Your e-commerce website is a central hub where you exhibit your brand, engage with your customers, and promote your merchandise. Nonetheless, you can expand your customer base and increase sales by leveraging online marketplaces like Amazon to reach and sell to existing and potential customers.
As a new e-commerce startup, you may have questions regarding selling on Amazon, such as:
- Why should I sell on Amazon?
- How do I manage to price between my Shopify store and Amazon?
- What does it take to grow a business on Amazon, and how can I sustain growth over the long term?
- What options and programs are available on Amazon that I can use?
This guide aims to address these questions and equip you with knowledge on establishing and expanding a profitable and sustainable business on Amazon. It provides insights on initiating selling on Amazon, optimizing your time and resources, and identifying the critical factors under your control that contribute to building a successful Amazon business.
To sell on Amazon as a beginner, you should take the following steps:
- Determine what products you will sell
- Select a plan for selling on Amazon
- Set up a seller account on Amazon
- Familiarize yourself with Amazon's fee structure
- Learn how to navigate Amazon Seller Central
- Choose your preferred fulfillment option
- List your first product for sale on Amazon.
Determine Your Product Offerings: How to Choose What to Sell on Amazon
To effectively run your Amazon business, your strategy should encompass the product types you will offer and your approach to acquiring them. There are several common approaches to selling on Amazon, which include:
Retail arbitrage: This involves purchasing products below market value and reselling them at a higher price to earn a profit on the difference. Amazon sellers can scour various markets for items on sale or clearance, such as Target, Best Buy, or Big Lots, and then sell them on Amazon at a markup.
While retail arbitrage can generate quick cash, it can also be labor-intensive. Resellers face stiff competition from other sellers offering the same products. If you can sell a product swiftly, you could get stuck with it if you are willing to sell it at a loss.
White labeling: Products can be purchased in bulk, dropshipped, or printed on demand. Amazon sellers often prefer white-labeling products because it eliminates the need for extensive product research and allows them to focus on selling. You don't need manufacturing or product design experience to sell white-label products.
Private labeling: Private labeling involves creating branded products through a third-party manufacturer. Personal label products are a popular choice for Amazon sellers due to Amazon's established audience. Common categories for private labeling include cosmetics, skincare, apparel, food, hair care, and supplements. Marketplaces such as Alibaba or Thomasnet can be used to source private-label products.
Affiliate marketing: Establishing an Amazon affiliate marketing business is an alternative to sourcing and selling products directly. Affiliate marketing allows you to select the products you wish to promote and advertise them to your audience through various platforms such as your website, Instagram, or TikTok accounts. Amazon provides a unique link that you can integrate into your content. If someone purchases a product using your link, you receive a portion of the sale as a commission.
Dropshipping: Dropshipping on Amazon involves not keeping any inventory. Once a product is purchased, the order is sent to a third party, who will then fulfill and ship the product to the customer.
The profit margins for Amazon drop shippers tend to be narrow, typically ranging between 10% to 30%. Additionally, Amazon takes a 15% cut off the top-line revenue, leaving a margin of approximately 15% per product sold. While dropshipping on Amazon is widespread, adhering to the platform's policies is essential to remain compliant.
Further information regarding Amazon's dropshipping policy can be found on their website.
Selling your own products: Selling your products is yet another option to consider on Amazon. Several owners of Shopify stores opt to synchronize their inventory and sell products from their stores on Amazon through a free Shopify app. You can avoid creating separate selling plans and manage inventory in a centralized location by doing so.
Tips for Conducting Product Research on Amazon for Selling Purposes
Identifying the right products to sell on Amazon requires considerable time and effort. It's crucial to look for trending products with a significant profit margin in a market with minimal competition.
Understanding Amazon's Best Sellers Lists
The Best Sellers page on Amazon is an excellent resource for discovering popular product ideas. Consider taking note of any pictures that appear promising. Amazon's top-selling categories are books, clothing and apparel, electronics, toys, and games.
