Amazon FBA is the best place to expand your eCommerce business and earn extra money online. However, getting started can be tricky when you don’t know how to sell on Amazon.
The truth is that selling on Amazon FBA is highly rewarding, and many Amazon sellers earn tens or hundreds of thousands of dollars annually through the program.
Besides, Amazon boasts over 300 million active accounts so you can reach millions of potential customers spread over 180 countries.
However, you must have the right eCommerce mindset to succeed on Amazon. You must also invest in the best eCommerce tools that integrate perfectly with Amazon FBA.
Today, I’ll show you how to sell on Amazon with the Fulfillment-by-Amazon (FBA) program. Later, I’ll share a few tips to increase your sales on Amazon.
With that in mind, let me take you straight into the steps to sell products on Amazon FBA.
As a new seller, you must understand how Amazon FBA works to make more money on the world’s largest and most competitive online marketplace, Amazon.
That’s where I come in to help you.
I’ve created a comprehensive step-by-step guide to help you get started!
To start selling products on Amazon, you must first create a new Amazon seller account.
There are two types of Amazon seller accounts: Professional and Individual seller accounts.
You must choose the Amazon seller account that suits your Amazon business best.
So how is a Professional Seller account different from an Individual Seller account?
An individual seller account doesn’t charge monthly subscription fees. However, you’ll pay $0.99 for every product sold on the platform.
This plan is suitable for low-volume merchants who sell not more than 40 products per month and beginners who are still deciding what to sell on the marketplace.
If you sell more than 40 products monthly, you’ll pay more fees per item than the cost you would incur with a professional seller account subscription.
An Individual Seller plan will also be ideal for your Amazon business if you don’t plan to advertise in the future or subscribe to advanced selling tools.
A Professional Seller plan charges a monthly subscription fee of $39.99. In addition, it provides access to more features that an Individual Seller account.
With the professional plan, you’ll get access to sales and data reports, PPC ads, advanced selling tools, gift wrappings, and discounts for shoppers.
This seller plan is ideal for merchants who plan to sell over 40 units per month or add advertising to their selling strategies. It’s also suitable for items in restricted categories.
Source: Business Tech Weekly
So, what do you do next after choosing your preferred Amazon seller account?
Well, you need to set up a seller central account. You can use an existing Amazon customer account or open a new seller account using a business email address.
However, you must have the following requirements.
- Tax information
- Valid phone number
- Chargeable credit card
- Business legal documents
- Business banking information
- Government-issued national ID
One of the trickiest parts of starting an Amazon FBA journey is selecting the first product to sell.
You can sell many items on Amazon, but picking the most profitable product can be challenging.
Here are the tips to help you select products to sell online on Amazon FBA.
Many shoppers are always looking to buy high-quality products, increasing their demand.
If there are not enough buyers to buy the item you sell, you’ll not be lucky even if you have the best listing for the best product.
So, how do you find a product with high demand?
- Use product research software that provide specific seller statistics, including a list of top-selling products and potential revenues. Also, check a product’s search volume.
- Take advantage of Amazon’s Product Opportunity Explorer, which is only available for Professional Seller accounts.
- Look for an item where at least three of the top ten product listings (non-sponsored listings) generate at least $5,000 in revenues monthly.
How many merchants already sell the product you plan to list on Amazon FBA?
If the competition in a particular product niche is higher, it becomes more challenging for newer merchants or products to capture the shoppers’ attention.
In that case, you’ll have to spend more money on advertising to promote your products and start generating profits.
Selling low-competition products can be highly profitable when their demand is high.
So, aim to find an item where at least three of the top ten product listings have less than 100 or 50 reviews.
Fewer competitor reviews signify that other Amazon sellers haven’t captured the market entirely, making it easier for new sellers like you to succeed.
Getting reviews and ratings is hard when your own products hit the market for the first time.
If you don’t have ratings or reviews, ensure that your item stands out from the competition.
Your product must have a unique feature that gives customers a reason to buy them.
They will leave positive reviews and ratings to prove that your product is worth the money. As a result, this will help you gain more sales.
You can check your competitors’ top reviews to gain insights into how you can make your products stand out.
Your brand name defines your Amazon business identity. It can help your customers identify with your goods, primarily if you sell high-quality products.
