Have you heard about people “Selling on Amazon?” And find yourself wondering, “What does ‘selling on Amazon’ even mean?” Or, “How does selling on Amazon work?”
Well, you are in the RIGHT PLACE!
Back in 2008, I found myself out of work and not wanting to go back. So I dove into selling stuff online with everything I had.
And it panned out! You can see more of my story on my about page. I won’t give you all of the details here, since you came here for the How To Sell On Amazon FBA information.
The short story is that a few years after I started my online selling venture, we turned selling on Amazon into a six-figure business that supported our family of three.
While working part time!
You can listen to the interview my husband and I did with Pat Flynn of the Smart Passive Income Podcast (episode #99) a few years ago.
The purpose of this post is to give you a 1,000-foot view of what it means to sell on Amazon so you can make an informed decision about whether this is the right move for you (and your family).
First, What Does Selling On Amazon FBA Actually Mean?
Usually, when I mention to people that I sell on Amazon, one of three things happens.
1. They look at me with a tilted head and glossed-over eyes … Like I just spoke a different language and they are trying to interpret what I said.
Then the conversation either moves in a different direction or they get really interested and have a bunch of questions!
2. They say, “Oh, like selling on eBay? I know someone who’s done that before.”
3. They know what I’m talking about and say, “So what do you sell?”
In those first two scenarios, I try to explain the best I can (you know, the 3-5 minute version) how selling on Amazon actually works and what it means to use Amazon FBA.
So here it goes (the longer version):
Amazon is the largest online retailer. In fact, it’s quickly becoming the largest search engine as well.
People often head to Amazon when they are looking for something — even before searching Google.
When they do actually search Google for a physical product, Amazon is usually ranked #1 there! So Amazon is just grabbing up all that traffic from online shoppers.
I tell you this because it is one of the main reasons we sell on Amazon rather than trying to build our own e-commerce site.
Imagine trying to compete with Amazon for traffic.
The good news is this: Amazon allows us to sell on their platform, thus SHARING that traffic with us.
Yes, this comes at a cost, but that cost doesn’t compare with trying to build a website and spending money on marketing.
You may not have even realized that Amazon has 3rd-party sellers (people other than Amazon the company) who sell on the site!
Here is an example of a product page on Amazon; the red arrow shows that if you click on the “Add to Cart” button, you are buying from Amazon.
The blue arrow shows other sellers, people like you and I, who are sharing that page with Amazon.
Now, why would someone choose to pay MORE from one of those 3rd-party sellers? Instead of just ordering from Amazon and paying less?
That’s a great question, I’m glad you asked 😉
The goal for most sellers on Amazon is not to COMPETE with Amazon for sales, but to get sales when Amazon runs out of stock on an item or when they are not even selling the item to begin with!
Let’s look at a different item and see what things looks like when Amazon doesn’t have the item in stock at all.
In this picture, we can see that “Mikes Super Store” is selling the party set. He is also using the “Fulfilled by Amazon” program.
That means that as a Prime member, I am able to order from “Mike” and get the same treatment as I would buying direct from Amazon!
So I don’t look at Mike any differently than I would if Amazon were selling the item. And the truth is, most people don’t even notice that it doesn’t say “Sold by Amazon.” They just see Fulfilled by Amazon and that they can get Two-Day Shipping on the order.
Then they click Buy It Now!
You see, “Selling on Amazon” means that you get to list your products for sale on the Amazon website. Then Amazon’s buyers get to purchase from you.
All the while, you haven’t had to create a new website, spend money on ads to get customers or even ship your items to the customer…
That’s right! Now let’s get to the reason we use and recommend you use the Fulfillment By Amazon Program.
What Is The Fulfillment By Amazon (FBA) Program?
Now we are getting into why selling on Amazon using FBA beats out so many other e-commerce business models!
When we talk to anyone who wants to start selling on Amazon, we always recommend that they use the FBA (Fulfillment By Amazon) program.
