How To Start an Ecommerce Business on Amazon [Complete Guide]

There’s a reason why Amazon is the preferred platform of over 1.9 million sellers. Globally, Amazon is the biggest online retailer with eBay a distant second. 

Rating high on the Customer Satisfaction Index, the retail giant has more than 300 million customer accounts, helping small and midsized businesses earn from online sales. Thousands of sellers on the platform have enjoyed impressive sales figures surpassing the $100,000 and million dollar mark.

Looking to give Amazon a shot? Here’s your chance. In this article, we’ll tell you more about the benefits of becoming an Amazon seller and how you can get your business set up on it.

Benefits of Selling on Amazon

There are many reasons why you should consider starting your e-commerce business on Amazon. It’s great because:

• It offers turnkey solutions. Amazon is designed to support different retail models and has several end-to-end solutions (such as Fulfilled by Amazon) that make online selling easier and more efficient.
• It has high traffic. Amazon is the most visited e-commerce platform with 2.4 billion visits from December 2021 to May 2022. 
• Amazon has a stellar track record. Since 2012, it has maintained a 100% year-on-year growth.
• It offers scalability. As your business grows, Amazon offers services to support you such as the ability to protect your brand and expand your marketplace to over 180 countries.
• You can create a seller account for free. Unlike brick-and-mortar businesses that entail sizable overheads, getting started on Amazon costs a lot less. It’s faster too!

How to get started? The first thing you need to do is decide how you prefer to sell on Amazon.

Decide How to Sell 

One of the greatest things about this online platform is it offers sellers a lot of flexibility in the way they sell their products. Here are five of the most popular business models available and what they mean for you.

1) Dropshipping

Under the dropshipping method, you don’t even have to maintain an inventory or warehouse space. When you receive an order, you must share its details with the supplier, brand, or manufacturer, who then fulfills the order.

In essence, you only have to get orders. The rest, which includes procuring items, shipping, and storing, is outsourced.  

2) Private Label

When you opt for this model, you have to do more of the heavy lifting. 

This includes:

• Sourcing products from a supplier
• Working with manufacturers or suppliers to customize products with your brand elements

While this may mean more work, note that 80% of U.S. consumers have shown a preference for it so it may be worth the extra effort. 

3) Online and/or Retail Arbitrage

This model requires you to purchase products from brick-and-mortar stores or websites. The idea is to find low-priced or discounted items in retail stores, big box stores, and discount sites like eBay and Alibaba so you can resell them on Amazon for a profit.

It sounds pretty simple, but it requires a lot of time to bear fruit. 

4) Wholesale

With this model, you can purchase high-demand products in bulk from a brand or manufacturer at a low cost or highly discounted price, then sell them as individual units by posting them on the brand/manufacturer’s existing listings.

This model allows you to tap into existing product demand to make significant profits. 

5) Handmade

Do you create your own products? Then, this selling method is perfect for you. 

It allows you to sell your handmade products — whether it is jewelry or home decor — on the Amazon marketplace. It has a separate section on Amazon, which can give you better exposure and higher chances of making a sale.

Pro tip: Consider your capital and the time you have to ensure that you can make this system work for you with profitable results.

These methods all entail selling products on Amazon and doing your own marketing. What differs is the behind-the-scenes processes that take place upon receiving an order. 

Step-by-Step Guide for Starting Your Amazon Business

Amazon makes it easy to set up an online store. Here are the general steps you need to follow:

1) Find a Product 

Finding a product is the most challenging part of being an e-commerce seller. 

You must study which products to sell, arrive at the right product mix, and carefully research your market. Products that are in high demand yet have low competition are always more promising. You’ll also have to find the ideal supplier that offers the most profitable margins.

This process will differ depending on your sales model, but if you’re looking for a reliable way to speed things up, use the AMZScout OA and Dropshipping extension.

It will:

• Help you find profitable products while weeding out high-competition products with low margins
• Help you focus your budget on scaling your business
• Make it faster to find products to sell and where to source them

2) Pick a Seller Plan 

Your seller plan affects some of the standard fees that Amazon charges and gives the platform an idea of how much product you’re going to move.

There are two options available:

• Professional which allows you to sell more than 40 products a month
• Individual if you’re planning to sell less than 40 products a month.

Keep in mind that if you choose the individual plan, you won’t be eligible for the Amazon Buy Box. The Amazon Buy Box is exactly what it sounds like. It’s an enclosed section on the right-hand side of the screen where Amazon recommends products from different sellers based on what a customer is looking for. This is prime web real estate that can’t be bought. Amazon chooses to advertise only trusted and reliable companies with significant sales volumes in their Buy Box.

3) Choose a Fulfillment Model

Amazon offers two fulfillment models: FBA (Fulfilled by Amazon) and FBM (Fulfilled by Merchant). Both models have their own set of benefits, but make sure to look at them closely to determine which one works best for your business needs.

FBM(Fulfilled by Merchant)

This method, also known as Merchant Fulfilled Network (MFN) is the more tedious of the two.Why? Because you have to take care of every aspect of the sales funnel, including listing the product on Amazon and paying attention to important factors like storage and shipping. You’ll also have to offer customer support which can be expensive if you’re hiring a third-party firm to do it for you.

