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by Travis F.posted on 25.12.2019

How to Sell on Amazon for Beginners: Challenges and Recommendations

There are plenty of stories online of people making a six-figure income by selling products for profit on Amazon. These tales are true and there are plenty of entrepreneurs who are selling successfully and growing profitable businesses. With so many people shopping on the platform and signed up for Amazon Prime the company is exploding. So, you’re probably wondering how to sell things on Amazon yourself to make money.

There are a number of strategies and techniques you can use to get started, which is why we’ve put together this comprehensive guide. It’s essentially “How to Sell on Amazon for Dummies.” There’s no need to search the internet reading countless articles on the subject. We’ll walk you through everything you need to know in order to start your own Amazon business and let you in on some tricks to increase your chances of success.

If you want to know how to sell stuff on Amazon you’ve come to the right place.

Selling on Amazon: Is it Worth it?

Before you begin you’re probably wondering if selling products on Amazon is really worth it. Can you actually make any money doing it?

Yes, quite a bit actually.

If you do your research and put the necessary time in it’s not unreasonable to expect to make anywhere from $500 to $2000 per month, per product. With just one product you could have yourself a really nice side business. Two are three products could provide you with a decent living. And once you get to four or five products you could be looking at making six-figures per year.

So yes, it really is worth it. That doesn’t mean it’s going to be easy. Like any business, in order to be successful you’ll have to put the work in. But if you’re willing to commit the necessary time and energy, an Amazon business can provide you with an excellent income.

What Do You Need to Get Started?

The next crucial thing to think about is what you’re going to need in order to get started. In order to begin your journey, you’re going to need to have a few things in place.

  1. Money: If you want to sell products you’re going to need to buy them first (in most cases). You can start with smaller orders and purchases, but keep in mind that the more products you purchase at once the better price per product you’ll get from suppliers. If you don’t want to pay for products upfront you can opt for dropshipping, however, the margins won’t be as good.

  2. Software: The most important piece of software you’ll need is a product search tool to help you find profitable products to sell. We recommend using the AMZScout web tools and Pro Extension, which we’ll cover in greater detail later in this guide. Other types of software you might want to consider are repricing tools and product feedback managers.

  3. Amazon Seller Account: In order to sell on Amazon you’ll need to register an account. You’ll also need to choose whether you want to sell as an individual or get a Professional Seller account. An Individual Seller Central account is free, but you’ll be charged $0.99 for every item you sell. Professional Sellers pay $39.99 per month but aren’t charged the listing fee. So basically, if you plan to sell more than 40 products per month the Professional account is the better option.

Where Can You Source Products to Sell on Amazon?

When it comes to sourcing products to sell on Amazon there are a number of different ways you can go about it. The strategy you choose will depend on a number of different factors, including:

  1. How much time do you have?: How much time you’re willing to commit to your business will play a big part in which strategy you end up going with. Maybe you’re just looking to start a side business and only want to spend a few hours a week on it. Or maybe you’re looking to create a full-time income and are willing to work on your businesses every day. Some strategies are more time-intensive than others, so keep that in mind.

  2. How Much Money Are You Willing to Invest?: Money will also play a factor in your decision. If you’re purchasing products from manufacturers and suppliers you’ll generally need to place a large order, which will require a fair bit of capital. If you don’t have a lot of money to invest right away you might need to look at options that are more cost-effective to begin with.

  3. How Much Money Do You Want to Make?: What are your goals when it comes to how much money you’d like to make? Some strategies have higher profit potential than others. However, the strategies that yield more profits also require more work. If you’re just looking to make some side money one of the simpler strategies may be a better fit for your goals.

We’ve outlined all of the most popular ways Amazon sellers source their products and have included everything you need to know about each of them, including their pros and cons.

Retail Arbitrage

If you’re brand new to Amazon selling and don’t have a lot of time or money to invest then retail arbitrage might be for you. It’s also a great low-cost way to get your feet wet and get a feel for selling on the platform before moving on to one of the more advanced strategies.

