We may earn a commission for purchases through links on our site at no cost to you, Learn more.
Amazon is one of the most successful and popular online marketplaces in the world, with millions of sellers and customers from all over the globe. The platform offers a convenient way for sellers to showcase and sell their products to a massive audience of potential customers.
If you’re looking to start selling on Amazon, the process might seem daunting at first, but it’s quite simple. In this comprehensive guide, we’ll walk you through the entire process of setting up your Amazon seller account and listing your products in five easy-to-follow steps. Whether you’re a seasoned seller or just starting, here’s everything you need to know to get started and succeed on Amazon.
Two different ways to sell on Amazon
Amazon provides two different ways to sell products on its platform, namely, Fulfilled by Amazon (FBA) and Merchant Fulfilled Network (MFN). The two options are not mutually exclusive; sellers can use them simultaneously. With FBA, Amazon stores, packs, and ships the products on behalf of the seller. In contrast, with MFN, sellers are responsible for storing, packing, and shipping their products.
Sellers can benefit from using both options, depending on their inventory. They can use FBA to sell their lighter and fast-moving products, while they can use MFN to sell their slower-moving bulky or heavy items. This strategy allows sellers to leverage Amazon’s shipping and fulfillment capabilities for their popular products while saving on shipping costs for their heavier products.
Fulfilled by Amazon (FBA)
Fulfillment by Amazon (FBA) is a program that allows sellers to store their products in Amazon’s warehouses and have the company handle the shipping, handling, and customer service. This means that when a customer purchases your product on Amazon, Amazon takes care of the rest – including packaging, shipping, and handling returns or customer inquiries.
However, this convenience comes with a few costs. First, sellers must pay a monthly service fee for the FBA program and monthly inventory storage fees for the products they store in Amazon’s warehouses.
FBA is a good option for those who don’t have a place to store their inventory, don’t want to handle shipping and customer service themselves, and are okay with giving control over to Amazon. Additionally, small and lightweight products with a high turnover rate are well-suited for FBA. This is because Amazon’s storage and handling fees can become quite expensive for larger or slower-moving items, which can eat into your profit margins.
Overall, FBA can be a great option for sellers looking to streamline their operations and take advantage of Amazon’s vast customer base. However, it’s important to carefully consider the costs and benefits and whether or not your products are a good fit for the program before signing up.
Merchant fulfilled network (MFN) or Fulfillment by merchant (FBM)
When selling products on Amazon, you have two options: fulfillment by Amazon (FBA) or fulfillment by merchant (FBM). FBM means that you will store and ship your own products, as opposed to using Amazon’s warehouses and shipping services.
While FBA may be more convenient for some sellers, FBM is a great option for those with bulky or heavy products that don’t sell quickly. This way, you’re not paying for storage in an Amazon warehouse and have more control over the entire fulfillment process.
However, it’s important to note that with FBM, you will also be responsible for handling all customer service inquiries and issues with your products. This means you need to have a reliable system to address any customer concerns or questions.
One benefit of FBM is that you can avoid long-term storage fees that Amazon charges for products that sit on their warehouse shelves for too long. The longer a product sits, the more it costs, so if you have slow-moving inventory, FBM can be a cost-effective solution.
Overall, FBM can be a great option for sellers who want more control over the fulfillment process and have the resources to handle their shipping and customer service.
5 Steps to start selling on Amazon
There are 5 simple steps to start selling on Amazon:
Conduct market research
If you plan to sell on Amazon, conducting market research is important before taking any further steps. Before listing your products, you need to check the restricted products list provided by Amazon. Some categories, like jewelry or DVDs, require approval before listing, while others are completely restricted. Restricted products are usually federally regulated; selling them without proper authorization can lead to legal consequences.
Once you know what products you can sell, it’s time to narrow down your options. You can consider private labeling a successful product to make it stand out from the competition. To do this, you will need to create a unique brand for your product and package it in a way that differentiates it from other similar products.
After deciding on a product or niche, you need to research the top listings for your desired product. Analyze the competition and check if they offer Prime shipping, have 4.5- and 5-star reviews, and use FBA. This information will give you a better understanding of what you’re up against and help you make informed decisions.
Once you’ve found a product you want to sell, you need to find a supplier. You can look for suppliers on Alibaba, AliExpress, or other platforms. When you’ve found a supplier, negotiate the terms of the deal and ask for samples to ensure the quality of the product meets your expectations.
After finding a supplier, you need to calculate your cost per unit. This will help you determine if your margins are high enough to make your product viable. If not, you may need to consider a different product. Ideally, you should have enough margin to offer discounts or coupons to attract more customers.
Set up a seller account
To set up your seller account, you will need to have the following information ready:
- Bank account number and routing number: This information is necessary for Amazon to transfer your sale proceeds to your account.
- Credit card: You need to have a valid credit card to verify your identity and pay for any selling fees or charges incurred.
- Government-issued national ID: You will need a valid government-issued ID, such as a driver’s license, to complete the verification process.
- Tax information: You will also need to provide your tax information, including your tax identification number (TIN) or social security number (SSN).
- Phone number: A valid phone number is required for Amazon to contact you in case of any issues or concerns.
Once you have all the required information, you can navigate to the Seller Central website and select your preferred selling plan. Amazon offers two selling plans: Individual and Professional.
The Individual selling plan is ideal for those who sell fewer than 40 items per month. It is a pay-as-you-go plan, and you will be charged $0.99 per sale.
The Professional selling plan is best suited for sellers who sell more than 40 items per month and require access to advanced reports and APIs. This plan costs $39.99 per month, irrespective of the number of units you sell. If you want to sell on Launchpad or Handmade, you must have a Professional selling plan.
