With nearly 10 million sellers worldwide, Amazon is doing something right. It is the largest eCommerce company in the world. Shopify, eBay, and all other providers don’t make enough combined.
To get a piece of that sweet pie, you need to know how to sell on Amazon. This guide will teach you how to start an Amazon business.
Decide How To Sell (Before You Start)
Before you start, you need to decide how to sell. There are five selling methods you can choose from:
- Dropshipping – Selling without buying or owning products. This technique leaves branding, warehousing, and shipping to a third party. It requires almost no money and a lot of time. Desired profit is also mixed (depending on who you sell for)
- Online Arbitrage – Reselling goods you buy at a significant discount from online retailers. You need some money to start and a bit of time on your hands, but there is decent profit potential.
- Retail Arbitrage – Reselling goods you buy at a significant discount from local retailers. It requires some money and time as online arbitrage.
- Private Label – Selling goods from a third-party manufacturer with your branding. It requires more money than dropshipping and arbitrage because you need to bulk order from retailers. However, the profit potential is much higher.
- Wholesale – Reselling goods you buy in bulk from existing retailers. It requires more money but provides decent earnings potential. You don’t have to establish the brand, but you must set yourself as a seller.
The best selling strategy for you depends on your start capital, time, and desired profit. The tradeoff of time vs. money is often a deciding factor, so pick your selling style carefully.
How to Start a Business on Amazon
Step One: Find a Product
The most important aspect of finding a good product is working with items that work. If your product doesn’t have a history of successful sales, it won’t get off the ground.
Product criteria changes depending on sales method. For example, materials cost is a massive concern with private label selling, increasing manufacturing costs. Other categories should be concerned with product cost, but potential earnings are a higher priority.
Here are some criteria you can apply to all Amazon products:
- Your item should be lightweight (under two pounds) to reduce shipping costs
- Your first product should be for everyday use (not seasonal use)
- Price your product around $20 to $60 to appeal to most shoppers
- Your product should be in the bottom 90 of a best seller subcategory (i.e., not the “Toys & Games” category, but more exact type like “Party Supplies” and “Centerpieces.”)
- Ideally, pick products in the “Movers & Shakers” category
- Focus on items that have between two and four active sellers
- Look for those with at least five thousand searches (ideally closer to ten thousand).
Private label sellers will spend less time looking for existing product details and more time looking for underserved product categories. If a product category explodes in popularity, you might release a competing product against it.
You can apply the above criteria to these proven research methods:
- Google Trends helps you find the latest trends in your product category involves searching for keywords.
- The Amazon Trend Report gives you an overall perspective on particularly successful product types on Amazon.
- Social Media (Facebook, Pinterest, Instagram, Twitter) have various trending pages that enable you to sort for your target niche.
- Third-Party Analytics Tools (like AMZScout) that will narrow down many of the criteria above for you.
Step Two: Open an Amazon Seller Account
To use Amazon’s features, you need a Seller Central account. If you already have an existing Amazon account, you can use that to start. Amazon doesn’t require you to be a business to start selling.
If you want to sell more than 40 products, invest in a professional account. Professional accounts cost $39.99, but waive the listing fee of 99 cents. Individual accounts cost nothing monthly, but you need to pay a per-listing fee.
If you need a new account with Amazon, go here and click the “sign up” option. From there, you will need to provide the following information:
- A good email
- Your preferred password
- Your physical and mailing address
This information is the same you need for a standard Amazon account. A sellers account will follow up with these additional requests:
- Billing information (to take payments)
- Banking information (to give you money)
- General tax info (whether you are a business or an individual)
- Front and back images of your government ID (driver’s license or passport)
Amazon has a system to verify banks digitally, but some smaller banks need documents. Having your most recent bank statement will be helpful in that matter.
Amazon will also send you a postcard to confirm your physical address. The card will contain a code you will need to re-enter in an acceptance screen later.
Finally, you will need to schedule a video call to verify your identity further. The video call asks you to bring your bank statement (assuming digital verification didn’t work) and your government ID.
