It is hard to argue with selling your product on Amazon, given their global e-commerce leadership. Other online marketplaces to sell your products include Etsy, eBay, Shopify, and Facebook Marketplace. Still, Amazon is unquestionably America's largest and most popular e-commerce marketplace.
Did you know they have 300 million active users, with about half of those, or 153 million, estimated to be Amazon Prime customers by the end of 2022?
Amazon's third-party selling partners are nearly 2 million small- and medium-sized businesses. At the end of 2021, 56% of Amazon's sales came from these businesses.
It is relatively easy to sell on Amazon once you have a viable product, as the company guides sellers through the five steps we discuss. Their selling guide provides videos and content.
Benefits of Selling on Amazon
There are many benefits of selling on Amazon:
- Massive reach gives small businesses international exposure
- Attractive sales channel
- Bestows sellers with credibility and trust
- Affordable pricing for built-in infrastructure
- Offers packing and shipping
With all these benefits, sellers may face high competition. To succeed on Amazon, it is up to the merchant to do their own market research to find a sweet spot when choosing your product.
Amazon Restricted Products
Before moving forward, you'll want to review Amazon's Restricted Products list to ensure your potential product doesn't appear on the list. These restricted products are a mix of potentially unethical or illegal items (e.g., alcohol, drugs, drug paraphernalia) or products that may not comply with federal, state, local laws, or Amazon's policies.
After their review, Amazon may approve your product, but many products will remain restricted.
Five Steps How To Sell on Amazon
Step 1: Research Your Product's Viability
If your product is not restricted, you need to determine the viability of your product by doing some research to target customers. You can use Google Trends to see what products are popular. Niche products in categories like fashion, arts & crafts, and housewares tend to be in demand.
It would be best if you understand the following factors:
The market's competitive nature – do you have something unique to sell? You should research your competitor's products and compare them to your product. Healthy competition is not necessarily a bad thing, and it may highlight that there is strong demand for your product.
Is there strong demand? Through research, you'll want to highlight what is unique about your offering.
What is the barrier to entry? A low barrier to entry is desirable (but not so low that you will be up against too many competitors). Look for a viable supplier you want to work with you and your products.
High-quality products with a relatively low cost of goods sold result in higher margins, a good outlook for your business, and flexibility to offer customers incentives. You don't want to enter the market with low prices causing low margins, as your product won't last long in such a scenario.
Other Selling Options
Other selling options include dropshipping, retail arbitrage, or private labeling. However, make sure you don't violate Amazon's policies.
Dropshipping is an order fulfillment option for Amazon sellers that allows the seller to outsource functions like procurement, storing, and shipping to a third party. As the Amazon seller, you must be the seller of record on the invoices, packaging slips, or any other information. You could either go with a separate supplier or use Fulfillment by Amazon (FBA).
Another option is retail arbitrage, where you find items on clearance with a deep discount (e.g., Bed, Bath and Beyond) that you resell to your customers for a profit. You can also consider looking at the private labeling of a successful product. The manufacturer can add your company label to an existing product.
Amazon can provide you with the means to build a good reputation, trust, and credibility, but you are the master of the product, and it is up to you to find the best products to sell, find potential customers, and drive traffic.
Two Selling Methods: Fulfilled by Merchant and Fulfilled by Amazon
There are two ways to sell on Amazon, and some sellers use both methods.
Fulfilled by Merchant (Fbm)
FBM is a selling method where the seller lists products in Amazon stores but manages all storage, shipping, and customer support independently. This method may benefit those who have dealt with some of the challenging aspects of inventory management.
The seller decides how to store inventory, pack and ship products, and handle returns or refunds, all while providing excellent customer service. They maintain control and can send the merchandise to their buyer.
If the seller has the resources to handle the inventory, they can save on some of Amazon's service fees for Amazon's for storing and shipping. It may work for the seller if they have logistics to handle the products to the customer, sell a low volume of products, and can handle the complexity of packing and shipping requirements.
Fulfilled by Amazon (FBA)
Fulfillment is the process of storing, packing, shipping orders, and handling returns and exchanges. FBA provides the infrastructure, including fulfillment centers and warehouses, to manage the seller's customer orders, send shipments on time, and obtain the latest information on products available in inventory.
Additionally, FBA can give the seller's business a competitive edge in attracting desirable Amazon Prime customers. Amazon Prime members spend more than non-Prime customers, at $1,400 per year compared to just $600 annually.
If your competitors serve their customers with FBA, you don't want to risk poor inventory management or product delivery that can disappoint your customers.
Since the pandemic, there have been severe supply constraints. Amazon, as an e-commerce leader, could be in a better position to overcome these issues than individual sellers. According to JungleScout's 2022 report on Amazon sellers, three-quarters (76%) of sellers will be profitable in 2022, despite severe disruptions due to supply chain problems.
Step 2: Create Your Account on Amazon
Amazon gives specific directions to those who want to Become an Amazon Seller on how to create an account. We provide those directions here for your convenience.
Residents of these countries are eligible and may become Amazon sellers.
