Always wanted to start a business of your own? Well, you’ll be thrilled to know that setting up shop has never been easier – especially in the digital age. Unlike your run-on-the-mill physical shop, an eCommerce business only takes a few clicks to set up, and also gives you a wider reach with lower overhead costs.
In this blog, we’ll take you through a step-by-step on how to launch a successful business on one of the most profitable platforms of the Internet era: Amazon.
Table Of Contents
5 steps to Start Selling On Amazon
- Set up your Amazon account
- Create your product listing
- Consider your product fulfillment options
- Monitor your store performance
- Finally – earn good reviews
What Is Amazon?
Like we need a reminder! Amazon is the largest online retailer in the world, and is valued at a whopping $1.1 trillion as of 2023. With a presence in over 100 countries across the globe, the retail giant has over 300 million active users, making it a very lucrative marketplace for aspiring entrepreneurs to enter and start selling online.
What Can I Sell On Amazon?
The great thing about Amazon is that there’s literally a market for almost anything!
So if you specialize in handcrafted products or plan to start your own private label brand, there are a lot of opportunities that you can tap into as an Amazon seller.
But before diving in, it does help to do a bit of research on your competition before opening your store. After all, you would want to differentiate yourself amongst the millions of sellers on the platform, especially if your product belongs to a saturated market.
To give you an idea, here are some of Amazon’s top selling categories for 2023:
- Clothing, Shoes & Jewelry
Fashion products are easily some of the most searchable items on Amazon, so if you’re planning to enter this market, be sure to bring something new to the table through unique designs or more affordable prices.
You can find all sorts of gadgets on Amazon at budget friendly prices. Stay on top by offering the latest models from trusted suppliers.
- Home & Kitchen
Equipment and decor are always in demand, especially with a growing number of people spending more of their time at home thanks to WFH and hybrid work set-ups.
Take Note Of Any Product Restrictions
Another thing to look into before registering would be whether your product complies with Amazon’s product policies and requirements. While it may seem like the eCommerce giant carries just about everything under the sun, they do have certain restrictions on specific categories (e.g. alcoholic beverages, skin care, dietary supplements) to ensure a safe shopping experience for their customers.
Thus, be sure to double check if your products fulfill all of Amazon’s requirements to save yourself from future headaches (not to mention, your time and money).
Before You Start Selling – Source Your Product
If you don’t have a supplier for your product yet, there are also lots of sourcing options for your business. Here are some of the most common business models on Amazon:
- Retail arbitrage
Getting discounted products from a retailer and reselling them at a higher price.
Buying products directly from a manufacturer’s catalog and listing them on Amazon. All your inventory will be stored in your manufacturer’s warehouse, who will be in charge of packing and shipping whenever you have an order.
Purchasing products in bulk from a manufacturer and selling them at a higher price. Many Amazon sellers use platforms like Alibaba to find suppliers that sell their goods at wholesale prices.
Once you’ve finalized your product and production chain, then the job is already halfway done. All that’s left is for you to sign up and launch your products!
Step 1: Set Up Your Amazon Account
The very first step is to create a seller account on Amazon Seller Central. Be sure to have the following information ready for a smooth registration process:
- Bank account number
- Credit card
- Government issued ID
- Phone number
- Tax information
You’ll also have to choose a specific selling plan depending on your business. There are 2 plans available: Individual and Professional.
Which Amazon seller account plan is for me?
The right plan for you will boil down to your business goals as well as the volume of products you’ll be selling on a monthly basis.
For instance, if you’re selling less than 40 items per month, then an individual seller plan will be more appropriate for your business’ current size. Plus, if you don’t think you’ll be using advanced selling tools or running ads, an individual account may also be more cost efficient as you can create your account for free. However, Amazon does charge individual sellers $0.99 for every item sold among other selling fees.
On the other hand, a professional seller plan will give you access to tons of features, reports, as well as seller perks for $39.99/month. So if you’re selling a high volume of products per month, we recommend signing up for a professional account for a better analysis of your store’s inventory and performance, along with additional benefits like setting your own shipping rates and Featured Offer (a.k.a. Buy Box) eligibility.
Another thing to know before signing up is that both programs also have additional selling fees such as referral fees and variable closing fees for media listings. Depending on the category, referral rates can range from 8% to 45%, with the average rate being 15%.
Since these fees will have an impact on your profit margins, it would be wise to take note of all additional costs for a more accurate financial forecast.
Step 2: Create Your Product Listing
Now that you’ve made your account, it’s time to add your first product to your new online store. There are two ways to go about it, each with their own advantages depending on your product’s features.
