It is a well-known fact that Amazon is one of the largest e-commerce sites in the world. It caters to millions of customers across the world on a daily basis by connecting them with various businesses. People who run these businesses are known as Amazon merchant or Amazon sellers. As the name suggests, they are people who sell their goods and products through the Amazon website. In fact, selling on Amazon is among the easiest and convenient ways to start a business online. Its business model has proven to be so popular that more and more people are listing their goods on Amazon every day!
If you happen to own a product-based business, then you may definitely want to consider becoming an Amazon merchant. We have prepared a step by step guide in this article to help you get started with doing a business on Amazon.
Benefits for Amazon Merchants
There is a reason, or rather a list of reasons why Amazon FBA is quite popular among merchants – it is known to be highly convenient. Just consider the following points:
- It frees up your time
- Your products carry the brand name of Amazon which, in turn, improves your chances of getting a sale
- Your items on the site are accompanied by the Amazon Prime badge. You should be quite excited about this, given that Prime listings appeal to Amazon Prime members and also, they are ranked considerably better in the search results.
- Amazon provides the customer support and processes the returns on your behalf.
- You don’t have to worry about shipping your products – Amazon will do it for you.
Now let’s go over the key steps to becoming an Amazon Merchant.
Step 1: First Up, Decide What Products You Are Going To Sell
This is the first step that goes into starting a business – figuring out what exactly your business is going to be. Ideally speaking, you need to find the products which are in high demand, cheap to procure and can be easily delivered without incurring high shipping charges.
Product research for Amazon may certainly be time-consuming, but it is going to be well worth the effort. You will have to consider the factors like competition, monthly searches, ease of shipment and logistical charges, reviews, demand, et cetera, before arriving at your niche.
The oldest trick to get started with this is to go on Amazon and see which the most popular, high selling products on Amazon. You need to remember that this information is dynamic, that is, the list of most popular products on Amazon is updated rather frequently. You will need to take this into account and avoid jumping to a conclusion.
If you already have a business and are simply planning to shift it online through Amazon, then you will have to pay special attention to your competition, prices, and shipping options.
Step 2: Create an Account on Seller Central & Merchant ID
Amazon Seller Central is going to be your best friend on your entire journey as an Amazon merchant. Seller Central is where you manage your Amazon account as a seller and monitor your sales, performance history, reviews, and other important metrics that define the success of your business. In addition to these, Seller Central is also used to prepare the listings of your products. This includes optimizing your Amazon product page with SEO based keywords, high-quality pictures, and product description. Preparing your Amazon product listing is an entire process in itself – one that needs to be done correctly for optimum results.
Step 3. Pick a shipping option
As an Amazon merchant, there are two ways to go about shipping your items to your customers – either do it yourself or let Amazon do it for you.
If you choose the first option, then you will have to depend on a shipping partner who is reliable enough to ship your products on time, without any damages. Furthermore, the shipping rates offered to you must be highly competitive and should not eat into your margins. In simpler terms, your profits should not suffer because of your shipping method. Another thing to consider here is that you will be managing all of this, all by yourself.
On the other hand, if you choose to partner with Amazon, you will not have to worry about logistics at all. This program is popularly known as Fulfillment by Amazon and as the term implies, Amazon fulfills your order on your behalf. Yes, that’s right! All you have to do is send your inventory to Amazon’s fulfillment centers and let them take care of the rest. When you receive an order, Amazon processes it by picking, packing, and shipping your items to the customers. It also provides customer support and processes returns.
As you can see, the second option is far more convenient. By joining the Amazon FBA program, you get access to its world-class infrastructure and delivery network which will help you boost your business. Since you are no longer worried about shipping and logistics, you can focus on other important aspects of your business. However, you will have to consider the Amazon FBA fees and compare them against the costs incurred while having your own shipping partner. In most cases, FBA fees turn out to be better than the third-party rates.
