Amazon FBA Business Plan
If you want to start an Amazon FBA business or expand your current Amazon FBA business, you need a business plan.
The following Amazon FBA business plan template gives you the key elements to include in a winning Amazon FBA business plan.
Sample Amazon FBA Business Plan
Below is an Amazon FBA business plan example with each of the key sections to help you write an Amazon FBA business plan for your own company.
I. Executive Summary
Business Overview
[Company Name] is a small ecommerce company headquartered in [Location], that does Fulfillment by Amazon (aka Amazon FBA). The Company will use the Amazon FBA service to fulfill orders for its products placed through the Amazon Marketplace.
Products Served
[Company Name] will maintain an inventory of its products at Amazon fulfillment centers, and when a customer places an order, FBA will handle the receiving, packing, shipping, customer service, and returns for those orders. The Company’s services include:
- 24/7 customer service
- All fulfillment and shipping costs included (pick, pack, and ship)
- Access to one of the world’s most dynamic fulfillment networks
Customer Focus
[Company Name], through Fulfillment by Amazon, will reach a much larger customer base than it would through a stand-alone ecommerce site. As an FBA seller, [Company Name] has access to millions of potential customers, worldwide. In addition, the FBA service provides Prime shipping, which has been identified as a major incentive to consumers.
Management Team
[Company Name] is owned and managed by [Founder’s name], who has been a graphic designer for [x] years. He has extensive experience in product design, working as a product director with one of the nation’s leading marketing firms prior to starting his own company. He will have the help and support of his business partner, [Insert Name], who will handle the procurement and admin tasks for the company.
Success Factors
[Company Name] is qualified to succeed due to the following reasons:
- There has been significant growth in Fulfillment by Amazon over the past few years. In addition, the company has served the local population and received highly positive feedback pointing towards an explicit demand for customized products (t-shirts, mugs, stickers, etc.), supporting the business after launch.
- The management team has a track record of success in the graphic design business.
- The Company will provide high-quality, unique products.
- The Amazon FBA business has proven to be a successful business in the United States.
Financial Highlights
[Company Name] is currently seeking $200,000 to launch its Amazon FBA business.
Specifically, these funds will be used as follows:
- Build-out and Startup costs: $20,000
- Working capital: $180,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even.
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name], headquartered in [insert location here], is a new company working to provide unique products via Amazon FBA. The Company will be working as a third-party retailer selling via the Amazon platform. With Fulfillment by Amazon (FBA), the company will be able to scale easily due to its access to Amazon’s logistics network.
The Company’s primary products include unique graphic t-shirts, mugs, banners, and other hats. The Amazon Fulfillment center will store, pick and pack orders, and then ship it to the customer, and handle any customer service or returns. The Company’s inventory management of products is automated, and its portal is designed in such a way that it generates reports instantly when required.
[Company Name]’s History
[Founder’s Name] is an entrepreneur with deep graphic design experience which he has leveraged to create unique, on-trend product offerings. [Company Name] currently successfully operates in [Location], and is expanding to reach a global market for mass-produced as well as customized graphic products.
Upon surveying the local customer base and contracting a product supplier, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
[Founder’s Name] has selected an initial product line and is currently undergoing due diligence in the local market to assess the most popular products and designs to offer via Amazon FBA.
Since incorporation, the company has achieved the following milestones:
- Developed the company’s name, logo, and website
- Registered with Amazon FBA
- Began recruiting key employees with experience in graphic design and printing
[Company Name]’s Products/Services
[Company Name] will produce a variety of graphic products, such as t-shirts and mugs, to sell on the Amazon Marketplace. It will use the FBA service to store products, so that when an order is placed, the FBA service will handle the receiving, packing, shipping, customer service, and returns for those orders. By using Amazon FBA services, the company will have:
- 24/7 Amazon customer service
- All fulfillment and shipping costs included (pick, pack, and ship)
- Access to one of the world’s most dynamic fulfillment networks
III. Industry Analysis
Amazon says that half of the American third-party sellers (approximately 2.5 million US sellers) took advantage of FBA. Amazon correlates usage of FBA with a sales increase of 34% among this cohort. Amazon also says that, on average, shipping with FBA costs 30% lower than other shipping carriers. This year, Amazon has aggressively grown its capacity of FBA, increasing square footage across its worldwide network of distribution centers by 50%. It has also hired 450,000 new employees to expand its FBA capacity.
