Whether you want to start a profitable side hustle or you’re ready to become your own boss, selling on Amazon provides a massive and lucrative opportunity. But despite what some online marketers would have you believe, it isn’t just a magical money-making scheme.
To be successful, it takes an adequate budget, hard work, a lot of research, and some dedication. In actuality, a lot of people who start their Amazon journey quit before they ever have a chance to succeed.
But if you work hard and do your research, you can maximize your potential to start and build a successful business. In this guide, we’ll walk through how to become an Amazon seller step-by-step. Let’s hop into it!
1. Find a Product to Sell on Amazon
Now that you’ve decided to become an Amazon seller, your first step is to determine what you want to sell. The research you conduct at this initial stage is one of the most important tasks in this entire process. The data you gather and the product choices you make from that data will determine the success or failure of your entire project. Finding good opportunities depends on a lot more than imitating the success of a popular product or competing against products with mediocre Amazon product pages. You’ll need to thoroughly research the products, competition, keywords, and market trends before making a decision.
Before you start to formulate ideas, you’ll need to be aware of the various selling methods. Which option will be best for you depends on your goals and ambitions:
- Retail arbitrage is generally a great starting point for an Amazon newbie. Otherwise known as RA, retail arbitrage is when you visit retail stores such as Walmart or Target, buy discounted products, and then resell them on Amazon at a higher price. What’s great about this technique is you can get your feet wet selling on Amazon without a huge investment up front. Online arbitrage is the same idea, only that sellers buy discounted products online to then resell them on Amazon.
- Private label is perhaps the most scalable model for selling on Amazon. With private label, you find a generic product and a manufacturer who can make the product in bulk at a cheap price. Then you tweak the product, adding your logo and business information, and sell it under your own brand.
- Wholesale means you buy products directly from a major brand (such as Nike, L’Oréal, or Fisher-Price) at wholesale price and sell them on Amazon. The difference between this and private label is that with wholesale, you’re buying products directly from an already established brand and then selling them under their brand name with their approval.
This guide specifically deals with private label, since it’s the most scalable, while still being a viable option for a newer seller. Your first step to getting started with private label is to start brainstorming product ideas. The possibilities are practically endless, but you can’t just pick a product at random and expect to make money. The best method for finding the best product ideas is to use data. Doing so will help you identify products with existing demand, which results in high sales potential for you. To gather this data, your best option is to use a product-finding software with market analysis capabilities.
Our favorite product finder is Product Discovery. This tool provides you with a list of product ideas that match your budget and sales goals. With a few simple filters, you can easily locate product markets where you can compete as a new seller.
If this is your first product, your market criteria should look something like this:
- Decent revenue: We suggest a range of $10,000-$25,000
- Low reviews: We suggest a maximum of 250 reviews
- Search volume: We suggest a minimum of 5,000 searches
- Sales to review ratio: We suggest a minimum of 3 (This means the average monthly sales are at least 3x the number of average reviews. Reviews are the toughest barrier to entry in a market, so you want to make sure you have plenty of sales opportunities to gather reviews and compete with existing sellers.)
These criteria are just a starting point, and you should customize them to your own goals. The more personalized your inputs, the better your results will be!
After gathering a list of products you’re interested in, you’ll then need to validate your ideas. Again, you must use accurate data to ensure you’re choosing a product that sets you up for success. Market Intelligence integrates with Product Discovery, so that you can dive right into the validation stage. This process helps you avoid oversaturated markets or markets where your sales potential is low. When you plug your ideas into Market Intelligence, you should analyze the following:
- Barrier to entry: How easy will it be to enter a market and compete with the existing brands? If there are already a number of established, successful brands with high sales and a lot of customer reviews, then your chance of success will be low. The ideal market for new sellers is one with low competition and high demand.
- Revenue and profit potential: How much can you make with this product? The ultimate measure of how well a business is performing is profit, and each business will have different goals. In Market Intelligence, you’ll see how much each existing product is making per month, which will help you determine how much you could expect to make once the product is up and running. Remember to look at market averages, not just a few outliers, so you can accurately predict revenue. And don’t forget: you will encounter costs such as manufacturing, shipping, and Amazon fees. (We added a cost calculator to help with this).
- Monthly sales: How many units are sold each month? In order to understand how many products you need to order from the manufacturer (which is typically in China and leads to long shipping times), it’s important to know how much demand for this product currently exists on Amazon. Look at how many units are sold each month for products on the first few pages for the product’s main keywords, keeping in mind that you’ll likely need to order at least 2 month’s worth upfront.
