Pros of Selling on Amazon
Selling on Amazon gives you access to millions of potential customers. In 2024, around 230 million people from around the world are subscribed to Amazon Prime. 165 million of those people live in the United States. By becoming an Amazon seller, you gain instant access to that massive customer base.
Amazon FBA sellers don't have to worry about inventory or shipping. If you join the Fulfilled by Amazon (FBA) program, you never have to give inventory or shipping orders a second thought. Amazon takes care of all those logistical concerns for you. Plus, using the FBA program means your products will be eligible for 2-day shipping, which is a benefit Amazon Prime shoppers look for while shopping.
Amazon makes marketing your products and finding customers easier. Amazon lets you choose how to help people find your products: using ads or their algorithmic search engine. Having options with different price ranges helps you stay within your marketing budget and optimize your advertising campaign until you find the ad types that generate the highest return. For example, you can optimize your product listings with keywords and let Amazon's search algorithms direct customers to your products through their queries. This method isn't guaranteed to help you rank higher in search results, however, and you'll likely face a lot of stiff competition from other sellers. Alternatively, you can pay extra to buy Amazon Ads and reach new customers both on and off the Amazon platform. This strategy may help you bypass some of your competitors in the search results ranks.
Cons of Selling on Amazon
Both FBA and non-FBA sellers must pay for inventory storage. If you choose to fulfill your own products on Amazon – that is, store your inventory and package and ship orders yourself – you may have to pay for a storage unit (or several units) to hold all your merchandise. And if you join the FBA program, you'll have to pay Amazon a fee for storing your merchandise in their warehouses. The average cost of a storage unit in the US ranges from $70-$260 per month depending on the size of the unit. Amazon charges FBA sellers $0.78 to $1.40 sq cu ft based on the size of the unit and the time of year.
Amazon FBA fees get expensive fast. There's a catch to letting Amazon fulfill all your orders for you: you have to pay them a fee every time they package and ship an item. The fee varies depending on the product type and how much it weighs. Whatever the cost, you'll need to raise the prices of your items to generate a profit and cut your losses. Unfortunately, when you raise the price, you risk driving customers away. In the end, it's almost always the sellers who lose.
Customers can ask for refunds for items you sold them for any reason. In general, third-party sellers who fulfill their own orders must manage their customers' refund and return requests. However, if a customer is dissatisfied with a third-party seller's decision on a refund, they can file an A-to-z Guarantee Refund claim directly with Amazon. If Amazon approves the claim, the seller has to remit the money for the order back to the customer, regardless of whether they feel the refund is fair. While this policy does protect customers, it can make sellers feel shortchanged – especially if they don't think the customer is asking for a refund for a valid reason (like claiming they didn't receive the package when the tracking information says the delivery was successful).
Amazon Seller Fees
Non-FBA Amazon sellers must pay a referral fee, plus a seller account fee. The referral fee is always a minimum of $0.30 but varies widely depending on the type and size of the product. The seller account fee is either $0.99 per item or $39.99 per month, depending on which option the seller wants to choose. If you're generating a lot of orders per month, paying $39.99 a month for a professional seller account is both more economical and more beneficial to your business. This plan stays the same price no matter how many products you sell, plus it comes with extra tools and resources to improve your sales and grow your brand. If you're only selling a few items per month, then $0.99 per item may be better suited to your budget.
FBA sellers must pay Amazon fees for fulfillment, storage, and more. Because Amazon fulfills the orders for these sellers, they can charge them a fulfillment fee (per item), a monthly storage fee, a fee for free shipping for items returned by customers, and more. Read the full list of FBA fees below. Fulfillment fee: A fee Amazon charges per item you sell. It covers packaging and shipping your items, so you don't have to do it yourself. The cost ranges from $2.48 for a 2 oz item to $203.46 for a 150 lb (68 kg) item, with every lb (kg) above 151 lb (68 kg) costing an additional $0.19. Storage fee: A fee for storing your inventory in their warehouses. The price varies depending on the size of your storage unit to the time of year (the storage fee is often 2-3 times higher from October-December than it is from January-September due to the holidays). Aged inventory fee: Amazon charges this fee for your inventory if they have to store in their warehouses for longer than 181 days. Removal, disposal, and liquidation fee: If you decide to dispose of or liquidate any of your inventory, Amazon will do it for you for an extra cost. FBA Inbound placement fee: A charge for a service where Amazon distributes your inventory to fulfillment centers closer to your customers. This allows for faster shipping, which will help you retain customers and maintain Amazon's reputation for timely deliveries.
