There is so much great free information out there on how to start an Amazon FBA business that is almost becoming too much and is really easy to get confused. But what I think makes it worse is that a lot of the good material is put out by companies trying to sell their ‘necessary’ software tools. Once someone has read material from five or six sources they come away with this hazy idea that they need five or six different bits of software just to get started. It makes me despair when I hear comments like this (a real quote from an email someone sent me):
This seems much more complicated than I anticipated. I don’t see how I could make money with paying for so much software and fees.
Yes there is a lot of software out there with expensive fees or monthly never-ending subscriptions. But 99% of them are only useful once you already have a successful Amazon FBA business.
Let’s tackle each of the major expenses and let me tell you why you shouldn’t be paying for them anyway! But before we start, if you are new to Amazon FBA and want to know what we’re talking about, then start here: How To Start An Amazon FBA Business
Amazon Seller Central Professional Account
This is the main one that I hear moaning about. An Amazon Seller Pro account costs £30 a month. Which very quickly adds up if you aren’t selling anything. And believe it or not a lot of people are signing up for a pro seller account when they are still many months away from launching their first product.
Let me set the record straight. There are two types of Amazon Seller accounts. A free one (called Individual or Basic) and a paid one (called Pro or Regular). Despite the names, they have nothing to do with whether you are a business or a person, they are simply different options aimed at differently sized sellers. And you can easily change between the two of them at any time. If you already a pro seller account and are not selling any inventory then go and downgrade now!
The free version charges you an extra 75p +VAT per item sold. So once you are selling more than 35 units a month it is cheaper to upgrade to the pro account. But until then there is almost no reason to be paying that £30 a month.
Some gurus will tell you to sign up to the pro version because of the advanced analytics. It is true that you get more info on your sales in the pro version. BUT if you don’t have any sales there is nothing to analyse! And once you are selling enough for the numbers to mean anything, it is cheaper to be on the pro version anyway.
Market Research Tools
Market research tools like Jungle Scout are really useful. But they are also very expensive, especially if you pay for a whole year upfront like they often encourage you to. But here is some really obvious advice: Once you have done your market research just cancel your subscription!
Two months of the standard Jungle Scout Web App is $138. And seriously if you haven’t found a product after two months of searching what are you doing with your time?
Jungle Scout is a business that I have a very high opinion of. Their tools are excellent, they have loads of great free resources and there are no shady upsell practices. Plus they make it relatively easy to cancel:
If you’re not using it, cancel it. Then when you have done your first successful launch and are making money, you can use the profits to sign up again and find your next product. Eventually, you will be making enough and using it enough to keep your subscriptions rolling.
If you really don’t want to spend any money then check out this post where I talk about how to find the best product to sell on Amazon manually. Back when I started on Amazon, manual was the only option because none of these tools had been invented yet.
I’m a big advocate of Xero and an Amazon integration tool called A2X. So much so that I personally pay over $350 a month to use them. But that is only because I am selling enough that it works out cheaper than doing it manually! These tools don’t do anything magical, they just automate what is a dull and lengthy process by hand.
I have another Amazon FBA business that is small enough that it isn’t yet VAT registered, so doesn’t need the same level of intense bookkeeping. I do it all by hand. Manually. For free.
You can download a transaction report straight from Amazon Seller Central. You can get a summary that covers your accountancy dates (or whatever dates you choose) and gives you all the info you need. It will look a bit like this:
Ps. If you do want to sign up to A2X you can use my discount code TRYA2X17_10%OFF for 10% off your first six months.
Accountants and Professional Services
Here in the UK, you don’t need to start a company in order to start selling on Amazon. You can start as an individual (sole trader) And then when it is worthwhile you can incorporate a company and start paying for professional help. I expect that is also the case in most other countries.
EDIT: In fact, it is even easier to get started here in the UK. You don’t need to pay any tax until your business is making a profit of over £1,000 a year.
I know accountancy and making sure you play by the rules is important. But it only really matters if your business succeeds. There is no point spending £1,500 for perfect accounts on a business that has gone nowhere and made no money.
Then once your business has succeeded it doesn’t matter that you are shelling out for professional help.
Even once you made the leap and incorporate a company, you can keep the accounting fees down. A traditional accountant will cost you around £1,500 a year. But there are some other options. You can use an online accountant. Or if you are very brave and rather foolish, you can even do it yourself. You only need an accountant by law once you are turning over millions a year.
Email Follow-Ups, Refund Chasers, A/B Testers, Customer Service Hubs, Listing Monitors, etc
There are hundreds of tools out there with varying usefulness (I go through all the ones I use in this post). But pretty much all of them are there to solve a problem. And are therefore only needed once you have that problem.
- You don’t need to automate email follow-ups until you have so many orders you can’t email each customer yourself.
- You don’t need to automatically chase refunds until you have so many orders that you can’t check each refund manually.
- You don’t need to do A/B testing until you have thousands of views on your listings and it becomes worthwhile to tweak them.
- You don’t need a customer service hub until the number of emails you’re receiving are too many to handle on Amazon’s system.
- You don’t need to monitor your listings for hijackers until you are selling so many units a day that missing a hijacker for a few hours would cost you a lot of money.
- You don’t need to integrate Amazon FBA with eBay or Shopify until you are selling enough on those platforms to make it worthwhile.
So in summary. Stop using the cost of software as an excuse not to start your business.