Are you looking to sell on Amazon? Well you’re in luck because you’ve stumbled across my ultimate guide on how to make money selling on Amazon.
With this guide, you will learn all the processes involved in setting up an online store on Amazon. We’ll cover everything including creating an account, finding products, securing manufacturers, marketing and branding, and of course, making your first sale.
If you have any questions when reading this guide, please feel free to comment below. I’d be happy to help.
Let’s jump right in:
Here's What we'll be covering:
- Amazon Marketplace – Stats
- Amazon FBA – An Overview
- Startup Costs to Selling on Amazon
- The Steps Involved
- Frequently Asked Questions (FAQ)
If you haven’t heard of Amazon before, there’s something wrong with you. Amazon is the largest online retailer in the world generating over $230 billion dollars in revenue in 2018 and a net income growth of 31% with no signs of slowing down.
More than 197 million people (source) worldwide visit Amazon.com. That’s more than the entire population of United Kingdom, France and Italy combined!
Here are a few reasons why you need to start selling on Amazon today.
- 9 out of 10 consumers price check a product on Amazon. (source)
- 95 million people have Amazon Prime memberships in the US. (source)
- $1.4K is the average spent by Amazon Prime members each year. (source)
- Amazon shipped over 5 billion items worldwide in 2017. (source)
- More than 50% of all Amazon sales come from third-party sellers. (source)
If you want to sell products on Amazon, it’s critical you understand what Amazon FBA is because it’s going to be the method you’ll be using to get started. In fact, it’s a method most successful Amazon sellers use.
Amazon FBA means Amazon Fulfilled-by-Amazon. It’s a storage, shipping, and support service for third-party sellers (like you) to use. The benefits of the FBA program is that Amazon does all the hard work for you.
The process goes as follows:
- You send your products to Amazon and they store it in one or more of their million acre fulfillment centres.
The fulfillment centres are massive warehouses with Amazon employees and robotic machines
- Your products will then be sorted and stored by Amazon.
Your products will be in good hands, and if something happens to them, Amazon will reimburse you the full price!
- When a customer purchases your product from the Amazon website, Amazon will handle the process.
- Amazon picks the customers order (your product) from the shelves and will box and ship the product on your behalf.
- Your product arrives to the customer.
If there is a problem with the product or the customer is not satisfied, Amazon will take care of the whole process automatically for you.
So you might be thinking… If Amazon does all the work for me, what do I do?
Here’s what you do:
- Choose your products
You need to decide what products you want to sell and the price your charging
- Keep your products in stock
You need to ensure your products are always in stock. Amazon will send you a reminder when inventory is getting low
- Promote your products
Amazon has millions of products on their website, so it’s your job to make sure your products are seen. You can do this through Amazon advertising, giveaways, promotions, and more.
Before you enter this business, it’s important to know all the costs required in order to actually start making sales. Let’s talk about how much money it costs to start an Amazon FBA business in 2019.
It’s also important to know that if you’re selling products that you already own (like unwanted items around the house), you can pretty much do it for free! However, I don’t recommend this method as you probably won’t make much money.
There are two types of Amazon FBA accounts you can choose from. The Individual or professional seller accounts. Individual seller accounts are free, but have higher sales fees. And professional accounts have a monthly subscription fee of $39.95, but with lower fees. If you plan on selling more than 40 items per month, I recommend you go with a professional account. But if you want to try it out with only a few items, then the individual account may be a better option for you.
Some costs are mandatory, with others being optional. Let’s take a look at what’s required.
- Product Research Tools ($97):
How are you going to discover what products to sell on Amazon? You have to do your own research to find these products. There have been a number of research tools within the past 5 years that have come into existence that help you make this process easier, faster and more accurate. (Examples: Jungle Scout or Helium10)
- Product Samples ($150):
Once you’ve discovered what product you want to sell thanks to your research tool, you’ll need to order samples from your supplier to determine the quality of the product. High quality products are a MUST because low quality products will get you negative reviews, product returns and customer complaints. I recommend you order a minimum of 3 samples, and because these products are most likely over seas.. the shipping and samples can cost you upwards of $150.
- Product Packaging/Branding ($125):
Now that you’ve found your product and like the quality, it’s time to get your product packaging done. This could include your logo, branding and product images. There are websites where you can find people to create this for you. (Example: Fivver)
- Inventory ($1500):
This depends on the product you purchase. It’s recommend you buy a product that is not very heavy because shipping costs are much higher with heavier items. Ask yourself how much can you invest in the product you’re purchasing? Let’s say the item costs $5 per unit and you order a minimum of 300 units.
