Amazon is the world's largest retailer and the biggest marketplace for third-party sellers. Sellers can sell absolutely anything on Amazon. If you're thinking of becoming an Amazon seller, we'll walk you through the process step by step in this post and show you how to start selling on Amazon.
If you want to become an Amazon seller in the USA, there is no better time to start. Learning how to become an Amazon seller is the first step in the process. Assuming that you have the patience to stick around, I will go through eight steps that can get you from today to becoming a seller on Amazon and possibly making a good living out of it.
There are a few steps to follow to get started. There are 8 in total, and it is important to do everything in the right order. It will make more sense to you as we get into each step as I will explain the reasoning for it, what you have to do and how it may impact your business.
The 8 Step Path to Becoming a Seller on Amazon
Step 1 Becoming Amazon Seller: Find your niche or product to sell
It is the most challenging step. Do not rush to create a seller account or start talking to random suppliers. You first need to research what product you want to sell. That needs to be a subjective decision as not everything sells. However, there is way too much competition in this niche for you to generate enough sales or sell anything.
We should add a small disclaimer here as there is a business model that you can use on Amazon that is more permissive regarding what you can sell. There are three business models in total:
– Wholesale. This business model means that you buy large quantities of stock or inventory from suppliers and sell them to retail customers on Amazon. You can sell brand-name products that everyone knows if you are willing to spend enough on large orders with the suppliers.
– Retail arbitrage. This method implies that you source your products from other retailers, usually brick-and-mortar stores such as Walmart, Target, or Best Buy that offer discounted products. The advantage of this method is that you do not need a large investment in inventory, but it can be time-consuming to find such products that you can flip for a profit on Amazon.
– Private label. Private label is a much more profitable business model than retail arbitrage. Unlike an Amazon wholesaling business, with a private label, you create your brand. You have to find products in demand, source them from a manufacturer that can add your branding and packaging to them, and then sell it on Amazon. For example, you can find a supplier of USB cables and order a large quantity that is personalized with your branding.
Product Research Checklist
Before moving forward, knowing now what I have described above, what comes next mostly focuses on a business model focused on private labels. If you wish to learn how to become an Amazon seller, the following steps talk about creating a product wearing your branding and selling it on Amazon. The reason is that you simply have more options when it comes to branding a product rather than striking a deal with a distributor of a big brand. Finding ideas for products is the challenging part, but it can also be fun. Thus, you should not feel intimidated. If you want to sell your products on Amazon, you need to identify what products have the potential of turning a profit based on market demand.
A few tools such as Jungle Scout or Helium 10 can help you research and provide factual data. I would not want to recommend a particular product since there are many to choose from. What I can tell you is what are the important stats you should look at.
– Potential revenue
Keep in mind that revenue is not the same thing as net profit. What this means is the total value of your sales. You want to look at products that sell well and have a potential monthly revenue of $10,000 to $20,000 in total sales. Your net profit should be at least 15% which means around $2,000 to $3,000 in net profit per month. That should be your starting point.
– Number of reviews
If you are looking at products, the number of reviews does indicate just how well it sells. You want products that have reviews but not too many. Around 250 reviews are the sweet spot as it indicates that the product sells, and there is potential to grab a piece of the pie in that particular niche.
– Search volume
That tells you the number of times people searched for a particular product. In simple terms, this is a good metric for the demand. You want at least 5,000 searches for a product.
– Sales to review
This ratio tells you how many times a product has been sold for each posted review. The sweet spot is around three sales for each review posted by a consumer. Once you choose a few products that appear to have revenue potential and market demand, it is time to move to your next product analysis stage. You will have to look at a few metrics that indicate profitability and competition in your niche.
– Barrier to entry
This particular term refers to how competitive the market is for a certain product. If there are already too many sellers of the same product or there are big brand names that offer it already, your odds of managing to generate sales as a new Amazon seller for that product will drop dramatically. You want low competition and little if any brand names that make and sell that product type tool.
– Estimated monthly sales
There is no magic formula for this. You should estimate how well your product will sell to determine how much stock you need to get. Not having enough inventory is an invitation for your potential customers to buy from your competition while having too much means that you have cash stuck in physical inventory.