This means that Amazon handles a big portion of the selling process for us sellers. Actually, they handle the hardest and most time-consuming parts!
Let me list the steps of selling a product on Amazon so you can see what parts the seller handles and what parts Amazon handles (when we use FBA):
- You find a product to sell on Amazon
- You list the product on Amazon (does not go “live” at this point)
- You prepare the items to send to Amazon’s warehouses
- You ship the items to Amazon’s warehouses
- Amazon unpacks and stores your inventory for you
- Your product shows up live on Amazon (according to where you listed in step #2)
- Your product is featured as a Prime Eligible purchase
- Amazon BUYER places an order from you
- The Amazon warehouse workers find and ship your product to the customer
- Your customer receives the product in 2 days (if they are a Prime member)
- The Customer is happy!
As you can see, we are responsible for finding products we want to sell on Amazon, listing them and preparing them to sell.
Once the products are listed and are ready for sale, we “hand them off” to Amazon and they do the rest!
When the product is sold, Amazon handles finding the box, scheduling the shipment, packing the item and making sure it gets to the buyer on time.
Fulfillment By Amazon is the MAIN reason that I stopped selling on eBay and went all-in with Amazon.
When I was selling on eBay, even though I was clearing almost $2,000 a month in profit, I didn’t have much room or ability to scale the business. If I wanted to make more money, it meant I had to find more products, create more listings, store more inventory, ship more items and deal with more customers.
I was already spending a lot of time on the business. I couldn’t imaging DOUBLING IT.
So, when I realized that I could sell more items on Amazon without adding to my daily workload, I was sold! Can you see the appeal now?
I can now send items into Amazon and then take a week off if I want to. That’s because all of my sold items will be processed and handled without any input from me!
There is another way to sell on Amazon where you DO NOT ship your items to Amazon. This is called Merchant Fulfilling. I am going to keep this post all about selling on Amazon using FBA so I won’t get all into MF other than to say that, with merchant fulfilling, you handle all of the steps above 🙂
The Biggest Benefit Of Selling On Amazon FBA
I know I mentioned that with merchant fulfilling you have to do all of the work. But to be totally honest, that isn’t even the biggest benefit of using the FBA program!
The biggest benefit is that when you use the Fulfillment By Amazon program, your products become Prime Eligible! I touched on this a little when I showed the picture of “Mikes” party supplies.
Amazon does a ton of marketing to get people to join its Prime Program. People spend almost $100/year so that they can have unlimited “free” 2-day shipping on items sold on Amazon. There are other benefits as well, but let’s just focus on this one.
So if someone spends $99 to get free shipping, do you think they are going to choose to buy from a seller who offers free shipping or from someone they have to pay an extra shipping cost to?
Even if the merchant fulfilling seller offers free shipping, buyers still have to wait longer than the Prime 2 days for the item to arrive! If you are a Prime Member yourself, I think you know the hassle of having to wait and pay extra for shipping, right?
As a Prime buyer myself, I ALWAYS choose FBA sellers over merchant fulfilled sellers. EVEN IF the price is higher. I trust that the item will arrive quickly and as described. Amazon has a trust factor built in that people have come to know and believe in.
And THIS is where the power of being an Amazon FBA seller comes in!
Amazon has trained us as buyers to look for Prime Sellers!
Take a look below and see which seller you would choose to buy from if you are a Prime member.
If I place an order from the first seller, I will receive the item on SUNDAY, which is in 2 days. I am writing this on a Friday and the second seller probably won’t even ship my order out until MONDAY. And because they are in TN and I am in CA, we are probably looking at an additional 5 days for me to receive the order. So, maybe next FRIDAY I will get it. Possibly longer.
The thing is, I honestly would choose seller number one, even if they were like $5-$7 higher than the merchant fulfilled seller. Just for the convenience of fast and easy shipping.
Thankfully, many people think the same way that I do, so this business model works REALLY WELL!
