The Ultimate Guide to Selling on Amazon
Amazon is the present and future of global e-commerce. Isn’t that enough reason for you to be selling on the platform already? Consider the fact that not only is Amazon an e-commerce powerhouse, it’s also a platform that shoppers use to conduct product searches. Now that you’ve finally decided to start selling on Amazon, here’s a guide to get you started.
The 4 Elements of Selling on Amazon
To simplify things, here are the 4 different decisions and activities you’ll need to indulge in to set your Amazon store up.
- Selling Model
- Seller Fees
- Fulfillment model
- Product Selection and setup
Let’s talk more about each.
1- Selling Model
Amazon offers two kinds of selling plans – individual and business.
The Individual Seller Plan is made to suit the needs of sellers looking to try out things on Amazon before committing. At $0.99 per item fees, this plan is a low expense method to test the Amazon platform out. Also, for sellers with a very modest product selection, it makes sense to go for this plan.
Whereas you get all the exposure that Amazon provides to products and brands, there are several restrictions. For instance, you can’t add multiple product listings, don’t get reporting functionality, and are restricted from selling items in some categories. Also, the Buy Box is not available for you!
The Business Seller Plan eliminates all these restrictions. However, it’s priced at $39.99 subscription fees per month. Correspondingly, you get all the facilities as well, such as Buy Box, reporting, 3rd party integrations, and multiple product listings. The economics are simple: if you believe you can sell more than 40 products in a month, go for the professional plan, because it will essentially pay for itself as compared to individual product listings under the ‘Individual Seller Plan.’
2- Seller Fees
It’s crucial that you understand all possible selling fees components associated with Amazon sales so you can decide on pricing accordingly.
Shipping fees – based on the product category and shipping service used, this can vary. Fulfilled By Amazon (FBA) will mean additional fees related to storage, fulfillment, and optional additional services.
Referral fees – again, this is based on product category, and calculated differently for media and non-media products. There are per item minimum referral fees for some product categories.
Variable Closing Fees – another component you need to be aware of.
3- Fulfillment Model
Here’s something – Fulfillment By Amazon is Amazon’s service to sellers. So, Amazon is not the buyer of your products, instead, it’s selling you its fulfillment service (for a fee), and acting as the middleman between you and your customers.
FBA service can help you sell more (you can offer 2-day shipping to Prime members). Plus, it means your returns become easier to handle, and you don’t have to worry about storage of bulky products.
Note that FBA can also cause inflated fees if your stock doesn’t move fast enough. So, you need to carefully assess the benefits and pit them against the costs.
Manufacturer Fulfilled Network (MFN) or Fulfilled by Manufacturer (FBN) model is an alternative. This model means that the manufacturers assume the responsibility of dispatching the product from his warehouse/business facility, or home.
Seller Fulfilled Prime (SFP) is another fulfillment model; for qualified sellers, this model offers the benefits of FBA without the requirement of sending the product to Amazon warehouses.
While considering FBA, make sure that your products are priced such that they can absorb all these costs, and still be profitable. If FBA proves a risky bet, consider the MFN option. Here’s a useful guide to help you compare these models and decide which one suits your business.
4- Product Selection and Set Up
Goes without saying, this needs a lot of analysis and informed judgment. Here are some product attributes that make a product perfect for e-commerce, particularly via Amazon:
- Not bulky
- Not fragile
- Heavy demand
Here are some tools you can use to research the most frequently searched and purchased products.
- Google Keyword Planner
- Google Trends
- Merchant Words
Setting product listings up will also need some planning and time investment. Consider these tips to raise your product rankings on Amazon. Moreover, here are some other useful suggestions:
- Include the product’s clear title and description, including product line, color, size, SKU, and brand in the title, so that customers know what they can expect to find in the listing.
- In the description, use bullet points to describe the product features and specifications such as material quality, dimensions, size, etc.
- Include details on complementary products as well.
- Create a list of search words that audiences might use to find your products and include them in the description.
- Source great quality images; they have a huge impact on conversions.
I hope this basic coverage of selling on Amazon will help you make well-informed decisions as you decide on the critical factors (product, pricing, and fulfillment) of selling on Amazon.