– Revenue and profit estimation
This metric simply refers to how much cash you will generate from sales and how much profit you will generate. Many people see sales numbers and mistakes for net profit.
– Market trends
Not all products sell the same throughout the year. You will discover that some products sell better during Christmas while others sell in larger volumes during the summer. Do your due diligence and avoid such products. Your goal is to find products that are in high demand regardless of the season.
Gathering enough data to get a good picture of the product can be overwhelming. I would encourage you to use third-party tools such as Jungle Scout or Helium 10 to extract information in a readable format that can help you draw some vital conclusions based on the above guidelines. Do not feel discouraged, as the Amazon marketplace can be intimidating, especially if you are just starting. Using various tools to help you find the right products can make the difference between making a living as an Amazon seller or throwing cash at products that do not sell.
Remember that this is just one step of the process, and you are still a long way away from your first order from a real customer. There are seven more steps, and even if you are finished with this step, you still need to source your products.
Step 2 To Become Amazon Seller: Create an Amazon Seller Account
Armed with your due diligence, having a good idea of what products you would like to sell, it is now time for you to move to the next step and open an Amazon seller account. If you want to become an Amazon seller, you need to familiarize yourself with Seller Central.
To create your seller account, you will need to have some information at hand. You will need to have the following:
- Business name
- Business address
- Contact phone number
- Banking details
- Tax information
During the signup process, you will need to choose between an Individual account or a Professional account. The main difference between the two is that with an Individual account, you have to pay a flat fee of $0.99 per item sold and have access to 20 product categories. There is no flat fee per sale with a professional account, but you pay a $39.99 fee per month and access 30 product categories.
If you do not estimate that you will sell more than 40 products per month, it does not make sense to make a Professional account. If you are optimistic about your sale numbers and think that you will exceed 40 products sold per month, a Professional account is a way to go.
Step 3 As Amazon Seller: Pick a Fulfilment Method
Amazon offers you options to handle your products. You can choose between FBA (Fulfilled by Amazon) or FBM (Fulfilled by Merchant). Both of them are viable, depending on your business model. Usually, FBM makes sense if you sell on Amazon and other websites. FBA is recommended if you plan on selling only on Amazon.
The advantage of using FBA is that Amazon handles everything. You will have to pay some fees, but Amazon will handle all order processing, packaging, and shipping, and it will even provide storage in their fulfillment facilities. All you have to do is manage your inventory and ensure that you order more stock when necessary. Products you list will appear as offered by you but fulfilled by Amazon. That is a great advantage as it makes you more trustworthy for customers knowing that Amazon handles their orders and you are just the supplier.
FBM does make sense in certain circumstances. If you have this option, you will have to deal with product storage, packaging, and shipping. All the orders are coming to you, and you have to handle them yourself. Your overhead is larger, but it may or may not move the needle depending on your sales volumes. You go with this option only when you plan on selling the same products on your site or other marketplaces in parallel. Also, when going for the FBM method, products will be displayed on Amazon as offered by you and shipped and sold by you.
Step 4 As Amazon Seller: Find a Supplier or Manufacturer
The next step is to find a supplier. Once you decide what private-label product you wish to sell, you need to get some inventory. That will require a good degree of research and time. Alibaba is a great place to find private-label suppliers, but you need to be wary of unreliable suppliers.
When looking for a supplier on Alibaba, you will notice several manufacturers for the exact item. No matter what you search for, you will discover that you always have more than one option in terms of suppliers. Therefore, you should look at reviews, sales, and if they offer the option to order samples. You will want to work with suppliers that have been on Alibaba for several years, have positive reviews, and have some form of quality control to ensure that what you are getting from them is sellable.
You should initiate discussions with several suppliers. Never limit your options to just one supplier. Alibaba has a messaging system that you can use. Contacting suppliers by phone is something that I would not recommend as there is a language barrier, and you want some sort of written confirmation or proof of everything you discuss with them. Ideally, you should talk with at least five suppliers to determine which one offers quality products, reasonable pricing, and can provide you with samples.
