Do Business with Amazon: How to Sell on Amazon in 2019
If you’ve been watching Amazon’s business model growing from strength to strength from the sidelines, perhaps you should consider making this year as the year to set up shop and sell on the world’s greatest e-commerce store.
Being a part of the Amazon Marketplace is great for beginners and advanced sellers alike.
Out of all merchant options available, the Fulfillment by Amazon (FBA) business model is considered to be the most popular, and for good reason. First, you can leave most of the logistics to Amazon and focus almost exclusively on profit margins and building your brand. Second, being under the Amazon umbrella for customer service and shipping means you’ll always be the preferred choice — ideal for a customer base of around 40% of Americans per month.
Selling on Amazon has never been a better choice for those wanting to leave their 9-5 and tap into a world of uncapped earnings. With Amazon as the most common starting point for online shoppers, trying your hand at e-commerce via the world’s most popular platform shouldn’t be more difficult than doing some basic research and learning as you go along.
If you want this year to be the start of a new career and adventure into e-commerce entrepreneurship, read on for our definitive guide on how to do business and sell on Amazon in 2019.
How Does Amazon FBA Work?
As mentioned, Fulfillment by Amazon (FBA) is one of the easiest ways to streamline your operations while scaling your Amazon ranking. FBA will handle stocking, storing, picking and sending goods. When you do business with Amazon FBA, they will also take care of all of your customer returns. This frees up time and resources, allowing you to focus on sales, marketing, and branding to raise the profile of your store. At a future point down the line, you can even use the profile you have built on Amazon to expand to a website and operation of your own.
Not only does FBA take care of logistics, but it also makes your products Prime eligible. This can help you instantly win the Buy Box — the first purchasing option among an entire list of sellers for the same product. Amazon always favors Prime sellers and if your competitors aren’t using FBA, you’ll have a considerable advantage. FBA also lets you offer free one-day and two-day shipping to Prime customers, which can give you the competitive edge against other options on Amazon.
Using FBA will slightly cut into your margins, but it is one of the most effective ways to propel yourself quickly in e-commerce and grow successfully.
Choose low-competition products
Most people starting a business on Amazon take the reselling approach by sourcing products externally and reselling them on the platform for a higher profit.
There are two ways in which reselling can be successful on Amazon:
- Option 1: Selling units that have proven success but high competition.
- Option 2: Selling units with low competition but no proven success, yet.
If you’re a new reseller, we recommend starting with option 2. Low-competition products are a great way to establish yourself as a leader in that product category. This can help you establish a brand and make a name for yourself in the competitive Amazon market.
Selling a low-competition product also makes it easier to win the Buy Box. Winning the Buy Box is critical to improving visibility and gaining sales, which in turn improves your reviews, seller rank, and branding — all of which further helps grow your business on Amazon.
The risk with opting for a low-competition product is the lack of a sales record, which could indicate a problem with the item’s saleability. Perhaps there might not be enough consumer demand, or the margins may be small. Do ensure you thoroughly research your product first.
Selling low-competition products can also be challenging if you don’t have a strong seller rank on Amazon. You need a strong seller rank to optimize on Amazon search (which gains visibility and boosts sales). Gaining seller rank is why some resellers choose to go with the second option first.
Sell low, win high
High-competition products are hard to break into, but they have a proven track record of sales. Selling a popular product can help you get an influx of sales to your seller account, which quickly boosts your seller ranking and stats on Amazon.
However, it may be difficult to get sales if you’re up against a lot of competition, especially if competitors already have strong seller rankings and stats.
To overcome this, it is recommended to offer a lower price on highly competitive products in order to help you stand out from the crowd and boost your sales. A lower price can help you win the Buy Box and attract value-driven customers that make up most of the Amazon consumer landscape.
Unfortunately, there can be some risks with this method. Selling products at a low price can unintentionally establish your business as a “discount” brand and thus attract discount shoppers. This can make it harder for you to raise your prices in the future, or gain the clientele you need to cultivate your business.