Ready To Start Your Own Business Selling on Amazon FBA?
Now that you know the benefits and reasons why the Amazon FBA business model works, you should have a good idea whether this is something that you want to try for yourself.
So let’s take a look at how someone gets started in their own Amazon FBA business.
Finding Products To Resell On Amazon
There are 5 different business models that people use for selling on Amazon.
The way that we teach people to “source” (the term for finding products) in our Amazon Boot Camp course is “Retail Arbitrage”.
This means buying products from retail stores, either locally or online, and then reselling the products on Amazon.
The goal of Retail Arbitrage is to find products that are being sold at enough of a discount in the store that we can “flip” them on Amazon for a profit even after paying for the item and Amazon taking its “cut,” which is about 30% of the total selling price.
To find the products, we head to local stores with our smartphones in hand. Then we use a scanning app on our phone that will tell us what the product is currently selling for on Amazon. We can then enter our cost of the item and the app will tell us if we would make any profit.
By scanning, I mean we use the camera on our phone, with the app open, and then “scan” the item’s UPC barcode.
Testing The Process With Products You Have Around Your House
Since you are not yet selling on Amazon you can’t use a scanning app, but I can show you another way to see what we would see in stores.
There is an online Amazon Profit Calculator that we can use to see the same details the scanning apps give us.
Say, for example, that you recently purchased this red can opener. You paid $10 for it on 75% off clearance at Target.
Typing the item name into Amazon, we can see (at the time of this writing) that this can opener is listed for almost $30.
Next we would look the item up on the Amazon FBA Calculator and add in:
#1 the price it is selling for on Amazon and
#2 the inbound shipping cost. I calculate this at roughly $.50 a pound. We get really good rates as Amazon FBA Sellers through the program. Since this was at home, I am considering it a zero cost item.
When you click “calculate,” you will get #3 - the profit on that item if it sells for the price listed.
Because you actually paid $10 for the can opener, you could then deduct that from the $19.43 and get a “profit” of $9.43!
See below for the example and how to use this calculator.
Now take a look around your house and do this process with a few items.
I don’t want you to find products that you can actually resell on Amazon, I just want you to look at the process of how we sell on Amazon. And how we find products in stores.
Ready To Start Your Own Amazon FBA Business?
Once you have decided that you want to actually start the process of selling stuff online, you will need to have an Amazon seller account and a few basic supplies before you can get going.
The seller account is required in order to use the scanning apps I mentioned previously. I know it may feel like jumping the gun since you haven’t found anything to sell yet, but it’s a catch-22 in this case.
From this point forward, if you are a person who prefers to see things laid out in a step-by-step fashion and watch videos to learn, it’s a good time to check out my Amazon Boot Camp video course, because I leave no stone unturned!
5 Myths About Selling on Amazon
You may have heard that Amazon is expected to reach $100 billion in annual sales within the next two years, but there’s something else you may not have heard: Over 40 percent of merchandise sales are attributed to third-party sellers.
That means that over $40 billion in sales is going to outside merchants.
Amazon may be the largest Internet retailer in North America, but it’s the merchants who are pocketing the most money. That’s not the only surprise you may learn about the ecommerce behemoth. As marketing manager of AMZ Tracker, I’ve spent countless hours helping Amazon sellers grow their product sales, and I've come across all sorts of misconceptions.
So, if you’re interested in getting your own chunk of the Amazon pie, here are five myths about Amazon illustrating that it may not be exactly what you thought:
1. That Amazon is 'just another website'
Amazon is the king of ecommerce websites. Social-media butterflies use Facebook to engage with friends. Internet users search Google for answers to questions. Online shoppers go to Amazon to do one thing: buy.
Given that $100 billion in expected annual sales, Amazon is the king of online markets. It has built-in trust, its buyers' payment information is already saved and Prime members receive two-day shipping on all Prime-eligible orders. So Amazon can’t be beat when it comes to choosing an ecommerce platform to sell on.