Limitations aside, this option can give you more flexibility over how your business operates. As you only have to pay closing and referral fees to Amazon, it can also help you save money in the long run. 

FBA(Fulfilled by Amazon)

With FBA, all you’ll have to do is ship your inventory to the Amazon eCommerce fulfillment center and they will take care of the rest.

The best thing about FBA? If you have enough inventory, you might qualify for Amazon Prime which allows you to ship a product to a customer within two to three days after their order! As delivery speed is a huge come-on for shoppers, this can give you a better chance of selling your product and earning rave reviews.

Now that you’re familiar with how the two models work, select a fulfillment model that best fits your needs. Amazon also allows you to opt for a combination of the two for more specific and complex fulfillment preferences.

4) Know How Much You’re Supposed To Pay in Amazon Fees

As an online entrepreneur, you have to do your homework and know how much it costs to do business on Amazon. Here are some expenses you need to be aware of:

Fulfillment Fees

If you use Amazon for the fulfillment, you will be charged this fee for every order. The isn’t a flat fee so expect to pay based on the size and weight of each product.

If you’re an individual seller, you’ll pay a standard fulfillment fee of $0.99 per sale. 

Referral Fees

This is a commission that Amazon charges for selling on its platform. It is typically between 8% to 15%. The percentage will differ based on the category that your product falls under. 

Storage Fees

Similar to fulfillment fees, storage fees are based on the size and weight of your product. However, you’re charged per square foot rather than per product unit, with extra cost levied on the storage time.

Other Fees

You’ll have to cover the shipping and handling costs. If you’re selling books, DVDs, etc., you’ll also have to pay media fees.

Visit this page for a more detailed list of associated fees.

5) Open Seller Account 

Once you’ve decided what you’re going to sell and have selected a seller plan, you can move on to opening a seller account.

To do this, you’ll need to provide essential information such as:

• Your business email address. If you have an existing Amazon customer account, you can also use the same account as a seller.
• Your business location and business type (privately owned, publicly owned, state-owned, charity, or individual categories)
• A valid chargeable credit card for billing purposes
• A copy of a government ID for identity verification. This could be your driver’s license or passport
• Tax information
• Your personal details, including phone number, full name, and date of birth
• A valid bank account where Amazon can send you proceeds from your sales
• Information about the products you plan to sell

6) Source the Product 

Once your seller account is verified, choose how you want to source your inventory. This can be retail arbitrage, online arbitrage, dropshipping, wholesale, and more.

Before making a decision: 

• Look for a bestselling product with low competition.
• Compare product ideas to understand the demand, competition, product margins, availability, regulations, and shipping costs.

Don’t forget to contact potential suppliers and manufacturers as well as online stores, big box stores, and other brick-and-mortar stores for samples. Doing a test run will help you see the quality of their products first-hand. This will make it easier to understand the customer experience you’ll be providing and whether or not certain products will sell. 

7) List your Product

After finalizing your product selection, register your inventory on Amazon.

You can do this in two ways. You can either:

• Piggyback on an existing listing. This is easy as you’ll have to add less information.
• Create a new listing. This will require more work because it entails adding a new product to Amazon’s catalog.

To enhance visibility and make your products searchable, optimize your product listing. 

• Use a product listing title with the right keywords.
• Employ bullet points in your product description to make scanning salient points easier.
• Upload optimized images and videos.

Consider doing A/B testing to discover what your customers really like.

After uploading all that information, you should see your listing on Amazon within an hour.   

8) Promote Your Listings To Improve Sales

Congratulations! You’ve got your own Amazon storefront set up. But your efforts shouldn’t end there. Don’t forget you also have to promote your products to get people to notice you and buy from you. This means continuously tweaking your marketing strategies and listings until you’ve optimized searchability, visibility, and conversions. 

You can promote your products on popular platforms like Instagram, Facebook, and even Google to generate traffic and get your products on the first page. You should also focus on interacting with customers to build a positive brand image and work with influencers to make people familiar with what you’re selling. 

Grow Your Business With Your Own Website

Once you’ve mastered the art of online selling and are enjoying healthy sales, it may be time to think about setting up your own website where you can sell your products.

Sure, it’s a big step but it’s a great way to expand and further establish your own brand apart from Amazon. 

When you’re ready to make the leap:

• Focus on selling a product you’re passionate about. This will allow you to work with your manufacturer and bring your insights into the design process.
• Formally register your business with the government. Ensure that all legal aspects are sufficiently covered.
• Buy a domain name and build your website. Optimize the content and user experience.
• Build engaging and user-friendly product pages. Include videos, infographics, and relevant product specifications.
• Set up payment gateways and offer multiple payment options. 
• Arrange for customer service, logistics, and handling.

And finally, launch your business. 

Conclusion

During Amazon’s 2021 fiscal year, the retail giant was responsible for 40% of all e-commerce sales in the United States. Couple this with promising growth rates and its extremely convenient services for merchants and consumers, and it isn’t hard to understand why they continue to be the gold standard for online shopping. 

If you want a piece of the Amazon action (and profits), it’s easy enough to set up an account and list your products. The next challenge will be successfully marketing your merchandise and making, sure enough, would-be customers see them. 

With its help pages, support services, and intuitive interfaces, Amazon is a great platform, whether it’s your first time selling online or you’re a well-established company looking to expand your sales channels.