How to Get Started Selling on Amazon
Sign up for a standard Amazon seller profile. You'll need to have a government-issued ID such as a driver's license or a passport handy, as well as a piece of mail that verifies your residential business address. You'll also need basic details about your business (like your location and registration number). Once you have all this information and documentation in hand, follow the steps below. Step 1: Provide Amazon with all your business information, such as your business location, type, name, company registration number, registered business address, and phone number. Step 2: Enter your seller information, including your full legal name, country of citizenship, country of birth, date of birth, residential address, and phone number. Then indicate whether you're a beneficial owner or a legal representative if your business (or both). Step 3: Enter your billing information (including the credit card where you want to receive the payments from your orders). Step 4: Provide your store name (i.e., your business name as it will appear to Amazon customers), along with your product codes, business certifications, and manufacturer or brand status. Step 5: Verify your identity by uploading a government-issued ID and prove your residential business address with a bill or bank statement you received in the mail.
Select a $0.99 standard or a $39.99 professional seller plan. The standard plan costs $0.99 per item sold and the professional plan costs $39.99 per month. If you're selling hundreds of items every month, Amazon recommends signing up for the professional plan to save money and access more helpful tools, like being able to create promotions and coupons and list items in bulk.
List and price the products you want to sell. To begin, fill out the product details for each item and make sure they comply with Amazon's Product safety and Restricted products policies. Then choose a price that's competitive with other sellers, but high enough that you can turn a profit from your sales. When creating each product listing, don't forget these essential details: Title Images Variations of the product Short description summarizing the functions and features of the product Detailed description of the product (in bullet points)
Select your desired fulfillment method. Now that your profile is set up and your listings are filled out, it's time to choose where you want your inventory stored and whom you want to package and ship your orders. You have two options: Fulfilled by Merchant and Fulfilled by Amazon. By selecting Fulfilled by Merchant, you'll handle all the storage and shipping yourself (or you can outsource these tasks to third parties). By selecting FBA, Amazon will handle all of it for you (for fees, of course).
How to Make a Profit Selling on Amazon
Resell products that are trending on the market. For example, toys from popular Disney movies like Frozen and Frozen II sold well immediately before and after the films premiered in theaters. Trends like these come and go fast, so it's important to keep an eye out for popular products and resell them while they're hot. To resell an item on Amazon, simply purchase the product and scan the barcode using the Amazon Seller app. Then match it to an existing listing or create your own from scratch.
Only buy products to sell that will double your investment. That way, you can cover all the fees Amazon charges while still making a tidy profit. For example, if you buy a brand-new doll from a dollar store for $5, you should resell it for $10 on Amazon.
Grow your audience reach and increase sales through advertising. Amazon offers an advertisement service where you can create and distribute ads on their platform and all over the internet. Choose from the following ad options: Cost-per-click (CPC) ads: CPC ads include Sponsored Products, Sponsored Brands, and Sponsored Displays. The way it works is Amazon places your product or brand high in search results or on relevant pages throughout their website. The best part is you only have to pay them when someone clicks on your ad. You also get to set a cap on how much you want to pay overall, so you never exceed your advertising budget. Display & video ads: Display and video ads are only available to sellers who are registered with the Amazon Brand Registry, book vendors, and vendors and agencies with clients. It's a long, splashy ad that stretches across the webpage. Amazon displays it on its platform as well as on other sites the company owns, like Twitch and iMDB. Cost-per-mille (CPM) audio ads: These ads are 10-60-second-long commercials that air on Amazon's podcast and streaming services like Alexa News, Twitch, and Amazon Music. They can even reach radio show listeners through the Amazon Publisher Direct (APD) network. For this type of ad, you must pay a certain cost per 1000 impressions of your ad ("mille" means "thousand").
Alternative Places to Sell Goods Online
Sell products on your business website. You can eliminate a lot of the middleman fees of selling and shipping through Amazon by setting up an online store on your own website. Simply find an e-commerce service like Shopify or install a plugin like WooCommerce and start your digital storefront, complete with a secure payment system.
Auction off or sell items as an eBay seller. If you don't like Amazon's return policies, selling on eBay may be a better option. As an eBay seller, you can set up your own return window and refund policy. You do still have to pay a generous amount in seller fees, but the greater flexibility in shipping and returns may outweigh the hit to your bank account.
List products on social media (Facebook Marketplace, TikTok Shop, etc.). If most of your clientele is on social media platforms like Facebook, TikTok, or Instagram, take your store directly to them. Simply set up a business profile on each platform (on Facebook you can even use your personal account), create a listing for your item along with pricing and shipping costs, and see if anyone is interested in it.
Comments
0 comment