If you’ve ever thought about how to make money online, you’ve probably considered selling on Amazon. You can sell products there whether or not you have an established business.
While many people earn a good living selling on that website, quite a few struggle to do well. It isn’t easy or quick, but the steps to begin selling on Amazon are simple. Learn how you can get started.
Why Should You Sell on Amazon?
Why sell on Amazon versus another site like eBay or Etsy? Or why not only sell through your website?
Here are the top reasons 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 they’ve never used before.
- No need for a website: While you can keep a website when selling on Amazon, you can start a business selling only through Amazon with no website.
- Scalability: Amazon can easily handle traffic spikes and inventory level changes. It can even handle fulfillment if you use Fulfillment by Amazon (FBA).
- Fraud protection: Amazon takes care of accepting payments and has great fraud protection. It’s one less headache to worry about.
Even though there are a few drawbacks, like having less control, selling through Amazon has many big benefits. If you’re wary of solely relying on Amazon, you can always sell through it on the side.
What Are the Best Ways to Sell on Amazon?
You can sell on Amazon whether or not you already have a business. We can further divide that into five types of selling on Amazon: dropshipping, arbitrage, reselling wholesale, private label selling, and manufacturing. Find out which option interests you the most:
When dropshipping, you offer products for sale that someone else manufactures. When someone makes a purchase, your manufacturer ships it to the Amazon customer, and you get a profit cut.
Dropshipping through Amazon is the latest craze in online business. You can start dropshipping for relatively little and avoid being involved with manufacturing. Amazon provides the customers, your vendor fulfills the orders, and you collect a cut.
Sounds perfect, right? Many people are successful with dropshipping, but there are some big challenges:
- Small profit margins
- No control over product quality or shipment times
- Often others are dropshipping the same products as you
There have been entire books written on dropshipping. Here’s Shopify’s intro guide to dropshipping.
Since the beginning of the internet, arbitrage has been around — buying something and reselling it for more, also known as 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 more by buying from retail stores. If you can find local clearance sales, selling online for a higher price through Amazon is often possible. It’s hard to scale with arbitrage, but it can be a great way to start without an existing business.
There are even apps to help you, which read your scan of an item’s barcode and look up how much it sells for on Amazon. The three main ones are:
- Amazon Seller App (free) — includes more features
- Profit Bandit (paid)
- Scoutify (paid)
Here’s a more in-depth guide to retail arbitrage on Amazon.
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 gotten 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 finding a good manufacturer to buy from and being able to afford bulk purchases (at least at first). You also have to carry more stock, which can be risky if it doesn’t all sell. Finally, others can wholesale the same product.
Private label selling
Selling a private label product is almost identical to reselling wholesale goods. The difference is you can put your branding on the product, building brand recognition that can increase sales long-term.
While others may sell the same product, your unique label allows you to stand out. But the same upfront costs and even more exist. Also, not all manufacturers will let you put your label on their products.
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.
You can do this on a small scale 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 Amazon. You’ll have to do this 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.
How Do You Sell on Amazon?
Selling on Amazon is an easy way to expand your business, reach millions of customers, and increase your bottom line. Follow the following steps to start selling on Amazon:
Find a product to sell
If you already sell a product, you are done with this step.
When picking something to sell on Amazon, there are many things to look for:
- Price: The ideal selling price range is between $10 to $50 for most products. That’s low enough that you will get impulse buys and just high enough the profit margin is worth it.
- Weight: The lighter a product is, the cheaper the shipping is. Shipping costs are a major factor behind the profitability of 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 worthwhile?
- Competition: If there are more than 10 similar products with hundreds of glowing reviews, it will be tough to break in. Find products with only a few serious competitors.
- Durability: Amazon has a great return policy for customers. So if your product tends to break easily, it will come back to bite you.
You can try to explore Amazon and brainstorm good product ideas, or you can put data to work with a tool to find products that meet the criteria above.
Here are the three most popular tools:
- Jungle Scout: This is an all-in-one tool for selling on Amazon. While it is a paid tool, it has some useful free tools like the sales estimator and product listing grader.
- Bqool: This focuses specifically on Amazon product research. It uses historical data to predict future hot sellers and how hard it will be to sell particular products. There’s a 14-day no-cost trial but no free plan or tools.
- Viral Launch: It comes complete with an Amazon keyword research tool like the first two options and tools to help you find new profitable products to sell.
