It’s never been easier for entrepreneurs to break into e-commerce. As an Amazon seller you can set up an Amazon store account within hours and start selling right away.
Except for a few restricted product categories, you can make money selling new, used, or handmade products of just about any kind on Amazon. However, there’s also a lot of competition. So what does it take to become a successful Amazon seller?
Here’s a quick rundown of the top things you need to know to make your Amazon seller business successful.
Why Small Ecommerce Businesses Should Consider Selling On Amazon In 2022
The Amazon marketplace is a large global ecommerce store for both B2C and B2B sellers with more than 300 million customers. More than half the items sold on Amazon come from independent sellers, and Amazon says that 60% of multichannel sellers (those that sell in multiple places, including in storefronts and/or online) report Amazon is their fastest growing channel.
Unlike opening a bricks and mortar retail store— or even your own Shopify store— it can be very easy to get started selling on Amazon. You don’t need your own website, an account to accept payments, or even a team to handle shipping and returns if you let Amazon to do that.
That means that other than your investment in inventory for the product(s) you want to sell, you may not need a lot of startup capital to start selling on Amazon.
Pros And Cons Of Selling Your Products On Amazon
- Easy to get started
- Low upfront costs
- Can use Amazon FBA for fulfillment
- Access to large worldwide customer base
- Can run promotions and ads to increase sales
- Lots of competition
- Amazon fees can add up
- Knockoffs can be a problem
- Buyers may be very price-sensitive
- Certain types of products are restricted
6 Tips for Success as an Amazon Seller
1. Focus on a Single Product or Product Category
While some sellers have done very well selling one-off items of things they find deeply discounted at local stores (a.k.a. arbitrage), this can be a hard way to create a scalable business on Amazon. With all the time you’ll spend creating listings, advertising, packaging, and fulfillment, it’s often easier to create a uniform process when you are selling multiples of just one item – or several very closely related items. That’s why you’ll often see sellers focusing on tightly niched items, such as books or baby products. You can sell a lot of these items without changing much of the process, saving you time and eventually money.
It’s not that you can’t branch out to new categories in the future, but when you’re starting out having a niche focus for our Amazon products will often help you learn what works and what doesn’t.
2. Consider Amazon FBA for Fulfillment
Perhaps the most tiring part of the selling process is shipping. Unless you’ve set up a dedicated area for packaging – and have invested in commercial packing accessories and tools – it may be easier to send all of your products to Amazon to have them ship out directly from their closest warehouse.
You will lose some of the special touches of DIY (such as creating custom labels), but you get some perks, as well. Fulfilled by Amazon comes with the benefit of having Amazon handle tracking, returns, and customer service issues. It comes with a bit of an additional fee, but shoppers will qualify for 2-day Prime shipping on all orders, keeping you competitive with other Amazon sellers. We’ll talk more about Amazon FBA shortly.
3. Write Product Descriptions Carefully
Since Amazon allows sellers to create listings for entirely new products or list an item for an existing, inventoried product, it may seem that the easiest choice would be to click the “I have one to sell” button and be done with it.
Unfortunately, product listings created by other sellers can be flawed, may be outdated, or can contain specific details that don’t apply to your individual item. Take the time to craft a compelling listing with product details and bullet points to help buyers understand why they should choose your product over another.
Amazon lays out very clear guidelines for product detail pages, including image requirements, bullet points, the Buy Box and the product description. Read their guidelines carefully and consider asking a few people you trust to review your listing to make sure it’s clear.
4. Know the Amazon Ecommerce Lingo
Condition is one category you should be very familiar with when selling. Do you know the difference between “new” and “NIB?” Are you well-versed in what makes a book “good” vs. “fair”? Don’t take the language of the seller for granted, and always rate your items conservatively. While you can command a higher price for an “excellent” item, buyers come to expect what they pay for. If it’s hard to tell just what exactly you have for sale, go with the lower quality listing choice.
Amazon Prime: Amazon reports over 200 million customers have Prime subscriptions, which gives them free 2-day shipping and other benefits. Sellers can benefit from this loyal customer base.
