Amazon entered the retail world almost three decades ago and revamped the entire scene.
Customers today turn to Amazon for all phases of the buying journey, from research to conversion and repeat purchases. The company generated more than 500 billion USD in revenue last year, a 9% increase from 2021.
Amazon’s success is driven by its innovative tools and the trust customers have in the retail brand. Sellers get to leverage this success for their own growth.
59% of paid units sold on Amazon in the fourth quarter of 2022 where sold by 3P sellers. This shows how third-party or 3P merchants own a majority of the businesses operating on Amazon.
The businesses operating on the 3P model have a lot to gain from Amazon, its tools, capabilities, and of course brand. This is why, the 3P business model is expected to grow at a much faster rate compared to the 1P model.
In this blog, we will share some tips on how you can start selling on Amazon. These tips may be helpful for you, whether you are already operating an ecommerce business or are starting from scratch.
Selling on Amazon: Tips to Get Started in 2023
Amazon 1P sellers are invited by the platform. As opposed to that, 3P sellers can hop on Amazon simply by signing up on Seller Central. So, getting started on Amazon is not a challenge. But going in with the right approach is what requires research and effort and this is what promises maximum chances of success.
Here are some steps you can take to build the right Amazon selling approach as you prepare to get on the platform:
Pick a Business Model
Before you jump into the marketplace, you will have to decide on a business model that makes sense for your business.
If you already have a business model in mind, feel free to skip to the next step.
Amazon allows various business models that you can implement to sell products and grow your business on the platform. These include:
Private Labels
Private-label products are made by one company and then marketed and sold by another.
When working on this business model, you essentially source your products from a manufacturer and then sell them yourself on Amazon.
This business model might work for you if you also plan on investing in Amazon FBA or if you can manage, pack, and ship your inventory yourself.
Online Arbitrage
Online arbitrage entails sourcing your products from one online marketplace (think AliExpress) and then reselling it on another online marketplace for a profit (think Amazon).
This is another viable option for brands looking for a low-threshold entry into Amazon. But online arbitrage may also have some caveats.
You could be dealing with offshore suppliers and may have to face delivery delays. Moreover, your supply chain will be beyond your control, so in case you scale, you may have to look for other suppliers to manage your inventory well.
Handmade Products
Amazon has a program for artisans who sell homemade products. This is another business model you can implement if you are into handmade goods.
Signing up for the handmade program requires a Professional Seller account that comes at a cost of $39.99/month. Amazon claims this fee is waived for approved applications.
Once you have decided on a business model, its time to pick a product. And for that you need:
Product and Market Research
When selling on Amazon (or anywhere for that matter) you need a product that sells reasonably well and does not sit stagnating in the inventory.
For this, you will need to delve into the market yourself to find out what options you have and then see how viable these options are.
You can start your product research on Amazon itself.
Amazon maintains a best sellers list that’s categorized according to the various departments available on the platform. You can access this list via a simple Google search and check out which products are in demand. From there, you can pick a niche and go deeper with the research.
You can also consider multiple niches and go beyond the best sellers list to check out product recommendations that accompany the best sellers for more product ideas.
Build a list of products you think you can sell and check their business viability. You can do that by searching for these products on a keyword research tool and checking the search volume. A high search volume will show that the product has a high demand.
Shortlist the products that have high demand and then scope the competition for these products on Amazon.
See what the competitors are doing, if there is a successful brand already reigning the market, and any gap or untapped area that you can capitalize on.
If the market for a product seems impossible to break into, consider adopting a more nuanced approach and get more niched with your product.
For example, settling on selling handmade wooden spice boxes instead of regular spice boxes if the competition for regular ones is too high, given that the handmade boxes have a sizeable demand.
Once you have decided on a product, look for competitors selling the same or similar products. Analyze their product listings and try to figure out what the industry standard is. Read the competitor’s reviews to figure out customers likes, dislikes, preferences, and what they would like differently etc.
Use this information as you move forward with creating your own listing and marketing your product.
An important note: if your niche seems to have high competition, that does not necessarily mean it will be impossible to break into. Asses the listing quality and apparent performance of the sellers in any niche before skipping it and looking for a different one.
Find Reliable Suppliers
Now you know what you want to sell on Amazon. Next, its time to find suppliers who will help you get the ball rolling.
Finding the right supplier is crucial for the success of your business. In 2022, 32% of consumers abandoned their carts if the shipping took too long. So, you want to work with someone who is dependable and won’t cause unnecessary delays in your supply chain.
You can work with overseas suppliers or local vendors, whatever makes sense for your business.
Once you have chosen a bunch of sellers, order some product samples for them to assess quality and delivery diligence. Find out their minimum order quantity, order limit, shipping costs, and other details that would influence your business.
If you are looking to adopt a private label business model, ask the suppliers whether they will do custom branding for you.
