How to Start an Amazon Business as a Seller
Most people have thought of starting their own online business at one time or another. And of all the options you have, starting an Amazon FBA business is one of the best ways you can go. This is because the profit potential is huge and you can easily scale and grow it once you become established.
While the idea of selling products on Amazon and building your own business can sound exciting, for many beginners the process can seem daunting. However, when you break it down it’s really not as difficult as it seems. If you follow the right steps and put some time in you can definitely start up a successful business on Amazon. You may even be able to quit your 9-5 job and work from home full-time, giving you plenty of flex time.
If you’re wondering how to start an Amazon business you’ve come to the right place. We’ve created this complete guide to give you the best instructions and help you on your journey.
Table of contents
- Initial Steps
- Choose a Product to Sell
- Sourcing Your Products
- Fulfilling Your Orders
- Growing Your Business
- Is Starting an Amazon Business Worth It?
Before you start selling products on Amazon there are a few initial steps you should take to give yourself the best chance at success. By doing your research and laying the groundwork early on you’ll make it a lot easier for yourself once you reach the later steps.
Set a Budget
Like most businesses, you’ll need some capital to get started. If you don’t have a lot of money to spare you can still become an Amazon seller, but it will impact what strategies you can use to build your business.
Look at your current finances and decide how much money you can reasonably invest in your business. When setting your budget, make sure to factor in all the expenses you’ll be paying. These include the cost of purchasing inventory, shipping costs, the monthly fees for your Amazon Professional seller account, and the cost of any ads you may want to run to promote your products.
Determine Your Capabilities
Before getting started, you need to think about how much time you have to devote to your new business and what resources you have at your disposal. Are you going to be able to work on your business every day? Do you have any resources, supplies, or infrastructure (like a warehouse for example) in place to ship products to customers, or will you need assistance with this?
Consider these questions as you review the different Amazon business models so you can choose the approach that’s right for you.
Start a Company or an LLC
You may be wondering what documents do you need to sell on Amazon, or if you need a business license. You don’t need anything like that, but it’s a good idea to start your own company or LLC. This will make your bookkeeping a lot easier come tax time.
Choose a Product to Sell
This is where the fun begins. It’s time to start deciding exactly what types of products you’re going to sell. With so many options available to you this may seem overwhelming at first. Amazon sells practically everything including books, beauty products, shaving kits, and jewelry. So, how do you know what items to pick for your business?
Luckily, we have a few tips and a couple of helpful tools that will make the process a lot easier for you.
Pick Products Priced Between $15-100
Any time you sell a product on Amazon’s website they’ll take a commission. So, you want to make sure the price of your product isn’t so low that it won’t cover this cost. And while the idea of selling high-priced items may seem appealing, in practice it doesn’t usually work since they don’t sell as much as lower priced items. That’s why it’s recommended to sell products priced between $15 - $100.
Pick Products that are Small and Light
Remember, when you purchase your inventory you’ll need to get it shipped to you. This can be especially pricey if you plan to import items from China or India. This is the reason why it’s a good idea to choose items that are small and light, as they’re cheaper to ship.
Use the AMZScout Product Database to Get Product Ideas
You could search for product ideas on Amazon, eBay, Etsy, Shopify eCommerce sites, blogs, and farmer’s markets, but it will take a long time to find items that meet your parameters. However, there’s an easier way.
Apply the tips above and sign in to the AMZScout account to start searching for products. This tool features 44 filters you can use to search Amazon’s entire database of products. You can search for items based on sales, rank, reviews, category, size, weight, and more.
This is a simple way to quickly narrow down your search to only the products that meet your strict requirements. From there, you can review your results and pick out the items that interest you the most.
Use the AMZScout Pro Extension to Analyze the Profitability of Products and Niches
The development of a successful business depends on your ability to offer products that people actually want to buy. This next tool can help with that.
After you’ve selected a few product ideas it’s time to analyze them with AMZScout Pro Extension. This will let you know how profitable a specific product or niche is and help you determine whether it’s actually worth selling.
Go to Amazon.сom and type your product into the search bar. Once you have your results, click the AMZScout logo in the top right corner of your browser to open the Pro Extension. Here you’ll get information on product sales, rank, reviews, and historical trends. You can also click on the “Niche Score” for in-depth information on profitability, demand, and level of competition.
Or you can click on “Product Score” to get advice on specific products. Scores of 7 or more mean a niche or product should be profitable.
You can try both the Product Database and Pro Extension for free, so test them out to see if they can help you find profitable products for your business.