Step 4: Consider the costs of selling on Amazon
The most important factor to consider while selling your products on Amazon. Since you are making a profit (hopefully) by listing your products on its website, it is only natural for Amazon to want a cut for the services you partake in.
If you are planning to sell more than 40 products a month on Amazon, then you will be categorized as a ‘Professional’ and you will be charged $39.99 a month to use the platform. On the other hand, if you are going to sell less than 40 items, then you will be classified as an ‘Individual’ seller and you will be charged $0.99 on every sale you make, along with other fees.
These other fees are often referred to as referral fees and variable closing fees. To understand these better, you can consider them to be the commission that you pay Amazon for every sale you make. Referral fees vary across different product categories – it is 15% for baby products, 8% for consumer electronics, 15% on musical instruments and so on. Variable closing fees are incurred when you sell media items on Amazon.
On opting for the Amazon FBA services, you don’t pay the referral and closing fees, however, you pay Amazon FBA fees, provided you opt for it. These fees depend largely on the dimensions and weight of your products.
Pro Tip: Use Most Favorite Amazon Seller Free Tool For Fba Calculation
As an Amazon merchant, you must take these fees into account while calculating your costs. You may have the niche product and an excellent marketing strategy but if you fail to pay heed to these fees, then you may find these charges eating into your margins.
Step 5: Understand the importance of marketing campaigns for Amazon Merchants
As a merchant on Amazon, you will be competing with your fellow merchants for the attention of your customers. You can have highly competitive prices and excellent products but nothing can beat a well-crafted marketing campaign. Amazon Marketing Services is a portal that has been designed exclusively for the sole purpose of helping sellers create excellent marketing campaigns.
These advertisements have the potential to reach millions of customers and if you are able to convert even 5% of them, then you are still going to make a decent profit.
It goes without saying that in order for these ad campaigns to be successful, you must optimize Amazon listing page for maximum visibility and conversions.
Step 6: Monitor and review your business performance
Becoming a successful Amazon merchant is a long and iterative process. You will have to regularly monitor the important metrics of your business and see which strategies work best for you.
For example, if you have a product page you have a low Order Session percentage meaning a listing which is visited often but has a poor conversion rate, that is, customers do not buy the product. The chances are that the product page is not optimized correctly, or possibly the pricing could be the factor. Fix this issue by ensuring that your listing passes all the checks of the Amazon Listing Quality Check tool.
Similarly, if one of your products is receiving poor reviews, then you should look into the issue, ensure the product is good enough and rectify it at the earliest.
Issues like these will come up every now and then. That’s why; you should make it a habit to examine your business data on your Seller Central account. Your Amazon business can quickly go downhill if you fail to pay attention to these crucial points.
Here is the best free tool to lookup your Amazon Merchant ID – SellerApp
Step 7: Don’t be afraid to seek help
It can be fairly tricky to understand the ins and outs of becoming a successful merchant on Amazon. In case you ever find yourself in any difficulty while dealing with the intricacies of doing business on Amazon, you must not hesitate to contact the Seller Central support team. Additionally, you can also join the Seller Central forums to discuss your queries with your fellow merchants. Chances are someone in the forum must have incurred the same problem as you did and they are well placed to help you out.
It is fair to say that starting a business on Amazon is fairly simple and it gives you access to an open market with millions of customers, at minimal prices. It also holds the key to unlock the true potential of our business. However, to someone who is just starting out, it can be tricky initially. Luckily, Amazon has prepared a plethora of documents, web seminars, tutorials, and videos to educate you about this entire process of selling on its portal. These guides cover every topic that you can ever imagine and it is recommended that you look into them. You can also follow the Amazon SellerApp site to help you boost your Amazon sales.
If you are an Amazon merchant, then please feel free to share your experience in the comments section below. We are curious to hear from you!
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Customer Success Head at SellerApp
Customer success leader with expertise in coordinating between cross-functional teams in product development and strategy, professional services, sales, marketing and content to deliver excellent customer experience and accelerate growth within the company by ensuring clients’ success.