Amazon is one of the first places people look when they have something they want to buy, and 9 out of 10 adults have gone to Amazon to price check a product. Amazon’s customer service and fast shipping has made it the go-to ecommerce destination for online shoppers, and that makes this platform the go-to ecommerce platform for sellers looking to start an ecommerce business.
Have you been considering selling on Amazon?
If you’re ready to start making money through this ecommerce platform, here are five easy steps to get started with Amazon selling.
Choose Your Amazon Seller Business Model
Amazon sellers have different models for earning on the platform. According to Junglescout’s 2022 Amazon Seller Report, the most popular business models on Amazon in 2022 are:
- Private label – 59%
- Wholesale – 26%
- Retail and online arbitrage – 26%
- Dropshipping – 10%
- Handmade goods – 8%
Private label typically involves creating your own brand and then adding your brand name and logo to a product. Don’t worry, you won’t have to invent something completely new and innovative to go the private label route. You can select a product and source a manufacturer who will add your logo to their product and packaging.
Wholesale businesses source bulk products from a manufacturer at a discounted rate and then resell those products at a retail price on Amazon. You are likely selling the same products and brands as other sellers when you go the wholesale route.
Retail and online arbitrage is where many sellers begin their Amazon sales journey, especially if they don’t have a current brand or previous e-commerce experience. With retail and online arbitrage, you source products directly from stores and websites and then resell those products through Amazon. If you love shopping for amazing discounted deals, you could buy a deeply discounted item and then resell it at its regular price (or higher) via Amazon. RA and OA is a popular starting point because of the low-cost barrier to entry.
Dropshipping is a popular business model for ecommerce sellers who don’t want to manage physical inventory. With a dropshipping model, your products are kept at a third-party location. When you receive an order through your online store, you initiate that third-party dropshipping partner to pack and ship the inventory to your customer. Amazon allows you to dropship with them, even if you’re not selling your products on the Amazon platform.
Handmade goods is a new category on Amazon, and it’s allowing creators to make and sell handmade and crafted items similar to Etsy’s platform. Amazon has an artisan application and audit process to ensure they’re building a shop of genuinely handcrafted goods. They’ll waive the monthly Professional Selling Fee ($39.99) for all approved artisan sellers.
FBA vs. FBM
In addition to choosing your Amazon seller business model, you’ll also choose your distribution model: either FBA (Fulfilled By Amazon) or FBM (Fulfilled By Merchant).
With FBA, you’ll have your goods delivered to Amazon’s warehouses, and Amazon will store your goods and then pack and ship them when an order comes in. Amazon will also handle customer service and returns. This is how you get your products to be Prime and eligible for fast shipping. If you choose FBA, be aware that you will have to pay monthly storage fees and shipping fees to Amazon in addition to any selling fees.
With FBM, you will be 100% responsible for storing, packing, and shipping your products to customers. You can store and ship yourself or outsource this to a third party. Either way, you’ll be responsible for meeting Amazon’s service levels related to shipping and orders. In addition, you must provide customer service and returns processing for FBM orders. While FBM gives you more control over your inventory and fewer Amazon fees, longer shipping times and the inability to show up when the Prime filter is turned on could negatively affect your sales.
Understand Amazon Seller Requirements
Selling on Amazon is a legitimate business model, and you will want to treat it as such. That means fully understanding Amazon’s seller requirements and putting things in place to ensure your business is in place, such as business documents, tax IDs, and insurance.
Business Documents
To start, a number of documents are required to sell on Amazon USA, including your business information, tax ID, and state tax ID. If you haven’t already done so, now is a good time to set up your business and take these crucial first steps.
Business Insurance
Amazon sellers who are Pro Merchants and sellers with gross sales over $10,000 in a single month are required to carry business insurance. According to the Amazon Services Business Solutions Agreement, sellers who meet these requirements must carry a minimum of $1M per occurrence and $1M aggregate limits of commercial general liability insurance and product liability insurance.