Conducting Keyword Research
Jungle Scout is a highly regarded keyword research tool that can assist you in identifying ideal products. By utilizing a tool like Jungle Scout, you can base your decisions on data. The product's search volume aids in determining whether or not it is worthwhile to purchase and sell.
Select a Subscription Plan
When starting to sell on Amazon, one of the initial choices you have to make is selecting the seller plan. Amazon provides two methods: Individual and Professional. The primary factor that distinguishes the two programs is the anticipated sales volume.
The two plans offered by Amazon for sellers are the Individual plan and the Professional plan, with the main difference being the projected sales volume. The Individual plan is a pay-as-you-go plan that provides access to basic listing and order management tools. With this plan, individual sellers only pay a fee of 99¢ every time they make a sale and do not incur any charges unless Amazon sells their product.
On the other hand, the Professional seller plan is a monthly subscription service that offers a range of tools and benefits, such as Amazon Marketplace Web Service, advanced business reports, customizable shipping options, and eligibility for top placement on detail pages. The Professional plan costs $39.99 per month, with variations based on the number of countries you sell in.
When you sell on Amazon, the company also charges a referral fee on each sale, which is a percentage of the total transaction and varies depending on the product category. To decide on the best plan for you, consider your projected sales volume.
If you plan to sell more than 40 products per month, the Professional plan may be the better option with its monthly subscription fee of $39.99, which offers advanced tools and benefits. If you sell fewer than 40 products per month or have seasonal fluctuations in sales, the Individual plan's pay-as-you-go system with a 99¢ fee per sale might suit you better.
Setting up an Amazon Seller Account
Before creating a new Amazon seller account, ensure you have the following information ready:
To begin, visit sellercentral.amazon.com and complete the registration process, providing details about your business, including address, tax, bank, and identity information.
Some product categories require approval from Amazon, including fashion, grocery, music, and jewelry. To ensure you're approved, read Amazon's overview of the allowed product categories. Once your Amazon seller account is approved, you can list your products and start selling.
Understanding Amazon's Pricing and Fees
Selling on Amazon can be done with minimal investment. Still, it is essential to understand the various fees associated with the platform, as they can significantly affect your return on investment (ROI). While there are other fees, here are some of the most common prices you should know.
Selling on Amazon comes with several fees that can impact your profits. Here are some of the most common costs:
- Referral fees: Amazon charges a commission for each sale, which varies depending on the category. The referral fee can range from 8% to 45%, with an average of 15%.
- Closing fees: Media products, such as books and DVDs, cost $1.80 per unit sold.
- FBA fees: If you use Fulfillment by Amazon, you'll need to cover each sale's shipping and handling costs. The fee depends on the item's category, size, and weight, ranging from $2.41 to $4.71 for a standard package.
- Additional fees: Amazon may charge you for inventory storage, disposal, returns, and advertising costs. Review the Selling on Amazon fees guide for a complete list of expenses.
Before starting to sell on Amazon, it's crucial to comprehend the platform's cost structure to prevent unforeseen expenses and maximize profits.
Understanding Amazon's Seller Central
This guide provides an overview of the key strategies and initiatives to help you grow your business on Amazon. Before delving into these, it's essential to understand the difference between selling on Amazon as a third-party seller (3P or marketplace seller) and selling to Amazon as a vendor.
As a 3P seller on Amazon, you own the inventory until a customer receives it. You can fulfill orders or have Amazon handle order fulfillment and customer support. Utilizing Seller Central is the most common and least expensive way to start selling on Amazon.
On the other hand, as an Amazon vendor, you can sell your products directly and wholesale to Amazon. However, Amazon then owns the products once it receives them. Amazon Vendor Central is an invitation-only program that provides benefits such as building customer trust, marketing placements, and access to additional initiatives. However, it also comes with disadvantages, such as less direct control over pricing, complicated fulfillment, and slower payment terms.
This guide will primarily focus on Seller Central since it is the most accessible option for sellers. Amazon also offers a mobile app called Amazon Seller that allows you to manage your business on the go, analyze sales, fulfill orders, manage returns, and respond to customer inquiries. The app is free for sellers and available on Android and iOS devices.