Add products
When it comes to adding products, you can use two primary methods. The first method involves using an existing listing of an identical product. This approach is ideal if other sellers already offer the same product you want to sell. The second method requires you to create a new listing. You should use this method if you’re the only seller for a particular product.
It’s essential to include various details in your product listing, such as the product identifier, SKU, price, product condition, available quantity, and shipping choices. Additionally, you need to provide important product information like the product name, brand, category, description, and images.
To ensure that your product descriptions are optimized for search engines, you must conduct thorough research on keywords relevant to your products. Keywords are a crucial element of SEO. If you’re not confident in your writing ability, you can hire copywriters on Fiverr and Upwork to help you craft high-quality product descriptions.
Images are also a crucial aspect of your product listing. High-quality images with a white background can make your listing more appealing to customers. You should use images with a minimum dimension of 500 x 500 pixels. You can increase the file size to 1000 x 1000 pixels for high-quality listings.
Attract customers
As an Amazon seller, attracting customers to your listings is crucial to stand out among the countless others. To do so, you need to follow the best practices that involve setting competitive pricing, offering fast shipping, and advertising your products through sponsored listings.
One of the most effective ways to attract customers is to set competitive pricing. Amazon offers built-in seller tools that automatically reprice your listings to an optimized price based on the parameters you set. This way, you can still make a profit while keeping your prices competitive. Additionally, Amazon offers bulk pricing that can help you attract Amazon Business customers.
Fast shipping is another crucial factor that can help you attract customers. If you don’t use Amazon Prime shipping, you can still make sure to ship your products quickly when you use Fulfilled by Merchant (FBM). This will help you maintain a good reputation and keep your customers satisfied.
Finally, advertising through sponsored listings can help you reach a wider audience and attract more customers. Sponsored listings are Amazon ads that appear on product pages and in search results. These ads operate on a cost-per-click basis (CPC), which means you only pay when someone clicks on your ad. You can set a budget for your ads and choose how much you want to spend per click. With sponsored listings, you can reach potential customers who are actively searching for products similar to yours.
Get reviews
When soliciting customer reviews, following the rules is important to avoid facing any negative consequences. Amazon has strict guidelines regarding what is and isn’t allowed when asking your customers to leave a review. Offering incentives in exchange for reviews is strictly prohibited, and if you’re caught doing so, your account may be permanently banned, and you may even face legal action.
However, there are still some ways to encourage your customers to leave a review without breaking the rules. You can certainly ask for a review, but you must not offer any form of compensation, free product, refunds, or discounts for doing so. This includes anything that could be perceived as an incentive, regardless of how small it may be.
One way to incentivize your customers to leave a review is by signing up for Amazon’s Early Reviewer Program. This program provides a small incentive to reviewers for providing authentic reviews. By participating in this program, you can encourage your customers to leave a review without violating any of Amazon’s guidelines.
Do I need a business license to sell on Amazon?
When it comes to selling on Amazon, you may wonder whether you need to obtain a business license. The answer is generally no; you don’t need a business license to sell on Amazon.
However, it’s important to keep in mind that your state or jurisdiction may have specific regulations that you need to comply with. It’s always a good idea to check with your state’s business regulatory agency or consult a legal professional who can advise you on any special rules that may apply to your situation.
Does Amazon report income to the IRS?
As a reputed e-commerce giant, Amazon is bound by law to report the income its sellers earn to the Internal Revenue Service (IRS). According to the IRS, if a seller on Amazon exceeds a gross payment volume of $20,000 and has more than 200 transactions in a year, Amazon will issue a 1099-K form to the seller for tax filing purposes.
This is crucial information for Amazon sellers who need to be aware of their tax liabilities and ensure compliance with the IRS regulations. It’s always a good idea to consult a tax professional to avoid any potential tax-related issues in the future.
What is dropshipping?
Dropshipping is a method of selling products where the seller does not physically have the items at their location. Instead, the seller collaborates with a supplier, who is responsible for keeping inventory of the products.
When an order is placed, the seller sends the relevant information to the supplier, who then ships the product directly to the buyer. In the case of FBA (Fulfillment by Amazon), Amazon acts as the supplier and stores the products in their warehouses.
The seller does not have to handle the shipping and handling of the products, as it is the supplier’s responsibility. The costs associated with shipping and handling are typically built into the dropshipping agreement between the seller and the supplier.
What products are in demand?
If you want to start a new business or expand an existing one, it’s important to identify what products are in demand. One way to do this is by conducting thorough research using various online resources such as Google Trends and social media websites.
These platforms provide valuable insights into what consumers search for, discuss, and buy. By analyzing the data, you can better understand market trends, identify gaps in the market, and develop a product strategy that aligns with the needs and preferences of your target audience. This can help you stay ahead of the competition and increase your chances of success.
The bottom line
Selling on Amazon can be lucrative, but it requires a well-thought-out strategy. The first step to success is selecting the right products to sell. Ideally, you want to choose products with low competition and high demand to increase your chances of making sales. Once you have your products, you’ll need to optimize your listings to make them stand out to potential buyers.
This includes writing compelling product descriptions, using high-quality images, and optimizing your pricing strategy. However, the work doesn’t stop there. To stay ahead of the competition, you’ll need to constantly monitor your listings and make adjustments as needed.
This might involve tweaking your pricing strategy, improving your product descriptions, or staying up-to-date with industry trends. In short, selling on Amazon is a dynamic process that requires constant attention and optimization to achieve long-term success.