If you’re serious about succeeding in ecommerce, chances are you stand to gain by selling on Amazon.
2. That selling on Amazon has to be difficult
You may think it’s difficult to switch from fulfilling your own orders to selling on Amazon, but for many merchants, the site actually makes their lives easier. Amazon has streamlined the fulfillment process through its Fulfillment by Amazon program.
For a small fee, Amazon will handle the majority of fulfillment and customer support tasks, which means zero phone calls, no shipping problems and less hassle for you, the merchant. All you have to do is ship your product, and Amazon wll take care of the rest.
3. That you can’t be successful selling on Amazon today
At our company, we see success stories every month from new sellers; these include multiple success stories of sellers going from zero to five figures a month in just a few weeks' time.
If you think you’ve missed the boat on selling on Amazon, you’re wrong. The boat is still very much in the harbor, and there’s still time for you to get on board.
4. That Amazon is too crowded a market to enter now
It can seem daunting to enter the Amazon world when there are over two million sellers on Amazon, but consider the fact that there are over a billion items sold worldwide by these sellers. There are over 200 million products on Amazon in the United States. The site has 175 million monthly visitors.
So, there’s room for everyone to carve out a niche for themselves.
On Cyber Monday alone, Amazon shipped 16 million items from third-party sellers, which was a 50 percent growth rate year-over-year from the year before.
Amazon isn’t showing signs of slowing down, so it’s safe to assume that these numbers are only going to grow for next year’s online version of Black Friday.
5. That you can just 'list your product' and it will be successful
It takes effort to achieve success with a new product on the Amazon platform. If you think you’re going to list your product, write a generic description, and watch the sales roll in, you may be in for a rude awakening.
While it’s not too late to get in on the Amazon game, that doesn’t mean you can skimp on the marketing and optimization.
Listing-optimization is crucial to ranking high in the Amazon search engine. That's the reason AMZ Tracker is growing like crazy -- because sellers know that growing their sales ranking pays healthy dividends, and that software can help them do just that.
The time to get in on the Amazon gold rush is now, and if Amazon’s current trajectory keeps up, the next couple of years are going to be good years for third-party merchants.
9 Things You Need to Know Before Selling on Amazon
To make sure your products are primed for success on Amazon, check out this post to see nine things you should know before you get started.
Amazon is a big, exciting place for online business owners to broaden their customer bases and boost their sales. But before you start your journey into the Amazon treasure trove, let’s answer some questions about the basics of this platform to prepare your business up for success.
The basics of selling on Amazon
To get a good idea of how your business will perform in this marketplace environment, you’ll want to get a clear picture of what selling on Amazon entails.
1. What is the Buy Box?
When browsing on Amazon, customers will navigate to a product’s main page and click on the “offers” links below the product description (as indicated by the red circle on the screenshot below) to see the majority of available sellers.
However, Amazon also gives merchants the ability to compete for the coveted “Buy Box” – the CTA button in that familiar shade of yellow. $56 billion of Amazon’s $62 billion sales happen right here, so it’s important to understand how it works.
The Buy Box is the box on a product detail page where customers can begin the purchasing process by adding items to their shopping carts.
The Buy Box is the box on a product detail page where customers can begin the purchasing process by adding items to their shopping carts.
2. How does Amazon determine who wins the Buy Box and the order of the merchant offers list?
Because a key feature of the Amazon platform is that multiple sellers can offer the same product, becoming the featured seller who wins the Buy Box is very difficult. In fact, it’s pretty unrealistic to think that your site is ever going to get ranked high enough to become the featured seller. But even if you never win the Boy Box listing, it is still important to understand how it works and how different parts of your site are weighted. Many of the things Amazon values fall in line with ecommerce best practices, so it’s in your best interest to be doing these things anyway.
A number of factors affect where a merchant appears in the offers list, including:
Competitive pricing. This includes not only the product cost, but shipping costs as well. Many shoppers expect to see low prices while browsing Amazon.