Once you have done your homework on product and seller selection, its time to land in the playing field:
Choose a Selling Plan
Amazon offers two selling plans to its 3P sellers:
Individual Seller Plan
Professional Seller Plan
The Individual Plan is best if you are just starting out in the ecommerce world and are not expecting more than 40 sales in the beginning. This plan is free but you will have to pay $0.99 per item when it sells in addition to the referral fee and other fees.
The Professional Plan is best for established sellers, especially those who want to use Amazon ads as well since the Individual Plan does not give you access to ads on Amazon.
This plan costs $39.99/month but you don’t have to pay the $0.99 per item whenever you make a sale. The referral and other fees still apply though.
In addition to ads, the Professional Plan also comes with some other perks like Buy Box eligibility and more.
Create your Amazon Seller Account
Once you know what plan you will use, you are ready to truly get started with selling on Amazon. The next step here is to create an Amazon Seller Account. You can do that by visiting the “Sell on Amazon” page and signing up with a business email. This is important so you can keep your business and personal emails in separate inboxes.
Once you create an account, Amazon will prompt you through the following steps and you will get to the Seller Central dashboard, which means you are now officially on Amazon.
The next step from here is to:
List Your Products
Once you are all set up in Amazon Seller Central, you can start adding your products either manually or bulk upload them through the Seller Central API.
If you are a new seller with limited experience with Seller Central and spreadsheets, the bulk upload option may not be the best idea. It may get confusing for you. So, consider saving your time by manually uploading your products.
Build a System for Inventory Management
Once your business goes live and starts to gain some traction, you will need to ensure your supply chain is optimized so you don’t run out of stock or have inventory overflowing with slow-moving products. For this, you will need to put a solid inventory management system in place right from the get go.
A good rule of thumb is to maintain a good relationship with your suppliers. Also, make sure you always have a few days worth of inventory to counter any supply chain delays.
If you are selling through FBA, you can also monitor your sell-through rate through Amazon inventory reports to help you forecast your sales volume and manage your inventory accordingly.
Choose A Fulfillment Method
Amazon offers its sellers four methods through which they can deliver their products to the customers. These include:
Fulfillment by Amazon or FBA
Amazon FBA is a popular choice, especially among new sellers and small businesses. When you sign up for the FBA program, Amazon takes care of storing, picking, packing, and shipping your products once the order is placed. The company handles customer care as well in this case.
FBA also comes with many other benefits like fast shipping and eligibility to become a Prime seller.
FBA does come at a price though and may be expensive unless you have fast-moving and regular-sized inventory.
Fulfillment by Merchant (FBM)
When using FBM, the seller is responsible for packing and shipping the products.
This method can help you save on FBA costs, but you will have to abide by Amazon’s strict rules and give up your eligibility to earn the coveted Prime Shipping badge for your products.
Seller-fulfilled Prime (SFP)
Seller-fulfilled Prime is a hybrid of FBA and FBM. You store, pack, and ship the products yourself while also displaying the Prime badge on your listings.
This program is much harder to qualify for. Amazon wants to maintain its “lightning-fast delivery” reputation and it makes sure you are capable of handling and delivering orders at the same speed when fulfilling them yourself.
Signing up for the program comes with a small test period and zero room for slowing down or slacking.
FBA Multi-channel Fulfillment (MCF)
MCF is best for sellers who already sell on their own websites and are moving to Amazon.
Using this fulfillment method, you get to store your inventory at Amazon’s fulfillment centers and Amazon packs and ships your products, regardless of where the order comes from, your website or Amazon store.
This option also comes at a price of course, but it may be reasonable for sellers looking to adopt a multichannel selling approach.
Consider Amazon Advertising
A travel and home accessories company started using Amazon ads a few years after they had first started selling the platform. The reason? They were looking to drive their inventory faster and wanted to increase brand and product awareness.
The brand invested in Amazon’s diverse ad products to build an advertising strategy that earned the 2x higher discoverability and a 100% increase in ad-attributed sales through Sponsored Display ads.
But given the rise in competition, it may no longer be wise to wait for years before you invest in Amazon ads. If you have an ad budget, consider investing in Amazon ads like Sponsored Products and Sponsored Brands to let your target audience know you are here and selling.
Sponsored Product and Sponsored Brand ads don’t require huge budgets. Therefore, you might be able to run ads, even on a small ad budget.
Work with Amazon Partners
You can start selling on Amazon all by yourself with the help of tips and strategies we have outlined above. And if you get stuck somewhere, you can always work with Amazon experts and get their input on your selling strategy.
Team Accrue builds on the experience of ex-Amazonians and marketplace experts. We have helped multiple brands build a strong presence on Amazon. Talk to one of our partners at Accrue, share your plan, and we might be able to share insights on how you can improve your approach.