You also want to be aware of how lower prices will impact your margins. You don’t want to sell at too low a cost just to get a high number of sales, because this could actually cause you to lose money. Doing this often quickly adds up and can run your business into the ground.
How do you know if it’s a low-competition or high-competition product?
Search the ASIN (Amazon Search Identification Number) on Amazon. You can see how many sellers are on that ASIN, which will give you a general idea of your competitors.
You can also look at the ASIN sales rank. An extremely high ranking shows that it’s popular with buyers (but not necessarily that there are a lot of competitors). Low or no ranking means it’s not as popular, but it could mean you’re opening up new markets.
Select good quality items
Whether you’re selling a low-competition or high-competition product, it’s a sensible idea to make sure your product is identified as good quality. The products you sell define your brand as you move forward. A product of exceptional quality can position you as a high-end reseller and brand, especially as you continue to grow in the future.
Also, high-quality products typically mean you can charge a premium once you create a strong brand for your store. This premium can help improve your margins.
Low-quality products typically result in high return rates and poor reviews, which hurts your seller account in both the short and long term.
Aim for high margins
While it may seem obvious, it’s advised to avoid low margins as much as possible, as this could hold you back from growing your business in the future.
You can have a high-quality product, but a low-profit-margin. For example, imagine you’re reselling a high-quality pencil case. Even though your customers may love it, perhaps you’ll only make a small profit of $1 for every sale. This likely won’t be worth the effort, especially when factoring in the costs of marketing and logistics services of FBA.
Before selecting the products you want to sell, a quick cost analysis should be able to tell you if a significant profit is viable. First, you should consider how much would it cost to procure the item, then incorporate the prices of labeling, packaging, shipping, warehousing, and other factors. You might even want to include the average marketing costs in each unit’s margin.
We recommend a margin minimum of $5-10 per product as a starting point.
Learn more about the methods of product procurement and sourcing.
One of the most important things to do as an Amazon seller is to properly analyze your inventory levels. It’s wrong to assume that inventory levels don’t matter as much for reselling as they do for private labeling.
Maintaining a healthy inventory is key to effectively managing your Amazon business.
A surplus of unsold goods can be intensely expensive — especially if you’re forced to liquidate for a lower cost than the purchasing price. On the other hand, too few goods in your inventory can leave you without products to sell to your customers. This can cause you to constantly spend time looking for new products and orders, which can take up a lot of resources.
Before you invest in reselling a specific product, you’ll want to ensure your sales and inventory are forecast on the basis of competition, pricing, procurement availability, quality and market need.
Build a brand
Don’t be just another Amazon seller that resells any old product that’s easy to come by. While this can help you make a quick buck, it’s not an ideal strategy for growing a business long term. If you want to increase your profits and develop your business towards strong levels of success, you’ll need to build a brand.
When establishing a brand on Amazon, it’s best to focus on creating some sort of lifestyle that’ll help you incorporate a number of different products. Trends and needs change, and so will the availability of products. For this reason, it’s important to keep the door open for variety and freshness.
For example, perhaps you may want to establish your store as a home cleaning brand. You can resell a variety of cleaning products and promote your brand at the same time. This can raise your brand’s profile for private labeling if you choose to do that in the future.
What are you waiting for?
Now that you have an idea on what it takes to get your foot in the Amazon Marketplace door, the next step is to just go for it! While you will need to have some up-front capital to start your business, there are plenty of techniques and methods to help you quickly scale up to a highly profitable operation. Going the Amazon route rather than the traditional, private e-commerce path will save you time, money and help you learn the ropes before investing further. With a myriad of resources to help you along the way, there’s no reason why this 2019 couldn’t be the year you make the change to upgrade your life and career for the better.
Focus on building your brands from the inside-out.
Ensure that your brand voice is consistent between your product listings, email campaigns, website and everything else. Create stunning images that set apart your listing while giving you the key marketing tools to help you win the Buy Box.