A brand name doesn’t have to be similar to the company’s official name. In other words, you don’t have to add official terms like “corporation,” “company,” or “LLC.”
However, the brand name must be defendable enough to avoid legal tussles with your competitors. Besides, you won’t have to change the name every time.
Here are the features of a good brand name for your business.
A brand name that describes a product’s category is less defendable.
Other businesses may want to use generic terms for their products or services without infringing on anyone’s brand rights. So, your brand name should be unique but not descriptive.
For example, if you sell laptops, you can’t use “Laptops” as your brand name since other companies that sell laptops also need to use the term to describe their products.
Pick a brand name that matches your product category to help customers understand what you are selling or what to expect from you.
If you are unsure about the kind of product you’ll sell on Amazon FBA, pick a brand name that will apply to any item.
The good news is that many tools can help you develop a brand name that aligns with your product category.
Your brand name must not sound identical to an existing brand in a similar product category. Instead, create a unique and defendable brand name to avoid brand confusion.
Also, ensure that your brand name is not yet trademarked. You can check for trademarked brand names in the government’s trademark database.
Once you’ve created a defendable brand name, you must trademark it to gain exclusive rights.
Like a creative brand story, a trademark can add credibility to your brand, raise your company’s value, and increase your earning potential.
Besides, it makes it easy to apply for Brand Registry on Amazon.
Although a trademark offers numerous potential benefits, it’s not a mandatory requirement to create a private label brand on Amazon FBA.
If you get a trademark, you’ll have the right to use your brand name in the region you promote or sell your product. All you have to do is register the trademark.
There are many ways to get your trademark registered, including:
- Filing for the trademark yourself
- Hiring a service to file for the trademark
- Hiring a lawyer to file for the trademark
Getting a lawyer to help you register the trademark might be more expensive than doing it yourself. However, it’s the most reliable option.
But regardless of the option selected, your trademark will take around 6-18 months from the application date to get approved. However, the duration varies by country.
You should also be selling your product actively before getting trademarked.
If you file for the trademark before you start selling products, the trademark registrar may put your application on hold until you start trading.
If you plan to source products from a third-party seller, you need to get a reputable supplier.
Thousands of manufacturers or suppliers worldwide can create various products you would never have imagined.
However, you must narrow the list to the suppliers who produce the highest quality products at the best price.
Thankfully, you can find suppliers on many platforms, including Alibaba.com. You can also work with sourcing agents to help you ship the products.
Alibaba.com is the most prominent online B2B (Business-to-Business) sourcing site. It is home to suppliers who can manufacture a wide range of products.
The site has a search function to help businesses find relevant products and the suppliers that manufacture them. So, look for a supplier who can make legitimate and unique products.
Here are the factors to consider when choosing a supplier on Alibaba.com.
- Product Quality: Does the supplier manufacture your product? If so, is their products high-quality? Sourcing high-quality products can get you high reviews. If you need a product with specific features, check the product detail page and the images.
- Experience: How many years has the supplier been doing the business? A supplier with a minimum experience of three years would be the best choice for your business. You can verify a supplier’s import history on Alibaba’s Supplier Database.
- SOPI Score: The Supplier Online Performance Index (SOPI) measures the performance of every supplier. The scores range from singular gray gems to excellent five orange gems. The higher the SOPI score, the more reliable and top-performing a supplier is.
- Communication: Effective communication is the key to a successful business, so find a supplier who communicates with you smoothly. They should respond to your queries on time. Thankfully, Alibaba can show you each supplier’s average response time.
- Product Prices: The price of the products matters a lot because it can influence your potential profits. Therefore, avoid suppliers who quote much lower or much higher prices than other sellers. Instead, pick suppliers who offer fair prices for your products.
Your primary objective of selling on Amazon FBA is to make profits, so you must figure out the potential profit from your products.
Contact at least three top suppliers and compare their quotes to help you calculate profits.
Here are the things to ask the supplier on Alibaba.com.
- Minimum Order Quantity (MOQ): In most cases, Alibaba suppliers require businesses to purchase tens or hundreds of individual units in one order. Ask your supplier about their minimum order quantity.
