Factors to Consider Before Selling on Amazon

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Whether it is a big brand like Apple or a small home-based seller, Amazon is the one-stop solution to expand one’s business. Millions of buyers visit the website every day since the goods featured on Amazon are available to the public around the clock.

If you are planning to sell your products on Amazon, there are a few factors to keep in mind that will help accelerate your sales. Since the platform is so vast, it can feel overwhelming in the beginning.

Continue reading the article to get all the information you need if you’re unsure about how to sell on Amazon, what the best products are, different fulfillment options, etc.

Before we tell you how to sell on Amazon, let us first understand what type of seller accounts are available.

Types of Amazon Seller Accounts:

The first step of making a seller account is to choose a suitable plan. There are two kinds of seller accounts i.e Individual and professional accounts. The main difference between the two is the number of units.

  • Individual Account: If you plan on selling less than 40 units per month, you should go with the individual account. The seller needs to pay $0.99 to Amazon every time they sell an item. There is no monthly subscription fee involved. The downside is that one cannot create sponsored ads with this plan.

If you’re interested in finding out more about setting up an Amazon Individual Seller account, check out this article.

  • Professional Account: If you are going to sell more than 40 units per month, we recommend you choose the professional plan. It comes with a monthly fee of $39.99. You can save money with this method if you have more items to sell. The advantage of having a professional account is that there is a possibility of winning the buy box.

Once that is decided, you can go ahead and create your seller account.

What is Amazon Seller Central

It is an online marketplace that enables retailers to use Amazon to sell and promote their goods to customers directly. One must register on Amazon Seller Central to start selling their products.

If you do so, you are now considered a third-party seller or 3P. It means you are eligible to publish product listings, control pricing, and have the freedom to choose how many items you want to sell.

Requirements for Seller Verification

Before setting up a seller account, one must make sure to have the following details ready.

  1. Business Information – This includes the legally registered business name, contact info, and address.
  2. Company Email Address
  3. Phone Number – To complete the registration and verification procedure.
  4. Credit Card – To avoid cancellation of the registration, make sure that the credit card is valid and can be charged internationally.
  5. Tax ID – This includes the business tax ID or Social Security Number
  6. State Tax ID
  7. Shipping locations
  8. Business Logo

What items are customers seeking?

These are the best-selling categories on Amazon. On a side note, if you want to save yourself the time and effort of conducting manual research for the things to sell, click here.

  1. Books
  2. Electronic items
  3. Clothes, shoes, and accessories
  4. Toys and games
  5. Baby products
  6. Computers
  7. Pet Supplies
  8. Video games and accessories
  9. Art, craft, and office supplies
  10. Home and Kitchen
  11. Camera and photography equipment
  12. Handmade products
  13. Beauty and personal care

Factors to consider when choosing a product to sell:

The chances of going wrong with these products are slim. But choosing what to sell takes into consideration several factors.

  • Are people interested in these products? – Do check if the goods you intend to sell have a high demand. You are more likely to have higher sales if you know what the consumers want. 
  • What are your competitors’ strengths and weaknesses? – Analyze your competitor’s performance in detail. Find out why customers are purchasing their products, what they like or dislike, and whether you have anything unique to offer.
  • How much profit will you make? – Calculate your profit margin by adding up the cost of sourcing, product price, packaging, shipping, and ROI. Make sure your profit is high to avoid suffering a loss.
  • Are too many people selling the same product already? – It will be challenging to sell your goods if numerous others are selling the same.
  • Avoid seasonal products – Although it could be tempting to sell seasonal goods, keep in mind that people will only buy them for a limited time. Choose products that are always in demand if you wish to sell perpetually.

What is Fulfillment By Amazon (FBA)?

Amazon offers three fulfillment options ie., Fulfilled By Merchant (FBM), Seller Fulfilled Prime (SFP), and Fulfilled by Amazon (FBA). We will talk about the former two in some time; meanwhile, let us look at the latter option.

If a merchant chooses Amazon FBA, Amazon will manage every aspect of shipping. All you are required to do is sign up for the program and ship your products to the fulfillment center.

From this point on, Amazon will handle every step of making sure your products reach customers. They handle everything, including picking the product off the shelves, packaging, shipping, delivery, returns, and customer support.

Business Models on FBA:

The following are the different types of ways in which merchants can sell their goods.

