5 Reasons To Sell On Amazon (And How To Do It)

Dale Cudmore
Last Updated on September 1, 2020
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If you’ve ever looked into making money online, I’m sure you’ve heard about selling on Amazon.

Amazon is a household name in most countries, and had over $90 billion of revenue in 2017 in the United States alone. Getting just a fraction of a percent of that for yourself would be amazing.

You can sell products on Amazon whether or not you have an established business. They also take care of a lot of the hardest part of online business — marketing.

It’s true that there are a ton of people making six figures or more by selling on Amazon, but many more do not. It’s not easy, and it’s not quick.

selling on amazon

This guide will give you a good idea of how much work selling on Amazon will actually take. It will cover:

  • The benefits of selling on Amazon.
  • The different methods of selling on Amazon.
  • How to sign up and actually sell products.
  • Managing your account.
  • Common mistakes.

If you can make it to the end, you might just have what it takes to succeed. There are plenty of links to resources that you can dive into after if you choose to.

Amazon.com Logo
Image via Wikipedia

Why Sell on Amazon?

Why sell on Amazon versus another site like eBay or Etsy? Or why not only sell through your own website?

Here are the top reasons I see to consider Amazon as a selling platform:

  • Enormous traffic — Millions of people go to Amazon first when they’re looking to buy something. You can sell products without any real marketing in many cases.
  • Brand recognition — People trust Amazon, but many are wary of buying from other sites that they’ve never used before.
  • Don’t need a website — While you can also have a website in addition to selling on Amazon, you can start a business selling only through Amazon with no website of your own.
  • Scalable — Amazon can easily handle spikes in traffic and changes in inventory levels. They can even handle fulfillment if you use Fulfillment By Amazon (FBA).
  • Fraud protection — Amazon takes care of accepting payments and has great fraud protection. One less headache for you to worry about.

Even though there are a few drawbacks, like having less control, there are many big benefits of selling through Amazon.

If you’re wary of solely relying on Amazon, you can always sell through it on the side.

The 5 Main Ways to Sell on Amazon

I’ve already mentioned that you can sell on Amazon whether or not you already have a business. We can further divide that into 5 different types of selling on Amazon.

See which option interests you the most.

Dropshipping

Dropshipping through Amazon is the latest craze in online business. You can start dropshipping for relatively little, and it saves you from having to be involved with manufacturing.

The idea behind dropshipping is to offer products for sale that someone else manufactures. When someone makes a purchase, your manufacturer ships it to the customer, and you get a cut of the profit.

Amazon provides the customers, your vendor fulfills the orders, and you get to collect a cut.

Sounds perfect, right?

It’s true that many people are successful with dropshipping, but there are some big challenges:

  • Small profit margins.
  • No control over product quality or shipment times.
  • There are often others dropshipping the same products you are.

There have been entire books written on dropshipping. Here’s a good intro guide to dropshipping written by Shopify if you’d like to learn a bit more.

Arbitrage

Since the beginning of the Internet, arbitrage has been around.

Arbitrage is the concept of buying something, and reselling it for more. Or as many people would call it: flipping.

On a small scale you can do this by sourcing products from garage sales, flea markets, and thrift stores. But it’s hard to find multiples of products, so you usually sell these sorts of goods through eBay, Craigslist, and other similar sites.

But those who practice arbitrage through Amazon try to scale up a bit more by buying from retail stores. If you can find local clearance sales, it’s often possible to sell them for more online through Amazon.

It’s hard to scale with arbitrage, but can be a great way to get started without an existing business.

There are even apps to help you do this by letting you scan an item’s barcode and looking up how much it sells for on Amazon. The 3 main ones are:

  • Amazon Seller App (Free) — Includes much more
  • Profit Bandit (Paid)
  • Scoutify (Paid)

Here’s a more in-depth guide to retail arbitrage on Amazon for further reading.

Reselling Wholesale Goods

This method is similar to arbitrage, but lets you sell at a much bigger scale.

Instead of buying from a retail store, which has already bought products from a manufacturer, you go straight to the manufacturer and buy from them in bulk.

You get a cheaper rate, and more profit when you sell.

It’s possible to start with retail arbitrage, and then move into reselling wholesale goods once you’re comfortable and know which products you’d like to focus on.