- Per Unit Price: Suppliers usually price products in tiers. The more units purchased in a single order, the less you’ll pay per individual unit. Purchase more product units in a single order to save more money.
- Lead Time: Refers to the number of days the supplier will take to build and deliver your order to your preferred destination. You can find the lead time on the product pages.
Once you get this information from potential suppliers, it’s time to calculate the profits.
Follow these steps to calculate the potential profits for goods ordered from every supplier.
- Step 1: Decide the product’s goal sell price.
- Step 2: Subtract the cost to manufacture a single product unit from the goal sell price
- Step 3: Subtract the Amazon referral fees and fixed FBA fees from the number
- Step 4: Divide the resulting number by the goal sell price
- Step 5: Multiply the figure by 100 to express your profit margin as a percentage
Always ensure that the product you decide to build will give you at least a 40 percent profit margin. That is after you’ve deducted the manufacturing, shipping, and Amazon costs.
With a profit margin of at least 40 percent, you’ll have much margin left over to advertise or market your product on the Amazon marketplace to increase your profits.
After identifying the supplier who will help you get a profit margin of at least 40 percent, order product samples and evaluate the manufacturer’s product quality.
Ordering a few samples will also help determine the value a supplier will add to your store.
But how do you pay for the goods ordered on Alibaba.com?
First, pay the supplier 30 percent of the manufacturing cost using Alibaba’s Trade Assurance.
Next, ask Alibaba to inspect the finished inventory batch through their Inspection Service.
Finally, pay the other 70 percent to get the products shipped to Amazon fulfillment centers.
Selling on Amazon FBA involves many things you must know before listing items.
Here are some things you must know when selling on Amazon FBA.
To become an Amazon FBA seller, you must understand how Amazon FBA works.
With FBA, you ship your products to Amazon, and they’ll handle the rest on your behalf.
Here is how Amazon FBA works.
- Step 1: Sign up on Amazon FBA and send your products to one of Amazon’s fulfillment centers. You can let your supplier ship your goods directly to Amazon.
- Step 2: Amazon stores the products in their warehouse until the items are ready for delivery to Amazon customers who are yet to place orders.
- Step 3: Customers buy products from your store. After that, Amazon FBA work starts immediately by picking up the product from the warehouse for packaging.
- Step 4: Amazon ships and delivers the product to your customers’ preferred destination’ without hassles. You can sit back and relax as Amazon handles everything.
- Step 5: Amazon manages refunds and returns once the order gets delivered. In other words, Amazon handles all the after-sale services on your behalf.
- Step 6: Amazon deposits earnings from the sales into your linked bank account.
Amazon fees and policies can affect your operations directly, a reason to master all of them.
Here are the Amazon seller fees you’ll pay.
Amazon seller fees encompass account and product fees.
There are two Amazon seller plans; an Individual Seller Account that doesn’t require subscription fees and a Professional Plan that charges a monthly subscription of $39.9.
Although an Individual Seller plan doesn’t charge subscription fees, you’ll pay a $0.99 fee for every product you sell online.
Amazon product or referral fees range from 6 percent to 45 percent of an item’s selling price. You may also pay the long-term storage fees if Amazon stores the goods for long.
You must also factor in the cost to fulfill and ship orders to your customers. However, the charges vary depending on your product’s nature and fulfillment method.
Here are the Amazon seller policies to master.
Amazon FBA has many program policies for Amazon sellers, including
- Customer Product Review Policies
- Seller Code of Conduct
- Product and Listing Requirements
- Intellectual Property Policies
Pro Tip: Ensure you familiarize yourself with all the policies and implement them accordingly to protect your seller account from getting closed.
Amazon has a list of restricted items that must comply with specific policies.
Some restricted product categories include grocery, watches, jewelry, music, and automotive products. You must get approval from Amazon before listing them.
Amazon might require additional fees, performance checks, and other qualifications for you to list items or sell some brands in restricted categories.
Thankfully, you now know how to sell on Amazon FBA. All you have to do is list your products and deliver them to an Amazon fulfillment center for packaging and shipping.
But before you start selling on Amazon, calculate your potential profits to ensure your efforts are worth it. Most importantly, invest in the Amazon Product Research, PPC management and Amazon Inventory Management software you’ll need to manage your business.
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