Competition in eCommerce is tough, especially with Amazon. To sell on Amazon and make money online, you’ve to have something to sell.
Choosing good products is an important first step to becoming a successful Amazon seller. If you buy products with low demand or low-profit margins, you risk being stuck with expensive inventory that you can’t sell or being forced to sell at a very low profit, if not a loss. Products with high demand and large profit margins, on the other hand, make your job much easier and more rewarding.
Finding products to sell involves two steps: deciding what you want to sell, and finding suppliers who have the product and will sell it to you at the price you need to make a profitable sale.
In this guide, I’ll show you how to start an Amazon business the right way. We have worked with Amazon experts to give you real advice, not the generic advice you find in most guides.
This includes successful Amazon sellers, digital marketing experts who help Amazon entrepreneurs grow their businesses, and others.
As the statistics show, Amazon is the largest online retailer. When you sell your products there, you make your brand accessible to new customers.
Are you ready to sell on Amazon? Learn how to set yourself up for success with this beginner’s guide.
Table of Contents
- 1. Understand How Selling On Amazon Works
- 2. Choose A Type of Amazon Business
- 3. Calculate The Costs of Selling on Amazon
- 4. Comply With The Amazon Selling Policy
- 5. Decide What To Sell and Not Sell
- 6. Product Sourcing
- 7. List Products for Sale on Amazon
- 8. Ship Products to Customers
- 9. Increase Sales with Advertising and Marketing
- 10. Provide Excellent Customer Service
1. Understand How Selling On Amazon Works
One of the main reasons for selling on Amazon is the simplicity of the sale. Here we divide the process into two phases: before you start selling and before you sell products. We also explain the basics of how Fulfillment by Amazon (FBA) works.
1. Before you start selling
Preparing to start selling on Amazon is a simple three-step process:
- Determine what you want to sell. Amazon offers 20 product categories for all sellers and 10 or more additional categories for professional sellers only.
- Create a sales plan. If you intend to sell less than 40 items per month, choose the single plan that costs $0.99 per item. If you intend to sell 40 or more items, choose the Professional plan, which has a monthly fee of $39.99 and no per-item fee.
- Register to become an Amazon Seller. Go to SellerCentral.Amazon.com to register and follow the on-screen prompts.
2. Selling products
After registering, you can begin listing products for sale. The process basically consists of the following four steps:
1). List the product(s) you want to sell. You have two options:
- List products that are already available on Amazon. Select products already listed on Amazon and specify the quantity available, condition (new or used), and shipping options.
- List products that are not available on Amazon. If the product you want to sell is not yet available on Amazon, you must include the item’s universal product code (UPC) and stock keeping unit (SKU), as well as a product title, description, and product photos.
2). Sell the item. Selling means waiting for someone to buy the item you are offering. Amazon notifies you of a sale when someone clicks on your listing and buys the product. During this time, you can try to increase sales by using Amazon pay-per-click (PPC) advertising and other marketing and promotional efforts. Learn more about how to increase sales on Amazon.
3). Ship the product to the customer. Upon receiving notification of the sale, you ship the product to the customer or, if you use Fulfillment by Amazon (FBA), Amazon ships it from its warehouse for you.
4). Get paid. Amazon deposits payments (less Amazon seller fees) into your account and notifies you when payments are made when you sell products.
3. Using Fulfillment by Amazon (FBA)
You ship your goods to various Amazon fulfillment centers across the country and, if desired, worldwide with FBA. When someone orders a product from your listing, Amazon selects it, packs it, and ships it on your behalf. FBA offers several benefits, including the following:
- You save time and money because you do not have to pick, pack and ship the product yourself. However, you will have to pay for inventory storage and an FBA fee based on the size and weight of the product.
- Shipping costs can be reduced because you benefit from the rates Amazon negotiates with carriers.
- Your products qualify for free shipping within two days and, in some cases, one-day shipping (for Amazon Prime members), as well as free shipping on eligible orders (for all Amazon customers).
- You have a greater chance of winning the Buy Box (the box on the right side of the product detail page that allows the buyer to add the product to their cart).
- Amazon handles returns and refunds on your behalf.
