Selling on Amazon

29 Aug

min read

Learn how to start and succeed as an Amazon seller. Master key strategies to boost sales and grow your e-commerce business on this giant marketplace.

The Key To Becoming a Successful Amazon Seller

Opening an Amazon store is an exciting venture for entrepreneurs in digital retailing. It's a big step, but the platform offers huge business potential. Sellers in Germany, for example, have seen an average 37% increase in sales by switching to FBA, thanks to the fast delivery times that customers love. Tapping into this marketplace can be a game-changer.

But where do you start? Use this article as your guide. We'll walk you through the entire

registration process and launching your Amazon e-commerce store, from what you need to know before selling on Amazon to setting up your storefront and mastering the intricacies of the Amazon platform.

How to Sell on Amazon for Beginners

How much does it cost?

The costs associated with selling on Amazon include subscription fees (€0.99 per item on the Individual plan or €39 per month for the Professional plan) and referral fees, which vary by product category but are around €0.30 per item. If you opt for Amazon to fulfil your orders, you may also incur additional fees, such as FBA fees.

What do you need?

To start, you require a business plan, an Amazon seller account, and a clear product idea, especially if you aim to sell digital products on Amazon.

What are our tips for selling on Amazon?

Optimize your product listings, understand and manage your costs effectively, and utilize Amazon’s advertising tools to increase visibility. Utilize tools and services like Silvr's loans to manage cash flow efficiently. These loans can provide the financial flexibility you need to stock up on inventory before high sales periods or expand your product lines without depleting your operational funds.

Different Approaches to Selling on Amazon

The first thing you’ll need to consider is that Amazon offers various ways for businesses to market and sell their products, each offering unique benefits and factors to consider.

Understanding these options will help you choose the best path for your business model and goals.

Amazon Vendor

As an Amazon Vendor, businesses sell their products in bulk directly to Amazon, not to the customers themselves. This approach is typically invite-only and allows Amazon to handle all selling, marketing, and customer service aspects. It's ideal for manufacturers or distributors who prefer to focus on production and leave the retail concerns to Amazon.

However, this method might offer less control over pricing and marketing than other selling options.

Amazon Seller (FBM/FBA)

This is the more hands-on approach to selling on Amazon, and it comes in two forms:

Fulfillment by Merchant (FBM): As an FBM seller, you list your products on Amazon and manage all aspects of storage, shipping, and customer service yourself.

This option gives you complete control over your inventory and shipping processes, potentially leading to higher margins since you're not paying Amazon to handle order fulfillment.

Fulfillment by Amazon (FBA): With FBA, sellers send their inventory to Amazon’s fulfillment centers. Amazon then handles storage, shipping, returns, and customer service.

This option is great for sellers who want to scale their business quickly and benefit from Amazon's powerful logistic capabilities. While it reduces the logistics burden, it involves additional FBA Amazon selling fees, which can impact profit margins.

Third-Party Sellers

Third-party sellers operate on the Amazon marketplace by listing their products and handling all aspects of the business themselves, or they may use third-party services to help manage their sales.

This model includes FBM and FBA but is characterized by more direct interaction with the Amazon customer base without being under the Amazon brand umbrella, like Amazon Vendors.

This route offers the most independence and flexibility, allowing sellers to build a brand presence within the confines of Amazon's platform.

Why Amazon Seller makes the most sense for most e-commerce businesses

Whether FBA or FBM, choosing Amazon Seller balances control and support. It offers flexibility in managing inventory and shipping, direct control over listings, and a potentially more significant profit margin, making Amazon Seller (particularly FBA) a favored choice. This method can be particularly beneficial for online businesses that want to maintain close customer relationships and adapt quickly to market changes.

Pros and Cons of Selling on Amazon

Selling on Amazon offers significant advantages, but there can also be problems with selling on Amazon. Here’s a detailed look at both sides to help you make an informed decision:

Pros:

Extensive Customer Reach: Amazon is one of the largest online marketplaces, offering access to millions of customers worldwide. This vast reach can significantly increase your product’s visibility and sales potential.
Ease of Scaling: Utilizing Amazon’s infrastructure, especially through Fulfillment by Amazon (FBA), can help you scale your business efficiently. FBA eliminates the need for large investments in warehousing and logistics, making expanding your product offerings and market reach easier.
Trusted Platform: Amazon’s established trust with consumers can lend credibility to your business. Customers are often more willing to purchase from new sellers on a familiar platform than through an unknown website.
Integrated Services: Amazon offers a range of integrated tools and services, such as Amazon Advertising, Amazon Prime, and customer analytics, that can enhance your sales strategy and improve the customer experience.