How it Works

Retail arbitrage is the act of buying products from local retail stores and reselling them for a higher price on Amazon. You might be wondering how this is possible. If you already bought a product at retail price how can you sell it for a profit?

Well, it turns out that some products sell for different prices in different states and areas of a country. An item may be on sale or clearance in one state, while in another state it’s in short supply. Savvy sellers can take advantage of this disparity, scooping up products for cheap at their local retail stores and then selling them for a profit on Amazon.

If you’re going to try this strategy, we recommend visiting big-box stores like Walmart, Target, Kmart, Home Depot, Lowes, and looking for any sales racks or clearance bins. You might also be able to find used products to sell as well. If you install the Amazon seller app on your phone you’ll be able to scan items in the store to see what they’re selling for on Amazon. This will allow you to identify items with a large profit margin. Just make sure to factor in Amazon’s fees as well.

Pros

The biggest advantage of retail arbitrage is that it doesn’t require a very big investment upfront. You can purchase as many or as few products as you can afford. Because of this it’s also relatively low risk. It’s pretty easy to keep your costs down and never purchase more products than you can afford, so there’s less chance of you losing a lot of money.

This makes the strategy great for beginners and novice sellers you want to start their first online business. You can run the business out of your own home and you don’t need to deal with wholesalers, suppliers, or manufacturers.

Cons

As you might suspect, because retail arbitrage offers less risk it also offers less reward. Even if you find really good deals on retail products, the margins will never be as good as if you sourced your products from manufacturers and wholesalers. You’re also limited by how many products are available in your area.

Finally, retail arbitrage can be extremely time-consuming. Driving from store to store, searching sales bins, and scanning items takes up a lot of time. This is fine if you enjoy the process and just do it in your free time. But if you want to really grow your business you may find this strategy isn’t very efficient.

Online Arbitrage

Online arbitrage works similarly to retail arbitrage, but instead of buying your products at local brick and mortar stores you purchase them from other online retailers. 

How it Works

In order to pull this strategy off, you’ll need to scour sites like eBay, Craigslist, Etsy, Facebook Marketplace, Newegg, and Bonanza. You can also browse the various Shopify stores and other e-commerce sites currently out there.

Look for sellers who are selling products below market value. Maybe they’re desperate to unload excess stock or in need of a quick profit. Take advantage of these situations and purchase the products at a lower cost. Then list them on Amazon at a higher price in order to make a profit.

Many people have had success buying and selling books in this way. While ebooks are growing in popularity physical books are still very popular. Look for romance and erotica titles as those are generally the most popular.

Pros

Like retail arbitrage, online arbitrage doesn’t require a very large investment, making it relatively low risk. It’s also not as time-consuming as retail arbitrage since you can purchase products online from your home.

Cons

Online arbitrage offers the least amount of profitability and scalability of all of the strategies listed here. You likely won’t find the same types of deals online as you will at local retail stores, making the margins smaller. And given that it requires less work than retail arbitrage you’ll find that there is a lot of competition.

Dropshipping

If you don’t want to pay any money upfront for your products, dropshipping may be a good option for you. Just keep in mind that traditional dropshipping isn’t technically allowed on Amazon.

How it Works

Dropshipping allows retailers to sell products without having to purchase or store any inventory. How it works is when a customer purchases a product the retailer passes the order on their supplier who fulfills and ships the order for them. So essentially, the retailer doesn’t purchase any products until they’ve been bought by customers, then they have the supplier ship the product directly to the customer.

While Amazon states that dropshipping is allowed, it also states that purchasing a product from another retailer and having them fulfill the order is against their policies. So, in reality, true dropshipping isn’t allowed on the platform. However, many sellers still do it anyway as it’s extremely hard for Amazon to police it.

Pros

Obviously, the biggest advantage of dropshipping is that there are no upfront costs. You’re not purchasing any products until you’ve actually made a sale, making it extremely low risk. You also don’t have to fulfill any order yourself, saving you time and resources.

Cons

While dropshipping is extremely convenient you’ll end up paying more for that convenience. Dropshipping suppliers will charge you more since you’re only purchasing one product at a time. This means your margins will be lower and it will be harder to grow and scale your business.