The challenge is in finding a good manufacturer to buy from and being able to afford bulk purchases (at least at the start). You also have to carry more stock, which can be risky if it doesn’t all sell.

Finally, others can wholesale the same product.

To learn more, read this guide to wholesaling.

Private Label Selling

Selling a private label product is almost identical to reselling wholesale goods.

The difference is that you are allowed to put your own branding on the product. This lets you build a brand name and brand recognition that can increase sales long-term.

While others may be selling the same product, you will have your own unique label on it, allowing you to stand out from the competition.

But there are the same upfront costs and even more. Also, not all manufacturers will let you put your own label on their products.

Here’s a good intro video on how you would go about finding private label products:

Manufacturing & Handmade

Finally, you can take care of the manufacturing yourself. This usually means more control over product quality and higher profit margins, but more work and startup costs for you.

You can do this on a small scale by yourself with handmade goods, then sell through Amazon or other platforms like eBay and Etsy.

But you can also manufacture a product on a bigger scale if there’s enough demand, and sell mainly through just Amazon. You’ll have to do this if you want to sell a product that doesn’t exist yet.

Read this thorough guide to learn more about the actual details behind finding a manufacturer and producing products.

Step 1: Find a Product to Sell

If you already sell a product, you are done with this step.

For everyone else, you’ll first need to figure out what you’d like to sell, and where to source it. As we’ve gone over, you might need to manufacture it yourself, or you might be able to find an existing manufacturer you can purchase it from.

When picking something to sell on Amazon, there are many things to look for:

  • Price — The ideal selling price range is between $10-$50 for most. That’s low enough that you will get some impulse buys, and just high enough that there’s enough profit margin to make it worth it.
  • Weight — The lighter a product is, the cheaper the shipping is. Shipping costs are a major factor behind profitability on Amazon.
  • Demand — Find similar products already being sold on Amazon. Enter their best seller rank into this Amazon sales estimator. Will you sell enough to make it worth it?
  • Competition — If there are 10+ similar products with hundreds of glowing reviews, it’s going to be tough to break in. Find products with only a few serious competitors.
  • Durable — Amazon has a great return policy for customers. So if your product tends to break easily, it’s going to come back to bite you.

The Best Tools to Find Profitable Products to Sell on Amazon

You can try to explore Amazon and brainstorm good product ideas, or you can leverage data by using a tool to find products that meet the criteria above.

Here are the 3 most popular tools.

  1. JungleScout: An all-in-one tool for selling on Amazon. While it is a paid tool, they have a few useful free tools like the sales estimator and product listing grader.

    junglescout sales estimator
    Screenshot via JungleScout
  2. BigTracker: Focuses specifically on Amazon product research. They use historic data to predict future hot sellers, and predict how hard it will be to sell particular products. There’s a 14 day free trial, but no free plan or tools.
  3. Viral Launch: Comes complete with an Amazon keyword research tool like the other 2 tools here, plus tools to help you find new profitable products to sell. They have some great tutorials on YouTube, like the one below, so that you can see for yourself if you think the tool is worth it.

Sourcing Your Product

You have 3 main options to source a product:

  1. Make it yourself (as in handmade) — This is incredibly hard to scale, but could be fine for low-volume products. Eventually, you could set up your own manufacturing facility if you wanted to scale up.
  2. Manufacture it locally — Getting a product made in North America is more expensive, but usually higher quality. It’s also easier and faster to get what you want when you both speak the same language.
  3. Source it from overseas — China is usually the go-to place to do this. It’s easy to find wholesalers and private label manufacturers through Alibaba.

There are entire books written on each of these topics, and unfortunately, I can’t go into more detail here. But, I’ve linked to further resources on all of these previously in this guide in the section on the ways to sell on Amazon.

Step 2: Set-Up an Individual or Pro Amazon Sellers Account

To sell on Amazon, you’ll first need to set-up your basic free account if you haven’t already.

After that, head to the Amazon Seller Plans page.

You’ll need to sign up for either a Individual or Professional selling plan.

amazon selling plans
Screenshot via amazon.com

The Individual plan, where you pay a small fee of each sale, is designed for people selling a few items here and there, less than 40 products per month. It’s okay for getting started and selling handmade products.