Do you need commercial insurance for your e-commerce business? Coverdash helps ecommerce business owners meet the insurance requirements set by Amazon and other popular selling platforms. We specialize in e-commerce insurance solutions, and our customer service team will help you find the best rates from top-rated carriers, as well as submit proof of insurance (also known as a certificate of insurance) to the platforms on your behalf so you can worry less about insurance and focus more on selling.
Get an e-commerce insurance quote from Coverdash.
Create an Amazon Seller Account
Once you’ve gathered all the necessary documents, it’s time to create your Amazon Seller Account.
Before you sign up, make sure you’re ready with the following:
- Business email address or Amazon customer account
- Internationally chargeable credit card
- Government ID (identity verification protects sellers and customers)
- Tax information
- Phone number
- A bank account where Amazon can send you proceeds from your sales
Choose Your Selling Plan
When you first create your Amazon seller account, you can choose between two different seller plans: the professional selling plan and the individual selling plan.
The professional selling plan costs $39.99 monthly. With the individual selling plan, you will be charged $0.99 for every unit you sell on the platform. This choice between the two plans is relatively easy to make. If you plan on selling more than 40 units per month, you will likely save more money with the professional selling plan than you will with the individual selling plan.
Source, Buy, or Create Your Products
Now comes the fun part: finding, buying, or making your Amazon products!
If you are interested in wholesale or private labeling, you’ll want to find manufacturers who will sell to you at wholesale prices. Use a tool like JungleScout or Helium10 to do product research. These tools let you identify trending and popular products and discover how profitable a product is so you know what to start sourcing.
If your business model is retail or online arbitrage, then you get to start shopping for those deeply discounted products. Again, you’ll want to use tools like JungleScout or Helium10, in addition to the Amazon Seller app. With these apps downloaded to your phone, you can find a great deal in a store and instantly verify if that product will sell on Amazon before you even take it to the register (or add it to your online cart).
Makers and creators can get to work on their artisanal handmade goods. You can self-publish books and ebooks, create print-on-demand products, and even launch a subscription box! Explore all of Amazon’s programs and selling opportunities here.
List Your Products and Start Selling
Your final step to selling on Amazon is to list your products in your Amazon store so you can start selling.
List Your Products on Seller Central
Once you register as an Amazon seller, you’ll have access to your Seller Central account, where you can:
- Keep track of your inventory and update your listings from the Inventory tab
- Download custom business reports and bookmark templates you use often
- Use customer metrics tools to monitor your seller performance
- Contact Selling Partner Support and open help tickets using the Case Log
- Keep track of your daily sales for all the products you sell on Amazon
If you are listing a product that already exists on the Amazon platform, you’ll match an existing listing. You'll create a new listing if you have a brand new product that is not currently on the Amazon platform, and you are the first and only seller.
Start Selling!
Learn everything you can about different ways to make — and improve — sales on Amazon.
Amazon recommends sellers follow their Perfect Launch strategy to maximize sales in the first 90 days. Utilize Amazon’s five selling programs for a perfect launch, including:
- Brand Registry
- A+ Content
- Fulfillment by Amazon
- Automated Pricing
- Advertising
Learn more about the Perfect Launch here.
Are You Ready to Become an Amazon Seller?
There is tremendous potential for Amazon Sellers. Despite lasting supply chain disruptions arising from a global pandemic, 76% of Amazon sellers are profitable in 2022. And 25% of sellers with 2 or fewer years in business on Amazon and 60% of businesses with 3 years or more earn over $100,000 in annual ecommerce revenue. If you’ve been dreaming of starting a side-hustle, expanding an existing business, or launching your brand, Amazon is still one of the best places to sell online.
Get Amazon Seller Insurance from Coverdash
Coverdash helps ecommerce sellers meet Amazon’s insurance requirements so you can get started on this seller platform. Our insurance brokers specialize in ecommerce insurance, and we provide top-rated coverage at rates sellers can afford. Once we’ve got you covered, our team continues to support you by submitting a COI (certificate of insurance) to Amazon on your behalf, making it that much easier for you to start selling.
Request a quote for Amazon seller insurance from Coverdash today.