Manufacturers and Wholesalers

If you want to find the best margins on existing products you have to go to wholesalers and manufacturers. This strategy will involve a bigger investment but also has the potential for a lot greater profits.

How it Works

Once you decide what product you want to sell you’ll need to start doing your research and find a supplier that carries that product. Start by trying to source the product directly from the manufacturer as that’s where you’re going to get the best deal. Just keep in mind that a manufacturer’s minimum order quantities will likely be very high and you’ll have to buy in bulk.

If you’re unable to find a manufacturer that suits your needs you can start looking for wholesalers and distributors. These are businesses that buy products from manufacturers in order to resell them to retailers. You can use wholesale directories or simply perform a Google search to find suppliers that have what you’re looking for. 

Remember, unlike retail stores manufacturers and wholesalers can usually be negotiated with. If your order quantity is high enough they may be willing to give you a lower price in order to secure your business.

Pros

When dealing with manufacturers and wholesalers you’re going to get a much lower per-product price than if you purchased your products at retail stores. This means you have a much higher potential for profit.

Also, while finding the right partner might take a little bit of work, once you have one in place sourcing your products is fairly easy. You simply place your order with your supplier as needed and they’ll ship your inventory to you.

Cons

As you can guess, this strategy requires a much higher initial investment. Manufacturers and wholesalers generally sell in high quantities, so while the per-product price might be low, the total cost of your orders will be high. So, it’s important to do your research and ensure you have a winning product on your hands before placing your order (we have more information on how to find profitable high-selling products later in this article.)

Private Label

If you’re looking for the strategy with the highest profit potential and like the idea of developing your own unique products then sourcing private label products might be for you.

How it Works

Private label products are unique products that you design yourself with your own brand name on them. While this may seem like a complicated process, creating and sourcing your own private label products is actually easier than you might think. You don’t have to create the next Nike. You just need to find a niche that’s in demand.

The best strategy is to take an existing product and improve it, rather than create something completely new. Go on Amazon and look for products that are performing well. Then, think of ways they can be enhanced or made to work better.

There are many Chinese manufacturers that can be found on Alibaba that will be willing to help you with your project. You may be wondering how to buy from Alibaba and sell on Amazon, but it’s actually not that difficult. Once you know the type of product you want to sell, head over to Alibaba and look for manufacturers selling similar generic products that you can improve and place your branding on. Reach out to manufacturers that you feel meet your requirements and describe your project to them. If you find a good company they can help you sort out the details.

Here are a few tips if you’re thinking about sourcing private label products:

  • Shop around and talk to multiple manufacturers in order to find the best quality and price.

  • Always have the manufacturer send you a sample first before you place your order so you can test the quality and suggest changes.

  • Remember, manufacturers are often willing to negotiate. Don’t accept the first price you’re given and see if you’re able to strike a better deal.

  • Don’t forget to factor shipping into your costs. Shipping from China can be expensive, so consider choosing small lightweight products that are cheap to ship. Furniture, for example, is not a good idea as the shipping costs would be too high.

  • Create your own website in addition to your Amazon listings in order to build your brand.

Pros

Because you’re buying your products directly from the manufacturer your margins are going to be very good. The other big advantage is you’ll be selling a product that no one else has. If you alter your product in a way that people really like you’ll have a competitive edge over your competitors and could corner the market.

For these reasons, private label products offer the highest potential profitability of any of the strategies listed here.

Cons

Private label products require a large upfront investment, so you’ll need to have a fair bit of capital to start in order to make it work. There will also be a good amount of work upfront in order to develop your product. However, once the design and construction are finalized placing your orders is very easy and straightforward.

Bonus Strategy: Teespring

Teespring allows you to create custom t-shirts, long-sleeved shirts, hoodies and more. You can come up with your own design or logo and choose your color to create a truly unique piece of clothing or merchandise. The best part is, Teespring has recently integrated with Amazon allowing you to sell your custom shirts on the platform. Plus, your shirts are only created once you have orders in place, making it a fairly low-risk business venture.

How do You Fulfil Your Orders?

