by Drew Estes
So you’ve got basically no cash but you want to start an ecommerce business and live the dream of making money online. You want to start this thing up on a tight budget and, you know, potentially become the next bootstrapping entrepreneur to get featured on Forbes.
Well sit down because – oh you’re already sitting? – well hold onto your butts because I have some news: it’s incredibly hard to start an Amazon FBA store without money.
Okay you can stand up again, because there’s hope! Before you click away and flush that dream down the toilet like an underfed goldfish, look at the options you have at your disposal.
In the world of software, things that were once pricy are now affordable, and things that were once cheap are now free. With some patience, determination, and a bit of resourcefulness, you can do a lot more with a small budget than someone twenty years ago could.
This post is a primer on starting an Amazon business on a tight budget, some resources to get you oriented, along with some affordable and free tools to get you going.
Before we go any further, I need to say this up front: if you intend on charging this all to your credit card because you don't have the money on hand, you’re in for a rude awakening (and a terrible, terrible credit score).
Amazon expenses can add up fast, so you’re going to need a big old comfy cash cushion (or as big as you can manage) especially if you want to create your own brand.
In another post, we broke down the typical costs of selling on Amazon, comparing four different business models and what they look like. These estimates range from around $700 on the low end to nearly $8000 on the high end (though the costs for starting your own brand can be much higher than that, depending on your product).
The cheaper business models such as dropshipping or retail arbitrage might look more tempting, but you have better odds of making profit when you own a brand of your own, despite the higher starting costs.
That said, these models are an easy way to get your feet wet as an Amazon seller, and as the cheaper options you can expect to pay around $700-1000 to start selling on Amazon FBA.
Remember that this is a minimum – just because you can start with this small budget, doesn’t mean it’s going to be easy. And it definitely won’t happen quickly until you can grow your marketing funds.
If these costs don’t look like something you can comfortably handle right now, read about how to raise money for an Amazon business. If you can collect enough investment to build a starting budget, it’s time to get started with research.
Yes, we’re always talking about the importance of learning through action instead of just sitting around, but here’s a little disclaimer: with a small budget, your margin for error is smaller too.
You can still afford to make mistakes, but you have to be more careful about which mistakes you might make. If you choose the wrong product category for instance, it’s going to be a big investment and you might not earn it back. If you pick something that’s too niche, not niche enough, or merely a short term or seasonal trend, you’re going to have a bad time.
Thankfully you can find product research tools at very accessible prices these days. The free (limited use) product research apps will save you money, but if you want to thoroughly research your potential niche before throwing money into it, twenty or thirty bucks is practically nothing.
Manufacturing is a big one too. No matter your business model, you’ll want to spend time making sure you can rely on your supplier or manufacturer for quality and consistency.
Reading reviews about suppliers on IndiaMart or AliExpress can be a good starting point here (or ThomasNet if you’re sourcing from the US), especially since you probably won’t be traveling to meet your manufacturers in person.
Note the difference here: a manufacturer makes the products, while a distributor or supplier generally just sells them wholesale, and only sometimes handles the manufacturing side too.
Once you’ve found some good manufacturing (or distribution) options, give them a call or message and get some information about their pricing at various order quantities, how long they can ship an order from the time you put it in, and anything else that’s going to be relevant to your bottom line.
You’ll want to use a free FBA Fee Calculator to get estimates for all your shipping and storage costs. Do this for every product you research, because otherwise you may find that the hot-selling cash behemoth of a product you were considering is not actually as profitable as you hoped.
Whether it’s initial product research or marketing the finished item later, data is powerful, and the right seller tools can save you a lot of trouble, both in the short term and down the road.
You’ll need some software to stay competitive these days, but don’t get fooled into thinking it’s all required. Yes, certain tools are essential to keep up with other sellers, but many are just convenient; luxuries for merchants who have more money to throw around.
Services like inventory management and repricing aren’t exactly “must-haves” in the beginning when you don’t have much cash flow, but marketing and advertising tools are often essential. Why? Because you can’t have a business without sales.
Simply put, the app that directly helps you get sales will be more essential than the apps that just make it easier to organize numbers and manage data.
We’ve also included some accounting tools on this list, because while they aren’t necessary in the beginning, they can quickly become useful as your sales grow since they free up your time to focus more on the tasks you want to do yourself to save money.