Ask Questions and Negotiation
Do not shy away from asking questions. Try to get as much information as possible from your potential suppliers. If they are slow to respond or simply fail to respond to your questions by either evasion or not answering at all, that should raise a red flag. It means they are not paying attention and may ship you a product below the standards they advertise. I strongly recommend that you ask for samples from all your potential suppliers. You will discover product quality differences, and sometimes, it may be worth spending a bit more to get a superior product.
Lastly, ask for quotes, prices, discounts based on quantity ordered and shipping price. You will need to calculate an estimation of how much your product will end up costing on Amazon. The final price of your listed product should include the costs incurred by Amazon, product sourcing, shipping from supplier, shipping to customers, packaging, profit margin, etc. It should not surprise you if you end up selling small items that you get for cheap from Alibaba for double the price on Amazon.
Step 5 As Amazon Seller: Order Some Inventory
Assuming you have found your supplier and got some samples that you are happy with by reaching this step, it is time to order some inventory. Your first full order should be large enough to cover around two months' worth of sales. If you estimate that you will sell about 100 units per month, your first order should be 200. The reason for having such a large buffer of more units is how long it takes to get the products manufactured and delivered to you or an Amazon fulfillment center. Also, since we are talking about an overseas shipment, you will need to discuss with your supplier about the payment options you have.
Before making the payment, you need to know where your products have to be shipped. For the FBM business model, you will need to supply the manufacturer with the address of your warehouse or storage facility. If you decide to go with the FBA method, you must inform Amazon of an inbound shipment via the Seller Central. It is there where you will find the shipping details that you need to provide to your supplier. You will also need to provide the supplier with the labels you need for the pallets, box labels, and FNSKUs. With that set, you need to learn about each payment option available if you want to learn how to become an Amazon seller as, over time, you may need to use one or more means of payment.
– Credit/Debit Card or Paypal
It is a common payment option for smaller orders. It is a secure means of payment, but it incurs more fees, currency conversion, and currency conversion at ridiculous rates. As items sold on Alibaba are listed in US dollars, some manufacturers may not accept this means of payment as they lose a lot of money, especially on large orders.
– Bank wire
That is considered a riskier method. The way Alibaba works is that when you choose bank wire as a means of payment, you have to pay upfront directly into the bank account of the seller/supplier. This means of payment incurs the least amount of fees. While it is riskier, it can save a bit of money on your orders.
– Escrow service
It is considered the safest method of payment. The way it works is relatively simple. You make a payment directly to Alibaba. Once you make the payment, the supplier must manufacture your products and ship them to you. Alibaba holds the funds until you receive the products. When you confirm that you received the products, the supplier receives his payment from Alibaba.
Step 6: List Your Products on Amazon
This should be the most thrilling moment of your Amazon seller career. When you list your first item, you are putting your product out for sale. It becomes visible to Amazon customers, and it will start appearing in searches.
To list a product, you will need to go to Seller Central. You will find a button to list products. A new form will appear that will require you to fill out relevant information about your product. At this stage, you need to be as accurate as possible, and you need to know a few things about your product.
You will need to have the following at hand:
- Product Name (ex: “Your Brand Name” Glow in the Dark USB Type-C cable)
- Product ID (This is the product UPC but more on this later)
- Brand Name (“Your Brand Name”)
- Manufacturer (It can also be “Your Brand Name”)
- Color (all color options separated by comma)
- Color Map (the same as Color)
- Size_map (you should leave this one empty)
- Unit count (ex: a six-pack of beer contains six beers. This unit count is 6)
- Unit count type (this can be a bottle, jar, ounce, piece, fl. Oz. etc.)
For your product to be listed, you will need to have a UPC or Universal Product Code. To obtain one, you need to go to the GS1 US website and request one. You can do this before listing your product on Amazon. This step is important, and you will do it more than once after you teach yourself how to become an Amazon seller. Once you get the UPC code, Amazon will assign you an FNSKU based on the UPC code. That stands for Fulfillment Network Stock Keeping Unit. It will be generated automatically by Amazon when you create your listing using the UPC code.
Product Listing Important Factors
With the basic information above filled in, you will still need to provide some additional details.
– Product Titles. It is the most important factor. You should put your brand name and the main keyword you want to target for your product.