Select Your Fulfillment Preferences on Amazon
Regarding fulfillment options, as a seller on Amazon, you can choose to do it yourself or use Fulfillment by Amazon (FBA), where Amazon receives packaging and shipping orders.
With the do-it-yourself option, also known as Fulfilled by Merchant (FBM), you will be responsible for fulfilling orders directly to customers and managing shipping, returns, and customer service. This option is suitable for made-to-order products or products requiring a longer processing lead time.
On the other hand, with FBA, you will send inventory to an Amazon warehouse, known as an Amazon Fulfillment Center (FC), and Amazon will handle shipping products and managing returns from customers. You control inventory levels, pay storage fees for the product, and a fulfillment fee for every unit sold to customers. It is important to note that you still own the inventory until a customer receives it.
In the FBA model, Amazon handles customer payments and pays you every two weeks. You can also access Amazon’s customer service team that handles questions, returns, and refunds. Additionally, you’ll have access to Amazon Prime and Free Super Saver Shipping to help scale your business.
How to List Your First Product on Amazon
For two key reasons, crafting a targeted product title is crucial for a successful Amazon listing. First, it grabs the attention of potential customers and assures them that they've found what they're looking for. Second, it can boost your click-through rate in search and enhance your SEO ranking.
While you can use up to 200 characters for your product title, limiting it to 60-80 characters is best. Research has shown that 33% of high-ranking Amazon listings fall within this range. Moreover, Amazon recommends adhering to this guideline, as it may shorten titles to over 112 characters.
Remember that every word in your product title can be searched, so start with the most relevant keywords. For example, Homesick's scented candle product line for Hawaii features its brand name, product line, style, scents (pineapple, coconut), and container size.
Product Title Optimization
A product title is a crucial element of an Amazon listing for two main reasons. First, it grabs shoppers' attention and assures them they have landed on the right product page. Second, it enhances the click-through rate in search results and improves your SEO ranking.
Amazon's product title limit is 200 characters, but keeping it between 60 to 80 characters in length is recommended. This length is supported by a study by Skubana, which found that 33% of high-ranking Amazon listings had titles within this range. Moreover, Amazon guidelines also suggest this character limit; if a product title exceeds 112 characters, Amazon can shorten it.
It is essential to remember that every word in the product title is searchable, so it's crucial to include the most relevant search terms at the beginning of the title. For example, the candle brand Homesick incorporates its brand name, product line, style, features, and container size at the start of its title.
Clear and High-Quality Product Images
The primary product image should depict the product before zooming in, and additional photos should provide other angles and, if applicable, lifestyle imagery. Video content can also be added to offer shoppers an in-depth view of the product. Since shoppers can zoom in on the images to see finer details, it's crucial to use high-quality images. According to Skubana's study, the top 62% of Amazon listings had between five and eight shots, so it is recommended to have at least five images.
Concise Bullet Points and Product Descriptions
Bullet points and product descriptions are vital to providing quick and easily digestible information about the product. Homesick's bullet points highlight essential information that potential buyers look for in a candle, such as a burn time, scent notes, type of wax, and candle care, and they are kept short and to the point. Bullet points should be concise, avoid lengthy paragraphs, and cover all the essential areas that customers need to know.
Regarding product descriptions, sellers must keep in mind that customers are skim-reading. Therefore, using the brand voice and reiterating the key selling points while mentioning supporting facts that can persuade customers to buy is recommended. Enhanced Brand Content (EBC) is a powerful tool for brand-registered sellers to improve their product detail page. It allows sellers to add visuals and text to increase customer engagement and tell a better product and brand story. WHOOSH!, an eCommerce brand, saw a 170% increase in sales six months after implementing EBC.
Variations enable sellers to display different sizes, colors, styles, and other product options quickly. Each product variation will still have its unique ASIN and detail page, but the variation feature allows customers to quickly switch between options and see different reviews. For instance, if a seller sells an iPhone case in black, blue, and silver, a variation option will enable customers to switch between these options, and the reviews for all the colors will be pooled together.
The image below shows an example of a detail page before and after optimizing key elements to maximize conversion.
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