Did you know that most Amazon sellers make at least $1,000 in sales per month while some super-sellers make more than $250,000?
While there are plenty of successful Amazon sellers that have made a large amount of income, there have also been Amazon sellers that have not. In fact, without the proper strategy, there’s a high chance of failing.
If you want to become a successful seller on Amazon, you will need to put in the time, effort, and money. In this article, we’ll give you an introduction to selling on amazon, plus some useful tips you should take note of if you want to start a business on Amazon.
What is Amazon FBA?
If you’re looking to sell products on Amazon, you have to choose between two options – FBA and FBM.
FBM refers to Fulfillment by Merchant and essentially means that you’ll be storing, packing, and shipping products on your own.
FBA refers to Fulfillment by Amazon. With this option, Amazon helps you handling:
- Customer service
If you choose the FBA option, you will have to pay an extra fee to Amazon for storage and fulfillment purposes. Unlike FBM, with FBA, you can get Amazon to fulfill orders from other marketplaces and even your online store.
Between the two, FBA has become one of the most popular ways to make money on Amazon, and more than 70% of sellers use FBA:
How to Get Started with Amazon FBA
If you are wondering how to get started selling on Amazon, here’s a quick guide that should point you in the right direction:
1. Create an Amazon Seller Account
To start, you’ll have to create an Amazon Seller Account. There are two types of seller accounts to choose from: The Professional Seller Account and the Individual Seller Account.
The Individual Seller Account is free, but you’ll have to pay a fee of $0.99 for every sale made. The Professional Seller Account, on the other hand, costs $39.99 per month.
Between the two, it’s best to go for the Professional Seller Account – especially if you plan on expanding your business in the long-term.
2. Send your products to Amazon
If you’ve opted for FBA, you’ll need to send your products to an Amazon Fulfillment Center. There are two ways that you can do so:
- You can send your products to a Fulfillment Center directly from your manufacturer.
- You can send your products from your company to the Fulfillment Center.
Depending on which marketplace you’re selling, your items, and the products you’re selling, Amazon will tell you which Fulfillment Center to send your items.
3. Have your products stored with Amazon
When your products have arrived, Amazon will add them to their inventory. If your products get damaged, Amazon will reimburse you the total amount of money lost.
4. Amazon ships your product
If a customer chooses to purchase your product, Amazon will send it to the customer.
5. Customer service and returns
With FBA, Amazon will help you to handle all of your customer service needs and returns. They won’t, however, take care of customer reviews.
When it comes to Amazon FBA, there are various fees you have to pay to Amazon:
- Referral fees: Since Amazon is technically referring customers to you, you’d need to pay a referral fee. This fee can be anywhere between 8 and 15%.
- Amazon Seller Account fees: You have to pay $39.99 per month for a Professional Seller Account.
- FBA – Any additional fees for packing, shipping, customer service, and returns.
- Storage – Since Amazon stores your products in their fulfillment centers, you’d also need to pay a fee for this.
What are the best products to sell on Amazon?
Now that you have a better idea of the whole process, here are some things you need to consider when figuring out what product to sell on Amazon.
A great product is something that has high demand but little to no competition. While it is not easy to find such a product, it is possible. A product that has high demand typically is defined by the following properties:
- High revenue/large amount of monthly sales
- High search volume for main keywords
- Low best seller rank
And a product with low competition typically has the following properties:
- No significant amount of reviews
- Bad rating
- Poor listing quality
- Not many search results
When it comes to selling products on Amazon, you’ll have to consider the profit margin. After all, you need to make a profit when selling products on Amazon. Your profit margin should be between 10% and 20%. Of course, everything above 20% is fine. You should check out this post about Amazon Chrome Extensions to see which tools you can use to calculate your profit margin.
Another thing to consider is the size of your product. Oversized products generally cost more than standard-sized products. Also, you’ll need to pay more for shipping and storing. If you decide to sell oversized products, it’s important to remember that you need to have a higher budget.
If you’re new to Amazon, it’s a good idea to sell products priced between $15 and $50. Any item below $15 won’t have a significant profit margin.
And if you sell products higher than $50, you’ll need a large amount of money to purchase inventory, and it’ll also be harder to close your first sales.
How to Promote Your Amazon Product
Now that you’ve got an idea of what type of product you’d like to sell on Amazon, it’s time to think about how you plan on launching this new product. There are a couple of ways to go about doing so, and here are some of our suggestions:
A great strategy is to run an Amazon PPC campaign when promoting your new Amazon product. Before beginning your campaign, make sure that you’ve got at least five reviews, as the fewer reviews you’ve got, the lower your conversion rate will be.
On deal pages, people only want to buy highly reduced products. Listing your product on deal pages with a high discount is an excellent way to promote it in the first place.
You can also advertise on various social media platforms such as Facebook and Instagram. Facebook, in particular, is a great channel to promote your products. If you choose to proceed with digital marketing, pay attention to your ad’s design and make sure that it’s attention-grabbing. Low-performing ads will only cost money instead of generating revenue.
Pros and Cons of Amazon FBA
Not sure whether selling on Amazon is the right business for you? Here’s a list of pros and cons for you to consider if you want to start with Amazon FBA.
- Convenience – Since Amazon takes care of storage, packing, and shipping, you don’t need to worry about these tasks.
- Low shipping rates – Since Amazon ships plenty of items, they’ve got massive discounts when it comes to shipping rates.
- Outsourced customer service – Since customer service and returns are also taken care of, you’ve got plenty of time to focus on marketing and growing your business.
- Storage – You won’t have to worry about figuring out where to store your products.
- Ability to scale your business – Since Amazon can handle orders from other marketplaces and your online shop, there’s plenty of potentials to scale your business.
- Fees – Amazon does charge fees for the FBA service, so you’d need to factor that into your profit margins.
- An increasing number of returns – Amazon does tend to value its customers more than its sellers, so there’s a good chance that you’ll be dealing with a good number of returns.
- Amazon TOS – Since you’ll be selling on Amazon, there are strict guidelines in place of how you can get in touch with your customers. You can’t contact your customers for promotional purposes and only to complete orders or respond to questions.
- Competition – Amazon decides who sells products and who doesn’t. With that being said, keep in mind that Amazon also sells their products on the platform.
Now that you’ve got a good idea of how Amazon FBA works along with the pros and cons, it’s time to get started selling on Amazon. While it can seem like an intimidating process, it’s easy to get the hang of as long as you know your business and what you’re getting into. By focusing on your business’s needs, you’ll be able to achieve online success with Amazon in no time at all.