– Product Features/Bullet points. You will need to list the features of the product. Try to be short but clear when you list them. Also, try not to overlook anything. The more features you list, the better.
– Product Description. Product description can be a short text that elaborates on the features, key aspects of the product, branding, and other types of information that should convince visitors to buy your product.
– Keywords. Keywords are the words that customers type in the search box. You will have to input the keywords for which you want your product to appear in search results. These keywords will not be visible on the product page that the customer views.
– Photos. You can add up to 9 photos of your product to the listing. The first image is called the hero image. It is what visitors will see first when visiting the product page. Avoid amateur photos or photos that you take yourself. You need professional photos of the product that you can pay someone to take photos for you, or your supplier might provide them to you.
Step 7: Optimize Your Product Listing
If you want to learn how to become an Amazon seller, you also need to optimize your listings. To put it simply, you will have to do a bit of SEO or search engine optimization. The goal is to have your product shown in searches in relevant positions on the first couple of pages, and you want to make it easy to find for as many potential customers as possible.
The starting point should be the keywords that we discussed above in Step 6. There are a few keyword research tools that are specifically designed for Amazon. Using such a tool as Helium10, you will determine which keywords to use on your listing. You can also use these keywords in the product description and the product title. Avoid creating excessively long titles for your products as they can appear unprofessional and reduce your credibility as a seller. You can make your work easier by using third-party listing tools that can help you use keywords smarter and provide some scoring for your optimization so you can evaluate how you stand.
Step 8: Boosting Sales With Marketing Campaigns
With everything set up properly, having the product manufactured, shipped, and stored in a fulfillment facility, and with the product listed on Amazon, sales should start flowing in, right?
Sales may or may not be flowing in. If you are waiting to generate sales organically without doing anything, you will notice just how slow things are moving. You may be able to generate a few sales per month, and at some point, after many months, you may be generating enough sales to turn a reasonable profit but do you want to wait that long?
There are two simple ways in which you can boost sales.
The first one is PPC campaigns.
PPC stands for pay-per-click. They are not complicated to set up on Amazon. What they do is display your product at the top of the search results for certain keywords. You do not pay anything for the product to be displayed in search results. You only pay when an Amazon customer clicks on your product from the page. These products will appear with a small piece of text in the corner stating “Sponsored.” Usually, this method brings more visibility to your products, and it can help boost sales.
A good piece of advice that I can give you is to start with a small budget for your PPC campaign. Test out how well it works and experiment with different keywords. The keywords that lead to the most sales should be the ones you should focus on. You need to calculate your ROI for your PPC campaigns running with these preferred keywords. Ideally, the net profit of the products sold through that PPC campaign should not be negative. The PPC campaign will eat up a bit out of your profits, but it should not eat all of it. It is better to have a smaller profit margin due to PPC campaigns that bring in sales than no sales, thus zero profit.
The second method is to promote your product with a product launch.
You can do that in many ways outside of Amazon. If you want to learn how to become an Amazon seller, you also need to study how to launch a product and boost its visibility. You can do this in the following ways:
– Pay for Press Releases. There are plenty of sites that publish sponsored content in the form of press releases. You can publish a press release describing your product, your launch, and your brand. This type of content can drive a good amount of traffic to your product page on Amazon.
– Launch event discounts. Everyone loves discounts. As a means to attract customers, you can offer your product at a discount. You can cut your profit margin completely to offer it at a very low price. That will make it much more attractive to customers. These initial customers that got your product discounted will leave reviews of your product on the product page. The more reviews you get, the more your product attracts organic traffic and sales.
Just keep in mind that you do not have to do this too long. Make sure that you only offer the discount for the first few orders to create scarcity, thus making your customers understand that they are getting a very good deal that they may miss out on if they do not act fast. I would recommend offering the product discounted for the first 50 orders or the first seven days since launch, whichever comes first.
– Giveaways. Giveaways are also another great means of creating awareness around your product. You will need to run these giveaways using social media channels as there is no way to do it on Amazon. Again, this will lead to more traffic to your product page because people are more likely to recommend a product if they are happy with it, especially if they got it for free.