Sourcing and purchasing your products aren’t the only things you need to worry about. Once someone purchases one of your products you need to have a way to deliver it to them. Amazon offers sellers two different methods to fulfill orders.

Fulfillment by Merchant (FBM)

If you opt for Amazon’s FBM program you’ll be responsible for fulfilling all of your order yourself. You’ll store your inventory at your home or warehouse, and when an order is placed you’ll package up the item and ensure it’s shipped to the customer’s address.

Fulfilling your orders yourself requires a lot more work, but it can save you money as you’re not paying anyone else to do the work for you. If you’re a smaller seller and don’t plan on moving a large number of products this strategy likely makes sense. You might also consider this if you have a warehouse and resources already in place to package and ship your own products.

Fulfillment by Amazon (FBA)

Amazon’s FBA program is likely the best choice for most sellers. It allows you to ship all of your inventory to Amazon to be stored in their warehouse. When an order is placed Amazon will pick, pack, and ship your items for you, saving you a considerable amount of time.

Of course, this service doesn’t come free. FBA fees start from $2.41 per item and go up from there depending on the size and weight of your items. Assuming your product is relatively small and lightweight the fees are very reasonable and worth it for sellers who don’t have the time and resources to fulfill their orders themselves.

If you’re going to use the FBA program just make sure to factor the fees into your overall cost to make sure your margins are still profitable.

How Do You Find Profitable Products?

Once you decide how you’re going to source your products and how you’re going to fulfill your orders you’ll need to decide what types of products you’re going to sell. This is the most important decision you’ll make when starting your Amazon business, so you’ll want to make sure you get it right.

There are an endless number of products you can sell, but not every single one of them is going to be profitable. Some won’t have big enough margins or enough sales, or others might just have too much competition. With so many factors it may seem like a difficult task to choose the right product, but luckily services like AMZScout make the process surprisingly easy.

Using AMZScout’s Product Database to Generate Product Ideas

The first thing you’re going to want to do is narrow your search parameters. This is where AMZScout’s Product Database is extremely useful. It provides dozens of product filters to help you quickly find the types of products you want to sell.

Here’s how it works:

  1. If you haven’t already installed it, sign in to your AMZScout account and begin your free trial.

  2. Once you've downloaded and installed the app, open it.

  3. Click on "Product Database" at the top of the screen.

  4. Select the criteria you'd like to use for your search. You can filter products by category, seller type, price, rank, estimated sales, reviews, and more (see below).

  5. Click “Apply Filter” to view the results

Here are some tips to consider when setting your filters:

  • The following categories have proven to be very successful for Amazon sellers and are a great place to start:

    • Home & Kitchen

    • Kitchen & Dining

    • Patio, Lawn, & Garden

    • Pet Supplies

    • Sports & Outdoors

    • Toys & Games

  • Avoid the electronics category. These products are more complicated and prone to break and malfunction, which can hurt the reputation of your business. Plus, items like video games, phones, iPhones, laptops, music CDs, DVDs, Kindles, and other digital devices generally have lower margins.

  • Search for products that sell between $10 - $100. These products should allow you to have good margins after your fees while also allowing for a high amount of sales.

  • Set the minimum rank to 3000 to ensure you find products that are actually popular on Amazon.

  • Set the minimum estimated sales to 300 to ensure you find products that are actually selling. 300 sales per month works out to about 10 sales per day, which is a good number to shoot for.

  • Set the maximum reviews for 200. The fewer reviews a product has, the easier it will be for you to overtake it in Amazon’s rankings.

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Once the Product Database has generated a list of products that meet your parameters, review the results and select some products you feel have potential.

Using AMZScout’s Pro Extension to Analyze Niches

Now that you have a few products you like it’s time to analyze those niches to see if they’re actually profitable for Amazon sellers. The goal is to find products that have a high demand and a low level of competition.

To do this you can use AMZScout’s Pro Extension. This Chrome extension is the quickest and easiest way to judge the level of profitability of any niche on Amazon.

Here’s a step-by-step guide of how it works:

  1. If you don’t already have the AMZScout Pro Extension, click here to install the extension and use it for a trial period for free.

