Last Updated on May 4, 2022
In the past few years, we have all seen a shift in the way that we shop. More and more, brick and mortar stores are becoming outdated. Even some large chain stores are closing due to online shopping becoming more commonplace. Since the beginning of the pandemic, people have gotten even more accustomed to shopping online. Amazon in particular has experienced unprecedented growth.
There is a good reason why so many people are starting their own eCommerce businesses. Amazon is an especially great place to start for these reasons:
Amazon is one of the most visited places on the internet. It’s a place people specifically visit in order to spend money. If you are going to sell things online, might as well do it on the largest online market on earth.
One of the greatest things about selling on Amazon, and online in general, is the fact that there is very little overhead. You don’t need a brick & mortar store and you can run your business from the comfort of your own computer.
The FBA system
Amazon makes selling online especially easy with their Fulfilment by Amazon (FBA) system. This allows you to ship in your inventory directly to Amazon and let them handle the shopping, storage, picking, and packing for you. This makes selling on Amazon the most hands-free business model available.
Constant Improvement & Innovation
Amazon is the number one online shopping platform for a reason. They put in the effort to be number one. Amazon is constantly finding new ways to offer more value to its customers as well as to provide more options and avenues of growth to third-party sellers on their platform.
How Much Does It Cost To Sell On Amazon?
Starting an Amazon business can be very inexpensive. You can make your first sale on Amazon by simply reselling a discounted item from your local store if you are a reseller. Even if you decide to sell in a more focused capacity, like with a private label, you can start that business model with as little as a few hundred dollars.
There is another cost related to selling on Amazon: the fees. If you choose to sell using the FBA system, you will pay 3 types of fees:
They are charged per fulfilled order and are based on the size and the weight of your single product unit.
These are also based on the size and weight of your product but are charged per square foot rather than per single product unit. The duration of your storage time also affects the price.
These fees are calculated as a percentage of the selling price. Referral fees are 15% for most products, but there are some exceptions and special circumstances when they might be calculated differently.
If you are wondering how much a seller should pay Amazon, the rule of thumb is that from every sale ⅓ goes to you, ⅓ goes to manufacturing and shipping and ⅓ goes to Amazon. Of course, that’s not always the exact split. However, this is the ideal division.
Can I Expand My Existing Business On Amazon?
Yes, you can. If you have an existing online selling business, it’s not that difficult at all to expand your products to Amazon. You can actually fulfill your own orders on Amazon since if you have your own selling platform odds are that you are doing that already. You also have the option of using the Amazon FBA system to fulfill your orders on other platforms. Businesses can actually expand to Amazon and upgrade their existing logistics network.
How To Start A Business On Amazon?
Starting a business on Amazon is actually not that complicated. There are multiple kinds of Amazon sellers but they all have to go through these basic steps in order to get started:
Step 1 – Determine what you want to sell
This is the most crucial step. A seller can do everything perfectly with their business and fail if they have not selected the right product to promote. This step is not one to be rushed. You should do careful product and market research, calculate your margins, and find the right supplier.
Step 2 – Sign up for your seller account
The process for signing up is very easy and straightforward. The only thing you need is a valid bank account.
Step 3 – Choose your business model
There are actually several business models that are most popular on Amazon. The three most popular are:
This model is when you actually source your own product from a supplier, put your own brand on it and sell it on the platform. You have to create your own product listing and optimize it, as well as run your own pay per click campaign and promotions. This method could be the biggest commitment, but in most cases, it’s also the most rewarding as well.
This model involves purchasing existing products and selling them by piggybacking on existing listings. With this model, you don’t have to worry about creating your own listing or managing your own brand. However, you can run some PPC campaigns if you are so inclined.
This is the most hands-on business model and it requires you to constantly be on the lookout for discounted items in brick and mortar stores. The idea is that you find something in your local store in the clearance aisle or at a bigger discount. Then, you proceed to list the item on Amazon and sell it for a profit. You don’t have to do much on Amazon, but have to make an effort to find items to sell.
Step 4 – List your product on Amazon
Whether you have to create your own listing or simply add your offer to an existing one, this is the last thing you need to do in order to register inventory.
Step 5 – Ship your items to FBA
Once you have all of your ducks in a row, it’s time to send them to Amazon and let them handle all of the heavy liftings.
Step 6 – Promote your products
Once your items are available for sale, it’s time to get some real estate on the platform and move up in the rankings. The best way to do this is by using PPC.
In conclusion, Amazon as well as eCommerce as a whole has become an integral part of people’s everyday lives. This is the best time to get into selling on Amazon, especially considering how easy the process is. Countless people have managed to create successful businesses on Amazon. Good luck sellers!
This post was written by the AMZScout Amazon Expert Team. AMZScout is one of the top Amazon research tools for online sellers and has been in the field for more than four years. We love to share our expertise and identify trends to guide sellers to success.