Having this said, it should equip you with the basics. It may feel a bit overwhelming at first, and you may still have a few questions, which is why I want to address the seven most common questions about becoming a seller on Amazon.
1. How do you sell on Amazon for beginners?
There is no simple answer to this. There are several things that you have to do. You first need to find the product you want to sell, create a seller account, list your items and start selling. It is the simplest way to explain the process, but there are many details you should know about that we will go through in my 8 step guide.
2. How can I make money on Amazon without inventory?
If you do not want to manage your inventory, you can use dropshipping. Dropshipping takes orders from customers on Amazon and then places them directly to your suppliers. Your suppliers will be the ones shipping the products directly to the customers. That is not the ideal way of building a business on Amazon due to the complicated logistics and the long wait times for your customers to get their orders delivered to their doorstep. Managing your inventory using Amazon FBA is considered a superior business model.
3. What percentage does Amazon charge sellers?
As an individual seller, you will have to pay $0.99 for each item sold. It is a flat fee. There is also a variable fee called the closing fee, which can be anywhere between $0.45 to $1.35. If you register as a business or professional, you will pay a closing fee and referral fee that vary between 6% to 25%. Also, the Professional account has a flat $39.99 monthly fee, but you no longer pay the $0.99 fee per item sold.
4. Is it possible to make money selling on Amazon?
If you know what you are doing and have firm control over your finances, it is definitely yes. You need to understand the difference between net sales and net profit. If you handle your margins correctly and have a decent sale volume, you can earn a comfortable living by selling products on Amazon. The first step is to learn how to become an Amazon seller and build a sustainable business plan.
5. How much do Amazon sellers make a month?
44% of all Amazon sellers make anywhere between $1,000 to $25,000 per month in sales. That is not net profit. Actual profit depends on margins. 20% of all sellers make between $25,000 and $250,000 per month in sales. 26% make less than $1,000 in sales per month.
6. How to sell to Amazon directly?
The answer to this question is a bit nuanced. You cannot sell directly to Amazon unless you are a supplier for certain products. It is extremely difficult to reach that status. What you can do instead is to use their FBA or Fulfilled by Amazon service. This method will list your products as being sold by you, but it will state Fulfilled by Amazon. Your customers will have the same benefits by buying from you as they would if the item was sold by Amazon directly.
7. What can I sell on amazon as a new seller?
You can sell anything on Amazon even if you are a new seller. The only thing that matters is for your items not to be prohibited for sale by Amazon. To answer this question better, I recommend checking the Amazon Seller Policy and looking at the items you cannot sell. Anything else is a free game.
Now that we have these seven questions answered, it is time to get into the specifics of becoming an Amazon seller. Hopefully, it will not become boring as there is a great degree of valuable information that I will be sharing with you. If you stick till the end, you will have gathered the basic knowledge of what you need to do and in which order you should do things. We will not get into the details of doing certain things as this post will become endless and convert into a full-fledged course.
Building a business on Amazon is not easy by any means. If someone told you that, he most likely knows much less about becoming an Amazon seller than you after reading my 8 step guide. Building such a business is not easy. It becomes easy after you are done with the eight steps. By that stage, the supply chain is nearly entirely automated. All you have to do is place orders with your suppliers and do some customer care tasks.
Also, by the time you reach this point, you should already be familiar with the entire process and start seeing this type of business as easy to manage. You will also find it much easier to start another business on Amazon after going through the process.
To take home, you should not feel discouraged by what I have said so far. I am trying to get your expectations right. You need to focus your energy on determination, the will to get started, and the ability to solve problems. Many have built profitable businesses on Amazon, and there will be more successful sellers in the future. Amazon is a very big marketplace, and if you are determined enough, you could be one of the many that made it.
If you want to learn how to become an Amazon seller, you can read my other blog on How To Start Amazon FBA Private Label Business. If you are ready to start the Amazon FBA business, you can check the Amazon FBA course to learn deeper step-by-step A to Z starts from scratch. They will help you If you have questions or you need help during your learning. Most importantly, it will help you to build your Amazon FBA online business successfully.
“I find that the harder I work, the more luck I seem to have.” – Thomas Jefferson.