Operating as a Fulfillment by Amazon (FBA) business is becoming an increasingly popular trend. Fashion brands operating as Amazon FBA businesses have been experiencing a gold rush. Jewelry, clothing, and shoes alone accounted for $33.4 million of FBA revenue.
Amazon FBA statistics reveal the following:
- There are 9.5 million Amazon sellers globally.
- 73% of Amazon sellers use FBA to sell.
- On average, new Amazon sellers make revenue of $26,000 to $810,000 annually.
- 57% of Amazon third-party sellers belong to the age group of 27 to 44 years.
- On average, an Amazon customer spends at least $700 every year, whereas Prime members spend about $1300 every year. This signifies that if a company utilizes Amazon FBA services, its visibility increases, especially to Prime buyers, and helps boost sales.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve consumers who shop for products on Amazon.
The precise demographics of individuals living in the U.S. are as follows:
| United States | |
|---|---|
| Total Population | 312,796,426 |
| Population Male | 49.00% |
| Population Female | 51.00% |
| Median Age | 37.5 |
| Target Population by Age | |
| Age 18 to 24 | 9.99% |
| Age 25 to 34 | 13.08% |
| Age 35 to 44 | 12.94% |
| Age 45 to 54 | 14.64% |
| Age 55 to 64 | 12.43% |
| Median Household Income | $57,639 |
| Households w/disposable income | |
| Income $50,000 to $74,999 | 18.03% |
| Income $75,000 to $99,999 | 12.97% |
| Income $100,000 to $124,999 | 8.65% |
| Income $125,000 to $149,999 | 5.40% |
| Income $150,000 to $199,999 | 5.12% |
| Income $200,000 and Over | 5.34% |
Customer Segmentation
The Company will primarily target the following customer segments:
- Consumers under 34: Individuals under age 34 account for 38.4% of all ecommerce sales. Those aged 25 to 34 shop online more frequently than those under the age of 25, simply due to their spending power.
- Consumers aged 35 to 54: Consumers between the ages of 35 and 54 make up an estimated 26.0% of the adult population, but generate an estimated 32.7% e-commerce shopping. Each year, the average shopper in this age group spends nearly $1,800 online.
- Consumers aged 55 and up: This age cohort has more wealth than the other age groups. Even though this age group is less likely to shop online, these consumers are willing to spend more with each purchase. As a result, this age group accounts for over one-quarter of ecommerce sales.
V. Competitive Analysis
Direct & Indirect Competitors
Competitor 1
Competitor 1 celebrate sellers and their businesses by collaborating to architect the exit of their dreams. Competitor 1 buys, grows and builds Amazon businesses, setting the precedent for what it means to be a forward-thinking CPG company. The company buys consumer-leading Amazon brands and elevates them to their full potential. It believes firmly in treating sellers fairly and with utmost professionalism. Competitor 1 is a cash buyer of Amazon FBA businesses backed by strong investors. The company also has a lucrative referral program for introductions that lead to the successful acquisition of an Amazon FBA business.
Competitor 2
Competitor 2 is an acquisition company that gives third-party FBA sellers on Amazon the life-changing payout they have worked so hard for. Competitor 2 acquires a select group of Amazon and Shopify-based brands and private-label FBA businesses that are uniquely positioned for growth. Competitor 2 is committed to transparent and speedy transactions – in less than 30 days. By pinpointing the category leaders in the eCommerce space, the company empowers the brands who “get” their customers and are devoted to consistently delivering products that matter and outperform customer expectations. Competitor 2 focuses on a quality-driven, boutique experience for the sellers it acquires, the products it scales and develops, and the end customers it serves.
