Amazon FBA Business Plan
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Amazon Business Plan Template
Below is a template to help you create each section of your Amazon seller business plan.
Executive Summary
Business Overview
Smith & Lopez is a personal care company headquartered in San Francisco, California. The company provides numerous personal care products for all ages and genders. Some of these products include lotions, perfumes, bath bombs, hair care products, and skincare products.
Smith & Lopez is a Fulfillment by Amazon (FBA) company and will provide its products primarily on Amazon. The personal care products will be manufactured at a warehouse and sent directly to Amazon warehouses nationwide. When customers order our products online, Amazon will take care of all the packing, shipping, and customer service, ensuring a smoother and positive experience for the consumer.
Smith & Lopez is founded by Maria Smith and Hector Lopez. Both are committed to providing high-quality personal care items and utilizing the strength of Amazon’s business model. Maria has a background in marketing, and therefore will take care of the marketing aspects of the business. Hector has extensive experience in the personal care industry and is familiar with the FBA business model, so he will run most of the operations.
Product Offering
Smith & Lopez manufactures and sells a variety of personal care items that appeal to all demographics. Some of our product offerings include:
- Lotions
- Perfumes
- Bath bombs
- Hair care products
- Skincare products
As an Amazon FBA company, Smith & Lopez will have Amazon handle all the packing, shipping, customer service, and returns aspects of the business.
Customer Focus
Smith & Lopez creates products that can appeal to all demographics. However, we expect females in the 18 – 40 age range will be our largest demographic. Traditionally, this demographic invests more in high-quality personal care items than any other, so we will primarily target them in our marketing efforts.
Though we are headquartered in San Francisco, we expect to reach the rest of the United States through the FBA business model. Through Fulfillment by Amazon, we will reach a much larger customer base than we would through a stand-alone e-commerce site. As an FBA seller, Smith & Lopez has access to millions of potential customers across 180 countries worldwide.
Management Team
Smith & Lopez is founded and run by Maria Smith and Hector Lopez. Both have been passionate about high-quality personal care items and used their passion to fuel their ideas for their own business.
Maria Smith will be a co-founder and the Vice President of the company. However, she has a background as a Marketing Specialist and a bachelor’s degree in Marketing. Therefore, she will handle all the marketing and advertising efforts until there is a need to hire a marketing team.
Hector will be a co-founder and the President of the company. He has an extensive history in the personal care industry and experience with the Amazon FBA program. He also has an MBA from UCLA. Therefore, he will handle all the operations side of the business.
Success Factors
Smith & Lopez will be able to achieve success by offering the following competitive advantages:
- 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.
- Convenient shopping experience: Amazon’s website makes shopping quick, easy, and convenient for millions of consumers around the world. When consumers buy our products from Amazon, they will have a convenient experience that can’t be matched by other e-commerce sites.
- Fast shipping: Amazon’s two day shipping is legendary. Amazon Prime customers can take advantage of this perk when they buy our personal care items from Amazon.
Download the Amazon FBA business plan template (including a customizable financial model) to your computer here <–
Financial Highlights
Smith & Lopez is currently seeking $230,000 to launch its Amazon FBA business. The capital will be used for funding startup costs, staffing, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Build-out and startup costs: $40,000
- Three months of overhead expenses (payroll, rent, utilities): $120,000
- Marketing costs: $40,000
- Working capital: $30,000
The following graph below outlines the pro forma financial projections for Smith & Lopez.
Company Overview
Who is Smith & Lopez?
Smith & Lopez is a personal care company headquartered in San Francisco, California. The company provides numerous personal care products for all ages and genders. Some of these products include lotions, perfumes, bath bombs, hair care products, and skincare products.
Smith & Lopez is a Fulfillment by Amazon (FBA) company and will provide its products primarily on Amazon. The personal care products will be manufactured at a warehouse and sent directly to Amazon warehouses nationwide. When customers order our products online, Amazon will take care of all the packing, shipping, and customer service, ensuring a smoother and positive experience for the consumer.
