Author: Maria Alfano
Get to know these Amazon seller tips before you start your Amazon journey. One of the easiest businesses to start in midlife and beyond is an Amazon business. It has a low cost of entry. You can sell almost anything. And, customers will pay a premium to purchase quality merchandise from Amazon.
When you choose to play with the big boys, you have to play by their rules. Not always are the rules clear. So, your best guess may just be the opposite of what they actually mean. This doesn’t mean that selling on Amazon is not lucrative. My husband and I don’t work anymore. We make a very good living selling on the Amazon platform. But, we had to learn the rules the hard way. I only wish someone had explained the expectations before we jumped in feet first. Having said that, we would not have had it any other way, nor would these lessons learned have changed our minds. The plan is to arm you with enough information to launch you into a healthy and successful business from day one!
Amazon is the perfect business for those on a limited budget. There are little to no monthly costs involved. And, you don’t pay any fees until you start making sales. This makes it a dream business for many beginner entrepreneurs. If you are retired or about to retire and you want something to supplement your monthly income, this could be the perfect business for you. When Amazon started in the mid-1990’s it was an online book retailer. Today you will find anything and everything ever invented for sale on Amazon. The best part is you can be a part of this community.
Amazon Seller Tips – What You Need To Know Before You Start Selling
Yes, Amazon is an easy business to get into. And yes, it has created many millionaires over the years. But, you need to understand what you are getting yourself into before you take that proverbial plunge into online selling.
This post will walk you through the Amazon seller tips you need to know before your launch your Amazon storefront.
Amazon Seller Accounts
There are 2 types of accounts you can sign up for with Amazon. The fee structure is unique to each type of account.
Individual – many new sellers start with an individual account. There are no monthly fees with this account. However, you will pay $1 per unit sold plus Amazon commission depending on the category the product belongs to. The commission fees range from 20% of the gross selling price up to 40%. This account is perfect for part-time sellers who don’t sell more than 40 units per month.
Professional – for those folks who wish to make this a true business, the professional account the monthly fee is $39.99. The $1 per unit fee is eliminated. It doesn’t matter if you sell 1 item per month or 1000 items per month, the monthly fee is only $39.99. You can switch to a professional account from the individual account when you start selling more than 40 pieces per month. Amazon’s commissions remain the same for both account types.
Unified – When you open a professional account, you automatically have access to the US, Canada, and Mexico for North America. You can sell in all 3 countries from one account.
Seller Tools
There will be many companies coming out of the woodwork to sell you training courses and applications to manage your business. When you first start you really don’t need any tools except for the free tools provided by Amazon. Once you start expanding and making substantial profits that can pay for the tools, then start to consider inventory management tools, repricing tools, and more. If you pay attention to any of the Amazon seller tips make it this one – no paid tools at the beginning of your journey.
Amazon Seller App – take your Amazon business on the go with you. The app is available for both Android and iOs smart devices.
Seller Central – is your back office. You can access this from any computer, anywhere. You will find all your inventory, reports, payments, fees, and sales on seller central.
Ways To Sell
There are many options for selling products on Amazon. You have a choice based on what you want to sell.
Arbitrage
In general, arbitrage means to buy something for a lower cost and sell it for a higher, more profitable price.
Retail arbitrage (RA) – if you like shopping and digging for buried treasures, then RA is for you. In a nutshell, retail arbitrage means you go shopping for bargains that can be resold on Amazon for a profit. Typically the largest profit margins come from RA products. Usually, you can find these products over and over from the retail store.
Liquidation arbitrage – buying liquidations can be quite fruitful. Often these are bulk goods that are no longer being produced but still in high demand. Once the product is gone, no matter how well it sells, there is no replenishing of your inventory.
Suppliers
Wholesale – purchasing products directly from the manufacturer or distributor. This cuts out the middle man (usually retail outlets). And, it cuts out the additional costs charged at retail. You will buy the products at a discounted price. However, if you are not buying the volumes that a Walmart or Costco would buy, your discount will not be as large as theirs. These are replenishable (replens) as long as the supplier carries the product.
Private label (PL) – do you manufacture your own products under your own brand name? If so, this is considered a private label product. This means you are the only person to sell this product on Amazon. You control how often you make the product and can replenish it at any time.
White label – many manufacturers will create products and allow you to add your own label on their product. It is very similar to PL without the added headache of making the product. This replen is available as long as the supplier is manufacturing the product.
