You want to start your own Amazon FBA business, but unsure of the amount of money you need to get going? This article will have all of the answers you need. Note, it’s based for Retail & Online Arbitrage, not Private Label.
In order to start selling on Amazon, we advise that you enter with a minimum bankroll of £3,000. This gives you just enough room to source items whilst waiting for other items to sell.
The good news is that you don’t need a massive amount of capital to start an Amazon FBA business. You can start with as little as £500, but it’s going to be a much longer process to make money. However, as with most things in life, the more money you have, the more flexibility you have.
There are some staple tools that you’re going to need (SellerAMP & Keepa) which would take up a considerable amount of that £500.
So to comfortably afford all of these tools and have enough capital, you should have between £3,000 and £5,000.
Your main costs as a seller are going to be product purchasing. You will also have to ship the items into Amazon Fulfilment Centers via UPS, but we get discounted shipping as FBA sellers.
You may also need to purchase packaging supplies (boxes and tape mainly) but if you can obtain these for free that will be another cost-saving exercise.
Starting an Amazon FBA Business
If you’re looking to start an Amazon FBA business, you’ll need to consider your initial capital requirements. While it’s possible to start with as little as £500 in inventory, most people opt to start with more. If you start with £500, you’ll eventually have to wait for your items to sell before purchasing new products, which can slow down growth.
Your main costs as a seller are going to be product purchasing. You will also have to ship the items into Amazon Fulfilment Centers via UPS, but we get discounted shipping as FBA sellers. You may also need to purchase packaging supplies (boxes and tape mainly) but if you can obtain these for free that will be another cost-saving exercise.
Initial Capital Requirements
As previously mentioned, you can start an Amazon FBA business with as little as £500 in inventory. However, it’s important to keep in mind that this may not be enough to cover all of your startup costs. Here are some things to consider when determining your initial capital requirements:
- Inventory: This will likely be your biggest expense. You’ll need to purchase enough inventory to meet demand, but not so much that you’re left with excess stock.
- Packaging: You’ll need to follow Amazon Packaging Guidelines to ensure the product is delivered safely.
- Shipping: You’ll need to factor in the cost of shipping your products to Amazon’s warehouses, as well as the cost of shipping them to customers.
You could end up spending £200 on a Scanner, which would take 40% of your entire bankroll. This isn’t ideal and will ultimately leave you worried that you’re exposed to returns etc, which might cause you more hassle than it’s worth.
It’s important to remember that your initial capital requirements will vary depending on your niche and the products you’re selling.
Some niches may require more expensive inventory, but you can always pick your battles and focus yourself on the lower priced items.
Tools & Supplies Needed
Before you even sign up for your Amazon Seller Account, you’ll need to have access to specific Tools and Supplies. I’ve separated these into essentials and recommended:
- Computer or Laptop – For Admin duties
- Mobile Phone – for Seller Apps
- Scanning App – for Retail Arbitrage
- Printer – for Shipping & Product Labels
- Packing Tape – To keep shipping boxes closed
- Label Printer – Faster Labels (10x faster)
- Boxes – Saves you purchasing them
- Subscriptions such as SellerAMP
- Access to Leads or Deal Sheets
- Scales – Weigh your Items pre-shipping
Inventory is the items that you source, it’s also known as ‘product’. Without this, you won’t make any money.
As you gain experience with selling on Amazon, you will soon notice that you never seem to have enough money at hand, to continue purchasing. This is a good thing in many ways.
I know one seller that make £150,000 profit per year, but his cashflow is rarely above £25,000. Consistently reinvesting profits, to make more profits. Warren Buffet-esque.
When you purchase inventory for the first time, you should avoid buying lots of the same item. This is because as a newbie to fba, you’re better spread out across multiple product lines.
If one of your listings tanks in price due to another seller starting a price war, you want minimum consequences.
If you had all of your money invested in that listing, you could be in big trouble. I know this, because I’ve been there.
Is £500 enough to start Amazon FBA?
I’ve seen other articles online that state £500 is more than enough to start Amazon FBA. It makes me wonder; are they bloggers? They can’t be doing FBA! (Upon further checking, they were selling beginner courses).
We’ve broken that down in a separate article, explaining how it’s possible, but it’s also incredibly tough.
You’ll need to pay Amazon £25 per month for your Seller Account, which is 5% of your budget if you have £500 starting out.
Now I’m going to make a scenario, buying Dog Food for £19.99 with a 25% profit margin after fees.
You decide to buy 5 Bags of the Dog Food totalling £99.95. You then manage to sell them for £24.98 each. Total Sales are £124.90, or a £24.95 profit.
You’ve used up 20% of your bankroll in Month 1, just to pay your monthly subscription to Amazon. We haven’t included the fees for the sourcing tools, packaging and supplies or even the label printer at this point.
Although I would love to say you can start with £500, it would just take far too much effort to make money. Remember, you’re a beginner to FBA so you’re also likely to make a small mistake or two.
There is no set figure for how much you need to start Amazon FBA selling.
However, you can make things much easier for yourself by having a little bit more money. This can open you up to being able to get specific software which will improve your businesses efficiency.
It is possible to start selling with £500, but it requires immense discipline and a little bit of luck along the way. If you can get around £3,000 saved up, this should give you the ability to purchase multiples lines of inventory, but also give you enough of a ‘float’ to wait for items to sell out.
We hope this has exposed some of the mis-truths about how much you need to start Amazon FBA. I wish I could tell you to start with a low amount, but it’s not possible long-term. And although I may have delayed your start, that’s much better than letting you jump in without a life-jacket.
I’d appreciate if you can let me know in the comments, what your starting bankroll was!