You have heard or seen people making tons of money on Amazon by selling FBA (Fulfilled by Amazon). You think it sounds amazing and would love to get started yourself.
But the fees and the amount of money you have to invest to get started are confusing, scary, and just plain overwhelming.
How much money do you need to start an Amazon FBA business? And when can you expect to see that money come back to you?
Put simply it depends.
How Much Money Do You Need To Start An Amazon FBA Business?
This is the first question I usually get, but the question that should be asked is, how much money do you want to make?
I say the minimum amount of money to start an Amazon FBA business is $100. However, if you plan on doing it full time than that $100 will take a long time to snowball into enough to do so.
A good rule of thumb is that you will make back 50%. So if you invest $100 you’ll get $150 back. Invest again and you’ll now have $225, a third time $337.50.
If you have the time you can grow your business that way, however, if you want to leave your 9 to 5 yesterday then you’ll need a lot more.
A safe rule would be whatever you want to make per month from an Amazon FBA business triple it and that’s what you’ll need to run a successful business.
Say you need $2,000 a month to pay your bills. You will then need $6,000 to run a successful business. You could get by with less but this gives a very nice buffer that allows you to continue to spend before things have sold.
With that amount of buffer you don’t have to buy merchandise, wait for it to arrive, then sell, then wait for the next payout. You can simply continue to buy without being concerned that you have run out of money and will have to wait.
Average Your Weeks
What I do is figure out how much I need to spend a month on inventory. Going back to our example if we need $2,000 a month and are expecting a 50% ROI than we need to spend $4,000 a month.
Break that down by weeks and we only need to spend $1,000 a week on merchandise and you’ll be at goal.
The reason you would want the $6,000 is that you will spend the initial $4,000 and may not receive a payment from Amazon for a few more weeks.
When Will You See A Return On Your Investment?
Amazon pays out every two weeks and it takes a few days after they send the payment for you to actually have it in your bank account.
Another rule I go by is when I spend money, I don’t expect to see that returned to me with profit for at least a month.
That may sound like a long time, but most investments are done annually instead of monthly. On top of that if you do have the buffer to keep spending in a few months you will be receiving a regular income every two weeks.