Dropshipping – technically this is allowed by Amazon under one condition only. To drop ship means you are selling a product that you do not own. You make the product available for sale on Amazon and once the customer makes the purchase, you buy it from your supplier to have it shipped directly to the customer. The caveat is the supplier must be the manufacturer or distributor of the product. It cannot be another online retailer like Walmart or Target. For example, I used to sell fiberglass paddleboards that were over 6 ft long and weighed well over 50 lbs. When I got a sale, I would contact my supplier to ship the boards directly to my customer.
Amazon Fees
There are several fees to be aware of. This is probably one of the most important Amazon seller tips I can give you. When buying your products you need to take into consideration all the fees associated with making that sale before you can determine if you will make a profit. The rule of thumb for new Amazon sellers is to be able to sell something for 3x the amount they bought it for. If you buy something for $5 you should be able to sell it for $15 or more. $5 goes to Amazon, $5 covers the cost of the product, and $5 is your profit.
Besides the monthly fee and the commission fee for each item sold, you need to consider the following additional fees:
Shipping – how much will it cost to ship the products into an Amazon warehouse? Depending on the size of your product, its weight, and how many fit in a box, the cost per unit for shipping can range from $0.25 to $2.00 per unit. This cost must be added to your purchase price when evaluating profit. As a rule, I use a $1 per unit average price for shipping.
Advertising – while this is completely optional, you should include your cost of advertising. This will be up to you and what your budget is. It can be as low as $1 per day and the sky is the limit.
Storage fees – Amazon will charge you for storing your items at any of their warehouses. If your products sell quickly, the fees will be negligible. But, if the products sit there for more than 30 days you will start to incur fees. The fees are based on the size of the product and how much space they take up.
Packing supplies – boxes, tape, bubble wrap, all cost money. These need to be included in the cost of the product.
Insurance – Amazon requires sellers to have liability insurance. Costs vary considerably based on your carrier.
Amazon Seller Tips – Terminology
You will hear other sellers using acronyms that only another Amazon seller would understand. Get a leg up on other newbies by using some of these terms with them. Practice makes perfect and the more you use them, the more they will make sense.
Customer Related
Buy box – is the most coveted thing for all 3rd party (3P) sellers like you who list a product for sale on this platform. It refers to the add to cart button. When there are multiple sellers of the same item, whose product ends up in the shopper’s cart. If it’s yours then you won the buy box!
BSR – best seller rank is the second most important aspect for selling. There are tens of millions of products available for sale on Amazon. The lower the rank, the more it sells. Think of it as there are 1,000,000 people in line to get a free car. There are only 10 cars to give away. The people closest to the front of the line are almost 100% guaranteed to get one of those cars. #1,000,000 has very little chance of winning a car. Keep in mind that the closer the BRS is to #1 the more competition there will be.
Prime – customers who pay an annual membership fee to Amazon are entitled to certain privileges like free shipping and 2-day delivery.
Amazon Related
ASIN – Amazon Standard Identification Number. Amazon assigns one of these unique codes to all the products listed online. It allows them to track the product much as a UPC code does.
Restricted – some categories and brands are restricted meaning you cannot sell in these categories without permission from either Amazon or the brand owner. Gated categories include beauty, grocery, and some baby items. Whereas gated (or restricted) brands will include Nike and Lego. You will need invoices from the supplier that include your name (or business name), your address, and an itemized list of products purchased from a reputable supplier. It cannot be a cash register receipt from a retail store.
FBA – fulfilled by Amazon. You will send in all your inventory to Amazon. They will distribute it to customers and take care of the customer service for you. FBA fees make up a large portion of your commission fees.
FBM – fulfilled by merchant. You are responsible for monitoring your inventory levels (don’t oversell a product), shipping the items you sell to the customer and customer support. Keep in mind that all the customers belong to Amazon and you will not have direct access to them.
What To Sell
This is a common question for new sellers. The easiest way is to consider a couple of things first.
Sell what customers want – it’s all about the customer, not you. If they don’t want something, it won’t sell. The BSR will tell you whether or not it will sell.
Sell what you know – if you are a hairdresser, it does not make sense to sell medical supplies. Sticking to products you know will allow you to offer the best products in your industry. Also, if there are any questions, you will have the proper answer.
In Summary
These Amazon seller tips are the essentials to build the base for a strong and lucrative business. Don’t let them scare you. They are the ground rules. Every business, sport, or game has ground rules. Amazon is a great way to make some extra money in retirement with little effort and start cost.
We would love to hear from you. Have these tips helped you to launch your Amazon business? Which were the most useful? Is there one that we missed and should be included?