You'll need the following :
- Use your Amazon customer account or Business email address
- Internationally chargeable credit card
- Government ID
- Tax information
- Phone number
- A bank account information so Amazon can send you proceeds from your sales
Choose Your Selling Plan
After setting up your seller account, you can pick your plan on Amazon Seller Central. There are two plans: the Individual Plan and the Professional Plan.
The Individual plan may work for those who may sell less than 40 items per month. Sellers pay $0.99 for each item you sell, plus there are additional selling fees. New sellers may be figuring out what to sell and don't yet want to promote their products with ads or use Amazon's advanced tools.
Amazon doesn't set a limit to how many items you sell. The Professional Plan costs $39.99 monthly (before additional selling fees) and is a desirable plan for those who exceed 40 units per month. This plan is more robust than the Individual Plan. It allows the sellers to leverage Amazon's advanced selling tools, including dashboards and product reports, and qualify for their product's top placement on Amazon.
Amazon collects extra selling fees from both plans, including a referral fee on each sale, a percentage of the total transaction, which varies by product category.
Step 3. Add Products
You can sell many products, categories, and brands, but review their list of restricted products. Some types may require a professional plan.
To start selling a product, Amazon wants you to create a product listing in Seller Central (or via API) with specific details that include:
- You'll need a product identifier, such as GTIN, UPC, ISBN, or EAN, to specify the exact item you're selling. You can get a UPC code directly from GS1 or request an exemption.
- An SKU is a product ID you create to track your product.
- Offer details, including price, product condition, available quantity, and shipping options.
- Product details include name, brand, category, description, and images.
- Keywords and search terms to help buyers find your product.
If another seller already offers the same product, you'll match an existing listing (which means some details will already be in place, like the product identifier). You'll create a new listing if you're the first seller to offer a product.
Amazon provides videos and content to help you attract customers once you complete your listing.
The Product Detail Page
You'll need to develop an SEO-friendly listing to attract customers and build demand when creating your product detail page.
Prospective customers search keyword terms in a relevant title, clear images, product descriptions, and bullet points that help them to find your products. Highlight the uniqueness of the product to make it stand out for them.
The better the listing, the higher you can convert into your sales. Ultimately, you will want your product to rank on the first page for the most outstanding visibility.
Step 4: Attracting Customers and Sales
Once your products are ready and listed in Amazon's stores, Amazon provides three suggestions for attracting customers, which may result in higher costs, impacting margins. To stand out from the competition, you may have to:
Provide fast shipping
Amazon is known for fast shipping, and customers want their products as soon as possible. You can achieve prompt deliveries through a robust FBA plan (as discussed above). Alternatively, some sellers will opt to provide the product themselves.
Advertise and promote your offers
The seller can promote your product with sponsored listings at an extra cost but it is only available on the Professional Plan. This strategy will help improve the visibility of individual products and boost brand awareness by advertising in search results and product pages. Consider running a deal or a coupon as another way to promote your products. Pick the products to advertise, desirable keywords for those products, and enter a cost-per-click bid, keywords, and SEO images.
Set competitive prices
Amazon Seller Central's built-in tools will help you set prices, with automated repricing and bulk pricing for business customers to help you stay competitive. Amazon recommends that your offer includes shipping incentives as part of your value proposition.
Additionally, check out Amazon's recommendations that may benefit your business. Weigh the benefits over higher costs, as most of their suggestions will impact your margins.
Access to an Amazon Selling Coach
An Amazon Selling Coach offers personalized recommendations to help you increase your success on Amazon.
Prime Fulfillment by FBA
If you choose FBA for your products, you get significant benefits from Amazon. Amazon fulfillment centers pack and ship them to buyers. Your products are eligible for Prime and free shipping by leveraging their fulfillment networks and expertise.
Hub by Amazon
Hub by Amazon is another comprehensive solution that frees you and your staff from daily package management, from high-rise buildings to garden-style apartments. The Hub does not require an Amazon Prime membership and does not charge a fee to your residents.
When shopping online, buyers look at various promotional offerings, including dollars or percentages taken off the price or free shipping.
Free shipping is what attracts buyers to Amazon. You, too, can make a great impression on buyers by offering promotions. Amazon found that one promotion-free shipping on orders with eligible items that total $35 or more impacts the purchase decisions.
Step 5: Get Customer Reviews
Customer product reviews benefit customers and sellers. You will need to review Amazon's policies and what may result in violations when trying to attract legitimate customer reviews. Become familiar with their guide that discusses the right and wrong ways to get more product reviews and avoid policy violations.
When you become an Amazon seller, you gain exposure to a massive global market that can help you grow your business online, whether your full-time job or a potentially profitable side gig. Do some homework and leverage Amazon's reach, infrastructure, and guidance.
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This article originally appeared on Wealth of Geeks.
The cents of money is about financial education, here to teach and inspire you about money, seek new ideas, and to create greater comfort in your world about one of life’s great stresses. Linda wants to use her financial skills honed by her professional experience to help others.