Competitor 3
Competitor 3 creates, builds, buys and scales consumer brands globally since [xx]. Competitor 3 distributes more than xx products to consumers in xx countries worldwide. Products are sold across more than xx channels including direct to consumer e-commerce, online marketplaces and wholesale. Competitor 3 has access to xx active ecommerce shoppers through several sales channels in a total of xx countries.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Experienced Management: The Company’s management team has xx years of experience that allows them to create better designs and produce higher quality products than the competitors.
- Existing Client Base: Having lived in the community for xx years, [Founder’s Name] has an extensive clientele, including local leaders and other influencers. As such, it will be relatively easy for [Company Name] to build on this local brand awareness to create a wider customer base.
- Built-In Customer Service: With Amazon’s built-in customer service network, there’s someone available around the clock to offer support to customers, a perk that’s free being in the Amazon FBA business.
VI. Marketing Plan
The [Company Name] Brand
[Company name] seeks to position itself as a respectable, upper-middle-market competitor in the graphic products category of FBA sellers.
The [Company Name] brand will focus on the company’s unique value proposition:
- Offering unique and high-quality graphic products
- Offering customization
- Providing excellent customer service on a 24/7 basis
Promotions Strategy
[Company Name] expects its target market to be online shoppers. The Company’s promotions strategy to reach its targeted audience includes:
Advertisement
Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The Company will advertise its services in popular business magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.
Social Media Marketing
Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand changing customer needs.
Word of Mouth Marketing
[Company name] will encourage word-of-mouth marketing from loyal and satisfied clients. The Company will use reviews and recommendations to grow its customer base through the network of its existing customers. The Company will be incentivizing its existing customer base to encourage their friends to come and try their products for the first time.
Pricing Strategy
Pricing strategy is one of the most important functions that any business can plan for attracting customers. Prices are a foundational element of a company’s revenues—if managed carefully, they can generate higher profits.
[Company Name]’s pricing will be moderate, so customers will feel that they receive great product value.
VII. Operations Plan
Functional Roles
To execute on [Company Name]’s business model, the company needs to perform several functions, including the following:
Service & Administrative Functions
- Procurement
- Customer service
- General & administrative functions including legal, marketing, bookkeeping, etc.
- Hiring and training staff
- Maintaining adequate stock at various FBA fulfillment centers
Milestones
[Company Name] expects to achieve the following milestones in the following [] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is owned and managed by [Founder’s name], who has been a graphic designer for [x] years. While [Founder] has never run an Amazon FBA business himself, he has been active in designing graphic products for many years. He has extensive experience in product design, working as a product director with one of the nation’s leading marketing firms prior to starting his own company. He will have the help and support of his business partner, [Insert Name], who will handle the marketing and admin tasks for the company.
[Founder] graduated from the University of ABC where he majored in Graphic Design.
Hiring Plan
[Founder] will serve as the Chief Executive Officer. To launch the Amazon FBA business, the company will need to hire the following personnel:
- Procurement Manager
- Printing Experts
- Staff for Distribution Management
- Quality Control Experts
- Staff for Legal and Accounting Purpose
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come from product sales and design services. The major costs for the company will be the cost of supplies and salaries of the staff. In the initial years, the company’s marketing spend will be high to establish itself in the market. Moreover, FBA membership and selling fees are also one of the notable cost drivers for the [Company Name].
Capital Requirements and Use of Funds
[Company Name] is currently seeking $200,000 to launch its Amazon FBA business.
Specifically, these funds will be used as follows:
- Build-out and Startup costs: $20,000
- Working capital: $180,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even.
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Number of customers per day | |
|---|---|
| Year 1 | 40 |
| Year 2 | 60 |
| Year 3 | 80 |
| Year 4 | 100 |
| Year 5 | 120 |
| Average order price | $32 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