You’ll want services to help find your market niche and to promote and sell your product, but also services to improve your product listing, so you can get more organic traffic from Amazon search. This list includes marketing software to cover these basics, along with tools for changing your prices later.
Accounting/Bookkeeping – while you can get a more complete list of these (and all the details you need on each) on our list of ecommerce accounting services, here are a few companies to check out. Each offers a plan for under $20 a month, though you may need more than one.
Inventory & Logistics – bigger budget sellers may want inventory management tools, but they’re generally more of a convenience. As long as you’re keeping an eye on your FBA stocks to see how quickly they’re depleting (and you have a steady supply of new shipments that you can easily increase or decrease throughout the year), these kinds of tools aren’t strictly necessary. Amazon FBA takes care of most logistics metrics for you, so it’s relatively easy to keep tabs on it as a small to medium seller.
Okay, bootstrapping an Amazon business is obviously about more than just cheap tools. You’ve gotta have some kind of plan, and some idea of the basic cost-cutting practices.
This will take some extra patience on your part, because cost-cutting often means DIY, and doing it yourself will be slower and less efficient than using a service. That said, here are some pointers to cut costs early:
Take your own product photos
Product photography isn’t the biggest cost out there, but you can save quite a bit by photographing your own products. And if you do it right, you won’t even need to sacrifice quality either. Read our post on DIY Amazon product photography to get started.
Cut deals with suppliers and freight forwarders
When shipping your products from overseas, always look for ways to cut costs. This can be with bulk orders, larger containers, or any other way you can provide a little value to your freight forwarder in exchange for a better deal.
This is 10x more true if you’re sourcing from an Asian country. Haggling is much more normal (and expected) in countries like China, India, Pakistan, and Thailand, for instance, than it is in the US or UK.
With this in mind, never take the first deal your manufacturer or supplier offers you. Oftentimes a supplier will respect you more if they see you’re willing to play the game and negotiate, and a better relationship with your supplier also means more opportunity for better deals down the road.
Entire books have been written on the topic of cross-cultural negotiation, so I’ll leave the rest of that research to you.
This can be a little obnoxious when done poorly, but take advantage of different social media platforms and other networks to promote your product. If you started your own private label product, it can be a lot easier to promote to people you know, since it’s a unique brand with a story people can share. The better you tell your story, the more shareable it becomes.
We covered promotion in our Ultimate Guide to selling more on Amazon, so if you need ideas on how to market your product in creative ways across a range of budgets, check out some of those tips.
Market through affiliates and influencers
On a similar note, use professional relationships wisely. If you know someone with a decent following, and their audience is the type who’d probably like your product, see what you can offer them in exchange for a referral link on their site, or even just a social post from them.
Again, this strategy is much more effective if you own your own private label brand. People don’t really have a reason to link to your product if it’s identical to ten other Amazon listings.
Leverage your email list
We’ve mentioned this countless times before, but there is no better advertising channel than a qualified email list. People who have expressed interest in your product and willingly given you their email are much more likely to buy from you than some random shopper seeing your ad somewhere on the internet.
Whether you own a website of your own or collect emails in other places, figure out how to build your mailing list and use it (without abusing it of course).
If it’s within your budget, Massview’s Professional plan includes the chatbot Masschat to promote your products via Facebook Messenger Ads, and collects email addresses in your Massview database. This way you have a list of qualified customers to sell to again down the road.
Make extra cash with affiliate programs
Many marketing companies will give you recurring commission for referring friends. To essentially cancel out the cost of marketing software like Massview, just sign up for the referral program and sign other people up.
With Massview’s affiliate program, you earn 30% monthly commission for each active paying user you’ve referred, with no maximum on earnings.
You can completely cover your costs with 1-4 referrals, depending on your plan. Since there’s no cap, you can refer as many people as you want and keep all the commission you earn. So if you want to essentially get paid to use the software, this is how you do it.
The hardest part here will be your first year, as you struggle to gain traction. Once you turn a profit though, you’ll have more money to invest in marketing so you can scale your business. From there, you may want to consider less essential services to streamline your workflow.
All things being equal, starting an Amazon FBA business on a tight budget is a lot harder than it would be for someone with more cash. But if you’re truly interested, don’t let that discourage you. It will take some patience and some hard work, and some creativity always helps, but with the right moves you can make it happen.