Option 1 – Adding your product to an existing listing
If you’ve ever shopped at Amazon, you’ll notice that some listings have multiple sellers. This is how Amazon prevents duplicates in order to create a more streamlined shopping experience for their customers.
Thus, if your product is already in Amazon’s catalog, you can simply add it to an existing listing manually with your Seller Central dashboard.
Adding your product to an existing listing would make your product easily accessible to potential buyers, however, you may have stiff competition depending on the other sellers’ offers. To make your offer more enticing, you can always provide a lower price, some add-on deals, or offer free shipping.
Option 2 – Make your own listing from scratch
If your product isn’t on Amazon’s catalog yet, then you can create a new listing from scratch. It’s a little more time consuming than adding your product to an existing listing, but you do have more flexibility when it comes to the content you’ll be adding on your page. Plus, you’ll also be able to sell your product at a premium since you won’t have any competition around.
To get started, here is the following information you need:
- GTIN (Global Trade Item Number)
A product ID used by Amazon to identify the exact item you’re selling. There are many types of GTINs and the requirements will vary depending on category.
- SKU (Stock Keeping Unit)
A code that sellers use to differentiate products and track inventory.
- Product Details
Name, brand, category, description, price (here’s our guide on pricing products), quantity.
- Other things to fill out
Shipping options, search terms and important keywords.
Some Bonus Tips To Optimize Your Listing
1. Nail your product title
Keep the most relevant words at the beginning of the title, and try to make your title as concise as possible (max. of 200 characters) for a better ranking. Be sure to capitalize the first letter of every word too!
2. Use images to show off your product
5-8 photos would be ideal for a well-rounded listing. Your main photo should show all your product’s features, while adding photos from different angles will give your customers a better perspective of your product.
Be sure to use HD photos as well (500×500 or 1000×1000 pixels) for the best quality. You don’t necessarily need the fanciest camera – check out our guide on taking pro-looking product photos on a budget.
3. Be sure to list all variations
This refers to colors, scents or sizes that your product may have. Properly filling this section up will allow your customers to easily see all the available options and switch between SKUs.
4. Write a product description that sells
Optimize your listing by using short bullet points when highlighting your product’s USP and benefits. It also helps to use your brand voice to make your copy more engaging for readers.
Lastly, be sure to cover details such as warranties and other information the buyer should know prior to purchasing (e.g. product prerequisites) to lower return rates. Check our guide on how to write a great product description if you need some inspo!
A Hack For The Pros: Use Bulk Editor to Upload Multiple Products
For those with professional accounts, you can efficiently create several listings at once by using Amazon’s bulk editor. For this method, you’ll have to build a product spreadsheet using Excel and upload the file on your dashboard.
Additionally, if you sell on another website such as Shopify, you can also directly connect your products from your store to Amazon (this’ll also streamline your inventory and orders too).
Step 3: Consider Your Product Fulfillment Options
Once your products are ready, you’ll now have to figure out how you want to fulfill your orders. The two main options are:
3.1 Fulfillment By Merchant (FBM)
Most sellers starting out typically ship out orders themselves, or hire a third party to store, pack and ship orders on their behalf. This method is called Fulfillment By Merchant (FBM).
3.2 Fulfillment By Amazon (FBA)
On the other hand, you can also let Amazon handle storage, packing and shipping for you by using Fulfillment By Amazon (FBA), which not only takes time off your hands, but also comes with perks that can boost your store’s sales.
Some benefits include:
- Your product listings may be eligible for Amazon Prime
- Free shipping for Prime buyers
- Better search rankings
- More Featured Offer (a.k.a. Buy Box) listings
- Post-sale services (i.e. returns, refunds)
89% of Amazon’s sellers use FBA, proving just how advantageous the program is for businesses. However, since Amazon’s rates will vary from product to product, we still recommend that you have a look through FBA policies and fees to see how profitable the partnership would be—especially for products that require special handling (which we will get to in a bit).
Additionally, you can also use Amazon’s revenue calculator to see which fulfillment option will be more feasible for your business.
3.3 When should you use FBA?
- For small and light products
FBA favors lightweight and easy to ship items and even offers discounted rates in their Small and Light program.
- For growing businesses
If your business still doesn’t have an integrated logistics system yet, FBA will be more cost efficient vs. getting an independent warehouse or hiring staff to fulfill your orders. Similarly, if you have a brick and mortar store and are looking to expand online, FBA will allow you to dedicate more time to running your offline channel/s while they take care of your online sales.