- Barcodes ($250):
Amazon has a newer policy where they require you to have barcodes that come straight from the source: GS1. Barcodes are mandatory for Amazon because it helps your product become scannable and trackable. If you have 1 product, you need 1 barcode. If you have 10 products, you’ll need 10 barcodes. If you only sell 1 product and have 300 units of them, then you only need 1 barcode because they’re all the same product.
- Shipping ($300-$1000):
This price depends on where you’re sourcing your products from.
Local: If it’s locally, then you have an advantage because shipping is a closer distance but also because you can ship using Amazon Seller Central and Amazon has a discount shipping rate with UPS and FedEx. Your shipping rates will be much less than shipping from overseas.
Overseas: If you’re shipping from overseas, you have an option to choose between boat or by air. If you ship with a boat, your costs will be much less, but the problem is it’ll take much longer and could range up to 40 days. If you ship by air, the costs will be much higher, but Amazon will receive your products much quicker. I suggest you ship by air for your first products.
- Customs Bond ($100):
In order to receive products into the United States, you have to get a Customs Bond. You have two options to choose, either a single entry bond or a continuous bond. If you’re planning on selling multiple shipments per year, I suggest you get a continuous bond. If you’re just trying it out and ordering only a few shipments here and there, then a single entry bond works.
- Amazon Professional Seller Plan ($39.95/month)
You don’t need to sign up to Amazon Seller’s Plan until your 100% ready to buy your products and have them shipped to Amazon’s facility. However, once you’re ready to begin, you must be a member of Amazon’s Seller Plan and have access to the program, the advertising options, etc.
– Total: $2,762
- Freight Forwarder ($200-$400):
Often times, your manufacturer can handle the shipping for you, but that’s up to you. If you trust them, you can have them do it for you. I don’t recommend you handle the shipments yourself as this can get quite confusing and become stressful if your products get lost overseas. I recommend you hire a freight forwarder because they will handle all the logistics of your shipments including the timing, check-ins and location updates of your shipment.
- Product Giveaways ($300)
When your products are finally on Amazon, your products will be most likely be on page 13 or 15 and won’t be seen very easily. If you’re not seen, you won’t make sales. Your goal is to rank and get to page 1 or 2 of Amazon’s keywords. How do you climb the ranks? Well, having sales helps. That’s why having product giveaways are important. This means you can discount your products by offering a 50% discount and encourage people to take advantage of this offer and buy your products.
- Amazon Advertising ($????)
Amazon Pay-per-Click ads (PPC) play a large factor in having your products seen and showcased on the page 1 of the keywords you purchase. The cost depends on how much you’re willing to spend
- TradeMark ($350-$1000):
I don’t recommend this when you first start out. The purpose of a trademark is to protect your brand name. However, if you believe you’ve create a good brand that can be replicated by knock-offs, then it might be worth purchasing. You can either do this yourself or hire a lawyer.
- Third-Party Amazon Course ($1000-$5000):
There are many third-party Amazon courses that teach you step-by-step how to find profitable products, climb the Amazon page rank and much more. This is optional because it is up to you on whether you’re willing to take a course on educating yourself on the process of being successful selling on Amazon.
– Total: $2,500+
Similar to other online marketplaces, Amazon charges fees for their services. Most of the fees are charged when a sale is made.
- Amazon charges a 15% referral fee every time you sell a product – for most categories.
- For Amazon’s FBA service, they’ll charge shipping and handling fees for your products. (However, if you choose to ship your products yourself, you’ll most likely pay a lot more than what Amazon would charge.)
- Amazon charges an additional flat fee on some categories like books and DVDs.
- If your inventory doesn’t sell quickly and sits on the Amazon fulfillment shelves long, you may end up paying long-term storage fees.
There are a number of steps involved in starting an Amazon FBA business. From finding a product, to securing a manufacturer, let’s take an in-depth look into each step.
The products you sell are everything when it comes to Amazon FBA. Finding high quality products that you can buy low and sell high should be your number one priority. Without a profitable product to sell you have no Amazon business.
There are a number of ways to find these products and let’s take a look at some:
Find low-priced products in retail stores or other online marketplaces to resell on Amazon at a higher price.
Buy bulk low-priced products to resell on Amazon at a higher price.
- Private Label
Research and manufacture your own branded products to sell on Amazon FBA. Manage and oversee the cost, quality and branding of the products.
