How to Start an Amazon Business If you are Just a Beginner
As a new seller, you might think this makes Amazon too competitive. But, despite the competition, new sellers can easily start up their own successful businesses on Amazon. Some are even starting from home and seeing the benefits of quitting their day job.
Whether you are a seasoned online seller or a beginner (and are thinking about quitting your job), selling on Amazon can present great opportunities for making money. By following the tips outlined in this article, you can make the most of this opportunity and find out how to start an Amazon business.
The Five-Step Process to Starting an Amazon Business (That's Actually Successful)
Starting a business on Amazon can be presented in 5 steps:
Below, we delve deeper into each step, providing a more detailed look into the process.
1. Deciding on Your Amazon Business Model
There are four popular business models you can choose from as a new seller. Each model offers its advantages and considerations, allowing sellers to find the best fit for their goals, resources, and preferences.
Retail or Online Arbitrage
Arbitrage is finding discounted products online or through physical retail and reselling them for a profit. Sellers can use the Amazon seller's app on their smartphone to look up products and easily find out whether they can make a short-term profit.
Budget: $100-500 in startup costs
Dropshipping is when you give 100% of your product management to a third-party company. The company manages your inventory, shipments, and storage. The only thing you need to handle is making sales. Many dropshipping suppliers let you start for free. But, after the free period ends, keeping those supplies requires you to pay in order to continue using their services.
Budget: $0 to start (monthly costs may vary depending on your supplier)
Wholesale is when you buy products in bulk from known brands. Then you resell these products at a higher price, without offering a discount, in order to generate profit. However, ordering these products in bulk means you have to pay more. Also, you still have to work hard to compete with other sellers.
Budget: $1,000 or more
Private Label Products
Private label sellers buy products from third-party manufacturers and put their unique brand names on them. These brand sellers can take a product idea to fruition, often trademarking it to prevent other sellers from entering the market.
Budget: $3000 or more
Once you have selected the most suitable business model, the next step is to proceed with finding the right products to sell.
2. Product Research
When starting your own business, research is vital. There are over 25 thousand product niches on Amazon, and you can sell in any of them. But whether you sell beauty products or jewelry, you need to focus on research to identify the best sellers in those categories.
Here are some steps when choosing products.
Get Niche Ideas Using the AMZScout Product Database
You can search for product ideas on Amazon, Etsy, eBay, social media, Shopify eCommerce sites, blogs, influencer pages, and farmer's markets, but this takes time.
The AMZScout Product Database streamlines your research by following these steps:
2. Log in to your AMZScout seller account.
3. Set your product criteria. The search filters help you define your standards.
Here are some common criteria to consider when searching for successful products:
Product prices are between $15-100
In-demand (at least 300 sales per month)
Small/lightweight items (lighter and smaller items have low shipping costs)
Low competition (with private-label products, focus on subcategories with fewer reviews)
Few sellers (for dropshipping, arbitrage, or wholesale models, it is advisable to target products with a relatively low number of sellers, preferably fewer than 20)
You can also use the Product selection tool's ready-made options for more proven results.
4. Get the results. Click Find Products to populate your results.
5. Choose your products. Pick products based on what you are most passionate about.
The Product Database provides a simple list of potential items to sell. You can use it with the next tool to find out the profitability of the items on your list and all potential products.
Find the Profitability of Products and Niches with the AMZScout PRO Extension
The AMZScout PRO Extension will let you know how profitable a product or niche is, helping you determine whether it's worth selling.
1. Start by installing the AMZScout RPO Extension.
2. Open AMZScout PRO Extension.
Amazon.com will automatically open. From there, you can search based on what you found in the Product Database.
Click the AMZScout icon in the top-right corner to open the Extension. If you haven't already, you'll be prompted to create a free account.
3. Examine product/niche profitability. The top of the screen shows essential product information (like the net margin, estimated sales, and revenue) in a table.
4. Determine niche demand. Click Niche Score to view a market analysis for the niche.
5. Examine the demand. The Niche History lets you see historical data and how it fluctuates based on the season.
6. Analyze the product's potential. The Product Score can be found next to individual items, showing their demand, competition, profitability, and other important factors.
Using both tools, you'll have a comprehensive data set to better select a product. Next, you'll need to find someone who provides these products.
To gain a better understanding of how these tools work, and acquire valuable insights into the field of online selling, consider attending free webinars available online. These events are led by experienced sellers who generously share their knowledge and real-life examples in order to guide beginners on their own journeys. You’ll also have the opportunity to ask any questions you may have, and discover unique insights not found in any blog.
3. Finding Suppliers and Sourcing Products
After you create a list of products, you can start to find providers of those products. How you do this depends on your strategy.
Wholesalers need to contact known wholesale distributors to find the right fit. You'll negotiate with them on the best deal for both of you. The difficult part here is that wholesalers are often picky with their sellers, so newbies must provide a business plan, increasing their odds of success.
Dropshipping suppliers exist online, meaning you can do a simple Google search. Many big-name dropshipping suppliers (like Modalyst) have proven records. However, if you’re using a smaller provider, check their reputation online before using their services.
Online and retail arbitrage specialists don't always work with suppliers. However, some online arbitrage specialists resell products from Alibaba. Retail arbitrage specialists get supplies from locations they can drive to (like stores having a massive sale).
With private label sellers, you have two choices: finding a local manufacturer or seeking out private label manufacturers online. One option is to use the largest private label manufacturing site where you can import goods overseas: Alibaba.
Finding Suppliers on Alibaba
Alibaba is an excellent site for finding inexpensive, high-quality manufacturers. It also integrates directly with AMZScout, making it a natural fit.