Some Interesting Statistics

“Amazon has become a cornerstone of e-commerce, with 50% of shoppers in the US, UK, Germany, and France beginning their online shopping journeys on Amazon, rather than a traditional search engine.”

“Germany leads in average spending, with Germans having spent an average of €1,377 on Amazon in the past 12 months. In Italy, the average spending surpasses 1,000 euros, reaching €1,064. In the UK, the average is €999, and in France, it is €860. Spaniards are the least spenders at €768. Average spending varies twofold across the European market.”

Cons:

High Competition: The same vast market that provides extensive customer access also brings intense competition. Standing out among millions of sellers can be challenging, and you may need to invest significantly in marketing and optimization to be visible.
Fees and Costs: Amazon charges various fees, including listing fees, referral fees, and fulfillment fees if you use FBA. These can add up and significantly cut into your profit margins, especially if you operate in a low-margin category.

Amazon Selling Fees

Amazon Selling Fees
Selling plan	Referral fees	Fulfillment fees	Other costs
The Individual plan costs €0.99 per unit sold, and the Professional plan costs €39 per month, no matter how many units you sell. Selling Fees Explained	Amazon charges a referral fee for each item sold. The amount depends on the product category. Most referral fees are between 8% and 15%. More on Referral Fees	The cost to ship your orders depends on whether you fulfill your own orders or use Fulfillment by Amazon (FBA). FBA Fees	Some selling partners may charge additional fees, such as high-volume listing fees. See other fees.

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Dependence on a Single Platform: Heavy reliance on Amazon can be risky. Changes in policies, fee structures, or search algorithms can impact your sales and business operations dramatically.
Limited Customer Interaction: Selling on Amazon limits direct interaction with customers, which can stifle your ability to build brand loyalty and collect direct feedback. This limitation can make it more challenging to engage with your customers and understand their needs more deeply.
Brand Restrictions and Control: Amazon controls the customer service standards and has restrictions that can affect how you manage your brand on its platform. For instance, strict guidelines on packaging and communication with customers might limit your branding opportunities.

Our Thoughts

Many brands and retailers are concerned that selling on Amazon could lead to losing control over their own products and brand perception. Uncertainty also stems from Amazon's unique setup, where multiple sellers compete for a single product listing. This competition drives sellers to lower their prices to win the Buy Box, which can result in less control over distribution and pricing, and potentially affect the overall perception of their brand.

How to Start Selling on Amazon

Starting your Amazon store involves several key steps, each important to ensuring a smooth launch and effective business management on this vast e-commerce platform.

1. Choose Your Amazon Seller Plan

To begin selling on Amazon, you must create an Amazon Seller account, which has two selling plan options:

Individual Account: This is best for sellers who plan to sell fewer than 40 items monthly. There’s no monthly subscription fee, but you pay €0.99 per item and additional Amazon selling fees.
Professional Account: This account suits sellers who plan to sell more than 40 items monthly. It costs €39 per month plus additional selling fees but provides access to advanced selling tools like bulk listing and advertising.

Check out Amazon’s site for a detailed look at the additional fees.

2. Choose Your Fulfillment Method

Decide whether you'll fulfill orders yourself (Fulfillment by Merchant, FBM) or use Amazon’s Fulfillment by Amazon (FBA) service:

FBM (Fulfillment by Merchant): You handle storage, shipping, and customer service. This method gives you more control over inventory and direct customer interaction but requires more logistics management.
FBA (Fulfillment by Amazon): You ship your products to Amazon, and they take care of the rest, including customer service and returns. This is ideal for scaling operations and reaching Amazon Prime customers, though it involves additional fees.

3. Create Your Account

Once you've selected your selling plan and fulfillment method, you'll register with Amazon and set up an Amazon Seller Central account. You can establish your Amazon account using the email linked to your existing Amazon customer account or use a different business email address. When you’re creating your Seller Account, you will need the following details to hand:

Bank account and routing number
Internationally chargeable credit card
Government-issued ID
Tax information
Phone number

4. Configure Your Seller Central Account

Once registered as a seller, you'll access Seller Central, your comprehensive hub for Amazon sales activities. Here, you can list products, manage inventory, fulfill orders, and use tools to create promotions and track finances. Consider adding team members to help manage tasks. For added convenience and to stay connected on the go, utilize the Amazon Seller App to manage your business from your mobile device. This app allows you to track sales, fulfill orders, find products to sell, respond to customer inquiries, and more from your smartphone.