Amazon’s Choice: If Amazon gives your listing this badge (based on price, availability to ship and product ratings), you’re likely to see sales go up.
ASIN: This is the number Amazon uses to track products in its catalog. It’s Amazon’s version of a UPC, the bar code you see on many products.
Amazon Seller Central (ASC): When you sign up for Amazon, you’ll get access to the ASC portal which is the control center for your Amazon seller product.
Arbitrage: It generally means “buy low, sell high.” There are several types of arbitrage Amazon sellers may use successfully:
- Online Arbitrage: This is where you find products on one ecommerce platform and sell them for more money on another.
- Retail arbitrage is a strategy some Amazon sellers use. They scour retail stores to find products they can buy and then sell for a higher price on Amazon.
- Wholesale Arbitrage involves buying large quantities of a product at a low price and then reselling it for more money on Amazon.
Best-Seller Rank (BSR): Amazon uses sales data to decide this rank, which can change frequently. Also known as the Amazon Sales Rank, it indicates how well the product has sold over time as well as recently. It’s a metric you’ll want to monitor.
Brand Registry (BR): Brand Registry helps protect your brand. We’ll discuss in more detail shortly.
Buy Box: This is where the sales action takes place. It includes the large “Add to Cart” and “Buy Now” buttons on each of your product listings.
Cost of Goods Sold (COGS): This is what it costs to create the products (or services) you sell. COGS is a key metric for determining whether your product is profitable.
Click through rate (CTR): This tells you how often prospective shoppers click on ads for your product.
Conversion rate (CR): This is another metric that helps you understand what actions potential shoppers are taking. CR measures actions; for example, you can measure CR for product purchases, adding your product to their Amazon shopping cart, etc.
Drop Shipping: When you are a drop shipper, you act as a middleman between the manufacturer and the customer.
Enhanced Brand Content (EBC): This Amazon program allows qualified sellers to create more detailed product descriptions with additional images and text. It’s available to sellers participating in Brand Registry as well as Amazon Handmade.
Fulfillment by Amazon (FBA): This program allows you to pay Amazon to handle fulfillment of your product. You get it to the Amazon warehouse, and then Amazon takes care of packing and shipping it when it sells.
Fulfillment Network Stock Keeping Unit (FNSKU). This is a mouthful, but it essentially a unique identifier that allows Amazon to keep track of products sellers send to an FBA warehouse.
Fulfilled by Merchant (FBM). If you don’t want to use Amazon to fulfill orders, you’ll need to ship orders yourself or with help of a 3PL. Full responsibility for packing, shipping and handling customer service falls to the merchant here.
Fourth Quarter: Amazon’s busiest season is the holiday season; the last three months of the year.
Gated Category: As we’ll discuss in a moment, these are products that Amazon will not allow sellers to sell without getting prior approval.
Ungated Category: You don’t need approval to sell in these categories or subcategories.
Lightning Deals: As a seller you can offer these discounts/sales for a limited time.
Listing: Your product listing is where you try to sell your product. Your listing page includes images, descriptions of your products, customer reviews, shipping details etc.
Minimum Order Quantity (MOQ): If you are using a manufacturer to source your product it may require you order at least a minimum number of items.
Negative keywords: If you are using pay-per-click ads to try to sell your products, these can help you avoid the wrong types of clicks (which you would pay for). Amazon gives the example of “dog toy” as a negative keyword for a stuffed animal shaped as a dog.
Private Label: You can sell private label goods by getting a manufacturer to produce them to be sold under your brand.
Pay-Per-Click (PPC): PPC ads are ones where you pay per click through. In the Amazon context, they are used for Amazon Advertising. If someone clicks on your Sponsored Product, Sponsored Brand, or Product Display ad you’ll be charged.
Promotions: You may be able to increase sales by offering discounts or running giveaways.
Search engine optimization (SEO): Using terms that shoppers are looking for can help your products get found on Amazon, and can help move your product up higher in customer search lists.
Sponsored Ad, Sponsored Brands and Sponsored Products: These are all variations on ads that allow sellers to get their brand or product in front of customers who have searched for products like theirs. Sponsored results will show up at the top of product listings or as banner ads.
