How to sell on Amazon
The modern sales landscape is transforming! With the steady decline of brick-and-mortar stores, online sales channels are taking over, with more and more consumers turning to the web to make their purchases. So, it's a great time for any existing e-commerce business or anyone who wants to start selling their own products to take the plunge and start selling on Amazon.
When it comes to selling online, Amazon is the best place to turn. This business giant is responsible for almost half of all US e-commerce spending in 2022 - and this number is only growing. The best part is that you don't need years of business and sales experience to start selling on Amazon. However, there are some important things to understand to give yourself the best chance of success! So, we've created this handy guide: How to Sell on Amazon!
We'll share everything you need to know about starting an Amazon business and becoming an Amazon seller, including setting up an Amazon seller account, finding a product to sell, selling your first product, understanding Amazon sales terminology and requirements, including Fulfillment by Amazon (FBA), and how to continually improve your sales. Becoming an online retailer is easier than ever!
Why Sell on Amazon?
Amazon is the latest and best way to start an e-commerce business anywhere in the world right now. It's also one of the easiest. Unlike a traditional e-commerce business, selling on Amazon doesn't require you to build a website, manufacture a product, or set up a dedicated customer service team. You don't even need to worry about shipping each product with Amazon FBA.
Instead, you're able to access a marketplace of millions of ready-to-buy customers around the world instantly and with low start-up costs. Selling products on Amazon offers total freedom to the modern business owner. You can run your business from the comfort of your own home, set your own hours, and work as flexibly as you'd like to.
Amazon Sales Statistics
When it comes to Amazon sales, the statistics really do speak for themselves:
- According to Big Commerce, Amazon currently sells over 12 million different products. This means that there is truly a niche for any type of product you want to sell.
- More than 50% of all items sold on Amazon come from third-party sellers rather than brands. So, there's a pretty even playing field when competing with larger, more established Amazon retailers.
- Amazon's Prime Day sees more customers and more profits than Black Friday or Cyber Monday.
- According to Marketplace Pulse, the number of Amazon sellers who made over $100,000 in 2019 is 225,000, with this number increasing year after year.
Is Selling on Amazon Worth It - How Much Do Amazon Sellers Make?
Tame Bay has managed to make a rough estimate for the annual income of the average Amazon seller by dividing the total amount of profit made by third-party sellers (approximately $230 billion) by the estimated number of third-party sellers on the platform as a whole (approximately 2.25 million.) This puts the average seller turnover at around £92,222 per year.
Of course, this is only a fundamental estimate of an average turnover. In reality, your Amazon income will vary depending on a number of factors, including:
- The product you're selling.
- Your price mark-up.
- How many sales you make per month.
- How much time you invest.
- The amount of competition in your niche.
Amazon Profit Statistics
In terms of more general Amazon seller profit statistics, according to Junglescout, a survey of their customers found that:
- 62% of sellers had increasing profits in 2020 compared to 2019.
- 64% of Amazon retailers see profits within their first year of sales.
- Nearly half of all sellers on the platform are self-employed, and over 20% of sellers use Amazon as their primary source of income.
- According to Tame Bay, the average third-party seller will use Amazon's FBA service for 55% of their sales. They, therefore, estimate that the average seller can make £51,000 annually from Fulfillment by Amazon sales, with the rest coming from Fulfillment by Manufacturer (FBM) sales.
How Much Does It Cost to Sell on Amazon?
How much it will cost to sell on Amazon depends on a variety of different factors. You'll have some upfront costs you'll need to invest, as well as some ongoing ones.
To help give you a better idea of determining overall costs, you'll need to factor in:
The Cost of Your Subscription
At a base level, you'll need to factor in the cost of your Amazon seller account.
- Individual seller - This is free to register; however, Amazon will take $0.99 from every product you sell.
- Professional seller - Amazon takes $39.99 per month. However, you won't need to pay $0.99 for every product.