Otherwise, you’ll want to go with a Professional plan, where you pay a monthly fee. The more you sell, the less this fee matters.

The sign-up process is fairly short, but you’ll need a few things handy:

  1. Your business name.
  2. Your address and contact information.
  3. A credit card for billing.
  4. A phone number you have access to (you’ll need to confirm the number during the sign-up process).
  5. Your basic tax identity information.

It should take no more than 10 minutes if you have all this information ready.

amazon seller account setup
Screenshot via amazon.com

After that’s done, you’ll have access to your Amazon Seller Central account.

Step 3: Create Product Listings That Convert

There are 2 situations when it comes to listing products.

If you’re selling the exact same product as other people, which happens if you’re doing retail arbitrage, you can simply add-on your stock to the listing page. You fill out a simple one-page form with price, quantity, quality, and shipping information, and that’s it.

The more common situation is where you have to make your own listing.

To do this, login to your Seller Central account and go to “Inventory > Add a Product”:

adding product to amazon
Screenshot via Amazon Seller Central

This process can take some time. There are 6 tabs (or pages) of forms that you’ll need to fill out:

amazon product details
Screenshot via Amazon Seller Central

This includes details like:

  • Product name
  • Brand name
  • UPC or EAN
  • SKU number
  • Description
  • Keywords
  • Images

Doing this for several products can be quite time consuming, but is a necessary step. Even though some aspects are optional (like description), these are important for getting more sales, so don’t skip them.

Here’s a more detailed guide to writing effective descriptions for Amazon products, complete with a template.

An Alternative: Use the Bulk Product Upload Tool

If you’re planning on selling several products, either right away or in the future, you’ll want to get familiar with the Listing Loader tool. Here’s the full description page from Amazon, but I’ll give you the highlights of what it does:

  • Let’s you import data of multiple products from a spreadsheet.
  • Can use a barcode scanner.
  • Detects errors and conflicts before you submit.
  • Can upload directly to Amazon from Excel.

You can download the lister loader spreadsheet template from the description page.

Lister Loader Template

Here’s a basic video tutorial of how to use it, and there are complete instructions in the template itself.

Step 4: Manage Your Inventory

It’s important to stay on top of your inventory so that you’re not selling products that you don’t have, leading to missing delivery times.

In your selling account, there’s an entire section for inventory management.

amazon manage inventory panel
Image via Amazon

You can quickly change it if you get a new stock in.

But what if you also sell products through your own e-commerce website? Fortunately, you can use the Amazon API to keep your inventory on both sites in sync when you make sales.

If you don’t have a website yet, consider using one of the following content management systems (CMSs) that automatically integrate with Amazon:

  • Shopify
  • Bigcommerce
  • Ecomdash
  • Sellbrite

You’ll be able to set your inventory in one of those, and your Amazon seller account will automatically update.

Step 5: Fulfill Your Orders

There are 3 main ways to fulfill orders, I’ll go over each at a high level.

Option #1: Fulfill On Your Own

If you only sell a small amount, it may be worth packing products by yourself and shipping them.

It’s time-consuming, but you avoid fulfillment fees. Keep in mind that you will have to purchase packaging supplies (boxes, tape, a scale) upfront.

Options 2 and 3 involve having your orders fulfilled by fulfillment services.

Option #2: Fulfillment By Amazon (FBA)

Your manufacturer ships products directly to Amazon, and they take care of shipping on time.

Amazon has its own called Fulfillment By Amazon (FBA). There are several benefits of choosing this route if you primarily sell through Amazon:

  • Can offer prime shipping (higher conversion rates).
  • Higher search result rankings
  • FBA sellers get preference if 2 products are tied for prices.
  • Highly reliable and scalable.

But there’s a cost of course. On top of your typical seller fees, you’ll also pay FBA fees.

Amazon has their own profitability calculator that gives you a net profit estimate.

fba profit calculator
Screenshot via Amazon

It’s important to run through different scenarios with the calculator to see if you will be profitable enough to use the service.

Option #3: Use a Third Party Fulfillment Center

There are other third party fulfillment centers that you can use if you sell on multiple sites other than Amazon.

They’ll often be more expensive and provide fewer benefits than FBA other than fulfilling orders from any source.