2. Choose A Type of Amazon Business
“Selling on Amazon” can have different meanings depending on how you do business on or with Amazon. You can sell on Amazon as a retailer, as a seller, professionally, as an individual, etc. Below is a brief description of different business types and how they work on Amazon.
Vendor (1P) versus Seller (3P)
Amazon sellers and vendors are primarily differentiated by their relationship with Amazon and the way they sell in the following ways:
- Sellers have a first-party (1P) relationship with Amazon by selling their products to Amazon, which then resells them to customers. Seller status is granted by invitation only.
- Sellers have a third party (3P) relationship with Amazon through which they sell their products to customers and receive payment. Sellers are responsible for listing, pricing, and marketing their products, and anyone can become a seller by registering as an Amazon seller.
Being an Amazon Vendor, has its pros and cons.
Here are the pros:
- Products that carry the “Sold By Amazon” label inspire strong customer confidence, thereby increasing sales.
- Amazon Marketing Services offers a range of marketing tools for sellers (AMS).
- Seller fees, such as referral fees, fulfillment fees, and other fees, are not typically paid by Amazon sellers.
Here are the cons:
- Amazon sets prices, and sometimes those prices are so low that the vendor loses money or does not make the desired profit margin.
- Launching new products may be difficult because Amazon is frequently hesitant to issue purchase orders for products with no sales history.
Meanwhile, being an Amazon Seller also has its pros and cons.
Here are the pros:
- Greater control over listing, prices, and delivery options.
- More analytics and customer performance metrics for business improvement
- Direct contact with buyers to get feedback and information about buyer preferences
And the cons:
- Seller fees, including commissions and referral fees
- Not having the “Sold by Amazon” label to instill consumer trust that leads to increased conversions, which is especially valuable when competing head-to-head with vendor products
Individual versus Professional
When you register to become an Amazon Seller, you must choose from the following two plans:
- Individual: You only pay $0.99 per item sold, there is no monthly fee, and you only pay when an item is sold. Amazon offers a number of basic tools for listing and managing orders. As an Amazon retail seller, you can create one listing at a time, either matching your products to existing listings or creating new listings. Amazon sets shipping rates for orders and determines what shipping service levels sellers can offer buyers.
- Professional: Whether you sell nothing or a million items, you pay $39.99 per month. You pay no fee per item sold. Amazon offers professional sellers access to additional features and tools, as well as the removal of some selling restrictions.
These aren’t the only costs incurred when selling on Amazon. Referral and shipping fees also apply.
Those who sell more than 40 items per month benefit from the Professional rate. However, the cost difference between the two rates is only one.
Arbitrage versus private label
As an Amazon Seller, you are in charge of acquiring products to sell. Arbitrage and private label are two common product sourcing methods.
Retail arbitrage (or simply arbitrage) is a simple, low-cost method of sourcing products that involves purchasing discounted items from other retailers, marking them up, and reselling them. Many Amazon sellers get their start through arbitrage.
Experimenting with arbitrage on Amazon allows you to gain knowledge and experience selling on Amazon without putting large sums of money at risk.
However, there are some disadvantages to arbitrage, including the following:
- Arbitrage requires a significant amount of time and energy in terms of finding deals and listing and marketing new products that are not already listed on Amazon.
- You run the risk of purchasing subpar, counterfeit products from well-known brands and getting into trouble with Amazon for selling them as genuine articles.
- If the brand owner files a complaint, Amazon will require you to remove the product from your listings, leaving you with unsold inventory.
A private label product is one that is manufactured by a third party and sold under the brand name of a retailer. Amazon Essentials, Target Mainstays, and Walmart’s Great Value brands are a few examples. You have two options for creating private label products:
- Create a new product, patent it, produce it (or have it produced), label it, and sell it as the manufacturer.
- Contact the manufacturer of a product you want to sell, have the product labeled with your brand, and begin selling it as your own branded product.
Selling private label products has a number of benefits, including the following:
- Competition is reduced. You’re not selling the same branded items as everyone else on Amazon.
- Increased pricing power.
- Increased likelihood of winning the buy box.
- Increased ability to expand sales beyond the Amazon marketplace in the future.