Once you get through these steps, you can source your product.
Step Three: Source The Product
The selling methods above dictate most of how you will source your product. Below, we will apply those selling methods to different product sources:
- Dropshipping suppliers like Modalyst and Oberlo exist to help you find products. You can also reach out to local, small businesses who want someone to act as their Amazon representative.
- Online Arbitrage involves browsing through items online (typically on sale) and reselling them on Amazon at a markup. Walmart, Sam’s Club, and eBay are examples of sites you can buy from.
- Retail Arbitrage is when you go to local retailers to find goods to sell at a markup. Walmart, Home Depot, and any local retailer will work.
- Private Label selling involves reaching out to manufacturers. Thomasnet and Alibaba are two of the more famous examples. Buying more results in bulk discounts.
- Wholesale work is when you reach out to major brands, buy in bulk, and resell at a profit. Because anyone can do this on any product, it involves sharing an Amazon listing, making it very competitive.
When choosing your product source, check online reviews and reputation. Also, be sure to ask for a product sample to be sure it meets your quality standard.
Step Four: FBA or FBM
Outside of choosing between an individual or professional account, you also have to choose between FBA and FBM.
FBA, or Fulfillment By Amazon, hands the warehousing and shipping off to Amazon. Unlike dropshipping, inventory management is 100% up to you, but you are paying Amazon to leverage their delivery network. When selling some products, you must do this if you want exposure.
FBM, or Fulfillment By Merchant, is when you handle the warehousing and shipping yourself. If you dropship, a third party does this on your behalf, but Amazon ultimately makes you the one to pay for their mistakes. Regardless, you are more personally responsible, meaning you don’t have to pay Amazon’s FBA fees.
Usage of AMZScout’s Free FBA Calculator can be handy here. The idea is to ensure that the price you set your products at provides you enough of a profit to pay for Amazon’s services. Otherwise, you will need to handle all shipping yourself (unless you hire a staff).
Step Five: List and Promote
Once you’ve established all of your processes and your account is up and ready, you can begin to list your products. You will use existing listings if you dropship, wholesale, or use retail (or online) arbitrage.
To find existing listings, you can use product barcodes. Scanning them in using the Amazon Seller App one way. Otherwise, you might manually type in the UPC (Universal Product Code). UPCs are nearby your barcode, usually on the bottom of products.
Private label sellers will also have UPCs (or GTINs due to global differences). The difference between these product codes is that there is no existing ASIN, as this is your unique product.
When creating your product listing, you’ll want to optimize it or make it high quality. You’ll also want to strategically place keywords to ensure you rank well for what people search for.
Here are some tips regarding listing optimization:
- Place your keyword in the title and a couple of times throughout the listing
- To find keywords, use keyword searching tools (like AMZScout) and Amazon’s PPC tool inside of Seller Central
- Long-tail keywords (those with four or more words) get better results
- Your primary image needs to have a white background (255, 255, 255)
- Secondary images should be high quality and show people using your product
- Encourage more customer reviews through product inserts thanking them for their purchase and asking them for reviews
To gain more reviews, you’ll also want to use Amazon’s PPC advertisement tool within seller central. You’ll want to establish a firm advertising budget to try and outperform your competition.
Because people won’t naturally find your listing if you are a private label seller, expect to pay more if you have a fresh listing. When advertising, use your primary long-tail keyword to start. The success of your campaign confirms the suitability of your keyword. It also tells you if your keyword meets the buyer’s intent (or the goal) in finding their desired product.
Failed PPC campaigns that have low conversions should be re-evaluated. Remaining active with your PPC campaign will ensure you can avoid wasting money.
Persistence and knowledge are the two most essential tools when starting an Amazon business. Knowledge comes through social media, third-party analytical tools, and trend reports. Knowing how to use that knowledge comes from some experience. This guide should help you through some of that.
- Along with leading the team, Millard also works alongside different Fortune500 companies as their management Consultant/Financial Analyst, which shows his passion in helping other businesses grow.