Step 6: Marketing to Get More Sales and Reviews

Amazon has millions of visitors per month, but if all you do is put up products, you won’t make many sales.

Even if you do make a few, it’ll take time to reach the volume that you’re looking for.

The key to success is to get to the top of categories and search results so that you get passive sales.

There are a few key parts of Amazon search engine optimization (SEO):

    • Product title and description (step #3)
    • Click through rate from search results (mainly from images and title)
    • Existing sales and reviews (both quantity and quality)

This third aspect is huge, because a new product typically struggles to get initial reviews.

But doing a little marketing to get those first reviews and getting the ball rolling will lead to passive reviews and sales in the future.

Here’s a good look at 9 major strategies to get Amazon reviews.

6 Common Pitfalls of Selling on Amazon

As I said at the beginning, selling on Amazon successfully isn’t easy. Here are the 6 most common places where sellers go wrong:

  1. Not collecting taxes properly — You are responsible for collecting the appropriate sales tax for your state. If you don’t set it up correctly, those taxes come out of your revenue.
  2. Focusing on sales, not profit — While volume is important, it’s hard to make a lot on Amazon with a razor thin profit margin.
  3. Not labelling products right (if you use FBA) — There are very strict guidelines for your manufacturer to follow. If you don’t, your products won’t be accepted and you’ll be behind schedule.
  4. Overselling — If you sell products that you can’t deliver, you can be penalized by Amazon.
  5. Competing against Amazon — Amazon sells certain products directly, and it’s near impossible to beat them. Find a type of product where you only compete against other sellers.
  6. Skipping marketing — Amazon reduces most of the marketing you’ll need to do, but not all. You should at least do some initially.

Selling on Amazon Frequently Asked Questions (FAQ)

Here are some commonly asked questions that you might have on your mind now.

What Happens if a Customer is Unhappy?

Amazon is known for their great customer service, and you’re expected to be a part of that as a seller.

Amazon has an a-to-z guarantee program for handling disputes if a customer claims they did not receive their order or it wasn’t what they expected based on the listing.

This process lets a customer file a claim, and if Amazon says you’re in the wrong, you will have to reimburse the customer.

Sometimes this may be unfair, but if you want to continue selling on Amazon, you have no choice.

How Will I Find Out if I Make a Sale?

You can choose to get email or text notifications every time you make a sale. Of course, you can turn these off in your account settings if they get annoying.

Can I Sell on Amazon.com if I Live in Another Country?

In most situations you can, just like Americans can sell on Amazon sites in other countries.

For Americans, you get default access to Canada’s and Mexico’s Amazon sites when you purchase a professional seller account.

If you use FBA, you ship your products straight to Amazon’s fulfillment center in any country you wish to sell in that you have access to.

Can I Source Products From China Even if I Don’t Speak Chinese?

Sourcing products is complicated, and can take a long time if you’re dealing with companies around the world.

However, it is possible. Many manufacturers in China speak English fairly well, so there shouldn’t be too much of a language barrier.

What if I Can’t Find a Good Product to Sell Because Everything Is Too Competitive?

Selling on Amazon has been a hot topic for years, so it’s no surprise that competition has gone up.

If you’re having a hard time finding a good product, try to think of up-and-coming products that you can establish your brand in before anyone else. Tools like JungleScout can help you do this.

Is There Any Downside to Selling on Amazon?

Yes, while there are many benefits, you have to play by Amazon’s rules.

You also are limited in which categories you can use, and don’t control the search results at all.

Just because you’re making sales one day, doesn’t guarantee that Amazon won’t take them all away the next (although that’s very rare so far).

Summary

Many Americans are making great livings by selling through Amazon.

You get to leverage their insane traffic levels and brand trust, and can source products any way that you like.

By now you should have a good idea of the main steps that it will take to become an Amazon seller. If you’re starting from scratch, expect this process to take at least 2-3 months if you’re sourcing products from a manufacturer.

It’s important to approach this as building a real business, and not some short-term money making “scheme” if you plan to succeed.

The top sellers on Amazon didn’t get there overnight, they slowly expanded their catalog of products over years.

Leave a comment below if you still have any questions about whether or not selling on Amazon is the right choice for you.

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