There are some disadvantages to creating and selling under your own brand, including the following:
- Aside from manufacturing and inventory costs, creating a private label can be costly in terms of branding, labeling, and marketing new products.
- If you are launching a new product that has not yet proven itself, your risk increases.
- Negative feedback and reviews can take a toll on your entire brand and reduce sales of all your private label products.
Many sellers balk at the cost of creating a private label brand and building and maintaining awareness. However, if you can overcome the initial challenges, developing and selling your own private label products can be very rewarding, and if you can build a very good supplier base and maintain quality control, you can build a very successful and profitable brand.
4. Sellers with and without brand registry
Although Amazon provides several tools to help sellers increase sales, such as Fulfillment by Amazon (FBA) and sponsored ads, most sellers’ marketing copy is still quite limited.
Amazon Brand Registry enables brand owners to overcome many of these limitations to provide more robust, visual, and interactive product descriptions that differentiate brand owners’ offerings from those of other sellers.
3. Calculate The Costs of Selling on Amazon
Selling on Amazon is not cheap. In addition to the cost of the products you want to sell, there are numerous costs, such as per-item closing fees (or monthly subscription fees), referral fees, storage and shipping fees, and administrative fees for refunds. To make a reasonable profit on sales, you must take all fees into account when pricing your products. This section provides a detailed breakdown of costs.
Amazon fees can and do change at any time. See the Amazon fee table for the country in which you sell for the most up-to-date fee information.
When purchasing products from a supplier, pay attention to both the cost of the product and any additional charges, such as packaging, labeling, freight, and duties (taxes imposed by a government agency, such as import duties).
Suppose you order 500 cell phone cases, each of which costs $3.00. Additional costs include an import duty of 4% ($3.00 x 0.04 = $0.12), a freight charge of $100 ($100/500 pieces = $0.20/piece), packaging costs of $0.50 per piece, and labeling costs of $0.10 per piece. Thus, the total cost per unit is $3.00.
Shipping and storage
Shipping and return costs depend greatly on the size and weight of the product and the carrier or service used. If you use Fulfillment by Amazon (FBA), you will be charged for both shipping and storage. At the time of writing, shipping costs ranged from $2.41 (for an item weighing up to 10 ounces) to more than $137 (for special oversized items).
FBA storage costs are calculated by cubic foot and were $0.69 per cubic foot (January – September) and $2.40 per cubic foot (October – December) at the time this article was written. The cost to store oversize items is $0.48 per cubic foot (January – September) and $1.20 per cubic foot (October – December).
When using FBA, you must take into account Amazon’s shipping and storage fees, as well as the cost of shipping products from your supplier (or yourself) to Amazon’s fulfillment centers.
For example, suppose the cost to ship 500 units from your supplier to FBA warehouses is $50 — that’s $0.10 per item. The 500 units consume 10 cubic feet, so that’s $24.00 for storage (October – December) or $24.00 ÷ 500 = $0.048/unit, which you can round up to $0.05/unit. Finally, you’re charged $2.41 to ship the product from the FBA warehouse to your customer.
Amazon Seller fees
Amazon Seller fees include the following:
- Per-item or subscription fee: $0.99 per item or $39.99 per month
- Referral fees: A percentage of the price the customer paid, which varies depending on the product category but is generally 15 percent or less
- Closing fee: Applicable to items in certain product categories, such as books and DVDs
Returns can be costly, especially if you sell items that are frequently returned or exchanged, such as clothing. Depending on your shipping and return policies, you may have to pay for both shipping and return shipping of the product, as well as an Amazon return processing fee (20% of the original order cost up to $5.00) and possibly the cost of the product if it is defective or damaged.
Factor in a ballpark estimate of 5 percent of returned items. If you’re planning to sell 500 units, plan to have 25 returned to you. In our example, if you pay the return shipping fee of $2.41, and 20 percent of the original order fees or 0.20 × ($0.99 + $2.25) = $0.65, you’re looking at $2.41 + $0.65 = $3.06 loss per item or a total loss of 25 × $3.06 = $76.50. Divide $76.50 by 500, and you get a loss per item of about 15 cents. You may want to add this to the total cost per unit of $9.72 in the previous section prior to setting your sale price.
