Amazon is the world’s largest online retailer with an extensive range of products that allows customers to buy anything from books , clothing , electronics and garden supplies to furniture and household essentials.
As a retail giant worth over $900 billion, people continue to come up with clever ways to get their own piece of the e-commerce pie. If you’re struggling to find your way in this market, keep reading to learn how you can succeed when it comes to selling on Amazon.
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Decide how to sell
One interesting fact about starting an Amazon business is that the barrier to entry is low. There are also many different ways to start a profitable Amazon business. There are five widely used Amazon business models for third-party sellers.
Retail arbitrage
The retail arbitrage business model involves sourcing products from offline platforms for a good deal and listing those products on Amazon at inflated prices. This model allows you to profit from sales of in-demand products that you can buy in bulk elsewhere and resell on Amazon. Each profit is calculated as the difference between the original price plus Amazon fees and your resale price. A variation of this model is online arbitrage, where you buy goods from online stores and resell them through Amazon. This model allows you to work remotely and enjoy flexibility.
Wholesale
The wholesale model involves buying products in large quantities from a supplier at a discounted price and selling them on Amazon at a higher price. This model results in high profits because you buy products at the lowest possible prices. However, you will need to do thorough research to ensure that the products you plan to sell are in demand. This model also requires a huge initial investment to become successful.
Private label
This Amazon business model involves sourcing products from a third party and branding them on your behalf. With this model, you can buy unbranded products at a low price, put your personal brand name and logo on them, and resell them at a higher price for a profit. This model requires strong branding, marketing and optimization to succeed. To ensure that your private label business is successful and highly profitable, you need to choose a good product idea for your brand .
Dropshipping
This is a popular business model for those looking for passive income. Dropshipping allows you to build a reputation and earn profit as a seller without actually owning any of the products. Instead, you sell products on behalf of the supplier . All you have to do is list the product and when a customer places an order, it is processed by your supplier, who ships the product to the customer on your behalf. Dropshipping eliminates the stress associated with inventory management, packaging, and logistics. However, if the products are of poor quality, it puts your reputation as a seller, not as a supplier, on the line.
Self made
This model involves designing and creating your own products that are listed on the Amazon marketplace and gives you complete control over both the quality of your products and the profit you make. This model also requires adequate product knowledge, suitable workspace, time, and coming up with ideas that will sell well on Amazon. If you are creative and have enough time, with the right guidance, the Handmade business model can be a moneymaker for you on Amazon. However, if you don’t know your path, you may end up not making money for a long time.
To choose the best Amazon business model for you, you must consider your budget, risk appetite, and how much time and flexibility you have.
Now that you know the different business models on Amazon, let’s discuss how you can get started and make money with your seller account.
How to start a business on Amazon
Starting an Amazon business can be a challenging experience because there are so many resources available and a lot to figure out to make sure you’re investing wisely. However, the platform has put together a framework that can help you achieve success. At the end of the day, Amazon only succeeds as a business when you succeed on its platform. To further break this structure down into bite-sized chunks, here are some important steps you should take to help you start a highly profitable Amazon business.
1. Product search
Let’s say you’ve already decided which business model is best for you. As we said earlier, Amazon is home to a variety of products across several categories. If you want to make good money, you will need to do your research and decide what you want to sell. There are many methods for this , including manual searches, analytical tools or other special services. The latter is the most effective approach if you don’t have enough knowledge and time to devote to it.
2. Open a merchant account
After deciding where you want to pitch your tent, you can create your Amazon seller account. There are two types of seller accounts on Amazon: individual seller accounts and professional seller accounts.
The Individual Seller Account is open to sellers who plan to sell fewer than 40 items per month. There is a $0.99 fee for each item sold, among other transaction fees. With the Professional Seller Plan, you can sell more than 40 items/month. This plan includes a monthly flat rate of $39.99, regardless of the number of items you sell.
3. Product source
This step will vary depending on which business model you choose. If you want to do arbitrage, you can visit physical or online stores that carry your desired product, compare prices and decide which is best for you. For other models, you should visit B2B marketplaces such as eWorldTrade to get an overview of potential manufacturers, suppliers and wholesalers who can provide you with high-quality products.
4. Choosing between FBA and FBM
When it comes to fulfilling your customers’ orders on Amazon, you have two options: FBA and FBM. Fulfilled by Amazon (FBA) is the preferred method for new sellers on Amazon. With this method, Amazon provides a warehouse where your products are stored. They also pick, pack and ship orders for you. Additionally, Amazon handles all returns and processes returns for you. FBA is preferred because it is the only fulfillment method for Amazon Prime members.
Fulfilled by Merchant (FBM) gives you more control over your inventory, labeling, and logistics with individual customers. It costs more, but also allows you more flexibility and control. You should consider FBM if you have enough time to handle all the processes of running your Amazon business.
5. Listing and promotion
Once your seller account is ready and you have received your product, the real show begins. Listing your product is the only way to showcase it to the millions of customers who shop on Amazon every day. Write a detailed product description to reach your target audience, showing them what you have to offer and why they should buy from you. To place advertisements for products, you must complete the following steps.
- Log in to your Amazon seller account.
- Add a new product (if you want to sell something that isn’t on Amazon yet) or select an existing product.
- Select a product category (or subcategory, if applicable).
- Fill out the product detail page with sufficient information.
The last step is to optimize your ad. Use relevant keywords and attractive product images to grab the attention of potential buyers. You can promote your listing through Amazon ads or through social media and Google ads.
Conclusion
The beauty of selling on Amazon is that it is largely free. However, you will incur some costs such as plan sales fees, referral fees, shipping costs, and fulfillment costs, among others. When you consider the pros and cons, Amazon is a great place to start your online business. With the right tools and strategy, you can make your Amazon business successful.