Ongoing Costs Per Product Sold
In addition to your subscription level, there are some extra ongoing costs you will be required to pay for each product you sell. The total amount will depend on the scale of your business, the types of product being sold, and whether you have opted for FBM or FBA. Therefore, you will also need to do your own research to factor in the cost of:
- Referral fees - Amazon will take a referral fee for every product sold. This is usually 15% of the total product price. However, this varies depending on the product category.
- UPC codes - Every product you sell will need a unique UPC code to identify it. You should purchase these from GS1 as this is really the only reputable organization for UPC codes.
- Shipping fees - These will vary depending on your account pricing plan. An average shipping fee can be anywhere from $3.99 to $14.95 for sales within the USA for individual sellers. Professional sellers can set their own shipping fees.
- Closing fees - Amazon can also charge closing fees depending on which item is being sold.
Fulfillment by Amazon (FBA) Fees
If you're using Amazon's FBA service to sell products, Amazon will be responsible for the entire sales process, including packing and returns. As a result of this, they charge extra costs including:
- Labeling fees.
- Packaging fees.
- Returns processing fees.
- Storage fees (if your products remain in an Amazon warehouse for more than 6 months without being sold.)
- Stock removal and disposal fees.
Fulfillment by Manufacturer Costs
If you're not using FBA to sell your products, you will be responsible for packaging and shipping each item. Therefore, you'll need to factor in the price of any materials needed for this, including:
- Product packaging.
- Packing tape.
- Labels and label printing equipment.
How to Choose Products to Sell on Amazon
When it comes to learning how to sell on Amazon, you'll need to start finding some products. For e-commerce businesses that manufacture their own product, this is relatively straightforward - you can register an Amazon account and start selling your own items.
However, if you don't have your own product, you'll need to do some product research. Choosing the right products to sell can make or break an Amazon retailer. There are millions of online items you can source, but the difficulty is narrowing down your focus to find products that will work well for your business and return the best results.
Some characteristics of a great Amazon product include:
- High purchase availability. -You should choose a product that is easily manufactured and readily available from a third-party retailer. You don't want to start selling only to find the manufacturer has run out of stock!
- Low Amazon competition. - Once you have a product in mind, you should always do your own research to ensure the market isn't too competitive. You can do this by searching what's currently available on Amazon, and you can also use tools like Jungle Scout's Opportunity Finder to find product niches with low competition.
- A retail price of between $20 - $30. - According to Quartz, this is the average price of the most popular products sold on Amazon.
- Something lightweight and portable. - This is another characteristic of the most popular Amazon products. These products are easier to store and ship, especially if you don't have a dedicated business premise.
- Something you are familiar with - You don't have to have a lot of experience with the product you're selling, but you should be familiar with the item, its features, as well as how to describe how it works, what it does, and how to use it.
In many cases, finding a great product to sell comes down to trial and error. Over time, you'll be able to hone your niche and consider the seasonality factor when it comes to the items you choose to sell. You'll also be able to use your product research and experience to improve your process month after month.
Choose Your Amazon Sales Model
You have a variety of options for the types of sales method you use, and the one you choose will come down to the types of products you're selling.
You don't have to commit to just one sales method. You'll find that different products will need different sales strategies, and you'll quickly find out what works for you once you've started selling.
However, you can choose from a variety of methods, including:
If you make your own unique product and are responsible for the whole process from product conception to sale, you'll be working with Amazon Handmade. Once you've registered an Amazon seller account, you'll be able to apply to become an Artisan, which means that you'll be recognized for selling your own hand-crafted products.
Private Label Selling
Private label Amazon selling involves ordering a product from a manufacturer, branding this product or altering it somehow, and then selling it for profit on Amazon. For example, you may buy an item such as a coffee mug from a manufacturer and then create some packaging and branding for this product to sell it via Amazon.
This is a great option for those who do not have their own product to sell but still want to have a hands-on, creative approach to running an e-commerce business. Many Amazon retailers who use this type of sales model use sites such as Alibaba or AliExpress to source products.
When choosing a reliable product manufacturer, you should make sure to check that:
- The manufacturers are willing to send you a sample or prototype of each product.
- The product is in good working order and is high-quality.
- Your supplier is reputable, offers guarantees, and operates legally.
- You've factored in the logistics of ordering from a supplier - i.e., shipping times, costs, production times, and stock availability.
- You've shopped around for the best deal by looking at all available suppliers.
You could also choose a wholesale sales model for your Amazon business. This involves buying bulk branded products from wholesale retailers and then reselling each individual item with a price mark-up. The advantage of this is that you can add your products to Amazon's existing product listings for branded products. However, it also means that you could be buried in the ranking results from competitors if you don't choose the right product.
Retail Arbitrage Reselling
Retail arbitrage, or reselling means finding products with variable prices and taking advantage of this for your sales model. For example, let's say you've found a retailer selling a specific electronic product at a discounted price. You could then purchase this product and sell it for full price on Amazon.
This is an Amazon resales model which is completely legal. However, it does mean that the product you'll be selling may change regularly as you'll be taking advantage of often temporary reductions.
Fulfillment by Merchant (FBM) or Fulfillment by Amazon (FBA)
Before you get started with sales, you'll also need to consider which fulfillment method to use for each of your products. This refers to who is responsible for fulfilling each order, packaging it, and shipping it to the customer. Amazon offers two fulfillment methods:
Fulfillment by Manufacturer (FBM) means that you will be responsible for accepting, packaging, and shipping a product to a customer. You will also be responsible for customer service and any returns.
Benefits of FBM selling include:
- Having more control over the sales process.
- Having direct contact with your customers for any returns or queries.
- Avoiding Amazon's extra fees for FBA sales.
However, you'll also need to keep on top of all of your orders, pay for all packaging materials and be responsible for the whole sales process from start to finish. This can be a difficult task if you're planning to turn over many products each month.
Fulfillment by Amazon (FBA) involves sending your stock to an Amazon warehouse or Amazon fulfillment centers. In this case, once Amazon receives your stock, they'll be responsible for the whole sales process. They'll manage incoming orders and then package and ship your products to your customers. They will also handle any customer service and returns.
Benefits of using Fulfillment by Amazon include:
- Next-day delivery for your customers. - Modern consumers expect quick turnaround times when they purchase a product and often choose a retailer who can fulfill a next-day delivery over others who do not offer this.
- More sales - According to Big Commerce, FBA gives sellers an average sales boost of 30% to 50%. This is because FBA customers are usually Amazon Prime Users. According to research by Reprice Express, Amazon Prime customers spend, on average, twice as much per year than non-Prime customers.
How to Get Started with Amazon - Create a New Amazon Seller Account
Once you've chosen your product and decided on your sales strategy, it's time to create an Amazon seller account.
Next, you'll need to either create an Amazon account or sign in with your existing details.
What Information Do You Need to Set up an Amazon Business Account?
Once you have signed up for an Amazon seller account, Amazon will then ask you to make sure that you have:
- A business and contact address. If you're selling from your home, you will need to use this address as your designated business address.
- An up-to-date email address - ideally, this should be a dedicated business email address, separate from your personal inbox.
- A chargeable credit card - this should be internationally chargeable and have an accurate billing address.
- Proof of identity.
- Your social security number.
- Your Federal Tax ID number.
Choose Your Selling Plan
Once you've created your Amazon seller account, you'll need to choose your pricing plan. You can choose from two selling plans for selling on Amazon: individual seller and professional seller. Which plan is right for you will depend mainly on the types of products you plan to sell and the scale of your e-commerce business.
If you're not sure what to start with, don't worry! Amazon lets users switch back and forth between professional and individual seller accounts. So, pick whichever selling plan feels like a natural estimate for your sales predictions to start. You can always amend this at a later date.
An individual seller account is free to register. Amazon won't charge you a monthly fee to keep your account open. However, they will take $0.99 for every item you sell. In addition, you'll only be able to add your products to existing product listings created by Amazon. You won't be able to list a brand-new, unique product not already sold on the platform.
This option is designed for smaller-scale Amazon sellers who do not expect to sell in bulk, which justifies the per-item charge.
With a professional seller account, you'll be required to pay $39.99 per month. However, Amazon won't take a $0.99 per product sold. Therefore, if you're planning to sell more than 40 products per month, it's better value to register a professional account than an individual one.
With this subscription, you'll also be able to register and sell under new product listings, set your own shipping rates, and will also be eligible to sell in Amazon's gated product categories, including:
- Collectibles such as books, coins, and entertainment.
- Large appliances.
However, you'll still need an extra level of permission from Amazon to sell in its gated communities, which can take up to 30 days to receive. It's a good idea to apply for this permission immediately once your account is open if you need access. You'll likely have an answer within 30 days, which means you'll be able to cancel your professional seller membership before you're charged if you don't get the permissions you need.
Everything You Need to Know About Seller Central
Seller Central is essentially your e-commerce hub. This will be where you'll log in every day to manage your Amazon business. It's where you'll go to:
- List new products to sell.
- Get a complete overview of how your sales are performing.
- Manage your account.
- Check on orders.
- Manage payments.
- Check account updates.
- Check inventory and stock.
- Manage your product listings.
- Monitor performance.
- Contact support.
Main Seller Central Features
Once you log in to Seller Central, there will be 7 main tabs that you'll need to know how to use. Getting to grips with your Seller Central dashboard is easiest when taking a hands-on approach. So, look around, explore and get to know each tab.
In Seller Central, you'll find:
- Catalog - Add new items and save products as a draft to edit the product page before going live.
- Inventory - View all of your products, manage stock and manage the shipments you send to Amazon warehouses for FBA products.
- Pricing - Monitor the price of all of your products and set up alerts and automation so that your prices can change in relation to competitor pricing.
- Orders - View pending, shipped, and unshipped orders and keep track of the sales process.
- Advertising - Set up, run and monitor advertising campaigns such as Amazon PPC. Set up promotions, offers, coupons, and more. Monitor paid advertising performance and learned how to optimize as you progress.
- Reports - View reports on every aspect of your Amazon business.
- Performance - Gain insights into how your business is performing overall and check reviews from customers.
Setting Up Your Seller Profile
Once you've input all of the information required by Amazon and chosen your price plan, you'll be able to enter your Seller Central account by visiting https://sellercentral.amazon.com and logging in. Then, you'll be able to set up your seller profile. This is relatively straightforward. You'll just need to fill in the boxes and provide the information requested by Amazon, including:
- Your account information.
- Your 'about' information, including your phone number and address.
- Your returns policy - this may vary depending on whether or not you're using FBA, in which any returns will be sent to an Amazon warehouse or FBM, in which case returns will be sent to your address.
- Gifting options.
- Shipping options and rates (if you are a professional seller.)
- Tax settings.
Adding Your First Product to Your Amazon Seller Central Account
When you're ready to add your first product, go to your Seller Central account and select 'Add a product' from the Inventory drop-down list.
After this step, the process depends on whether you're selling an FBM or an FBA product:
The step-by-step process for uploading an Amazon product is as follows:
- Select 'add a product' from the Inventory drop-down list.
- Select 'product listing' - You can either set up a new product listing for completely unique products not sold on Amazon, or you can select an existing listing.
- Add a UPC barcode under 'product ID.'
- Fill out product information, including a description, the condition it's in, as well as the quantity.
- Choose fulfillment channel (whether it is an FBM or FBA product.) Set this to 'Fulfilled by the merchant.'