When pricing your products, also consider additional costs, such as your operating expenses (e.g., legal fees, accounting fees, and bank fees) and what you plan to spend on marketing and advertising. To make sure your Amazon sales project is profitable, keep track of all your costs. Otherwise, you may only break even or even lose money.
As a retailer, you must also collect sales tax on all sales and remit it to the states where your items are purchased. Sales tax is not paid by you, but by the buyer.
Learn more about the costs of selling on Amazon.
4. Comply With The Amazon Selling Policy
Amazon’s success depends on customer satisfaction and maintaining a positive retail reputation. Other sellers are allowed access to the marketplace on the condition that they behave appropriately and share the company’s commitment to excellent customer service. In this section, we will go over the rules that apply to your participation in the Amazon Marketplace.
Amazon’s code of conduct and seller policies are subject to change. Click the search icon (top right of Seller Central), type amazon code of conduct, press Enter, and then click the Selling Policies and Seller Code of Conduct link for the latest information.
Seller code of conduct
Amazon’s seller code of conduct stipulates that sellers act fairly and honestly on Amazon to ensure a safe buying and selling experience. All sellers must comply with the following do’s and don’ts:
- Do provide accurate information to Amazon and your customers at all times.
- Do act fairly and don’t misuse Amazon’s features or services.
- Don’t attempt to damage or abuse another Seller, their listings, or ratings.
- Don’t attempt to influence customers’ ratings, feedback, and reviews.
- Don’t send unsolicited or inappropriate communications.
- Don’t contact customers except through Buyer-Seller Messaging.
- Don’t attempt to circumvent the Amazon sales process.
- Don’t operate more than one Selling on Amazon account without permission by Amazon.
Violations of Amazon’s code of conduct or other seller policies may result in penalties such as the removal of product listings, suspension or forfeiture of payments, or revocation of selling privileges.
The sections that follow elaborate on specific provisions in the code of conduct.
As a seller, you must provide accurate, up-to-date information about your company and the products you sell. For example, you must categorize your products and post accurate photos and specifications.
Acting fairly means no cheating, such as:
- Recruiting your friends to post positive reviews on your listings or negative reviews on your competitors’ listings.
- Hacking or hiring someone else to hack into Amazon to remove negative reviews.
- Hijacking a listing from the original owner to use as your own.
- Filing a brand or intellectual property infringement notice against a competitor to have competing listings removed.
Ratings, feedback, and reviews
Any attempt to influence or inflate customer ratings, feedback, or reviews is prohibited by Amazon. You may contact customers to request feedback and reviews, but you may not request or coach a positive review. Other prohibited actions in this area include the following:
- Paying for or offering an incentive (such as a coupon or free product) in exchange for removing a negative review or posting a positive review
- Requesting only positive reviews or asking a customer to remove or change a negative review
- Reviewing your own or a competitor’s products
Amazon requires that all communications to customers must be sent through Buyer-Seller Messaging and be necessary for fulfilling orders or serving customers. Don’t contact customers with marketing or advertising content or send any unsolicited or inappropriate messages.
Customer information such as names, addresses, and phone numbers is to be used only to fulfill orders and provide customer service. After processing a customer’s order, delete the customer’s information. Don’t sell or share customer information with any third party.
Circumventing the sales process
Amazon understandably wants all sales to go through its marketplace to collect fees and retain customers. Any attempt to redirect a sale to another site to avoid fees or steal customers from Amazon is a violation of Amazon policies. Don’t include links or messages that direct customers to another website, order a product from another store, or complete a transaction elsewhere.
Multiple Amazon Seller accounts
Unless you have a legitimate business reason to open a second account, and all of your accounts are in order, Amazon will only allow you one seller account for each region in which you sell. If any of your accounts are not in order, Amazon may disable all of your seller accounts until they are in order. Below are some examples of legitimate business requirements that would allow you to open multiple seller accounts in a given region:
- You own multiple brands, each of which is associated with a different business.
- You manufacture products for two separate and distinct companies.
- Amazon recruits you to participate in a program that requires separate accounts.
Use a different bank account and email address for each seller account in a given region. If you sell in multiple regions (for example, North America and Europe), you can use the same bank account for both seller accounts as long as they’re linked through Amazon Global Selling.