- Market trends: How does this product sell throughout the year? Certain markets are seasonal and see spikes in sales during certain times of the year related to holidays or changes in the season. You’ll need to anticipate these trends for inventory reasons, and if this seasonality doesn’t appeal to you, it would be best to avoid products that depend on demand at certain times of the year.
The Amazon marketplace can be overwhelming, especially to newer sellers, but by using software like this to gather data and help find strong product ideas, you increase your chances of success.
*Note: before selecting a product, you’ll want to make sure that you can source it for a price allows for a healthy margin. Use a site like Alibaba.com to get an initial idea for how much you will have to spend per unit, and don’t forget to account for shipping.
If you’re ready to start using data to find the ideal product for your Amazon business, sign up for a free trial. You can find 25 product ideas and validate 5 of them for free! Have questions about getting started on Amazon? Contact our team 24/7 at [email protected].
2. Open an Amazon Account
Once you’ve chosen a product to sell, you’ll want to make yourself official and open a Seller Central account, which will be the hub of your online business. This portal is where you’ll add product listings, manage your inventory, view your reports, and more.
You’ll start by signing up with a valid email address and then be prompted to add the following information. Make sure you have all the info you need on-hand to make the process a little smoother:
- Business name and address
- Telephone number
- Credit card/bank information
- Tax information (If you have an LLC, add your EIN. If not, you can use your SSN)
Later when you start making sales, Amazon will deposit payments directly into your bank account every two weeks and will notify you that your payment has been sent.
After clicking Next, you’ll enter your billing information. During the signup, you‘ll also choose which account type to sign up for. You have two options:
- Individual: This account type gives you access to 20 product categories and restricts you to a maximum of 40 items sold per month. You’ll be charged a fee of $1 per item sold, although there is no monthly subscription fee.
- Professional: With this option, you’ll have access to 30 product categories and are eligible, upon approval from Amazon, to sell in the additional restricted categories. This account costs $39.99 per month.
If you’re just looking to sell off some old books, you’ll probably want an Individual account. If you plan to flip items through Retail Arbitrage, you’ll need to decide how ambitious you want to be. A Professional account will be best if you plan to sell more than 40 products a month. As a brand-new seller, there’s no need to pay $39.99 a month until you’re actually selling your product. Just before your inventory arrives at the warehouse, you can easily switch over to the Professional plan.
3. Choose Your Fulfillment Method
The next step is to choose the method of fulfillment for your products. Fulfillment refers to the responsibilities of storing, picking, packing, and shipping products to customers. The two options are Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM):
- FBA: This method can be best defined using Amazon’s terms: “You sell it. We ship it.” Using the FBA model, you send your products to be stored in an Amazon fulfillment center, and Amazon will then pick, pack, and ship your products when a customers order. Amazon also takes care of customer service issues, such as returns. It’s an easy-to-use, hands-off model, but it’s important to know that additional fees are involved.
- FBM: Using this method, you list your products on Amazon and then you handle all aspects of storage and order fulfillment. You are also responsible for any late, missing, or damaged packages.
The infographic below outlines the pros and cons of each method. For even more in-depth information, check out our blog article, FBA vs. FBM: A Full Comparison for Amazon Sellers.
4. Create Your Amazon Listing
In this step, you’ll log into Seller Central and begin creating your product listing, which is the product page where a shopper will learn about and purchase your product. A product listing is your opportunity to show consumers what your product is, what it does, and why they should buy it. It’s important to be as accurate as possible when describing your product. You will also want to include all the necessary information, including ingredients, materials, dimensions, and anything else a shopper will need to know.
In order to have your product listed on Amazon, you’ll need to be assigned a specific product number from Amazon, known as a Fulfillment Network Stock Keeping Unit (FNSKU). However, in order to acquire one, you’ll first need to get a universal product code (UPC), which is a bar code. UPCs are created by the standards organization, GS1 US, and you can obtain your product’s UPC from their website. In order to get your FNSKU process started, you’ll need to obtain a UPC, which can take some time. Then once you’ve received it, you can create your product listing on Amazon.
The most crucial element in a listing is the keywords, and the effectiveness of your listing depends on your use of them. You could write some great copy for your listing, but if you haven’t included the keywords people are using to search for your type of product, your listing won’t be found. In a later step, you’ll focus on ensuring that your listing is optimized with the top keywords to earn strong organic search results and draw traffic. For the time being, you’ll get acquainted with how to create a listing and everything that needs to be included.
