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

Edited by Akshat Biyani

Updated


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Selling on Amazon is one of the best ways to make money online. It’s a great option for established businesses and solopreneurs alike. Existing brands can use Amazon as a way to earn more revenue from a new sales channel, and individuals looking to earn some extra cash can start selling on Amazon without having to create a website.

Getting started selling on Amazon is easier than you think, and this step-by-step guide will teach you how.

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 start your ecommerce store with one of our Featured Brands and always sell through Amazon on the side.

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What Are the Best Ways to Sell on Amazon?

There are five different ways to sell on Amazon:

  • Dropshipping
  • Arbitrage
  • Reselling wholesale
  • Private label selling
  • Manufacturing

The best option depends on factors like your budget, resources, and how much time you plan to spend on this venture. We’ll cover each of these five options in greater detail below so you can determine which method is right for you.

Dropshipping

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 has been a lot written on dropshipping and how to get started.

Arbitrage

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. Another advantage of private-label selling is that you have full control over your brand’s reputation and credibility.

You can try to position yourself as a high-quality option within a particular space, or maybe you want to target more budget-conscious audiences. The choice is completely up to you.

While private-label selling can be lucrative in the long run, it’s worth noting that there are definitely some hurdles in the early stages. You can expect to pay more for your inventory if a manufacturer needs to add a logo—that’s if you can find a manufacturer that offers this service (not all do). It can also be difficult to build a brand from scratch and convince customers to purchase your products over other well-recognized brands in the Amazon search results.

Manufacturing 

Finally, you can take care of manufacturing the products 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.

There are opportunities here if you can find a niche product that doesn’t really have a high presence on Amazon. But this is really hard to do, as Amazon has become really over-saturated in seemingly every category in recent years.

With that said, if you’re willing to put in the work to find the right manufacturing partner, you can set yourself up for massive profit margins. 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 these six simple steps to start selling on Amazon:

Step 1 – Find a product (or products) to sell

If you have an existing business that’s already selling products online through an ecommerce store or an in-person retail operation, then you can skip 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 with some useful free tools like the sales estimator and product listing grader. The software itself starts at $29 per month, and you can try it for free with a seven-day trial.
  • 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. You can also use its AI features to help with pricing to maximize profits. Plans start at $25 per month, and a 14-day free trial is available for new users.
  • Viral Launch: Trusted by over 52,000 brands worldwide, Viral Launch comes complete with an Amazon keyword research tool like the first two options and tools to help you find new profitable products to sell. Plans start at $69 per month.

Step 2 – Set up your Amazon seller account

You need an Amazon Seller Plan to sell through this marketplace. Fortunately, Amazon makes this really straightforward with just two plans to choose from—Individual or Professional.

Amazon Seller Plans pricing table

The Individual plan is free to sign up, and you just pay $0.99 per sale. It’s designed for people selling under 40 products per month, and it’s useful to get started with selling handmade products.

But the bast majority of you will benefit from the Professional plan. It starts at $39.99 per month, and 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.

setting up an amazon account
Screenshot via amazon.com

After that, you can access your Amazon Seller Central account.

Step 3 – Create product listings that convert

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.”

how to add a new product
Screenshot via Amazon Seller Central

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

editing product information
Screenshot via Amazon Seller Central

This includes details like:

  • Product name
  • Brand name
  • Universal Product Code (UPC) or European Article Number (EAN)
  • Stock-keeping unit (SKU) number
  • Description
  • Keywords
  • Images

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.

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.

Step 4 – 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.

stock information
Image via Amazon

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 an ecommerce platform that automatically integrate with Amazon:

You can log your inventory in one of those, and your Amazon seller account will automatically update.

Step 5 – Determine your fulfillment method

Sourcing products and adding inventory to Amazon is only half the battle. Now you need to figure how you’re going to get the products to your customers once an order gets placed. That’s where ecommerce fulfillment comes into play.

There are three main shipping options to fulfill orders on Amazon:

Option One: Fulfill on your own orders

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 Two: Use 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 Three: 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.

If you’re planning to use a third party to fulfill orders, check out our in-depth guide on how to choose a fulfillment services provider.

Step 6 – 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:

  1. 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.
  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 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.
  4. Overselling: If you sell products you can’t deliver, you can be penalized by Amazon.
  5. 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.
  6. 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.

Frequently Asked Questions About How to Sell on Amazon

What happens if a customer is unhappy?

Amazon is known for great customer service, and as a seller, you’re expected to be a part of that. It 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 you have no choice if you want to continue selling on Amazon.

How will I find out if I make a sale?

You can get email or text notifications every time you make a sale. If you don’t like receiving these, you can turn these off in your account settings.

Can I sell on Amazon if I live in another country?

In most situations. For people in the U.S., you get default access to Canada’s and Mexico’s Amazon sites when you purchase a professional seller account. If you use FBA, your products are shipped straight to Amazon’s fulfillment center in any country you can access and wish to sell in.

What if I can’t find a good product to sell because of the competition?

Professional selling on Amazon has been a hot topic for years, so it’s no surprise that competition has increased. If you’re having a hard time finding a good product, think of up-and-coming products where you can establish your brand before anyone else. Tools like Jungle Scout can help you do this.

Is there any downside to selling on Amazon?

Yes. While there are many benefits, you must play by Amazon’s rules. Also, you can use limited categories, and you don’t control the search results. Just because you’re making sales one day doesn’t guarantee sales will continue.

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