5. Decide What To Sell and Not Sell
We can’t tell you what you should and shouldn’t sell on Amazon. That would be like trying to hit a moving target. We can give you the direction you need to find potentially profitable products. First, you need to understand which products you can and cannot sell on the Amazon marketplace. Next, you need to understand how to predict product demand and profit margins.
Amazon product limitations
Assuming you shop on Amazon (a silly assumption we made), you know that Amazon divides products such as books, clothing, electronics, movies and TV, office supplies and pet supplies into categories and subcategories. As a seller, you should be aware that some of these categories are open while others are closed or restricted:
Open categories: Clothing, shoes and jewelry, electronics, home and kitchen, patio, lawn and garden, sports and outdoor, and toys and games are some of the product categories on Amazon where you can list items for sale without prior approval. Even in some open categories, however, you may encounter restrictions like the following:
- Restricted (gated) subcategories: You need to obtain permission from Amazon before you can list products in certain subcategories.
- Restricted brands: You may be prohibited by the brand owner from listing its products.
- Restricted products: Certain products may be prohibited, usually due to health or safety concerns.
Categories requiring approval: Amazon allows only reputable sellers to list products in certain categories, such as automotive, collectible coins, fine art, music, movies, and watches, to ensure product quality, safety, and authenticity for its customers.
Restricted products: Amazon does not allow the listing of certain products that are considered unsafe, unhealthy, illegal or unacceptable for any reason, including those available only by prescription. Do not include restricted products or products that you believe may be harmful or illegal. You must responsibly decide which products to discontinue, and the penalties for violating Amazon’s policies are severe; violations can result in account suspension, termination of selling privileges, destruction of inventory (at Amazon distribution centres), and permanent withholding of payments.
Amazon provides some guidelines on what products you are allowed to sell. For example, when you try to list a product, you will be prompted to select a category; restricted categories are indicated by a lock icon.
Learn more about what to sell on Amazon.
Product research is an important step in ensuring the viability and profitability of a product. In general, you want products that meet the following requirements:
- High demand: To find the best sellers in each product category on Amazon, go to Amazon.com and click on Best Sellers in the toolbar at the top of the page. Using the navigation bar on the left, select the product category that interests you.
- Weak competition: Check the reviews for a product you want to sell. If you find a high number of low product ratings and negative reviews, you may be able to outperform the competition by creating a more accurate product offering, providing better customer service, or selling a similar but better product.
- Decent profit margin: Look for products that sell for more than $25 that you can purchase for 60-70% less than the retail price, so that you make a decent profit margin after deducting your costs.
- Light and easy to pack and ship: Shipping and handling costs, as well as product complexity, can cut into your profit margin. Therefore, avoid products that weigh more than two pounds, are fragile or bulky. This will also save you money if you need storage.
- Not seasonal: Look for products that have consistent sales throughout the year. Seasonal products, such as those that sell well only in the spring or summer or near certain holidays, are acceptable, but should not make up the bulk of your sales.
6. Product Sourcing
Product sourcing is the process of finding items for a low enough price that you can sell for an acceptable profit. Numerous product sourcing options are available, including the following:
Retail arbitrage: They buy deeply discounted products from major retailers, mark them up, and sell them on Amazon. Retail arbitrage also extends to buying from online retailers like eBay sellers. Keep in mind that Amazon restricts some product categories and certain items, including many brand-name items. For example, you are not allowed to buy a range of branded shoes at a discount from a major retailer and sell them as “new” on Amazon.
Auctions and liquidation sales: At local and online auctions (as well as estate auctions), you can bid on items and often purchase them at a much lower price than they would sell for at traditional retail, although you may have to list those items as “used.”
Drop-shipping: Dropshipping entails selecting items from a dropshipper’s catalog and listing them on Amazon. When a customer orders the item, you forward the order to the drop-shipper, who picks, packs, and ships the item to the customer according to your specifications, making it appear to be from you.