Smith & Lopez is founded by Maria Smith and Hector Lopez. Both are committed to providing high-quality personal care items and utilizing the strength of Amazon’s business model. Maria has a background in marketing, and therefore will take care of the marketing aspects of the business. Hector has extensive experience in the personal care industry and is familiar with the FBA business model, so he will run most of the operations.
Smith & Lopez History
Maria Smith and Hector Lopez have been passionate about high-quality personal care products for years. Over the past few years, they have designed and tested their unique personal care product ideas they were inspired to sell. After years of research and testing, Maria and Hector finally incorporated their company on April 3rd, 2022.
Since incorporation, the company has achieved the following milestones:
- Found an office location and signed a Letter of Intent to lease it
- Developed the logo and website for the company
- Finalized list of products the company will be able to provide
- Created an Amazon seller account
- Determined the office equipment and inventory requirements
- Found a manufacturer who will make the personal care products
- Began recruiting key employees
Smith & Lopez Products
Smith & Lopez manufactures and sells a variety of personal care items that appeal to all demographics. Some of our product offerings include:
- Lotions
- Perfumes
- Bath bombs
- Hair care products
- Skincare products
As an Amazon FBA company, Smith & Lopez will have Amazon handle all the packing, shipping, customer service, and returns aspects of the business.
Industry Analysis
The Fulfillment by Amazon business model is quickly becoming the most popular business model for small businesses in the United States. Globally, Amazon operates more than 175 fulfillment centers with over 150 million square feet of space. The company is also continuously hiring workers for these centers so that millions of products continue to ship out on time throughout the world. Therefore, Amazon has the structure and resources to help small businesses thrive so that these businesses don’t have to do everything on their own.
Furthermore, there are numerous perks to taking advantage of this program and many businesses have seen great success because of it. According to Amazon, nearly half of all American selling partners took advantage of FBA in 2020. These businesses reduced their shipping costs by an average of 30% and increased their sales by an average of 20-25%. In fact, small businesses who sell on Amazon are 2.5 times more likely to see revenue growth of 25% or more in a given year than businesses who don’t use Amazon. It’s clear that the FBA program is highly successful and will continue to be in the future. Therefore, this is a perfect time to take advantage of this rapidly growing industry and business model.
Download the Amazon FBA business plan template (including a customizable financial model) to your computer here <–
Customer Analysis
Demographic Profile of Target Market
Smith & Lopez will primarily serve U.S. consumers who shop for products on Amazon. Since females under the age of 40 are traditionally the target demographic for the personal care industry, we expect most of our sales to come from this demographic.
The precise demographics of individuals living in the U.S. are as follows:
| Total | Percent | Male Percent | Female Percent | |
|---|---|---|---|---|
| Total population | 327,167,439 | (X) | (X) | (X) |
| AGE | ||||
| Under 5 years | 19,646,315 | 6.00% | 6.20% | 5.80% |
| 5 to 9 years | 19,805,900 | 6.10% | 6.30% | 5.80% |
| 10 to 14 years | 21,392,922 | 6.50% | 6.80% | 6.30% |
| 15 to 19 years | 21,445,493 | 6.60% | 6.80% | 6.30% |
| 20 to 24 years | 21,717,962 | 6.60% | 6.90% | 6.40% |
| 25 to 29 years | 23,320,702 | 7.10% | 7.40% | 6.90% |
| 30 to 34 years | 22,023,972 | 6.70% | 6.90% | 6.60% |
| 35 to 39 years | 21,571,302 | 6.60% | 6.70% | 6.50% |
| 40 to 44 years | 19,927,151 | 6.10% | 6.10% | 6.00% |
| 45 to 49 years | 20,733,440 | 6.30% | 6.40% | 6.30% |
| 50 to 54 years | 20,871,804 | 6.40% | 6.40% | 6.40% |
| 55 to 59 years | 21,624,541 | 6.60% | 6.50% | 6.70% |
| 60 to 64 years | 20,662,821 | 6.30% | 6.10% | 6.50% |
| 65 to 69 years | 17,107,288 | 5.20% | 5.00% | 5.50% |
| 70 to 74 years | 13,464,025 | 4.10% | 3.90% | 4.40% |
| 75 to 79 years | 9,378,512 | 2.90% | 2.60% | 3.10% |
| 80 to 84 years | 6,169,441 | 1.90% | 1.60% | 2.20% |
| 85 years and over | 6,303,848 | 1.90% | 1.40% | 2.50% |
Customer Segmentation
Smith & Lopez will primarily target the following customer profiles:
- Women
- Consumers under 40
- Customers who buy personal care items on Amazon
Competitive Analysis
Direct and Indirect Competitors
Smith & Lopez will face competition from other companies with similar business profiles. A description of each competitor company is below.
