How to start selling on Amazon
Amazon has emerged as the go-to place for all your ecommerce needs.
In fact, lots of people when trying to search products to buy often skip Googling for it and directly jump to Amazon.com search bar to find whatever they are looking for.
Hence, if you have any products that you are selling through other channels such as brick and mortar retail locations, or Ebay, Etsy, or through your own ecommerce store such as Shopify than you have to seriously consider Amazon since you may be missing out on lost revenue from the most popular ecommerce channel on the planet.
In this article we will present a basic overview on what it takes to sell on Amazon.
Types of ecommerce platforms
As an online retailer, you’re free to choose where you want to list and sell your products. You have three options:
Your own online store
You can find plenty of ecommerce web hosting services that provide the tools for setting up and maintaining your own store, such as Shopify.com or woocommerce etc.
Pure marketplace
A pure marketplace, such as eBay, simply brings buyers and sellers together and facilitates and secures transactions between the two. It doesn’t carry or sell inventory of its own.
Hybrid marketplace
A hybrid marketplace, such as Amazon, brings buyers and sellers together, facilitates and secures transactions between the two, and sells products, competing with other sellers in the marketplace.
This last part is especially controversial since Amazon has access to lots of proprietary data that can allow it to make an informed decision on whether to sell a product directly or not.
This is not a theoretical concern, in fact Amazon has launched multiple private label products (Amazon Basics) to compete with the third party sellers, thus explanding its direct sales at the expense of the third party marketplace seller.
There are legal challenges to prevent Amazon from doing so, and though there isn’t a definitive restriction announced yet, on the balance, for most Amazon marketplace sellers, selling on Amazon is still lucrative and profitable and hence, the drawback of the hybrid marketplace should not dissuade you from selling here at all.
Online marketplaces (both pure and hybrid) typically profit by collecting a commission on all sales. In exchange, they offer several advantages, including the following:
- Diverse product selection at competitive prices, which attracts sellers
- Secure transaction processing for both buyers and sellers
- Access to millions of shoppers eager to spend
- Virtually unlimited scalability to accommodate any level of growth
Amazon product categories
Amazon has 20 product categories open to all sellers.
Amazon Device Accessories
Amazon Kindle (only used allowed)
Baby Products (excluding apparel)
Beauty
Books
Camera & Photo
Cell Phones & Accessories
Consumer Electronics
Fine Art
Grocery & Gourmet Food
Health & Personal Care
Home & Garden
Independent Design
Industrial & Scientific
Kindle Accessories and Amazon Fire TV Accessories
Major Appliances
Musical Instruments
Office Products
Outdoors
Personal Computers
Pet Supplies
Software
Sports
Tools & Home Improvement
Toys & Games
Video Games
Some of the restricted categories listed below are only open to professional Sellers. .
Automotive & Powersports
Jewelry
Watches
Sports Collectibles
Video, DVD, & Blu-ray
Collectible Coins
Entertainment Collectibles
Fine Art
Music
Amazon seller plan
When you register to become an Amazon Seller, you must choose from the following two plans:
Individual
You pay $0.99 per item sold, no monthly fee, and you pay only when an item sells.
Amazon provides access to a basic set of listing and order-management tools.
As an Amazon Individual Seller, you have the option to create listings one at a time by matching your products to existing listings or by creating new listings.
Amazon sets the shipping rates for orders and determines which shipping service levels sellers can offer to buyers.
Professional
You pay $39.99 per month whether you sell nothing or a million items.
You pay no per item sold fee.
Amazon provides its Professional Sellers with access to additional features and tools and removes some selling restrictions.
| Seller Plan | Individual | Professional |
|---|---|---|
| Monthly subscription | N/A | $39.99 |
| Per item closing fee | $0.99 | N/A |
| Use of feeds, spreadsheets, and other tools to facilitate multiple listing creation and updates | No | Yes |
| Access to order reports and order-related feeds | No | Yes |
| Earn top placement on product detail pages | No | Yes |
| Sell in 20+ open categories | Yes | Yes |
| Apply to sell in 10+ additional categories | No | Yes |
| Customized shipping rates | No | Yes |
How to procure products to sell
This is not a major issue if you already are selling through other channels; however, let us go through some of the basic procurement strategies.
Retail Arbitrage
Retail arbitrage (or simply arbitrage) is an easy, low-cost approach to sourcing products, which involves buying discounted products from other retailers, marking up the price, and reselling them. Many sellers get their start on Amazon through arbitrage.