Verified Reviews: Reviews are important to many Amazon shoppers. Verified reviews may only be left by shoppers who bought on Amazon. These reviews carry more weight when it comes to the overall product rating.
5. Be Ready to Respond
If you are not choosing to use Fulfilled by Amazon, be ready to check your Seller account frequently. Buyers will have questions even before they buy, and — after a purchase is made — there will be more inquiries to address. Issues such as tracking errors, broken products, or confusion about how an item works will all be directed to you. While this may seem like a bit of a burden, it’s part of being a business, and it’s far better to have questions coming to you (which can then be resolved) then get negative reviews that you can’t respond to effectively. Always make it easy to contact your business during regular business hours (and weekends and evenings are even better.)
6. Check Amazon Communications Regularly
In addition to the emails you’ll get from Amazon through your seller account, there is a thriving Amazon seller forum that can be useful to stay on top of trends, tools, and selling tactics. People are very generous with the level of detail they share, and while these discussion threads can be useful in getting your questions answered, they can also give you insight on your competitors and how to get an advantage. You will also get word on how to respond to policy changes (which seem to happen almost weekly to Amazon sellers.) Everything from fee increases to new categories of prohibited items will be discussed in the community boards. Make a habit to check in at least weekly to stay in the know.
Steps To Opening An Amazon Seller Central Account
First, if you’re thinking of selling on Amazon, get the beginner’s guide to selling on Amazon. You read it online or download it as an ebook (for free). It will walk you through the step-by-step process of becoming an Amazon seller and is invaluable for new Amazon sellers.
When you get started on Amazon, you’ll start by opening an Amazon seller account. There are two Amazon selling plans: the Individual Seller Account or a Professional Seller Account. Besides the fees— 99 cents per sale for an Individual Account or $39.99 a month for an unlimited number of sales— the main difference between the two plans is that the Individual Account is aimed at the beginning seller. You can only sell up to 40 products a month on that plan.
The Professional Account opens up access to advanced selling tools but it’s fine to get started with an Individual Account if you aren’t ready to commit to the subscription fee.
Amazon Handmade requires a Professional Plan account but the monthly fee is waived after the first month once you are approved.
Note that there are other fees for selling on Amazon including referral fees (essentially Amazon’s commission – usually between 8% – 15%) and fulfillment fees. You may also choose to pay for advertising and premium account services.
You can register for one of these types of accounts on the Amazon website. You’ll need the documentation listed below.
Once you’ve registered you’ll have access to Seller Central, which gives you access to the tools you need to track inventory and sales, list products, track sales and more.
It’s also a good idea to download the Amazon Seller App (available in the App Store or on Google Play) to make sure you’re on top of your account activity. You can create product listings from your phone using the app.
What Documentation Does Amazon Require To Get Started
To complete your registration as an Amazon seller, you must have:
- Bank account number and bank routing number: We recommend a business bank account to help you keep your business and personal banking separate and for tax tracking purposes.
- Chargeable credit card: We recommend a business credit card for similar reasons. Most business credit cards are available to startups who qualify based on personal credit scores and income from all sources.)
- Government issued national ID
- Tax information: Taxpayer Identification number which can be a Social Security number, but for business purposes an EIN is often recommended and may be required.)
- Phone number: We recommend you get a dedicated business phone number, which you can do inexpensively through services like GoDaddy SmartLine, Google Voice, and others.
Learn If Your Product Categories Are Gated Or Ungated
One of the decisions you’ll need to make is which products to sell on Amazon.
Certain product categories, subcategories or brands on Amazon require approval before they can be listed on Amazon. These are often referred to as “gated” products.
Ungated product categories don’t require approval before listing. For that reason it can be easier to sell in ungated categories.
But if you have a product to sell that is in a gated category, it doesn’t have to be a deal-breaker. You may still want to go through the approval process which takes some time. (Remember that other sellers may be avoiding gated categories, which may mean less competition.)
Amazon publishes a list of categories that indicates which categories or subcategories may require approval. For example, new grocery or gourmet products don’t require approval as a category, but some items do. In addition, food items must meet certain guidelines.