Thea’s
Thea’s is a personal care brand that sells natural and organic skincare and other personal care items. They are particularly famous for their toners and moisturizers, which leave the skin looking youthful and glowing. Thea’s has been a major e-commerce personal care company for over a decade with millions of dollars of sales every year. However, Thea’s solely relies on their own e-commerce site and does not utilize FBA.
Miller & Miller
Miller & Miller has been a household personal care brand for generations, producing everything from skincare and moisturizers to toothbrushes and floss. Anything you need to stay healthy and looking good can be found in the MIller & Miller brand. Though Miller & Miller is a giant corporation that sells well through their e-commerce site and in stores, the company still utilizes Amazon and sells their best selling products on the site.
California Glow
California Glow is a new online personal care brand that sells lotions, makeups, and other personal care products. Like Smith & Lopez, they are a purely online brand and headquartered in San Francisco. They sell similar products and utilize FBA in addition to their e-commerce site. However, they sell far fewer products and are currently only a minor competitor.
Download the Amazon FBA business plan template (including a customizable financial model) to your computer here <–
Competitive Advantage
Smith & Lopez will be able to achieve success by offering the following competitive advantages:
- 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.
- Convenient shopping experience: Amazon’s website makes shopping quick, easy, and convenient for millions of consumers around the world. When consumers buy our products from Amazon, they will have a convenient experience that can’t be matched by other e-commerce sites.
- Fast shipping: Amazon’s two day shipping is legendary. Amazon Prime customers can take advantage of this perk when they buy our personal care items from Amazon.
Marketing Plan
Brand & Value Proposition
Smith & Lopez seeks to position itself as a respectable, upper-middle-market competitor in the personal care category of FBA sellers.
The Smith & Lopez brand will focus on the company’s unique value proposition:
- Offering unique and high-quality personal care products
- Offering a wide variety of products that appeal to all demographics
- Providing excellent customer service on a 24/7 basis through Amazon
Promotions Strategy
Smith & Lopez expects its target market to be online shoppers. The company’s promotions strategy to reach its targeted audience includes:
Amazon Advertising
Smith & Lopez will utilize the Amazon Advertising program provided by Amazon. This marketing program allows small businesses to advertise directly to Amazon consumers by purchasing sponsored ads. The program is highly effective. According to Amazon, the program reaches about 96% of consumers in the 25-54 age group every month. Since this is the majority of our target market, this will be an invaluable marketing and advertising tool.
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/Amazon Reviews
Smith & Lopez will encourage customers to post reviews to give honest feedback about our products. Amazon reviews can be incredibly effective and help us gain numerous new customers with little effort on our part. The company will use reviews and recommendations to grow its customer base through the network of its existing customers.
Website/SEO Marketing
Smith & Lopez has a website that is well-organized and informative and lists all our available products. The website also lists the company’s contact information and has links to our Amazon store. We will utilize SEO marketing tactics so that anytime someone types in the Google or Bing search engine “San Francisco personal care” or “California personal care products,” Smith & Lopez will be listed at the top of the search results.
Pricing
Smith & Lopez’s pricing will be moderate, so customers will feel that they receive great product value. We will set our prices based on similar FBA sellers in the personal care category.
Operations Plan
The following will be the operations plan for Smith & Lopez.