In my opinion, Private Label is the best option for selling on Amazon. The most successful Amazon FBA sellers use the private label method.
What is Private Label?
A private label product is manufactured by a third-party manufacturer and sold under a retailer’s brand name. In other words, you take a product that already exists and manufacture it with your own brand and logo.
Why Sell Private Label VS Other Methods?
Selling Private Label offers a lot of advantages compared to the other methods. Let’s see how:
- Less work sourcing. You only have to source a single product in large quantities versus many small products like you would with arbitrage.
- Better Price control. The Amazon listing for your product is under your control. Therefore, you don’t have to worry about underpricing your competition like you would with wholesale or arbitrage.
- Higher profit margin. In my experience, private label is the most profitable and predictable method of how to sell on Amazon FBA.
How do I Find Private Label Products to Sell?
Finding products to sell are easy… that’s not the problem. The problem is finding high quality, low-priced and low competition products, because THAT’S the products you want.
This is what differentiates successful Amazon sellers from others.
Finding these products aren’t easy; however, with the introduction of new third-party tools like JungleScout, it makes the process a little easier. JungleScout is a product research tool that scans and finds quality products for you and provides in-depth analysis of the sales/searches.
In regards to finding private-label products, you should follow these steps:
Research high-demand/low-competition products using third-party research tools like JungleScout.
- Search & Locate
Search and find these products on websites like Alibaba.com.
- Contact Manufacturer
Contact the manufacturer and ask questions about the product.
- Negotiate Prices
Contact the manufacturer and negotiate prices for the product.
- Purchase a Product Sample
Test the quality of the product by purchasing a sample.
- Buy & Ship
If you’re satisfied with the product, buy a bulk order and have them ship it to an Amazon FBA facility.
Now that you’ve determined the product you’d like to sell, you need to find a supplier or manufacturer to make it.
Using manufacturers in countries like India or China are a great way to keep costs low as their employee salaries are much lower when compared to USA or Canada.
Alibaba.com is the largest marketplace for suppliers and manufacturers with most of them based in China and India. Don’t worry though, because most of them speak English.
It’s critical to put extra effort in researching quality suppliers by shopping around, reading their reviews, ordering samples and contacting them with any questions.
Once you’ve identified the right manufacturer, ordered and tested product samples; the next step is to create an Amazon account.
- Register an Account
Create an Amazon seller account here.
- Select a Selling Plan
Amazon offers two selling plans and gives you the flexibility to sell one or one thousand products. The Individual seller accounts are free, but have higher sales fees. And professional accounts have a monthly subscription fee of $39.95, but with lower fees. If you plan on selling more than 40 items per month, I recommend you go with a professional account. But if you want to try it out with only a few items, then the individual account may be a better option for you.
As a non-U.S. citizen, you can still sell on Amazon.com. You’ll just need to follow these steps:
- Use your personal home address as your business location.
- Use your local phone number (with your area code prefix)
- Use a Credit Card that can be charged internationally (VISA or Mastercard)
- Use a local bank that supports ACH (automated clearing house) which basically means your bank can accept electronic transfer payments from Amazon.
- A U.S. EIN number – You don’t need to be a corporation or be a US citizen to get this. IRS regulations require non-U.S. taxpayers to provide Form W-8BEN to Amazon in order to be exempt from U.S. tax reporting requirements.
Once registered, you can begin listing your products on the Amazon marketplace using your Amazon Seller account.
Creating an Amazon Listing is a critical step in making sure your products are seen. It’s important to know that a few tips can increase the chances of somebody clicking your product listing.
Let’s take a look at some below:
- Product Images
Make sure you have high quality, well-lit product images as a good product image will capture the attention of possible customers.
- Product Description
Ensure you have a well written, search engine optimized (SEO) product description to rank higher on the search results.
- Click “Add Product”
- Select “Create New Product Listing”
- Choose a Product Category
Make sure the category is not restricted, If you do, you’ll have to wait to get approved.
- Fill out the Required Fields
– Title: Your Product name
– Manufacturer: Because you’re a private label seller, you can list your own business name.
– Brand: You business name
– Price: Input the price you’re selling your product for. This can be changed at any time.
– Product ID: This is a required field and is where you will put your UPC Code. Move to Step 5 to learn more.
- Buy a UPC Code
In order to sell products on Amazon, it’s required to have a UPC Code for each product you sell. If you don’t have a UPC Code, you won’t be allowed to list your products in the Amazon marketplace.
A UPC (Universal Product Code) or “Barcode” is a 12 digit code that is unique to the product being sold. It’s used to scan products at the point of sale and follows the GS1 specifications.