Amazon also suggests looking at existing products you want to sell. While you’re in Seller Central, search for a product you want to list in Add a Product then click on show limitations to see whether approvals are required. If you have a new product not currently selling on Amazon, search for similar products.
Ensure Your Product Has Proper Copyright And Trademark Protection
If you’re using arbitrage to sell on Amazon, then you don’t need to worry about protecting your brand. You simply sell other people’s products. But if you are developing your own products under a brand identity, you’ll want to protect your brand name and other intellectual property with a copyright and/or trademark.
There are costs associated with registering trademarks, but it may be worth it in the long run.
Why You Should Consider Amazon Brand Registry
If you have a trademark, you’ll want to take steps to protect and enforce it. Amazon Brand Registry is a free service designed to help protect it with tools to help detect and report infringement, both on Amazon and elsewhere. It’s free and worth considering.
Amazon FBA (Fulfillment by Amazon) or Ship From Home: Pros and Cons
When you sell a product, you must get it to the buyer. As mentioned earlier, Amazon offers Amazon FBA but you can also choose to do it yourself, or with a third-party ecommerce fulfillment provider (3PL). Here are pros of using Amazon FBA over other solutions.
- Streamlined fulfillment process
- Prime 2-day shipping
- Amazon customer support
- Amazon handles returns for FBA items ordered on Amazon.com
- No minimum number of products
- Exporting to 100 countries available
- FBA fees add up
- Must prepare for warehouse including ASIN
- Amazon’s easy return policy may increase refunds
- Storage fees can reduce profits
- Customer is Amazon’s, not yours
Know The Fees Associated With Amazon FBA
Amazon has an extensive network of Amazon fulfillment centers, and deep expertise in inventory management and order fulfillment. Although Amazon FBA can be an efficient and relatively easy way to ship products, it does come with a cost. You need to make sure you can pay for those services and still make money.
FBA fees vary based on the size and weight of the product, so the best way to estimate the cost is to use Amazon’s free Fulfillment by Amazon Revenue Calculator.
Decide On A Business Structure
If you are serious about developing a long-term ecommerce business, you’ll want to seriously consider setting up a business structure such as an LLC or Corporation (S Corp or C Corp). This can be helpful for many reasons, including tax benefits as well as to help protect your personal assets. It can also be helpful for building business credit.
In this process you’ll create a business name which may or may not be the same as your brand name. Make sure you research both to avoid confusion or trademark infringement with other brands.
Amazon Vendor Central Vs Amazon Seller Central
There are different types of sellers on Amazon: third party sellers who are selling products to customers through the Amazon marketplace. But there are also first party sellers, who sell to Amazon. Amazon then resells their products. First party sellers use Amazon Vendor Central to sell their products to Amazon. This platform is invite-only, so you don’t apply directly to Amazon.
Get Your First Sale
Getting your first sale on Amazon is an exciting milestone for new sellers. It can be hard to get that first sale though because Amazon shoppers may hesitate to buy from someone without customer reviews. That’s why it’s especially important to create a strong product listing and then to respond quickly to questions.
Those first reviews will be crucial to helping build your reputation on Amazon. Make sure you read and understand Amazon’s policy regarding customer reviews. For example, asking a family member or employee to post a review of your product (or a competitor’s) is not allowed.
Monitor And Improve Your Amazon Business
As you grow your Amazon business you’ll want to monitor performance metrics in your selling account. You can be sure Amazon will!
Third-party sellers are judged by performance metrics and customer reviews. Performance metrics that you’ll be able to monitor in your seller’s account include:
- Order defect rate (a measure of a seller’s customer service standards): < 1%
- Pre-fulfillment cancel rate (cancellations initiated by the seller before shipment): < 2.5%
- Late shipment rate (orders that ship after the expected date): < 4%
You may want to explore advertising opportunities to expand your customer base. Or you may want to try promotions or discounts such as money off, free shipping, and buy one get one free to generate more sales if the numbers make sense.
Amazon also includes global selling opportunities as well as B2B sales.