Operation Functions:
- Hector Lopez will be a co-founder and the President of Smith & Lopez. His extensive background in the personal care industry (as well as his experience with Amazon FBA program) will help him run the general operations of the company.
- Maria Smith will be a co-founder and Vice President of the company. In addition to helping Hector run and maintain the general operations of the company, Maria will use her extensive marketing background to handle all the marketing efforts.
- John Smith will be the Procurement Manager and ensure that our products are always in stock at Amazon warehouses.
- Sheila Martinez will be the Accountant and handle all general accounting, tax payments, and monthly financial reporting.
- Kyle Martin will be the Administrative Assistant. He will assist Hector and Maria with all general administrative tasks.
Download the Amazon FBA business plan template (including a customizable financial model) to your computer here <–
Milestones:
Smith & Lopez expects to achieve the following milestones in the following six months:
06/202X Finalize lease agreement
07/202X Design and build out
08/202X Hire and train initial staff
09/202X Kickoff of promotional campaign
10/202X Launch Smith & Lopez
12/202X Reach break-even
Management Team
Smith & Lopez is founded and run by Maria Smith and Hector Lopez. Both have been passionate about high-quality personal care items and used their passion to fuel their ideas for their own business.
Maria Smith will be a co-founder and the Vice President of the company. However, she has a background as a Marketing Specialist and a bachelor’s degree in Marketing. Therefore, she will handle all the marketing and advertising efforts until there is a need to hire a marketing team.
Hector will be a co-founder and the President of the company. He has an extensive history in the personal care industry and experience with the Amazon FBA program. He also has an MBA from UCLA. Therefore, he will handle all the operations side of the business.
Financial Plan
Key Revenue & Costs
Smith & Lopez’s revenues will come from selling products on Amazon. 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 spending will be high to establish itself in the market. Moreover, FBA membership and selling fees are also one of the notable cost drivers for Smith & Lopez.
Funding Requirements and Use of Funds
Smith & Lopez is currently seeking $230,000 to launch its Amazon FBA business. The capital will be used for funding startup costs, staffing, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Build-out and startup costs: $40,000
- Three months of overhead expenses (payroll, rent, utilities): $120,000
- Marketing costs: $40,000
- Working capital: $30,000
Download the Amazon FBA business plan template (including a customizable financial model) to your computer here <–
Key Assumptions
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
- Average number of items sold per month: 500
- Average sales per month: $20,000
- Retail space lease per year: $100,000
Financial Projections
Income Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
| Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
| Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
| Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
| Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
| Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
| EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
| Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
| PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
| Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
| Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
| NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
Balance Sheet
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
| Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
| Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
| Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
| Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
| TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
| Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
| Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
| TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
Cash Flow Statement
| FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
|---|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | ||||||
| Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
| Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
| Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
| Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
| CASH FLOW FROM INVESTMENTS | ||||||
| Investment | ($180,950) | $0 | $0 | $0 | $0 | |
| Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
| CASH FLOW FROM FINANCING | ||||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 | |
| Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
| Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
| Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
| Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
Amazon FBA Business Plan FAQs
What Is an Amazon FBA Business Plan?
An Amazon FBA business plan is a plan to start and/or grow your Amazon FBA business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your Amazon FBA business plan using our Amazon FBA Business Plan Template here.
What are the Main Types of Amazon FBA businesses?
There are a number of different kinds of Amazon FBA businesses, some examples include: Reseller, Private Label, and Proprietary.
How Do You Get Funding for Your Amazon FBA Business Plan?
Amazon FBA businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start an Amazon FBA Business?
Starting an Amazon FBA business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop An Amazon FBA Business Plan - The first step in starting a business is to create a detailed business plan for Amazon FBA that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your Amazon FBA business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your Amazon FBA business is in compliance with local laws.
3. Register Your Amazon FBA Business - Once you have chosen a legal structure, the next step is to register your Amazon FBA business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your Amazon FBA business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Amazon FBA Equipment & Supplies - In order to start your Amazon FBA business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your Amazon FBA business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful Amazon FBA business: