Connect with us

business

How To Start an Amazon Business From Scratch

Published

on

Featured image: How To Start an Amazon Business From Scratch

Amazon has changed the way we buy and sell. As the largest online retailer in the world, it generated $469.8 billion in revenue in 2021 and $502.19 billion in 2022.

amazon homepage

When you start selling on Amazon, you gain a worldwide network of customers. With the platform’s functionalities and features, customers have millions of products to choose from at different prices. As a seller, you can have a steady stream of income. 

Want a piece of the Amazon pie?

Here’s a quick but comprehensive guide on how to start an Amazon business

8 Steps for Starting an Amazon Business

Amazon has 310 million active users worldwide. The platform generates more than half of eCommerce sales in the country. Amazon is where you need to be if you want to make decent profits from online sales.

To help you get started, we’ve listed eight steps to starting an Amazon business

1. Find Profitable Products To Sell

Finding products to sell is the first (and hardest!) task you’ll face when starting a business on Amazon. Part of the challenge is because of the almost infinite product range the site already has.

To find products to sell on Amazon, you’ll need to do some research. Here’s a quick guide on choosing winning items for your business. 

  • Check trends on Google (and other marketplaces). Also, do keyword research to understand what your potential customers are looking for. Once you understand the “what’s in it for me?” (WIIFM) concept, tweak your offerings and collaterals to provide optimal value. 
  • Find a niche you’re familiar with and passionate about.
  • Use product research tools to determine the demand for a particular product. Dive into Amazon’s Best Seller Rank (BSR) and look for products rated 1,500 and below to confirm if a product sells

Search for your first products by browsing through AMZscout’s comprehensive product database. The product database lets you identify potential bestsellers on Amazon and other eCommerce sites. You can use 16 parameters like net price and rating. It can also check product history so you can see if an item can help you generate sales

AMZ scout dashboard

Keep in mind that the Amazon marketplace is saturated with merchants. To sell on Amazon and make money online, you’ll need to make your mark in a competitive market. Here’s a list of product ideas for inspiration. 

  • Look for a product category with items priced between $10 and $50 for decent profits. Anything with a hefty price tag is more challenging to sell.
  • Consider flipping clearance items from retail stores like Target and Walmart. The process, called “retail arbitrage,” allows you to scan discounted products with a barcode. You use a barcode scanning app to see how much they sell on eCommerce sites. You can also use it to calculate potential profits and resell items
  • Select high-demand products with low competition. They’re “impulse buys” that can be sold in large volumes. 
  • Pick products you’re passionate about. Passion will help you create a stellar brand that enhances the customer experience. It will also help you establish yourself as a leader and boost your popularity.
  • Avoid seasonal products. They decrease the consistency of your sales. They also limit your profitable months which can reduce your cash flow. 
  • Don’t compete with established products and brands with high ratings.

Once you know what you want to sell and have identified some items —

Source Products From the Right Supplier

For example, you can buy products in bulk at cheap prices from international suppliers like Alibaba to sell on Amazon. Alibaba is another online platform where you can find mass-produced products at wholesale prices. The only downside is you’ll need to notify your suppliers in advance as shipping times can be unpredictable.

You can also start your seller journey with verified suppliers in the country. You can find them through trade magazines and local trade shows on Google. Purchasing products from them can help you get products to your customers faster.

Once you’ve narrowed down suppliers, order samples from multiple suppliers. You can then see if the prices are reasonable for the quality they offer. Then, narrow down your final picks, negotiate the best price, and place an order. Pay through websites like Paypal so you can get your money back if the order doesn’t come through. 

Pro tip: Focus on establishing positive relationships with your suppliers. This will help you enjoy savings and an efficient supply chain. You also get more efficient communication, minimal price volatility, and continuous improvements.

2. Create Your Own Brand on Amazon

Can you fill gaps in existing products and offer something even better? Unleash your creative and entrepreneurial spirit. Brainstorm some mean product ideas. Give them a test drive to check their durability and launch your private label

A private label means designing your products and having someone else manufacture them. This is more work but provides a greater level of control. You can incorporate specific details into your products. Dictate how they’re packaged and have your logo imprinted on them. Of course, you’ll have to pay for production and shipping.

Private-label products are useful if you want to establish your brand. You’ll need to hire a team to develop branding materials such as a name, color palette, and logo for your business. A good logo will make you more memorable to customers which can help you secure all the sales

With your own label, you can also register it on the Amazon brand registry.

amazon seller stats

Amazon’s brand registry is a perk that comes with the professional plan. It allows professional sellers to create unique storefronts for their private-label products. They can also access new features that help them stand out. Plus, it gives brand protection by preventing counterfeit products from being sold.

3. Register Your Amazon Seller Account 

You need an Amazon seller account to start selling on the platform. 

To register, choose a plan. Amazon offers two options: an Individual seller account which costs $0.99 per sale and a Professional seller account. The Professional plan has a monthly fee of $39.99 and is perfect for sellers who expect to sell more than 40 items in a month. 

amazon seller registration menu

Once you’ve selected a plan that fits your needs, enter your business details. This includes contact details like email and phone number and tax registration information. 

4. List Your Products and Optimize Your Product Listings 

Listing your products on the Amazon store puts your products up for sale. 

To do so, go to seller central > inventory > add an item. Add product information such as the title, category, and price to your product listing. Use high-quality images to push your customers through your sales funnel. 

Why is optimizing your product listing so crucial to the success of your business? 

Customers compare different products before buying. These small details can help them decide if your product will suit their needs. With clever SEO tactics, you can make your product listing more attractive to users. They can also increase your ranking in search results and convince buyers of your product’s superiority. To put it simply, it will help you boost sales

Friendly tip: Add items individually. This gives you a detailed look at the products you’re selling. If there’s any discrepancy in the information, you can head to the “manage inventory” section in your seller central dashboard to edit product details.

5. Shipping: Select the Right Fulfillment Option 

How will you get products to your customers? Well, Amazon has you covered. 

Amazon offers three options: the Amazon FBA business model, the Amazon FBM business model, and the Amazon easy ship business model. Let’s take a look at them:  

FBA (Fulfilled by Amazon)

When you opt for the Amazon FBA business model, you send your inventory to Amazon Fulfillment Centers after receiving items from your supplier. 

The professionals at the Amazon Fulfillment Center will take care of everything from packing to shipping products to the buyer. They’ll also collect payments on your behalf, oversee customer queries and concerns, and manage returns. 

FBA fulfillment fees

Choosing this option makes you eligible for Amazon Prime which can help ensure consistent sales. Some sellers find that it has increased their sales by up to three times which is great for business.

FBM (Fulfilled by Merchant)

With FBM, you’ll need to store, pack, and ship your own products

When you opt for FBM, you need to reach out to a third-party courier to deliver your products. If you’re selling on a large scale, consider using your own delivery associates. This will give you complete control of your business so you’ll only have to pay closing and referral fees to the eCommerce giant. 

Keep in mind that delivery fees can quickly add up. To keep shipping costs and selling fees low, choose small, lightweight products under 2 lbs. It’s also a good idea to avoid products that can break during transport as you’ll incur extra fees for damages and returns.

Amazon Easy Ship

Amazon Easy Ship is a delivery service for Amazon sellers

When you opt for this service, an Amazon Logistics Delivery Associate will pick up your packaged product from your warehouse and deliver it to your buyer. It gives you control over your inventory and allows you to pick your own packaging which you can customize to enhance your brand value. 

The best thing? Amazon will also handle customer service and returns under this method.

6. Perform Accounting Regularly To Achieve Your Desired Profits

Accounting can help you achieve your desired profit margin which should ideally be between 10% and 30% for your business’s health and long-term growth.

To calculate it, consider all your expenses, including:

  • Manufacturing costs
  • Amazon FBA business fees, if applicable
  • Advertising costs
  • Referral fees (start at 2% but vary across categories)
  • Shipping fees (vary by item volume and distance)
  • Closing fees (vary by product price range, but you will pay less if you get your products fulfilled by Amazon)

Practice due diligence when it comes to your launch strategy. It will ensure that you break even when pricing the product. Once your business picks up, you can use metrics to measure performance. Also, monitor product reviews to identify issues, take active steps to improve your offerings and ensure you’re meeting your targets on seller central

7. Market Your Business With Amazon Ads

Once you’re ready to launch your Amazon business, you might think it’s time to sit back and enjoy the fruits of your labor, but that’s not the case. 

You’ll have to focus on implementing customer acquisition tactics in your marketing strategy to get customers quickly. You’ll also have to write a copy that contains lots of relevant keywords for product advertisements on Amazon. 

Use Amazon ad campaigns for an edge over your competitors. For a cost-effective approach, consider pay-per-click (PPC) campaigns. They boost your product’s visibility to specific demographics which can put you on top of search results and help you reach more customers

amazon ad campaign example

Also, check out sponsored brand ads to sell an entire product line instead of an individual product. It’s one of the most effective marketing strategies to date. You can also explore paid advertising on other platforms like Google and Facebook.

This can take some trial and error to show results which is why we recommend that you conduct A/B testing. It will help you understand what’s working and what’s not so that your marketing is more effective.

8. Establish Your Credibility With Reviews 

Quality reviews provide social proof, increase search traffic, and boost conversions. Safe to say, acquiring reviews is essential for your marketing campaign.

So, ask your buyers to leave reviews. Most will do so readily if they’re excited enough about your product. You can also send products to bloggers and reviewers so they can review them. 

amazon customer reviews

Keep in mind that Amazon has certain guidelines for customer reviews. These ensure authentic reviews that are free from seller manipulation.

Frequently Asked Questions (FAQs) 

1. How much does it cost to start an Amazon business?

Most sellers successfully launch their businesses with a budget of $500 to $3,000. Note that higher capital investments can increase the odds of success.  

2. How much do Amazon business owners make?

Most Amazon sellers make at least $1,000 in sales every month with profits going as high as $25,000 per month. Successful sellers make even more. A study showed that one in five vendors enjoys $25,000 to $250,000 profit monthly. 

3. Is owning an Amazon business profitable?

Selling on Amazon can be very profitable for sellers. Competition has increased in the past few years. You may have to commit more capital and time for a successful venture.

4. Can I start my own business with Amazon?

Yes, you can start your own business on Amazon. If you have limited resources, we recommend starting with Amazon FBA business. It takes care of your offline and online business needs so you can offer better products.

Conclusion 

Starting an Amazon business takes time, effort, and some capital. This guide on how to start an Amazon business will help you start selling products more quickly. You should have a successful business before you know it with product research, search engine optimization (SEO) tactics, and marketing.

Trending