This question comes up so often; I had to write an article about it. The reason answers vary on this issue is due to many factors. You have people who are trying to sell expensive courses and want to ease you in with lower start-up costs, and you have individuals who have invested different amounts into the Amazon FBA business and gotten different results.
I will tell you my general recommendation at the end of this article, but I also want to give you some insight.
The amount of money largely depends on the product and what level of competition you feel you can handle. It comes down to wanting to go up against other small businesses, think iPhone repair shops versus going against the big guys like Microsoft or Coke. Do you have the resources to battle giants (the Giants on Amazon aren’t that big) or do you want to go against other small businesses?
You also need to keep in mind the rewards that come with each type of competition come at different levels as well.
Let’s Look at Some Real Examples
Let’s looks at one of the popular products on “argan oil.”
If you have no idea how sales work on Amazon when it comes to what products people generally choose, look at this article: Secret to Success on Amazon
Now if you take a quick look at the search result page, you will see your competition is quite stiff. I count 16 products with over 1,000 reviews. The winner when it comes to reviews has over 5,000. Now the one’s with lower review counts are doing well, but we have to keep in mind they may be part of fledgling brand lines and are pickups by those familiar with the brand on other platforms or past purchases.
The fact here is to see your investment pay off you are going to have to unload a lot of product just to rank on the page, never mind the reviews, which will have to be the result of any more product sold.
Argan oil at 2 oz. can cost up as much as $4.00 a bottle to source, purchasing 500 units would cost upwards of 2,000 plus shipping, and that’s before adding packaging or launching.
Let’s look at something a lot less popular…a titanium whistle.
The average review count on the page is already a big difference. The average review count on this page is just 59. But you can already see the cost of picking such an unpopular product. The top selling product sits at half the review count, but due to product design or brand name at just 63 reviews it sells about 4,000 a month. A drop in the bucket compared to the $100,000 a month product in the argan oil SERP page.
Strangely, the cost of titanium whistle from a manufacturer can be at 4 or more. But I have seen some that cost 0.99 with the right manufacturer. So your cost for an order of 500 (I would not order that many on the first go around, as that could be a four month supply depending on fast you could get your reviews up) could range between $500 and $2,000.
Do you see why the money you need to start on Amazon fluctuates so much from person to person?
The factors that come into play vary.
- Product Competition
- Product Price
- Ease of access to product
These are just three factors that play a part in how much you need to invest.
The bare minimum I suggest is $1500 but the more money on hand the easier it is to be successful. If you wanted to be extra careful, you could put my recommendation up to $3,000. The thing about an Amazon FBA business is the higher amount of resources you have to spend the easier your climb to the top will be.
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