A product listing consists of the following elements:
- Title: The title is the most important element in your listing since it’s what Amazon focuses on the most when it comes to keyword ranking. In addition to your main photo, the title is what shoppers will see first In a search results list. Keep in mind that a title should give an accurate overview of what your product is and does. For some products, this will mean including dimensions or quantity counts. It’s also crucial that you include the most important keywords here.
- Bullet points: In Amazon, these bullet points are known as product features. This is where you can elaborate on and highlight important aspects of your product. This is also where you’ll want to include any important keywords you didn’t fit into your title.
- Product description: Your product description is where you can write in greater detail about your product and expand on what you covered in the bullet point section. Although brevity and keyword placement is key in the title and bullet points, the product description is where you can establish your brand voice.
- Backend keywords: This section doesn’t actually appear on your live listing, so your customers won’t see it. This is where you should input any related keywords you weren’t able to fit in the main parts of your listing. You can include foreign-language keywords here along with misspelled words to gain the most visibility.
- Photography: Each listing can have a maximum of nine product photos. The first, and most important, image in your photo set is called the hero image. This is the main image shoppers see when looking at your product in search results or on your listing page. In addition to your hero image, you can add images to show your product in use, known as lifestyle photos.
5. Find a Manufacturer
Let’s say you’ve decided to sell private-label products as an FBA seller. Where do you get your inventory? The goal of this step is to answer that question. It’s time to research the potential manufacturers and decide on the best one for your business.
Among the most popular sourcing options for private-label sellers is Alibaba. This site is a good place to begin your search for an overseas manufacturer who can supply bulk orders of your product.
When making this choice, make sure you do your research and choose a legitimate company to work with. Alibaba provides its own quality assurance metrics such as its Verified Supplier and Gold Supplier memberships. These designations are certified by third-party groups outside of Alibaba and confirm the business’s legitimacy. When looking at a supplier’s product page, you can view information that includes their response rate and the number of transactions they’ve had in the last six months.
We recommend creating a longlist of 10 or more suppliers and contacting each of them. Alibaba offers a messaging system for getting in touch with a manufacturer; just click the Contact Supplier button on the product page.
In assessing each one, you’ll be looking for a number of different characteristics. You’ll want to avoid any language barriers and find someone who will be easy to understand. Pay attention to how quickly a supplier responds to messages and they should be able to provide good answers to your questions, as well as ask good questions of their own regarding sizes, colors, and other specifications. It will also be preferable to find a supplier who has experience working with other Amazon sellers and is familiar with Amazon’s requirements. You’ll also need to know how flexible they’ll be if you need to make changes after an order has been placed.
Pricing is also a vital point since you’ll want to source a quality product that meets your budget. Once you have prices from each supplier, go Viral Launch’s FBA calculator to ensure you will be able to make a profit. To estimate your potential profit, you’ll need to know the cost of goods sold, the shipping costs to Amazon, and the selling price of your product on Amazon.
After communicating with each supplier, narrow down your list to two or three and request product samples from each of them. Also buy some competitor products off Amazon and compare them. After reviewing everything, you can decide on which supplier to work with.
For more in-depth information about finding a manufacturer, listen to this episode from Viral Launch’s podcast, Follow the Data.
6. Order and Ship Your Product
In the last step, you’ve decided on the best supplier for your product, so now you can place your first full order. We recommend that you order enough product for at least a two-month run of inventory (or, at least enough to cover your lead time)
Since you’ll be ordering from an overseas supplier, you’ll have a few different payment options:
- Bank wire (or telegraphic transfer): This method is the riskiest since you make a payment directly to the supplier’s bank account before you receive your order. Of the other methods, this requires the least amount of fees. Manufacturers usually prefer these kinds of payments, but we would recommend using a different option, especially when forming a new supplier relationship.
- Credit card/PayPal: This is a more reliable and secure payment method, but requires more fees. Because of the security involved and ability to cancel a payment, many Amazon sellers prefer this method. However, due to fees, some manufacturers will not accept these for a large order.
- Escrow service: Alibaba provides this payment option, which is essentially a combination of the previous two. Your payment is sent to the supplier, but it’s held by Alibaba until your confirm the receipt of your product. This is a great middle ground; try to find a manufacturer who is willing to accept Alibaba pay or similar, which protects you and them.
