By Michael Keenan
Introduction
Your online store is your main hub, where you showcase your brand, engage with your audience, and sell your products. However, there are many ways to reach both existing and new audiences and sell products through online marketplaces like Amazon.
If you are a beginner in the e-commerce field, you may have some questions, including: Why should I sell on Amazon? How can I manage pricing between my Shopify store and Amazon? What does it take to grow a business on Amazon, and how can I maintain growth in the long term? What are the options and programs available on Amazon that I should use?
The goal of this guide is to tackle these questions and help you understand how to create and grow a profitable and sustainable business on Amazon. You will learn how to get started selling on Amazon, how to optimize your time, and the things you can control to build a business on Amazon.
How to Sell on Amazon for Beginners
1. Determine What to Sell
Your Amazon business strategy should cover the types of products you will sell and how you will source them. There are several common ways to sell on Amazon:
– Retail arbitrage. If you buy something for less than its market value and sell it at a higher price while profiting from the difference, that is retail arbitrage. Amazon sellers can search various markets for discounted or clearance items, like Target, Best Buy, or Big Lots, and then sell them on Amazon at a higher price.
– Private labeling. Generic products that have your brand name or logo added are known as private label products. You can order private label products in bulk, drop ship them, or print on demand. Amazon sellers find it easier to private label products because they can skip product research and start selling right away. You do not need to have any manufacturing or product design experience to sell private label products.
– Wholesale. Wholesale is the process of creating branded products using a third-party manufacturer. Amazon already has a target audience, making private label products an attractive option for Amazon sellers. Common categories include apparel, skincare, cosmetics, food, hair care, and dietary supplements. You can find private label products through marketplaces like Alibaba or Thomasnet.
– Affiliate marketing. If you don’t want to deal with sourcing products to sell, you can start an affiliate marketing business on Amazon. You just need to choose the products you want to sell and promote them to your audience – whether on your website or your Instagram or TikTok accounts. Amazon will provide you with a unique link to include in your content. When someone buys a product using your link, you earn a commission from the sales.
– Dropshipping. When dropshipping on Amazon, you don’t keep products in stock. When someone buys a product, the order is sent to a third party. The third party fulfills the order and ships the products directly to the customer.
There is a slim profit margin for Amazon sellers who dropship. The average ranges between 10% and 30%, with Amazon taking about 15% of the total revenue. So, you will have a profit margin of about 15% for each product sold.
While dropshipping on Amazon is popular, there are many rules to follow for compliance. Read more about Amazon’s dropshipping policy.
– Selling your own products. Another way to sell on Amazon is to sell your own products. Many Shopify store owners use the free Shopify app to sync inventory and sell products from their own stores on Amazon. This way, you won’t need to create separate sales plans, and you can control inventory management in one place.
Tips
Searching for Products to Sell on Amazon
It takes time and research to find the right products to sell on Amazon. Look for products that are popular and have a good profit margin in a space with little competition.
– Amazon’s Best Seller Lists
The Amazon Best Sellers page is a great place to find product ideas based on what is selling well at the moment on the site. Pay attention to any ideas that you find worth considering. Books, clothing, electronics, toys, and games are among the best-selling categories on Amazon.
– Keyword Research Tool
Jungle Scout is a popular keyword research tool that can help identify the ideal products. When using a tool like Jungle Scout, you make decisions based on data. The product search volume helps you determine whether it’s worth buying and selling yourself. Image provided by: Jungle Scout
– Amazon Reviews
Any market can be profitable if you provide customers with something they lack. There’s always some kind of gap in every category. You should examine Amazon product reviews to identify what customers like and dislike about your brand or product. You may be able to determine whether it’s appropriate for you to try selling it yourself based on that information.
Choosing a Plan
One of the first decisions you will make when selling on Amazon is the type of seller plan you will use. Amazon offers two seller plans: individual and professional. The main difference between the two plans depends on your expected sales volume.
– The Individual plan is a pay-as-you-go plan that gives you access to basic listing tools and order management. Individual sellers pay $0.99 every time they sell a product. You don’t pay any fees unless you sell a product on Amazon.
– The Professional plan is a monthly subscription service that provides a range of tools and benefits, including Amazon Marketplace API access, advanced business reports, customizable shipping options and prices, and eligibility for higher placement on detail pages. The price is $39.99 per month, but it may vary depending on whether you are selling in multiple countries.
Amazon also takes a referral fee on each sale. This fee is a percentage of the total transaction and varies by product category.
Which one is better for you? If you plan to sell more than 40 products a month, you might want to choose the professional plan. If you sell less than 40 products a month or experience seasonal fluctuations in sales, the individual plan may be better for you.
Creating a Seller Account on Amazon
The next step is to create a new seller account on Amazon. Before you register, gather the following information: business email address, bank account number or routing number, active credit card, government-issued ID, tax information, phone number.
Next, go to sellercentral.amazon.com to register. Amazon will ask for details about your business, such as the address and tax information, as well as bank and identity information.
Amazon requires sellers to obtain approval for certain types of products. Fashion, groceries, music, and jewelry are common categories that require approval before setting up an Amazon seller account. Read an overview of the product categories you can sell.
Once your Amazon seller account is approved, you are ready to list your products and start selling.
Understanding the Cost Structure on Amazon
You can start selling on Amazon with minimal money. However, there are some fees that you should be aware of as they are charged frequently and can affect the return on investment of your Amazon channel. The following fees are not the only ones, but they are common fees.
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Referral fees. Amazon charges a commission on sales on the platform. The percentage varies by product category. The average referral fee is 15%, but it can range from 8% to 45%.
– Closing fees. This is a fee of $1.80 taken from each unit sold for products in media categories (books, video discs, music, software, computer/video games, video game consoles, and video game accessories).