Wholesalers: Traditionally, a large quantity of products is purchased from a manufacturer and then sold individually to consumers at a significant markup. There are numerous domestic and international suppliers who offer wholesale products. Platforms for product sourcing, such as Alibaba.com, make it simple to connect with tens of thousands of manufacturers and other wholesalers. Suppliers can also be found at well-known trade shows.
Handmade products: You can create your own Amazon products and sell them in the Handmade category. However, you must register as an artisan with Amazon, and your products must be handcrafted rather than mass-produced. (Hand tools and light machinery can be used.)
See our guide for additional information and guidance about these product sourcing options. Also, you can learn more about how to evaluate and negotiate with suppliers.
7. List Products for Sale on Amazon
When you have products to sell on Amazon, you can list them for sale. Amazon features several methods for listing products:
- List a product already for sale on Amazon. This is the easiest method to list one product at a time. Simply search for the product by name, Universal Product Code (UPC), Amazon Standard Identification Number (ASIN), or other unique identifiers, select the product, enter the required information, including the price you’re asking, and click the Sell This Product button.
- Add a product not listed on Amazon. This method requires you to select the most appropriate product category for the product and create a product listing that includes a product title and description, keywords (so buyers can find the product), and product photos.
- Upload a file to list multiple products at once. If you have a professional seller account, you can download and fill out a spreadsheet template that contains all the information needed to list dozens or even hundreds of products at once. The file is then uploaded to Amazon.
Whichever method you choose, the first steps are always the same:
- Log in to your Amazon Seller account at sellercentral.amazon.com. Open the Catalog menu and select Add Products.
- Amazon presents a screen that enables you to search for products in Amazon’s catalog, add a product not sold on Amazon, or upload a file to add multiple products.
- Follow the on-screen directives to complete the process. The steps vary depending on the method you chose to list products in Step 2.
See our guide for detailed guidance on how to list products for sale on Amazon.
8. Ship Products to Customers
You must fulfill orders for your products as soon as they arrive. Picking, packing, and shipping are part of order fulfillment. You select all the items the customer ordered from you, pack them in a box or envelope, label the package, and deliver it to or have it picked up by a carrier such as the United States Postal Service, UPS, or FedEx.
If that’s too much work for you, you can also deliver your products to an Amazon fulfillment center (or have your supplier deliver them), where Amazon will pick them up, pack them, and ship them for you.
In this section, we explain Amazon Prime, from a seller’s perspective, and introduce your order fulfillment options.
If you shop frequently on Amazon, you are probably familiar with Amazon Prime. For about $120 a year, Amazon Prime members (shoppers) get a bundle of benefits, including free shipping within two days, free same-day delivery in select zip codes, free Prime Video, exclusive savings at select stores and on select products, and more.
Even if you are not a paying member of Amazon Prime, you can still benefit as an Amazon seller. Any items you list that qualify for two-day Prime shipping can be shipped in the following ways:
- Your product listing will be awarded the Prime badge, giving customers a greater incentive to buy from you than from a competing seller whose product isn’t Prime-enabled.
- Amazon rewards your product by increasing its ranking in search results and increasing your chances of winning the Buy Box – the box on the right side of a product page where customers can add the product to their cart. Since the Buy Box is responsible for more than 80% of all Amazon sales, winning the Buy Box is a big deal.
Your products are not eligible for Prime two-day shipping by default. To make your products Prime-eligible, you must do one of the following:
- Have your products enrolled in Fulfillment by Amazon (FBA) and maintain a sufficient number of items in inventory to meet shopper demand.
- Qualify for Seller Fulfilled Prime.
You can choose to ship some orders yourself while others are shipped through FBA. Those shipped through FBA are eligible for Prime, while those shipped by you are not unless you qualify for Seller Fulfilled Prime.
Fulfillment by Amazon (FBA) and Small and Light (SNL)
Fulfillment by Amazon and Small and Light are two order fulfillment options that allow third-party sellers like you to benefit from the efficiency of Amazon’s fulfillment centers.
With both programs, you (or your supplier) ship products to Amazon’s fulfillment centers, which are then scanned into Amazon’s inventory system and shipped to customers. When a customer places an order that includes one or more of your products, Amazon selects the product from the fulfillment center closest to the customer, packages it (alone or in combination with other products), and ships it to the customer.