- Add the price of the product.
- Add product images.
- Add product variations if you have multiple types of the same product.
- Add SKU codes to help track and manage your product inventory. (You can generate your own code or let Amazon do this for you. For more information about SKU codes, you can read Quickbooks' SKU guide.)
The process for uploading a product to be fulfilled by Amazon is largely the same as one for an FBM product. You'll still need to add all the product information included above. However, there are some extra steps you'll need to take:
- In the 'fulfillment channel' section, you'll need to select 'Fulfilled by Amazon.' This does not automatically mean that your products will be FBA ones; it just gives you the capability to add this feature.
- After listing your product and completing all of the other steps above, you'll need to convert the items you've listed to FBA ones. You can do this by clicking 'manage inventory' from the 'inventory' tab in your Seller Central dashboard. This will take you to a list of all of your products. You'll be able to convert any product to FBA by clicking the 'actions' dropdown menu next to the product and selecting 'Fulfilled by Amazon.'
- Choose whether you would like Amazon to print and include sales labels for you ('Amazon label service') or 'stickerless, commingled inventory' (Amazon will mix your inventory with other sellers' products of the same brand.)
- Select 'Convert and send inventory' if you're only sending one FBA product to Amazon. Alternatively, select 'Convert only' if you're setting up multiple FBA products. Then, go back and convert more items to GBA in 'manage inventory.'
- Choose an Amazon shipping plan and add your items. - Select 'case-packed products' if you're sending a case full of the exact same product. Alternatively, select 'individual products' for your shipping plan.
- Ship your products to Amazon.
Amazon Image Upload Guidelines
You'll want to add plenty of high-quality images to your product listings. However, there are several requirements you'll need to follow, including:
- The main product images need to have a white background and show the product itself, not inside packaging and no drawings or illustrations.
- Main image Backgrounds must be pure white with RGB color values of 255, 255, 255.
- Main images are not allowed to show logos, watermarks, or graphics.
- The image must match the product that is being sold as well as the product title.
- The product needs to fill at least 85% of the complete image.
- Your file size should be 1600px on the longest side to allow users to zoom. The smallest file size that allows zoom capability is 100px.
- Your product image needs to be a minimum of 500px.
For more information on image requirements, visit Amazon's image upload guidelines.
Understanding Sales Tax When Selling on Amazon
Working out whether or not you are responsible for paying sales tax when selling on Amazon can be confusing. It also largely depends on which state you are operating your business from. Factors that affect sales tax include:
- Your location.
- Type of product being sold. - Some products are exempt from sales tax in some States, such as grocery items, vitamins, and certain types of media.
- Whether or not you have to pay a sales tax nexus. - This will depend on your business location and type of business premises.
You'll also need to check the following factors, which depend on your State:
- Amount of tax to be collected per item.
- How often you'll need to file your taxes.
- When you'll need to file your taxes.
- Whether you need a sales permit- If you have a business premise that requires you to pay sales tax nexus and your product is taxable, you will need to register a sales permit. You can register for this at your State's Department of Revenue. For more information regarding State-by-State sales permit regulations, read the Alvara Guide.
There can be strict penalties (both from Amazon and from your state) if you calculate or file your taxes incorrectly. If you're unsure about what taxes you are required to pay in order to sell on Amazon, make sure to contact a qualified accountant or tax professional in your State.
How to Increase Amazon Sales and Stand Out from the Competition
Even with all of the benefits provided to the modern seller through Amazon, there's no denying that there is a great deal of competition with the platform. According to Practical Ecommerce, there are over 2.6 million active independent sellers on Amazon in total - that's a lot of white noise you'll need to cut through to stand out to consumers.
Whether you're just getting started with Amazon and want to set yourself up with the best chance of success, or whether you're looking to improve your current sales and grow your business, there are several key areas you should consider:
Use Professional Images
The modern consumer expects all the benefits of being in a physical store through their phone or computer screen when buying a product. So, you'll need to make up for the fact that they can't pick up the product in order to decide whether they'd like to buy it. For this reason, it's essential to have professional photos taken of your products.