– FBA fees. If you use Fulfillment by Amazon (known as the Amazon FBA program), it covers the shipping and handling costs for the sale. These fees are charged to fulfill items for purchases from Amazon and depend on the product category, size, and weight. The cost of standard packages can range between $2.41 and $4.71.
– Additional Amazon fees. Amazon will also charge inventory storage fees for inventory in its distribution center. You may pay monthly fees or long-term storage fees, in addition to return order fees and advertising fees.
For a comprehensive overview of all possible fees, read the Amazon fee guide.
Learn Amazon Seller Central
While this guide aims to summarize the key strategies and initiatives you can use to grow your business on Amazon, let’s start with some basics, starting with the difference between selling on Amazon (third-party seller or marketplace seller) and selling to Amazon (vendor). Amazon Seller Central with fulfillment options
When you are a seller on the Amazon marketplace, you own the inventory until the customer receives it. You can subscribe to Amazon’s service to handle order fulfillment and customer support or do it yourself.
In most cases, being a third-party seller is considered the easiest and most cost-effective way to start selling on Amazon. Sellers use Amazon Seller Central, with some different features available than those in Vendor Central. Amazon Seller Central
Becoming a vendor for Amazon means you can sell products wholesale directly to Amazon. However, they own the product once received. Vendor Central is a program that you are invited to join and can be a good option for companies that do not want to sell their products directly to Amazon customers.
Benefits of being a seller include: building customer trust, simple sales process, marketing products on category pages and email blasts, access to additional category initiatives such as gift guides and holiday bundles, access to programs like Prime Now, Fresh, and Pantry, lower chance of account suspension for unknown reasons.
Disadvantages of being a seller include: less direct control over pricing, fulfillment being more complicated and providing less control, slower payment terms, a more expensive model, increased reliance on Amazon vendor managers and retail teams.
While there is overlap in features available on Seller Central versus Vendor Central, we will focus for the remainder of this post primarily on features available on Seller Central, as they are the most applicable to you.
Amazon also offers a mobile app for sellers to manage their businesses on the go. The Amazon Seller app is an easy way to analyze sales, fulfill orders, manage returns, and respond to customer inquiries directly from the app. You can even create product listings from your phone.
The Amazon Seller app is available for both Android and iOS and is free for sellers.
Choosing Your Fulfillment Options
As a seller, you have two options for fulfilling orders: the first option is to do it yourself or use FBA, where Amazon is responsible for receiving, packing, and shipping the orders. Fulfillment by Merchant (FBM)
You fulfill orders directly to customers and manage shipping, returns, and customer service. This is a good option for made-to-order products or products that require longer processing times. Fulfillment by Amazon (FBA)
You send inventory to an Amazon warehouse, known as the Amazon fulfillment center, which ships products and manages returns from customers. You control stock levels and pay storage fees for the product, in addition to fulfillment fees for each unit sold to customers. You need to keep the inventory until it is received by the customer.
In
This model, Amazon handles the payment from the customer and pays you every two weeks. You will have access to Amazon’s customer service team that deals with questions, returns, and refunds. You will also gain access to Amazon Prime and free shipping to grow your business.
Listing Your First Product
The product detail page is where sales happen on Amazon. The information you put on this page helps sell your product and encourages shoppers to buy. The Homesick candle brand is a great example of a product page that sells. Let’s take a look at the reasons.
– Targeted Product Title
Your product title is crucial for your Amazon listing for two reasons. First, it grabs the attention of shoppers and tells them they are in the right place. Second, it can improve click-through rates on search and enhance your SEO ranking.
The product title has a maximum of 200 characters, but you should keep your title between 60 and 80 characters. Why? A Skubana study of over 3,000 high-ranking Amazon listings found that 33% of them fall between 60 and 80 characters. Amazon recommends sellers shorten product titles that exceed 112 characters.
Every word in your product title is searchable. Place the most relevant search terms at the beginning of your product title. You’ll notice that Homesick uses its brand name (Homesick), product line (Scented Candle), style (Hawaii), features (Scents of Pineapple, Coconut), and container size.
This provides shoppers with a clear and concise description of your product. They can then decide whether to stay on your page or search for the product elsewhere.
– Clear Product Images
The main image should clearly show the product before zooming in. Additional images should provide different angles of the product and illustrative images where applicable.
You can also add a video to give shoppers a deeper look at your products. Shoppers can scroll through your media to help them decide if the product is right for them. Note: Ensure your images are high quality. Shoppers can also zoom in to see the fine details of your product. You do not want to present a low-quality image.
How many images should you add? According to a Skubana study, the top 62% of highest-rated Amazon listings had between five and eight images for customers to view. Try to add at least five images to your product listing page.
– Concise Bullet Points
Bullet points help shoppers quickly get the information they need. They are descriptive texts on your product detail page that showcase the benefits of your product. Homesick keeps its bullet points concise and to the point, highlighting only the main information that buyers look for in candles, such as burn time, scent notes, wax type, and candle care.
Be sure to cover all the key areas customers need before they have to scroll down on desktop or to additional sections on mobile. Mention key facts, such as whether there is a warranty or customer service available to resolve issues. Avoid having bullet points that exceed several long lines, as most customers just skim this section.
– Concise Product Description
Remember that shoppers read quickly, so a long paragraph with 20 lines is unlikely to hold their attention. Use your brand voice here and repeat the main selling points while mentioning any supporting facts that can help customers understand why they need to buy now.
Registered brand sellers can use Enhanced Content to improve their product detail page. A+ Content, previously known as EBC, provides extra space on the page to add images and text to increase customer engagement and tell a product story.
Source: https://www.shopify.com/ca/blog/sell-on-amazon
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