FBA offers the following advantages:
- Products signed up for FBA will immediately receive Amazon Prime status, provided there are enough items in stock to meet customer demand.
- FBA products have a better chance of winning the Buy Box.
- Amazon takes care of picking, packing, and shipping, saving you time and effort.
- Most customer service issues are handled by Amazon, including product support, returns, and refunds.
- When factors like Amazon’s ability to negotiate lower shipping costs with carriers are taken into account, the total cost of FBA can be less than the cost of shipping yourself.
Amazon, of course, charges fees to sellers to cover the costs of storage, handling, and customer service. Fees vary by product weight and size, with different rates for clothing. However, FBA can be less expensive than packing and shipping the products themselves.
You benefit to some degree from Amazon’s ability to negotiate lower shipping rates with carriers when you use FBA, and you do not have to buy packing materials. Plus, FBA saves you valuable time that you can spend on product research, creating excellent product listings, and other tasks that will help you increase sales and grow your business.
The Small and Light program is designed to lower your packaging and shipping costs for products that cost no more than $7, weigh no more than 10 ounces, and are no more than 16x 9x 4 inches. Certain products, such as restricted products, adult products, and hazardous materials products, are not eligible. The Small and Light program offers vendors the following benefits:
- Free three- to five-day shipping to Prime customers
- Lower fulfillment costs
- Instant customer trust through Amazon’s A-to-Z Guarantee program
Learn more about how Amazon FBA works.
Fulfillment by Merchant (FBM)
Unlike FBA, Fulfillment by Merchant (FBM) requires you to do all of the heavy lifting yourself, including storing, picking, packing, and shipping products. FBM has a few advantages over FBA, which are as follows:
- Ability to pack items yourself, which may be best for large, bulky products or fragile items
- Greater control over inventory
- Potentially lower costs
- Ability to deliver more personalized customer service
The main disadvantages of FBM over FBA are that you give up the many benefits of FBA described in the previous section.
Packaging and shipping a small number of products yourself is perhaps the best way to get started with Amazon. This way, you can learn the basics of selling on Amazon without the added complexity of FBA and without the risk of buying large quantities of products. You can transition to FBA as your business grows and you feel more comfortable and confident selling on Amazon.
Seller Fulfilled Prime
Seller Fulfilled Prime (SFP) combines the benefits of FBA and FBM. With SFP, you ship products directly from your own warehouses to domestic Prime customers. (Amazon provides you with the appropriate transportation solutions to deliver products within the two-day Prime delivery window). You ensure your listings can display the Prime icon and have a better chance of winning the Buy Box by committing to fulfill orders within two days at no additional cost to Prime customers.
As an Amazon seller, you are not automatically eligible for SFP. To prove you can deliver to Prime customers within the two-day delivery window, you must first register for the program and then successfully complete a trial period. If you are accepted into the program, you must purchase shipping labels from an approved carrier and pick, pack, and ship orders the same day they are received.
As mentioned earlier, dropshipping is a product sourcing and order fulfillment option that does most of the heavy lifting for you. You list products on Amazon and route all incoming orders to a dropshipper, who selects, packages and ships the order to your customer. You never come in contact with the product.
The benefits of dropshipping are obvious, but there are also some potential drawbacks, including the following:
- You pay a premium for the convenience of having the drop-shipper do all the work.
- You have no control over inventory. If the drop-shipper runs out of stock, so do you.
- You can’t promise two-day shipping, so your products won’t be eligible for Prime.
- Handling refunds and returns becomes more complicated with a third party involved.
- Customer satisfaction relies heavily on the performance of your drop-shipper, which you can’t control.
Amazon’s Multi-Channel Fulfillment (MCF) service allows you to use Amazon’s global fulfillment network to deliver products to customers wherever they buy them online. For example, you can list products for sale on your own website, an e-commerce platform like Spotify, and Amazon, and whenever (and from wherever) a customer places an order, Amazon selects, packs, and ships the product for you, and also handles customer support, refunds, and returns.