  2. Go to Amazon and type in the type of product you’re interested in selling (mug, hedge clippers, dog food bowl, etc.).

  3. Once Amazon displays the results, click on the AMZScout Pro Extension icon in your browser to open the extension and analyze the results. You’ll be able to check a wide range of niche indicators, such as average price, average sales, averages margin, average reviews, and more.

  4. The quickest way to determine the profitability of a niche is to check the niche score. Ideally your niche should have a score of 7 or higher. A high score indicates a product that has a lot of demand and low competition. Click on the niche score for detailed information on the pros and cons of the niche.

  5. You’ll also see that other people’s products within the niche are given a score. Click on individual product scores to learn more about that specific product.

  6. The AMZScout Pro Extension lets you dive deep into a niche and includes a number of metrics and charts, including niche history, trends, and more.

Make sure to analyze a number of products and niches before settling on the one you’re going to sell. Ideally, you’ll find a product that’s both profitable and interesting to you.

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Tips and Tricks to Help You Succeed

In addition to all the information above, consider the following tips to help give yourself a better chance at success.

List Your Items on Amazon

Amazon has many different marketplaces around the world, and some of them are bigger than others. The biggest is Amazon.com, which is their American website. Whether you live in Canada, the UK, India, or Mexico, list your products on Amazon for the best profits. Plus the US dollar is relatively strong, so converting your profits from US currency to your own should be beneficial to you.

Avoid Restricted Categories

Products like shoes, clothes or any type of clothing, jewelry, wine, fresh food, groceries, supplements, and cosmetics require you to apply to get approved by Amazon before selling them. There are plenty of other products to choose from that don’t require you to go through this process so it’s best to just avoid them. Also, remember that you’re not allowed to sell gift cards on the platform.

Getting Your UPC Code

Before you start selling your product on Amazon you’re going to need to get a UPC code. You can purchase your UPC code by visiting the Global Standard 1 Website.

Utilize Amazon Advertising

If you want to boost sales and get more traffic on your product page it’s a good idea to utilize Amazon advertising. These ads give your products more visibility and will help ensure you appear in more Amazon searches.

Plus, the average cost of a click on Amazon is about $0.35, which less than other ad networks. So, if you can set-up a profitable campaign it’s a great investment.

Here are a few tips to help you optimize your Amazon ads:

  • Use compelling copy that highlights the benefits of your product.

  • Use professional high-quality photography.

  • Amazon offers different ad formats, such as search ads and display ads. Experiment with each format to figure out which one works best.

  • Do keyword research and make sure you’re targeting the right keywords. You’ll also want to use negative keywords to ensure your ads don’t show up in the wrong searches.

Promote Your Products on Social Media

In addition to using Amazon advertising, you should also use social media platforms like Facebook, Instagram, and YouTube to promote your products. You can create ads on the various platforms to increase your product’s exposure, shoot promotional videos, send samples to online influencers, or post about them on your own accounts if you have a strong following.

Manage Your Inventory

Once your Amazon business is up and running it’s important to manage your inventory. Keep track of your stock and make sure to order more inventory when you’re close to running out. If you continually run out of stock you’ll be losing potential profits. Plus, if you sell an item and it turns out you actually don’t have any in stock it could lead to your account being suspended.

Start Now

The longer you wait the more money you’ll be missing out on. Stop asking silly questions like “Am I ready?” “How old do you have to be?” or “How long does it take?” Anyone can start an Amazon business if they have the drive and determination.

Conclusion

There are many different ways to sell on Amazon. Each strategy can be effective if you’re willing to put the time and effort into finding the right products to sell. If you follow the advice listed here and take advantage of helpful tools and downloads like the AMZScout you’ll be well on your way to building a successful business.

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© AMZScout. All rights reserved 2016-2020 AMZScout Corp., 1735 Market Street, Suite 3750, Philadelphia, Pennsylvania 19103 AMZScout DMCC, Unit No: BA402, DMCC Business Centre, Level No 1, Jewellery & Gemplex 3, Dubai