Before you make your payment, you’ll need to plan where your goods are going to be shipped depending on your selling plan. You’ll also need to provide the supplier with box labels, pallet labels, and FNSKUs.
If you choose FBA, the destination will be one of Amazon’s fulfillment centers. You’ll need to let Amazon know that your order is on it way through creating an inbound shipment in Seller Central. If you choose FBM, your manufacturer will send your product directly to you or to your desired warehouse. You can work with your manufacturer and a freight forwarder to handle shipping logistics.
At this stage, you’ll want to consider an inspection. You can have a third-party inspection company check over your inventory to make sure it’s up to your standards, either in the country of origin or in the United States. Alibaba has an inspection directory to help you find an affordable provider in the origin country. We’d recommend an inspection on your first order, followed by inspections every few orders after that to ensure the highest quality.
7. Optimize Your Listing
In this step, we return to the product listing we started in step 4 to do some search engine optimization (SEO). The goal here is to ensure the listing will reach the greatest number of consumers seeking your product. As discussed earlier, using the most relevant keywords will be crucial to creating a listing that earns a high search ranking and draws traffic.
You may have already started gathering the important keywords from the earlier product research step, but if you haven’t, entering your product in Keyword Research will give you a list of the top keywords to include. You’ll want to write a title that artfully incorporates the top keywords, and the first five words in your title are the most important to your ranking. The following is an example of a well-optimized title for a first aid kit:
First Aid Kit Emergency Preparedness Medical Supplies for Home, Office, School, Car, and Travel – 150-piece small basic kit with full range of medical supplies for treating common injuries
Our Listing Builder tool provides an efficient and simplified way to create a listing, helping you build each element. Enter your title, product features/bullet points, description, and backend keywords, and you’ll generate an optimization score, telling you how effective your listing is. If it needs some work, the score will tell you and you can keep adding keywords from the displayed list to increase your score.
When you have a well-optimized listing, you can copy it into Seller Central and get one step closer to starting your Amazon business.
8. Start Driving Sales
Your business as an Amazon seller officially begins now. Once you have your product listing completed and your products ready to ship, it’s time to go live.
However, there’s a lot more to it than just throwing up a product listing and expecting sales to start rolling in. To set yourself up for success, you’ll want to increase your visibility. We recommend a couple of different tactics:
- Running a pay-per-click (PPC) campaign.
- Offering a product giveaway, or what we call a product launch.
PPC campaigns are essentially the “sponsored content” advertisements you’ve probably seen when browsing products on Amazon. In these campaigns, you bid for your advertisement to appear in a sponsored ads section for a specific keyword related to your product. When a consumer searches for that keyword, your ad appears and you pay a small amount of money to Amazon for each click your ad gets. This helps you generate some initial visibility and gets your product in front of even more people than you would otherwise.
Another way to get your product more visibility is through product launches. These will help kickstart your listing through deeply discounted sales. This helps Amazon’s algorithm understand your product as important for the keywords in your listing, and the goal is to increase your product’s rank in search results. The higher a product ranks on Amazon, the greater your sales opportunity. Most shoppers don’t make it past the first couple pages when browsing, which is why page-one positions for major keywords are so important.
For a launch, you can work with a Viral Launch Amazon seller coach who will look for a major keyword for your product with high search volume that will lead to the most relevant impressions possible. Next, your coach will do research to determine how many units you should give away at a discounted price. Usually, the discounts end up being about 90%. A heavy discount helps ensure all of your giveaway units are purchased within the right time frame. Your coach will determine how many products to give away based on the sales of page-one competitors. Most of our launches are for a period of 7 to 10 days because we’ve found that it’s a long enough period of time for Amazon to recognize the sales but also short enough to limit the number of products being given away.
The end result of a product launch is that your ranking in Amazon’s search results will be on page one, providing you with some strong exposure to consumers and the chance to being driving significant sales. Sales and rank both influence each other. As your sales increase, your organic ranking will increase, which will help your visibility to drive sales and your ranking will continue to rise.
If you want to learn what not to do when it comes to launches, read our blog article, 9 Common Launch Mistakes to Avoid.
Now What? Next Steps for Going Beyond the Basics
You’ve now learned the essential steps of how to become an Amazon seller now it’s time to dive deeper into the process. Enroll in the free How to Sell on Amazon course today!
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- 40,000 Strong: Viral Launch Reaches 40K Product Launches - October 19, 2018
- Amazon Advertising: Tools for Increasing Product Visibility - October 15, 2018