  1. A private Label is when a company purchases unbranded goods manufactured by a third-party business and markets them under its brand name. The said brand can then decide on its pricing and packaging. Example: Energy bars.
  2. Reselling or Retail Arbitrage is when someone buys products from a physical or online retail store for a deducted price and resells them for a higher amount. Example: Art supplies.
  3. The wholesale model is where a retailer buys products from a manufacturer in bulk and sells them on Amazon. The only difference between retail arbitrage and wholesale is that here, products are sourced in large quantities. Example: T-shirts, books.
  4. Dropshipping is when an individual or company mediates between the manufacturer and the customer without buying the stock. They are only involved in taking orders and forwarding them to the manufacturer. Example: Headphones.
  5. Handmade is where individuals can sell their handcrafted goods to consumers directly. Example: Paintings, jewelry.

Subscribe and Save:

Amazon Prime is a membership program made for the convenience of customers. Regularly purchased items, like groceries, can be automatically delivered by subscription. Users can save money, as there are standard discounts for these items. They can pay a monthly or yearly fee and get free delivery.

Given the long-term commitment and recurring business, this is beneficial for sellers.

Advantages and Disadvantages of FBA:

Advantages:

  1. Amazon Prime: The Prime badge increases the likelihood that customers will convert. They will receive their order within two days, and it ensures free delivery.
  2. Reliable Customer Service: It includes free service of communicating with customers for inquiries/returns/refunds/exchanges.
  3. Buy box: If sellers choose FBA, they have a greater chance of winning the Buy Box. This boosts their visibility and sales.
  4. Unlimited storage: Amazon’s multiple fulfillment centers around the globe provide limitless storage space for your inventory.
  5. Economical Shipping: Since Amazon has tied up with multiple shipping companies, you can ship your stock at an affordable price. You can also offer free, quick shipping on orders to your consumers.

With just one click, the SellerApp FBA Calculator provides accurate information regarding your expected revenue.

Disadvantages:

  1. Exorbitant fees: Amazon charges you separately for storage, returns, removal, and disposal of damaged goods in addition to the standard monthly fee.
  2. More returns: Customers will return your goods even more since it is easy for them to do so if they receive damaged or unsatisfactory packages.
  3. Commingling: Amazon stores goods from various sellers in one place. If you haven’t labeled your item properly, it could get mixed up with goods from other brands.
  4. Inventory tracking: It will become challenging to keep track of your packages as you are not in charge of the inventory.
  5. Packaging: The seller has very little packaging flexibility. Amazon has a rigid policy, therefore packing your products in accordance with their requirements can be time-consuming.

If you want more in-depth information about how FBA works, click here.

What is Fulfilled By Merchant (FBM)?

FBM is a fulfillment option where the seller lists his products on Amazon but manages the inventory and logistics by himself. The merchant uses his resources for packaging, handling, and shipping the goods to customers.

One can choose FBM if they do not have a large number of units to be sold daily, or if the products are from their brand. This is a money-saving method because you do not have to spend extra on storing inventory and shipping.

What is Seller Fulfilled Prime (SFP)?

If you do not want to spend a high fee on FBA but want to have complete control over your products just like FBM, there’s a solution for you. Seller Fulfilled Prime is a combination of FBA and FBM.

This is where verified sellers with a professional account who have the Prime badge can offer to ship within 2 days. But what’s different here is, they can use their own warehouse or that of a third party, instead of storing their inventory in an Amazon fulfillment center.

Pros and Cons of Selling on Amazon

Pros:

  • Global Reach: Selling on Amazon gives you the advantage of reaching international customers
  • Easy to start: Registration and selling is a relatively easy process that doesn’t require much effort
  • Recognition: Selling on the world’s largest e-commerce platform makes you reliable and trustworthy
  • Flexibility: You can list your products at any time and from the convenience of your home
  • No need to stock up: If you choose FBA, you do not have to worry about manually stocking your products as Amazon does it for you

Cons:

  • High Competition: Since there are millions of vendors in the marketplace, there is fierce competition.
  • Risk of Deletion: Make sure to comply with the rules to avoid the risk of your account getting deleted
  • No control: Unlike the conventional seller-buyer relationship, you cannot interact directly with your customers.
  • Not budget friendly: Be mindful of what you do when selling and advertising because it could drain your bank account
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  • Stock theft: Due to commingling, there is a great risk of your stock getting stolen or damaged

Conclusion

Now that you have reached the end of this article, you are ready to start selling on Amazon. The platform can be used by anyone with little to no experience. It is open to everybody. If you want to succeed as a merchant, make sure to remember these pointers and be updated with trends. No business comes with a foolproof plan so do remember to pay attention to what is not working for you and make changes accordingly.

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