MCF is very similar to FBA (but you don’t have to be signed up with FBA to use MCF ). You ship your products to Amazon’s fulfillment centers (or have them shipped), and Amazon picks them up, packs them, and ships them for you. With MCF, you can offer the same fast delivery to all your customers, regardless of where they store, and you manage all your inventory through Amazon. MCF allows you to grow your business without increasing your fixed costs.
Click on the search bar at the top of Amazon Seller Central, type in “multichannel,” hit enter, and then click the link to learn more about processing orders through other sales channels.
9. Increase Sales with Advertising and Marketing
Amazon is a highly competitive marketplace, with Amazon, brands, and retailers competing for customer attention and sales. Whether you’re new to the marketplace or a seasoned seller looking to increase sales and margins, Amazon offers several tools to raise your profile, get your products in front of customers, and convert clicks into sales, including the following:
- Sponsored Products: Sponsored products are paid ads for individual product offerings. When customers search for keywords or products related to the ad, ads for your sponsored products appear on search results pages and product detail pages. To keep costs under control, set a budget and decide how much money you want to bid per click. You only pay when a customer clicks on your sponsored ad.
- Sponsored Brands: Sponsored brands are paid ads available only to Amazon Brand Registry sellers. Sponsored brands appear like sponsored products on customers’ search results pages and product detail pages when they search for keywords or products related to the ad. These ads include a customized headline, brand logo, and a selection of products from the brand.
- Sponsored Displays: These advertisements appear both on and off Amazon. You choose your audience, daily budget, and bid amount, as well as the products to include in your ad, and then create your ad campaign. These ads include a product image, pricing, badging, star rating, and a Shop Now button that takes you to your product’s Amazon detail page.
- Amazon Store: You can expand your profile and boost customer loyalty by creating your own multi-page store on Amazon for free. If you establish yourself as a trusted seller on Amazon, customers will be more willing to visit your store and buy from you when they need the products you sell.
- Early Reviewer Program: Product reviews can help you perform better in product searches and increase your chances of winning the Buy Box. With this program, you can give customers who buy your products a $3 gift card when they leave a review. You only pay when a customer leaves a review. Customers can receive their reward from Amazon for up to one year, or until your product has received five reviews.
- Prime Exclusive Discounts: You can offer discount pricing on specific products to Amazon Prime members. Your discount will appear in the member’s search results and on the product detail page with the original price struck out along with the discount price.
Your marketing and advertising campaigns need not be limited to Amazon. Consider ways you can promote sales off Amazon, such as the following:
- Social media marketing via your accounts on Facebook, Instagram, YouTube, Pinterest, and so on
- Blogging about a topic you know a great deal about that’s related to the products you sell
- Creating a website landing page for a product or collection of products and using it to drive traffic to your Amazon store where people can purchase related products
- Launching an email marketing campaign to advertise directly to people on your mailing list
Learn more about how to advertise on Amazon.
10. Provide Excellent Customer Service
To succeed on Amazon in the long run, you should prioritize customer satisfaction over sales and profits. We’re not suggesting that you sacrifice your own financial success to satisfy Amazon customers. We’re suggesting that you provide enough value to create a shopping experience that makes people happy to pay the price you charge. Good customer service will increase sales, allow you to achieve higher profit margins, and keep you in good company on Amazon.
To provide good customer service, you need to focus on several areas, including product quality, product listings, order fulfillment, communication, and returns and refunds. Here are some pointers for excellent customer service:
- Customers should be offered more than they expect in terms of product quality and customer service. If you’re selling an inferior product to customers who’re not willing or able to pay for the high-end version, you shouldn’t present it as such.
- Create product offerings with the goal of helping the customer make an informed buying decision, not selling the customer a product.
- Respond to all customer questions, concerns, and complaints within 24 hours if possible.
- Always be courteous and respectful when communicating with customers, regardless of what they say or how they behave.
- Make every effort to resolve issues directly with the customer to avoid the customer having to go through Amazon or their credit card company to resolve the issue. It’s not in your best interest for the customer to file an A-to-Z warranty claim against you or contact their credit card company to request a chargeback.
- Track all positive and negative feedback from customers about products and sellers. Customers should thank you for positive product ratings and reviews, as well as positive seller feedback. If you receive negative feedback or reviews, contact the customer to find out what you can do to turn a bad shopping experience into a good one.