Set up an individual or professional Amazon seller account
To sell on Amazon, you’ll first need to set up your basic free account. Afterward, head to the Amazon Seller Plans page to sign up for an Individual or Professional selling plan.
The Individual plan, where you pay a small fee for each sale, is designed for people selling under 40 products per month. It’s useful to get started with selling handmade products.
Otherwise, 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:
- Your business name
- Your address and contact information
- A credit card for billing
- A phone number you can access (confirm the number during the sign-up process)
- Your basic tax identity information
It should take no more than 10 minutes if you have all this information ready.
After that, you can access your Amazon Seller Central account.
Create product listings that convert
There are two situations when listing products.
If you’re selling the same product as others — like with retail arbitrage — you can add your stock to the listing page. You complete an easy one-page form with price, quantity, quality, and shipping information.
The more common situation is when you have to make your listing. To do this, log in to your Seller Central account and go to “Inventory > Add a Product.”
This process can take some time. There are six tabs (or pages) of forms you’ll need to fill out.
This includes details like:
- Product name
- Brand name
- Universal Product Code (UPC) or European Article Number (EAN)
- Stock-keeping unit (SKU) number
Doing this for several products can be quite time-consuming, but it is a necessary step. Even though some details are optional (like description), these are important for getting more sales, so don’t skip them.
Here’s a detailed guide to writing effective descriptions for Amazon products, complete with a template.
Bulk product upload tool
If you’re planning on selling several products, either immediately or in the future, you’ll need to get familiar with the Listing Loader tool, which:
- Lets you import data of multiple products from a spreadsheet
- Permits use of a barcode scanner
- Detects errors and conflicts before you submit
- Allows you to upload directly to Amazon from Excel
You can download the Listing Loader spreadsheet template from the description page.
Manage your inventory
It’s important to stay on top of your inventory so you’re not selling products you don’t have, leading to missing delivery times. Your selling account has an entire section for inventory management with various tools.
You can quickly change it if you get new stock. But what if you also sell products online through your e-commerce website? Fortunately, you can use the Amazon Application Programming Interface (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:
You can log your inventory in one of those, and your Amazon seller account will automatically update.
Fulfill your orders
There are three main shipping options to fulfill orders.
Option #1: Fulfill on your own
If you only sell a small amount, it may be worth packing and shipping products yourself. It’s time-consuming, but you avoid fulfillment fees. Remember to purchase packaging supplies (boxes, tape, and a scale) upfront. Options 2 and 3 involve having your orders handled by fulfillment services.
Option #2: FBA
Your manufacturer ships products directly to Amazon, which handles timely shipping. Using Amazon’s fulfillment center, known as FBA, has several benefits if you primarily sell through Amazon:
- Prime shipping (higher conversion rates)
- Higher search result rankings
- FBA sellers get preference if two products are tied for prices
- Highly reliable and scalable
But on top of your typical seller fees, you’ll pay FBA fees.
Option #3: Use a third-party fulfillment center
There are other third-party fulfillment centers you can use if you sell on multiple sites other than Amazon. You can fulfill orders from any source, but these services are often more expensive and provide fewer benefits than FBA.
Market to get more sales and reviews
Amazon has millions of visitors per month, but if you only put up products, you won’t make many sales. Even if you sell a few things, reaching the volume you’re looking for will take time.
The key to success is to get to the top of categories and search results, so you receive passive sales. 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 launching new products typically leads to a struggle in getting initial customer reviews. But doing a little marketing to obtain those first reviews and get the ball rolling will lead to passive reviews and sales in the future.
Six Common Pitfalls of Selling on Amazon
Selling on Amazon successfully isn’t easy. Here are the six most common areas where sellers go wrong:
- Not collecting taxes properly: You are responsible for collecting the appropriate sales tax for your state. Those taxes come from your revenue if you don’t set it up correctly.
- Focusing on sales, not profit: While volume is important, it’s hard to make a lot on Amazon with a razor-thin profit margin.
- Not labeling products correctly (if using FBA): There are strict guidelines for your manufacturer to follow. If they don’t, your products won’t be accepted, and you’ll be behind schedule.
- Overselling: If you sell products you can’t deliver, you can be penalized by Amazon.
- Competing against Amazon: It sells certain products directly, and it’s near impossible to beat Amazon. Find a type of product where you only compete against other sellers.
- Skipping marketing: Amazon reduces most of the marketing you’ll need to do, but not all. It is best if you at least do some initially.
FAQs About Amazon
What happens if a customer is unhappy?
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 you have no choice if you want to continue selling on Amazon.