- For products with high demand
The faster your inventory turnover, the less costs you’ll need to pay for storage fees.
3.4 When should you stick to FBM?
- If your business already has an operations team
FBA may not be the most cost-effective if you already have your own team handling order fulfillment.
- If Amazon isn’t your main online channel
For businesses that sell on multiple online platforms, it will be more economical to stick to your usual courier.
- If you have a lot of oversized products
FBA fees can be very steep for large or heavy products, so it’ll be best to look for a third party that specializes in shipping bulkier parcels.
- If you have products that require special care
Not all of Amazon’s warehouses have climate control, making it risky for temperature-sensitive products such as food, cosmetics and medical equipment. Thus, we recommend looking for a courier that specifically caters to your product category.
Step 4: Monitor Your Store Performance
Just like any type of business, you’ll always want to keep tabs on how your store is doing. And on Amazon, there are three key metrics that you need to watch over at all times:
- Order defect rate: < 1%
- Pre-fulfillment cancel rate: < 2.5%
- Late shipment rate: < 4%
Anything outside these values might affect your seller ranking negatively, so it’s imperative for sellers to stay consistent every month. Regularly check on your account by clicking the Account Health section under the Performance tab of your dashboard.
Step 5: Finally – Earn Good Reviews!
Product reviews are an essential part of the Amazon shopping experience, and are beneficial for both sellers and customers. Be sure to have a read through Amazon’s policies to acquaint yourself with the right and wrong ways to get feedback from customers and avoid policy violations.
Moving forward – you should also look into strategies to grow and strengthen your brand. This includes enrolling in Amazon’s Brand Registry, and looking into marketing campaigns such as sponsored product ads and coupon deals.
And there you have it! An A to Z of selling on Amazon. If you’re still unsure of whether the platform is for you, here’s a quick rundown on Amazon vs. other popular sites:
How Amazon Compares with Other eCommerce Platforms
What differentiates Amazon from other eCommerce powerhouses like Shopify is that Amazon lets you sell products alongside millions of sellers in its online marketplace. However, platforms like Shopify allow you to build a store of your own using their customizable templates.
Each come with their own pros and cons:
Why Many Sellers Go With Amazon
One of Amazon’s biggest advantages is its high traffic, which means that your products will consistently be getting exposure. Moreover, Amazon also offers additional services such as FBA, which takes fulfillment duties off your hands and gives you more time to focus on other aspects of your business.
However, it comes with disadvantages too – you’re up against a lot of competition, and your options to customize your store are extremely limited – a challenge for anyone who wishes to build a strong brand image.
Why Many Sellers Prefer to Build Their Own Store
If you prefer to have more control over your brand and the selling process, consider building your own online store. These days, it’s really not that difficult. Most entrepreneurs simply use an eCommerce platform, which works as a virtual storefront for your customers, and provides you with an easy back-end interface to run your business.
Shopify is one of the most well-known around, and comes with a lot of fantastic tools and apps to help you design your store exactly the way you want it, though you may have to spend a bit extra for additional features. Moreover, you will also be in charge of marketing and driving traffic to your store.
If you’re after a bit more freedom for your store, check out our reviews of the best eCommerce platforms. We usually recommend Zyro for first-time store owners, as it’s the most basic to use and requires no coding knowledge. Their intuitive dashboard to help you manage everything: from inventory and order tracking, to sales tax and customer service.
Conclusion: Is Selling on Amazon Right For You?
Overall, we think that Amazon is a great platform for beginners with limited capital or traditional retailers looking to expand to eCommerce. The online platform already has a large customer base as well as an excellent reputation worldwide, which gives your business the opportunity to reach millions of users in a short amount of time.
The main drawback would be the heavy competition in the marketplace, but if you’re ready to put in the work in developing a solid product and marketing strategy, then we reckon that the benefits definitely outweigh all the risks.
Frequently Asked Questions
1. How much does it cost to sell on Amazon?
An individual plan on Amazon charges $0.99 for every product sold, while a professional plan costs $39.99 per month. Both plans come with additional selling fees which will depend on the category of your product.
2. How does Amazon FBA work?
Fulfillment By Amazon (FBA) is a service that lets Amazon handle fulfillment duties such as picking, packing and shipping out your orders. They also provide customer service and offer exclusive benefits for FBA sellers which can help boost sales.
3. Do Amazon sellers need to pay shipping fees?
FBA merchants will need to pay a fulfillment fee for every product sold, with the amount depending on your product’s size and weight.