Amazon also requires the UPC Code to follow GS1 Specifications. GS1 is a global standard for barcodes and if your code doesn’t follow the GS1 standard then it’s not legitimate and can violate Amazon’s terms of service.
You can buy a GS1 Barcode from SNAPUPC. They are my #1 recommendation as they buy UPC Codes from GS1 in Bulk and have great prices. They cost about $5 each.
Once you’ve purchased the UPC Code, open the folder with UPC .JPEG in it and write down your UPC number.
Insert your unique UPC number in the Amazon Product Listing field “Product ID”.
Click “Save and Finish”
When you’re ready to send your products to Amazon, you start by creating a “shipping plan”. A shipping plan includes:
- The inventory you want to send to Amazon
- The product quantities
- The shipping method and carrier details
- Select whether you want to label your inventory yourself or have Amazon handle it
In order to complete this, you’ll need to follow the six-step shipment creation process. The process includes:
- Set the quantity for shipment to Amazon
- Prepare your products for FBA shipping
- Label products
- Review/view shipments to Amazon
- Prepare shipment to Amazon
- Summary of shipment process
When you get to this stage, I recommend you visit Amazon’s online guide where you can follow each step in detail. You can access the guide here.
Now that you’ve got your product and it’s listed on Amazon, it might be worth thinking about branding your products with a specific logo and colour scheme.
Branding and packaging can make a difference if you’re planning on selling a family of products that can look and feel the same. For instance, Clorox Bleach is worldwide brand and if the logo/brand is on another product, it gives you instant trust.
Now… it’s important to know that your branding/packaging won’t be recognized or identified because it’s new; however, who’s to say that one day it won’t be?!
If someone buys your product and loves it.. they may consider looking for the same branding/logo when they make the purchase again.
When you add your brand to product, it’s important to do it to the packaging as well. You can coordinate this with your alibaba supplier.
Amazon works similar to search engines where techniques like Search Engine Optimization (SEO) help your product get seen. Optimizing your product listing is crucial in getting more eyes to your listing. When you first get started and post a product, chances are that it will be posted on Page 17 or 18.
That’s why optimizing your product listing is important. It will help get more eyes on your listing. There are many different factors that play a factor in your product listing. Here are 6 of the most important factors you should focus on:
- Product Titles
You’re allowed to have a 250 character limit or about 50 words for your product title(for most categories). You should use all that’s allowed. Make your title long, and human-friendly. Also include added-value when you can like “eco-friendly”. (Title Example, Teak wood table 6ft x 3ft thick, extra long, heavy duty, 3 peices. Great for dinners, get togethers and made from 100% reclaimed wood.)
- Product Images
You’re allowed to have up to 9 images including a lead image. You should use all of them. Most people like to see what they’re buying so it’s important to have them take by a professional photographer. I suggest you take different angles of the product and also include physical dimensions and how it stacks up next to a person. This builds trust and reliability. It’s important to note that Amazon requires your photos to have a white background.
- Product Features
This is where you write bullet points of your product’s features. It’s important to put yourself in the shoes of the buyer. What do they want to know? Why should they buy this product? Including details like warranties, product material and durability also help make sales.
- Amazon Listing Description
Amazon allows up to 300 words (or 2,000 characters). I would use this space to elaborate on any of the features you wrote above. The product description should be short, and to the point. I recommend keeping it relatable and using a language that you would use when talking to your friend about it.
- Amazon Product Reviews
This section is self-explanatory. Reviews are critical in making sales. This is why you should sell high-quality products that don’t get negative reviews. A high reviewed product builds trust and confidence for future buyers.
- Product Rating
Product ratings are affected by your product reviews. It’s important to know that if your product is rated between 4-5 then your doing well. However, if your product is lower than 3 then you should take the time to read your negative reviews and go back to your manufacturer and fix the problems that customers are complaining about.
This part is optional; however, once you get big enough, you can look into the possibility of automating your process. This process eliminates all the headaches you can have when handling all your steps.
You can do this by hiring third-party companies to:
- Schedule freight services for you
- Inspect your products before they leave the country
- Return any defective products before they leave the country
- Prep your products to follow Amazon’s FBA standards
- Send and organize your products directly into the Amazon warehouses
This option can cut into your profits, so make sure you’re willing to give up less work in order to receive less profit.
That was a lot to read, I know. I bet you have lots of questions. Don’t worry, I’ve provided you with a list of frequently asked questions for Amazon FBA.