Make sure to use professional photos which:
- Show all angles of the product.
- Show the scale of the product if necessary.
- Have a file size large enough to allow zoom capability.
- Show the product in use or situ.
Write Compelling Product Descriptions
The product description text on an Amazon item page appears to the right of your product image. This means that they're likely the second thing a page visitor will see. Therefore, they need to grab the attention of potential customers right away.
You can improve your product descriptions by:
- Making use of copywriting tactics such as NLP.
- Condensing information into clear bullet points.
- Talking about the benefits of the product rather than only its features.
- Making sure that your text is skimmable - most customers will skim read product pages, but key information needs to stand out.
Optimize Your Product Pages with Keywords
Like other digital search platforms, an algorithm is responsible for ranking all product listings on Amazon. Therefore, you'll need to bear in mind that it's not a human who reads all of your product pages and decides where to rank them in relation to competitors or how to categorize them with other similar products. The Amazon robots can't look at photos to understand what you're selling.
Therefore, you need to write and optimize your product pages in a way that Amazon's algorithm can read and understand them, as well as in a way that helps you stand out from the competition and rank higher in search results.
One way you can do this is by using keywords. Everything that a user might type into an Amazon search bar is a keyword - everything from 'black T-shirt' to 'modern style desk and chairs.'
Many sellers just add whatever text comes to mind into their product listings and descriptions. However, you'll need to make sure you're using:
- The exact words your customers would use to find products like yours in the Amazon search bar.
- Keywords that have plenty of search volume - i.e., plenty of people are searching for that keyword on a monthly basis.
- Keywords that have lower search competition - i.e., there aren't thousands of other Amazon sellers using the same keyword, which would result in your product listing becoming buried.
Choosing the right keywords will improve your Amazon rankings and help your ideal customers find you more often. When choosing the text for your product descriptions and working out which keywords to use, you should:
- Do plenty of research into the search terms your customer will use to find you, and make sure to include them in your product listing.
- Look at the words your competitors are using to see if there are any gaps in the market.
- Use a keyword research tool such as Sellics or Viral Launch to find high search volume, low competition keywords, and synonyms.
- Make sure your keywords are relevant by typing them into the Amazon search bar to see what other products come up.
Increase Your Amazon Customer Reviews
Positive product reviews are essential for any Amazon business. The more positive reviews you have, the more likely your products are to rank well in Amazon search results, and the more likely customers are to trust you as a seller - all of which increase sales.
There are a number of ways to increase the number of product reviews you have, including:
- Amazon's paid Early Reviewer Program. This system sends a request to people who have purchased your product to fill out a review on your product page with a small Amazon voucher incentive.
- Amazon's Vine Program. - This allows sellers who meet certain requirements to send a free product to a trusted 'Vine Voice' reviewer in order to receive authentic feedback. These reviews are usually very comprehensive, often include images of the product in use, and are only sent to reputable reviewers selected by Amazon for their helpfulness. However, these reviews are not guaranteed to be positive - reviewers will provide their real feedback. For more information, read Amazon's Vine terms and conditions.
- Handmade requests - If you're not using FBA and hand-pack or hand-make your products, you can include a small card or note encouraging customers to leave an Amazon review.
- Sending follow-up emails - You also have the option of sending an email to your customers to ask them to review your product. You should do this within a few days following the purchase for the best results.
Start Selling on Amazon Today
Congratulations! - You now understand the basics of how to sell on Amazon. Now you should have a better idea of how to sell your products online, have the confidence to get started, and understand how to scale your business by improving as you go.
Really, the next step is to learn by doing it yourself. Go and find that perfect product, sign up for an Amazon seller account, start learning your way around Seller Central and generate that first sale!