How to Start a Business on Amazon

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Amazon needs no introduction.

Over the years, the online retailer has pioneered various income-generating programs for budding entrepreneurs.

First were the Amazon Affiliate and Influencer programs that allowed affiliates to earn from sending customers to Amazon.

Soon after, Amazon was the first big book retailer that allowed independent authors to sell their books through Kindle Direct Publishing.

Fulfillment by Amazon (FBA) is the retailer’s most recent program that allows sellers to sell products under the Amazon banner.

FBA lets you leverage Amazon’s huge customer base and powerful distribution network to make your business dreams come true.

There are millions of sellers around the world earning a living through this business model.

The Stats

Over 50 percent of 2019’s Amazon’s $280 billion revenue was fueled by its third-party sellers (outside business like you and me).

New sellers on Amazon (large companies, small and mid-sized businesses, individuals) are earning between $26,000-$810,000 annually in profits.

With 300 million customers shopping their stores across more than 180 countries, it’s safe to say that Amazon has an big army of loyal customers. These customers are waiting to discover your products.

You don’t need any inventory or a ton of money to start a business on Amazon; just a little bit of time, determination and grit.

If you want to know how to sell on Amazon and make big profits, keep reading.

What’s Fulfillment by Amazon?

If you have some knowledge of e-commerce, you probably know of dropshipping.

If you don’t, dropshipping is a popular business model that lets you pick products to sell, find a reliable supplier, and sell those items at a markup. This makes it easy and less costly to sell products online.

With FBA, Amazon will:

  • Stock your products (receive and handle inventory).
  • Fulfill your orders.
  • Handle customer service.
  • Process returns on your behalf.

This means that you don’t have to worry about warehousing your products, packing or shipping them. With this taken care of, you can focus on expanding and growing your business.

To make this possible, Amazon owns a large chain of 175 fulfillment centers. The FBA service passes certain Amazon benefits like Prime perks and free shipping to your products.

FBA is affordable. If you sell less than 40 items per month, go for the individual plan. You’ll just have to pay 99 cents per sale. This fee includes storage and handling fees!

Professional sellers (those selling 40+ items per month) pay a monthly subscription fee ($39.99) on top of the completion and referral fees under the professional plan.

Decide which plan best fits your business before you begin registration.

According to this Wyatt Investment Research article, Amazon FBA has helped to create over 40k millionaires.

How to Start a Business on Amazon

Before you get all excited about your new money-making venture, there are a few vital details you need to know regarding the startup costs, the product you’re planning to sell, where you’ll source your product, and how you’re going to market it.

Here are 7 steps on how to sell on Amazon:

  1. Startup Costs

While you don’t need a lot of capital to start, you’ll need to make a few investments.

Before selling, you may want to get a computer, an open space for shipping preparation, polybags, boxes, packaging tape, a regular and label printer.

Other common costs include product photography equipment and state/local business license and registration.

The first big obstacle to starting a new business is finding customers. No one knows about your brand and you will likely need to spend a ton of money on advertising and marketing to get people to know about you.

Amazon gives you access to its massive market when you launch your business on the platform. You can tap into their existing network of active shoppers to get your business up and running. Besides traffic, Amazon offers credibility and buyer confidence.

  1. Finding Products to Sell on Amazon

This is an exciting stage, but picking your first project can be pretty time-consuming.

Not to put too much pressure on you, but your product choice can make or break your business.

If your first product is listed in a super-competitive market, has little or no demand, or is expensive to buy in bulk, you may not get the good ROI you were hoping for.

Take time to brainstorm, perform market research and explore various supplier options.

Avoid broad product categories and instead focus on niche product categories. To find a niche, use Amazon itself. Check out your competition to find a product that is selling well.

You can sell items on the following categories: kitchen, home improvement, automotive, electronics accessories, baby, luggage and travel accessories, lawn and garden, sports, toys and games, office products, etc.

Begin with what you’re passionate about. For example, if you’re into fashion and run a fashion blog, this can help you figure out your niche. If you’re a sneakerhead and your followers know that, they will trust you when you market your awesome new line of kicks.