Experimenting with arbitrage on Amazon enables you to develop the knowledge and experience of selling on Amazon without risking huge sums of money.
However, arbitrage does have potential drawbacks, including the following:
Arbitrage requires considerable time and energy in terms of finding deals and listing and marketing new products that may not be listed on Amazon already.
You run the risk of buying substandard, counterfeit products of popular brands and getting into trouble with Amazon for selling them as the real thing.
The brand owner may file a complaint, result in Amazon requiring you to remove the product from your listings, in which case you get stuck with the unsold inventory.
Private label
A private label product is a product that’s manufactured by a third party and sold under a retailer’s brand name. Examples include Amazon Essentials, Target’s Mainstays, and Walmart’s Great Value brand. To create private label products, you have two options:
Invent a new product, patent it, manufacture it (or have it manufactured), label it, and sell it as the manufacturer.
Contact a manufacturer of a product you want to sell, have the manufacturer label the product with your brand, and start selling it as your own branded product.
Selling private label products offers several advantages, including the following:
- Reduced competition. You’re not selling the same brand-name products as everyone else on Amazon.
- Greater control over pricing.
- Improved changes of winning the Buy Box.
- Greater ability to expand sales in the future and beyond the Amazon marketplace.
Creating and selling under your own private label does have some drawbacks, including the following:
Creating a private label can be expensive in terms of manufacturing, branding, labeling, and marketing new products, in addition to manufacturing and inventory costs.
Introducing a new product with unproven sales to the market increases your exposure to risk.
Negative feedback and reviews could sink your entire brand, hurting sales across all your private label products.
The cost of creating a private label and building and maintaining brand recognition discourages many sellers from taking this approach.
However, if you can clear the initial hurdles, creating and selling your own private label products is very rewarding, and if you can establish a very good supplier base and control quality, you can build a very successful and profitable brand.
Listing the product you want to sell.
You have two options:
- List products already on Amazon: Choose products already listed on Amazon and specify the number you have available, their condition (new or used), and your shipping options.
- List products not on Amazon: If the product you want to sell isn’t being sold on Amazon, you need to specify the item’s universal product code (UPC) and stock keeping unit (SKU); write a product title and description, and provide product photos.
When someone clicks your listing and buys the product, Amazon notifies you of the sale. 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. As you sell products, Amazon deposits payments (less Amazon Seller fees) into your account and notifies you when payments have been made.
Amazon’s Rules
Amazon allows other sellers access to its marketplace on condition that they behave themselves and share the company’s commitment to delivering superior customer service.
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. As a seller, you’re responsible for providing accurate, up-to-date information about your business and the products you sell. For example, you must list products in the correct category and post accurate photos and specifications.
Do act fairly and don’t misuse Amazon’s features or services.
- 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.
Don’t attempt to damage or abuse another Seller, their listings, or ratings.
Don’t attempt to influence customers’ ratings, feedback, and reviews. Amazon prohibits any attempts to influence or inflate customer ratings, feedback, or reviews. You’re permitted to contact customers to request feedback and reviews, but you’re not allowed to request or coach a positive review. Examples of other prohibited behaviors 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.
- 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.
Don’t send unsolicited or inappropriate communications. 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.
Don’t contact customers except through Buyer-Seller Messaging.
Don’t attempt to circumvent the Amazon sales process. 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. Amazon wants all sales to go through its marketplace, so it can collect fees and retain its customers. Any attempt to divert a sale to another website to avoid paying fees or to steal customers from Amazon is a violation of Amazon policies. Don’t provide links or messages that prompt shoppers to visit any external website, order a product from a different store, or complete a transaction elsewhere.
Don’t operate more than one Selling on Amazon account without permission by Amazon. They allow you to have only one seller account for each region in which you sell unless you have a legitimate business need to open a second account and all your accounts are in good standing. If any of your accounts aren’t in good standing, Amazon may deactivate all your selling accounts until all accounts are in good standing. Here are a few examples of legitimate business needs that qualify you to open more than one seller account 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.
- You own multiple brands, each of which is associated with a different business.
Use a different bank account and email address for each seller account in a given region. If you’re selling across regions (for example, in North America and Europe), you may use the same bank account for the two seller accounts as long as your accounts are linked through Amazon Global Selling.
Violating the Amazon’s code of conduct or other seller policies may result in penalties such as having product listings removed, payments suspended or forfeited, or selling privileges revoked.