is history after just a few months can depend on it. Sellers should pay special attention to the market analysis. Even with a very good product, sales can be hopeless if too many competitors are already active on Amazon or if the company itself offers the same or a very similar product.
Because on the online marketplace, much more depends on it than just a good product idea. Those who sell merchandise compete for the Buy Box, without which it is hardly possible to achieve sufficient sales. Those offering Private Label, on the other hand, must achieve as high a ranking as possible within the search results. Excessive and especially already established, experienced competitors make both endeavors extremely difficult.
Anyone who wants to dive deeper into the topic of product research than this Amazon FBA guide can offer, click here: Researching new products for Amazon.
7. To-do: Search for a manufacturer
The newcomer now knows the product – so it is time to take care of finding a suitable manufacturer. And it is not the case that the lowest price wins. A trusting business relationship between the merchant and the manufacturer is extremely important to build the FBA business on Amazon step by step together. Finding a manufacturer means reaching out to many different producers, comparing prices, and creating a list of all favorites. A product sample from these favorites then helps with the final decision.
A central question is often whether to source in Germany, in the EU, or in a third country. While many Asian manufacturers are cheaper and many products offered on relevant portals like alibaba.com are not necessarily of lower quality. However, anyone importing goods from a non-EU country into the European Union is also considered an importer – and thus bears the full liability risk. It can therefore make sense to look for producers on wlw.de or zentrada.de.
For anyone who is unsure while reading this Amazon FBA guide about how and where to approach sourcing, you can find more expert tips for crisis-proof sourcing in our blog and what advantages sourcing in China vs. the EU has.
8. To-do: Acquisition of patents and certificates
This point is very important to achieve legal certainty and should definitely be clarified before the first purchase. Having a patent on a product is extremely unfavorable, as merchants then need the permission of the patent holder to be allowed to sell a product at all. An initial indication of this is, for example, the exclusive sale of the product by only one (large) manufacturer. Despite the high costs, we clearly recommend in this Amazon FBA guide to work with a patent attorney.
FBA sellers also need to take care of certificates in many product categories – for example, with children’s toys, cosmetics, or food. As a rule of thumb: if it touches the body, the product probably needs a certificate. Not only the manufacturer can provide specific information here, but customs or TÜV are also a good point of contact.
9. To-do: Brand name, logo, and design
For private label sellers, the creative part now begins: A brand name needs to be found, a logo must be created, and based on this, the design of the product packaging can also be approached. Of course, the recognition value should be high, but various brands have established themselves in the market. There is no secret formula for this point of our Amazon FBA guide.
It is important, however, that the name, logo, and design do not infringe on other trademark rights; otherwise, a warning with a cease-and-desist declaration may follow. Therefore, aspiring sellers should always research whether they can find search results under the targeted brand name on Google and Amazon or if there is a registration in the DMPA register.
10. To-do: Purchase of EAN numbers
Although marketplace sellers do not necessarily need an EAN number, they are mentioned in this Amazon FBA guide, as a product is limited to sales on Amazon without an EAN number. Therefore, anyone who wants to enter other channels may need these numbers to identify their products unambiguously and avoid issues with inventory management. EAN codes can be purchased from both GS1 Germany (in larger packages) and GS1 Netherlands (also in smaller packages).
11. To-do: Purchase of products
Now it is time to clarify the logo and packaging with the manufacturer and to order the first product batch. For this, all details should be discussed to avoid any unpleasant surprises at the end because not everything was produced as the seller envisioned.
Payment is also a topic in itself. Those who source through Alibaba can, for example, use Alibaba Trade Assurance. In this case, the client transfers the money to Alibaba, which in turn verifies the receipt of funds with the manufacturer. Only when the goods have arrived at the seller’s location and the seller has confirmed that everything is okay will the money be released to the manufacturer. This creates security for large sums. When the business relationship is longer and trust grows, traditional bank transfers are, of course, also possible.
12. To-do: Conclusion of business liability insurance and licensing of packaging
As mentioned earlier in this Amazon FBA guide, importers in the EU are also considered manufacturers and thus bear the liability risk. This becomes important if, for example, there was an accident involving one of the products and the injured party demands compensation or even damages for pain and suffering. Therefore, private label sellers who source outside the European Union should definitely take out insurance for these cases.
In addition, sellers of their own products must ensure that the packaging they put into circulation is disposed of or recycled correctly according to the Packaging Ordinance. There are various providers for this, such as the Green Dot.