Sourcing Your Products
Once you’ve decided what you’re going to sell you’ll need to figure out a strategy for sourcing your products. There are a number of different ways to do this, each with their pros and cons.
Retail Arbitrage: This involves buying products from local retail stores for the purpose of reselling them on Amazon. There are apps you can use to find products that are under-priced and can be resold on the platform for a profit. This is a good strategy for those with little money to spare, but it’s extremely time-consuming and difficult to continually find products that have resale potential.
Wholesalers: Wholesale companies and vendors buy products in bulk from manufacturers in order to sell to businesses. You’ll be able to purchase items from them much cheaper than retail stores, but keep in mind wholesalers usually have high minimum order quantities, so you’ll need to pay a lot of money upfront.
Manufacturers: You can also purchase products directly from a manufacturer. A great place to find manufacturers to source products from is Alibaba. You’ll get the cheapest prices when dealing directly from manufacturers, but like wholesalers you’ll have to buy in bulk which can be costly.
Fulfilling Your Orders
An important part of any Amazon business is order fulfillment. Once you sell a product you need to have a delivery strategy in place to get that product to the customer. Here are three options for you to choose from:
Fulfilled by Merchant: Amazon’s Fulfilled by Merchant program is exactly as it sounds. If you go for this option you’ll need to create your own packages and courier all of your items to your customers. While this is the cheapest option it’s also the most time-consuming and can be difficult for a one-person operation.
Dropshipping: Another option is to partner with a dropshipping company. These are suppliers or wholesalers that will dropship your items to your customers for you. Instead of purchasing inventory in bulk, the company holds your inventory for you and ships your items to your customers when they’re sold. Keep in mind that traditional dropshipping isn’t technically allowed on Amazon, so make sure you understand the rules before exploring this method.
Fulfilled by Amazon: With Amazon’s FBA program, you’ll ship all of your inventory to Amazon and they’ll fulfill your orders for you. This is a great option for individuals who don’t have the resources to ship a lot of items themselves. Just keep in mind that Amazon charges a fee for this service, so make sure to include that in your budget.
For most Amazon sellers, especially those working by themselves, the FBA program is likely the best choice. It’s by far the easiest way to deliver products to your customers.
Growing Your Business
Once your business is up and running you’ll likely be looking for ways to grow and scale it so you can start increasing your earnings. Here are a couple of strategies you can use:
Add More Products: The best Amazon sellers don’t just sell one product, they sell a number of different items. So, once you have one winning product start looking for more. Adding new items to your inventory is the best way to grow your personal income and get those dollars rolling in.
Private Label Products: These are products you create yourself that have your own brand name on them. You can create your own version of existing products, or come up with your own products. You can even trademark these products if you want so no one can copy you. Building your own brand and products means less competition, and if you come up with something new that everyone wants you’ll be able to generate a lot of sales. If you want to sell clothing and t-shirts, consider using Merch by Amazon to create your own unique designs and sell them on the platform.
Is Starting an Amazon Business Worth It?
So, is an Amazon business really worth it? In the end, it will be up to you to decide whether this type of venture is right for you.
Here are some pros and cons to consider:
High Profit Potential: Of all the online business opportunities available, an Amazon business has one of the highest ceilings when it comes to potential earnings. The sky’s the limit and you can grow it as much as you want.
Access to Lots of Customers: Amazon is by far the largest eCommerce platform in the world. So many people have Prime accounts now and their customer base is constantly growing. They offer virtually everything now, including groceries, rentals and more, meaning many people now shop on Amazon exclusively. So, by selling on their marketplace you’ll have access to way more customers than you would if you sold on your own site.
Limited Marketing Needed: While you can create ads to promote your products, if you target the right keywords and sell the right products you should have no trouble driving traffic to your product listings. By hiring freelance writers with experience writing Amazon pages you should get great results.
It can be Automated: Once you have the right systems in place a lot of the work will be automated for you.
You Need Money to Get Started: Starting an Amazon business does require an initial investment since you need to buy inventory.
Some Work is Required to Get Started: You’ll need to spend some time researching products and talking with suppliers in order to get your business up and running. That being said, any business requires some work so this is something you should be prepared for.
As you can see, there are a number of benefits to starting this type of business. While selling products on Amazon isn’t for everyone, if your goal is to start an online business this is definitely one of the best ways to make money.
Starting an Amazon business may seem complicated, but it’s not that difficult if you know the right steps to take. If you follow our advice and take advantage of software like the AMZScout you’ll be well on your way to building a business you can be proud of.