Here are a few ways you can find suppliers using AMZScout:
1. Search for products on the AMZScout PRO Extension.
2. Click on the PRO Extension's Find on Alibaba button.
3. From Alibaba.com, click Contact Supplier and start chatting with them about how you can buy their product.
Alibaba's full website will also let you find private-label products. The built-in search engine enables you to find manufacturers based on location (between China and India), cost, and product sales.
What to Do After Finding a Potential Supplier
You don't want to jump straight to selling if you've found a few good potential suppliers. Instead, your goal should be to get the best possible rate.
Aim to negotiate the best possible rate with potential suppliers rather than immediately focusing on selling.
Talking to multiple suppliers will provide you with an understanding of manufacturing costs and give you leverage during rate negotiations.
Conduct thorough research on materials and the manufacturing process to ensure transparency and quality.
Ordering a sample from selected manufacturers allows you to assess the quality and durability of the product.
Ensure that the sample survives overseas shipping, withstands regular use, is safe, and maintains its appearance.
Shipping Your Products to an Amazon Fulfillment Center (only necessary for FBA sellers)
If you want to be an FBA seller, your next step is to send it to a nearby fulfillment center. Fulfillment centers are where Amazon handles the goods for you (or, they are fulfilled by Amazon). That way, you can focus more on marketing and product research.
FBA sellers have incredible advantages over non-FBA sellers (also known as FBM sellers). Typically, they get faster shipping, higher sales, and more visibility on Amazon. You'll just have to pay extra for the FBA fees.
Alternatively, if you want to choose to be a "fulfillment by merchant" seller or one who does it themselves, you'll have to contend with storage, fulfillment, and hiring extra staff to handle those duties. The rental of a storage facility or warehouse can get expensive.
This brings us to a new aspect of picking your supplier: finding someone who knows Amazon. Fulfillment centers have detailed requirements. By having a supplier who knows their stuff, you won't have shipping delays and the potential of returned goods because Amazon can't approve them.
4. Creating an Amazon Seller Account
Step four could technically be step one or two. But it's important to know what you are selling before you start an account to sell it. Creating an Amazon account is pretty simple but also detailed.
To get started, sign up for an Amazon.com account. If you want, you can use your shopping account to get started.
Next, you'll fill out some basic information about yourself. You can connect this to your business entity if you want, but Amazon doesn't require you to have a business to become a seller.
What documents do you need?
Amazon requires you to provide a current photo ID, a payment card to make payments, and a way to connect to your bank to receive payments. You might need to provide Amazon with a copy of your latest bank statement during this step.
Amazon will require you to commit to two extra steps as well. The first is a video interview where you'll be asked to provide your photo ID and (possibly) a bank statement again.
Next, you'll receive a postcard with a code that confirms your physical address. But entering that code from your incomplete seller's account will let you verify your account.
At this point, you can begin to sell using one of two plans:
The individual plan. This costs nothing monthly, but requires $0.99 per sold unit. You also get less access to Amazon's advertising tools. It's fine for personal selling, but not as great at the professional level.
The professional plan. This costs $39.99 in monthly fees and requires no $0.99 product sales fee. You can access more advanced selling tools and unique Amazon programs (like Handmade or Launchpad).
If you sell more than 40 products, the professional plan is better. Otherwise, you can test it out for a month to see if you like the extra tools.
Once you pick your plan and finalize your account, you can begin to list your products.
5. Creating and Optimizing Product Listings
Creating your first listing can be an exciting step in your new business venture. But you'll want to do it right and not get ahead of yourself because of your excitement.
You don’t need to worry about this step if you are selling an existing product. Private label sellers always need to do this, while others might not need to.
Making the best product listing is called "listing optimization." This is just fancy terminology that means "making your listing better."
The basics, like high-quality product photographs, compelling titles, and correct grammar, are all essential. But, the other part of your optimization process is keyword research and implementation.
Keywords are what your target customer types into Amazon to find your product. While the built-in PPC tool for Amazon can help you with some keywords, it isn't built to optimize. This is mainly because Amazon doesn't provide data about how other sellers do it.
You can use AMZScout's Keyword Search and Reverse ASIN Lookup Tool to get this data and find out what your competitors are doing. Here's how you can get started:
1. Find the ASIN (Amazon Standard Identification Number) on your competitor's product page
2. Enter the ASIN in the search bar of the Reverse ASIN Lookup.
3. Specify how many words you want in your keyword. You can also leave this blank if you want all keyword lengths.
4. Select how much you want your search volume to be. You might want to target high or low-competition options.
5. View your keyword results.
Longer keywords, otherwise known as long-tail keywords, are usually better when describing your product. This is because the more words your keywords contain, the more detail they include. This is known as "keyword relevancy," which means your chosen keyword connects very well with the product you sell.
Long-tail keywords also have lower levels of competition because fewer sellers have that specific product description. They also include short-tail keywords that are one or two words, giving you dual-keyword ranking potential.
You'll also want to go through the complete listing optimization process found in this guide.
Conclusion - Is it Worth it to Start an Amazon Business?
With the right mindset and guidance, anyone can become a successful Amazon seller. But, if you need confirmation of its worth, here's a short list of reasons:
Solid profits. If you find the right product, you can make good money selling on Amazon.
Access to Amazon's customers: Amazon has over 150 million Prime accounts. This helps FBA sellers reach a massive market of potential buyers. Your products might even be delivered on the same day through an Amazon Flex courier.
No marketing experience is required. Amazon provides the traffic; you just need to point it in the right direction. You don't need any expertise to get started.
You can automate it. Amazon has several automated tools that can notify you of inventory shortages, reprice your products for competitiveness, help with bookkeeping, and manage the process using the software. At the same time, you can focus on growing your business.
Regardless of your business model, you're sure to find great opportunities for profits. Use AMZScout's kit of tools to simplify your product research and selling strategy to give yourself a chance at business growth.