13. To-do: Creating the listing on Amazon
As banal as this point may sound among all the important to-dos in this Amazon FBA guide, it is not at all. On the contrary, the listing, consisting of the product title, bullet points, product description, etc., will ultimately determine whether a customer buys the product or switches back to the search results to view another offer.
Describing how private label sellers should optimize their listing would be too extensive for this Amazon FBA guide. You can read more about it in our blog post on Amazon SEO. It is also important to note the correct addressing of different customer types.
14. To-do: Shipping to Amazon
For the first product batches, it is certainly advisable to first check the products randomly yourself and only then send them to Amazon. Once a trustworthy business relationship has been established with the manufacturer, they may also be able to deliver directly to Amazon.
In any case, a shipping order is required, which sellers can create in Seller Central under “Inventory” → “Manage Inventory.” Behind each product listing, there is then the option “Send items to Amazon.” After clicking on “Create new shipment plan” and going through a few more steps with the details of the shipment and the selection of the carrier, the shipping labels can then be downloaded. Normally, Amazon informs the seller via email after a few days to weeks that the shipment has arrived.
15. To-do: Launch of the product
The sales of a product and the number of reviews are extremely important for ranking on Amazon. This FBA guide can hardly cover all the points to consider for a good product launch. Suitable product photos, for example, are an underestimated point and should be created professionally. In any case, newcomers should also take care of running ads and generating initial reviews.
Those competing for the Buy Box face similarly challenging issues and must first sell on Amazon for at least 90 days to be considered. It is important to elevate and maintain one’s seller performance at a very high level. All important metrics can be found here: Criteria for the Buy Box.
Congratulations! Now the first orders can start coming in!
And now? First of all, new sellers will have enough to do improving the existing listing, running ads, optimizing them, and generating reviews. Because even though the product is now theoretically orderable, it can still be quite a struggle to increase sales enough to improve the ranking or qualify for the Buy Box.
However, once the product is performing well, the product range should be expanded. Then some points of this Amazon FBA guide will no longer apply, but others will remain. Gradually, Amazon sellers will establish their own workflow and continue to professionalize. However, two points still need to be addressed.
16. To-do: Checking for FBA errors
With Fulfillment by Amazon, the e-commerce giant has created an extremely helpful service for many sellers. But even though Amazon has already automated many processes, there are still people working in the logistics centers. And people make mistakes. For example, it can happen that items are damaged or incorrectly logged, or that a customer does not return a return. In such cases, Amazon must compensate the FBA seller. However, the online giant does not provide guidance or assistance to track down such errors.
To do this, sellers would need to analyze up to 12 FBA reports – an extremely time-consuming task! It is easier with appropriate tools like Lost & Found. This tool analyzes all processes in the background and reports discrepancies directly to the seller. All the seller has to do now is copy the pre-formulated text into Seller Central and open a ticket with Amazon. If there are issues with the refund, the experienced SELLERLOGIC staff are also available to assist with communication at any time.
17. To-do: Implementation of helpful tools
Every Amazon seller will eventually reach the point where they want to automate some processes. This could be invoicing with a tool like Amainvoice or Easybill. There are also corresponding tools for inventory management and keyword research. Many Amazon analysis tools also offer various functions in one.
For sellers of retail goods, it is also very important to eventually invest in a repricer. This automatically adjusts the price of a product according to market conditions. Manual adjustments are very time-consuming and are hardly feasible even with a medium-sized product range. Here you can find out how a repricer works and why it is so crucial.
Conclusion: Amazon FBA without a guide? Better not!
How Amazon FBA sellers ultimately structure the process of their business is variable in many respects. However, starting such a business without any guidance is hardly feasible or at least very prone to errors. In particular, the legal steps and questions of product liability should ideally be clarified with a professional.
Although complete newcomers in e-commerce cannot start without guidance or help through Amazon FBA, it still makes starting a business significantly easier. If new sellers had to store their products themselves, assemble and package the orders by hand, and also organize the shipping, it would quickly become unmanageable as a solo entrepreneur.
The Amazon FBA guide as a checklist: Download
Keeping so many aspects in mind is not easy. Therefore, download our Amazon FBA guide in PDF format here!
Frequently Asked Questions
“FBA” is the abbreviation for Fulfillment by Amazon. Merchants can add this service for their products if they want to outsource storage, order preparation, as well as shipping and customer service.
In principle, anyone can sell on Amazon and use FBA. However, this requires some preparation. This includes, for example, sourcing products, registering a business, and applying for EORI and EAN numbers. The seller account must also be set up and filled.