Before starting your sales, ensure your Seller Central account is tailored to your business needs. Check and update these key areas as necessary:

Public seller profile
Payment and business information
Shipping and returns policies
Tax settings
Notification preferences
Login and user permissions

5. Enroll Your Brand

Enrolling your brand is a step worth considering before you list your products. If you have the right to a brand eligible for Amazon's Brand Registry, this step helps link your products with your brand name more effectively. The Brand Registry is free and grants sellers extra benefits and protective tools.

Once your brand is enrolled, you control your product detail pages more. You can also use free tools such as A+ Content, Stores, Manage Your Experiments, and Brand Analytics to enhance audience engagement and boost sales. You also benefit from automated brand protection and additional reporting features.

6. List Your Products

Whether you’re selling unique products or items that are already available on Amazon, listing them correctly is crucial:

For Existing Products: Search for the product on Amazon and use the ‘Sell on Amazon’ button to start listing your items under that existing listing.
For New Products: If you’re bringing a new product to market, you must create a new listing. To improve visibility, include detailed product descriptions, high-quality images, and relevant keywords.

To help list your products more efficiently, follow these guidelines:

Title: Limit to 200 characters and capitalize the first letter of each word.‍
Images: Use 500 × 500 or 1,000 × 1,000 pixels to enhance the quality of your listing.‍
Variations: Offer options like different colors, scents, or sizes.‍
Bullet Points: Short, descriptive sentences emphasize key features and benefits.‍
Featured Offer (“Buy Box”): This is the primary offer on a product detail page, allowing customers to add the item to their cart or buy it immediately.‍
Other Offers: Listings for the same product from multiple sellers featuring various prices, shipping options, etc.‍
Description: Incorporate keywords to increase the likelihood that people will find your listing.

7. Optimize Your Listings

Optimizing your product listings is essential for visibility and sales conversion. Focus on high-quality product images and detailed and engaging product descriptions, and strategically use keywords that potential customers might use to search for your products.

8. Manage Your Inventory

Keep a close eye on your inventory levels. Running out of stock can hurt your rankings and sales, while overstocking can increase your storage fees, especially if you use FBA.

9. Promote Your Products

Utilize Amazon’s internal advertising tools like Sponsored Products, Sponsored Brands, and A+ Content to enhance product visibility and appeal. Moreover, consider running promotions such as discounts or a buy one, get one free offer to increase sales.

10. Monitor Performance and Optimize

Regularly check your sales analytics through Amazon’s Seller Central. Use this data to understand customer behavior, adjust pricing, optimize listings, and develop strategies to improve your sales and customer satisfaction.

3 Keys To Successfully Sell on Amazon

Focusing on three crucial strategies can help you improve your Amazon operations, satisfy customers, and increase profits. It’s essential to keep adjusting your methods to stay successful as the market and Amazon’s rules change.

1. Optimizing Listings

Creating compelling and optimized product listings is crucial for success when selling on Amazon. This involves several elements:

Title: Craft clear and concise titles that include main keywords without stuffing. Your title should be easy to read and informative.
Images: High-quality images can drastically improve click-through and conversion rates. Use multiple images to showcase your product from different angles and highlight important features.
Bullet Points: Use bullet points to succinctly communicate your product's key benefits and features. This should address common customer questions and highlight unique selling points.
Description: Develop a detailed description that goes beyond the bullet points to weave a story about the product and brand. Use natural language that includes secondary keywords to improve SEO and give Amazon PPC better chances.

2. Budgeting

Effectively managing your finances is essential for maintaining profitability on Amazon:

Understanding Costs: Be aware of all costs involved, such as Amazon fees (listing fees, FBA fees, referral fees), shipping costs, and cost of goods sold.
Pricing Strategy: Set competitive prices by considering your total costs and market conditions. Use tools like Amazon’s pricing tools to stay competitive without constantly manually adjusting prices.
Profit Margins: Review your profit margins regularly to ensure you make money after all expenses. If margins are too thin, consider pricing adjustments or cost reduction strategies.

3. Inventory Financing

Maintaining adequate inventory levels is vital, especially if you're scaling up. Here’s how you can manage it:

Forecasting: Use sales data and seasonal trends to predict stock requirements. This helps to avoid stock-outs during high demand and over-stocking during slow periods.
Funding Options: To support your inventory needs without impacting your cash flow, consider exploring inventory financing options. Silvr offers tailored business loans that align with your sales cycles and growth objectives.
Inventory Management Tools: Implement tools to monitor inventory levels, track sales patterns, and reorder products efficiently. This can be integrated with Amazon’s inventory tools for streamlined management.