Focus or products that are small, light and easy to ship when starting out or when you have limited capital. Search your house for new products you haven’t used. The items can be anything from household items to cosmetics, toys, clothes, and more.

If you don’t have many items lying around the house, check out a discount store or the clearance section of your local store for deeply discounted items. Make your weekly trips to Walmart, Target and other outlet stores count.

Avoid prohibited items like gift cards, tobacco, prescription medicine, lottery tickets, alcoholic beverages and other illegal items (guns and ammunition, illegal drugs).

There are 5 sale models you can explore:

Dropshipping – Purchasing items directly from the manufacturer (or distributor) who handles order fulfillment and shipping.

Retail arbitrage – Arbitrage is basically buying low and selling high. Retail arbitrage involves using retailers (local stores) to buy discounted products to sell on Amazon.

Online arbitrage – Online arbitrage involves capitalizing upon a price difference between different online markets and taking advantage of that imbalance. Here, you purchase discounted products online to sell on Amazon.

Wholesale – Purchasing products directly from a manufacturer (or distributor) in large quantities to sell on Amazon as a reseller.

Private label – Creating your own brand/label by finding readily available generic products, branding them, and selling them under your brand. You probably buy private label products daily without knowing it.

Handmade – Crafting your own products, joining Amazon’s Artisan-only community and sell your handcrafted goods.

  1. Finding a Supplier

After you’ve settled on a product, your next step involves where you’re going to get it from.

The cost will drive how and where you source your product. Many FBA sellers rely on Alibaba and AliExpress to land relatively cheap suppliers and get a broader profit margin.

Alibaba is like the Amazon for business. Factories and distributors from all around the world display their items on this Chinese online wholesale market.

Feel free to request quotations from different suppliers.

  1. Creating an Amazon Seller Account

You’ll need to register for an account to get started on Amazon.

Amazon is becoming more and more selective about whom it approves to sell on the Marketplace. It has put in place measures to eliminate counterfeiters and unscrupulous sellers who manipulate rankings with multiple accounts.

To bolster security, you may be requested for documentation and additional verification. Have in hand a government-issued ID, bank account number and bank routing number, contact information, tax information and a credit card that can be charged associated fees.

If you want to earn serious profits, sign up as a professional seller to earn pro-level benefits such as customizable shipping rates, access to order reports and no closing fees.

  1. Add Product Listings

I’m sure your product is pretty amazing — otherwise, you wouldn’t have selected it! But your audience needs to be aware of why it’s so awesome.

You can create product listings and start selling your products once your account is set up!

You can either add items one at a time or upload in bulk if you have many products. The products must have a Global Trade Item Number (GTIN), such as EAN, ISBN, or UPC. These product IDs are used by Amazon to identify the exact item you’re selling.

Build a high-converting Amazon listing by targeting the right keywords. Don’t simply type out your product name because other businesses are doing it. Come up with a compelling headline.

Next, write a small message that addresses a problem. Let visitors know how your product solves it. You can create a list of bullet points that highlight the best features of your product.

The smallest of errors can make a significant difference. Re-read the description and double-check the details for errors.

Remember, a picture is worth a thousand words. Your product pictures are one of the biggest selling points for customers. Instead of including some stock product photos, use high quality images.

Upload up to 7 high-resolution photos set against a plain white background showing product features, angles and options.

  1. Pricing Your Products and Preparing Them for Amazon

You should consider the price of similar products, the condition of your product and your delivery costs when working out the price to sell your product.

Go through Amazon’s instructions on how to label and ship your items. Once Amazon confirms receiving your items, you’ll receive a notification that your listing/s are live.

Remember to follow all the rules. Small infractions are the number one reason new sellers are suspended.

  1. Payment

Amazon will pay you every 2 weeks after your first 30 days.

You will get an email notification that payment has been sent. The money will be deposited into your bank account.

Conclusion

If you have been wondering how to start a business on Amazon, there you have it!

With an intuitive seller interface, unparalleled logistics systems and a massive pool of loyal customers, Amazon eliminates most barriers to starting a new business.

So what are you waiting for? Go out there and start selling your products like a boss!