Competing offers. Generally, the more sellers there are, the harder it is to climb to the top.
How much history the merchant has on Amazon as a seller. Merchants who have long, positive selling histories with Amazon have better chances of obtaining one of the top spots.
How many Seller reviews the merchant has on Amazon. Online reviews have a huge impact in driving sales, and can really end up making or breaking your business.
There are many other factors as well, and there are some pretty good articles out there about how to optimize your sales. As a general rule of thumb, the most effective solution is to ensure that any transactions you receive through Amazon run as smoothly as possible. That means delivering your product in a timely manner and communicating with your customers along the way.
However, if you’re looking to break into the market a little quicker, here are two shortcuts that can help:
Start by selling a low-competition item to boost your seller ranking. This will increase the probability that the offer will show higher for more competitive products.
Try offering a very competitive price on a popular product. This draws in bargain shoppers and can increase your seller ranking. You can check out Amazon's "Most Wished For" list to see the most popular items by industry if you need some inspiration.
3. What is Fulfillment by Amazon (FBA)?
Fulfillment by Amazon is a program where you send your merchandise to one of the many Amazon fulfillment centers to be stocked; then customers buy products from you, and Amazon ships them. This sort of arrangement allows you to focus on other aspects of running your business while Amazon handles many facets of shipping and customer service. Other benefits include extending the reach of your products to Amazon Prime members, and gaining an extra push towards winning the Buy Box, even if your products have a bit of a higher price. With Volusion, merchants have the ability to set up different shipping options including dropshipping, which allows flexibility to try using FBA. You can learn more about Fulfillment by Amazon here.
4. What types of merchants tend to benefit the most from selling on Amazon?
Three kinds of merchants tend to perform particularly well on Amazon:
Merchants selling unique-to-them products. (e.g. companies who produce their own products, such as a company that designs its own jewelry)
Merchants who sell hobby or niche products. Amazon generally won't start fulfilling or carrying hobby or niche products, so there's less of a risk you'd have to compete with Amazon itself.
Merchants selling refurbished or used products. Amazon has a huge market for these products, as they attract shoppers whose main concern is price and don’t mind waiting on shipping. It is worth noting, however, that used products cannot win the Buy Box spot.
That said, the benefit of owning your store’s URL and fully branded website cannot be overstated; this gives an extra level of credibility and authority, and visitors are more likely to remember you versus someone else. Many merchants who achieve popularity on Amazon still find it essential to have control over their own ecommerce website and branding. This allows them to achieve a fully independent store presence and market to large audiences outside of Amazon through other marketing channels.
Other frequently asked questions about selling on Amazon Marketplace
Now that we have the basics covered, let's get into the nitty-gritty. Here are a few common questions about the details of selling on Amazon:
5. Why should I associate one of my products with an Amazon product that's already listed?
Products are only allowed to be listed once in the Amazon catalog, so creating a second product detail page for an existing product will result in your listing being removed. By matching your product to the product detail page that already exists, your offer has a chance to be seen.
6. Why can’t I use certain shipping methods at first?
Amazon doesn’t allow new merchants to offer certain shipping methods right off the bat, such as two-day shipping. These shipping methods have to be earned by establishing a history of reliable shipping at the slower shipping speeds.
7. Why aren’t I being compensated correctly for shipping?
Amazon determines how much they think it should cost to ship a product based on the merchant’s origin, the customer’s address and the given weight of the product. However, oftentimes the amount of money that Amazon reimburses merchants for shipping won't match the actual shipping cost.
8. How can I increase the number of reviews on my Seller account?
Please note that merchants are forbidden from soliciting or paying for Seller Account reviews. Any sellers who engage in these practices risk having their accounts suspended. Your best bet is to give customers a great shopping experience (including aspects like product price, clear and informative customer communication and shipping reliability) so they want to vouch for you on their own. If your business is hurting for reviews, we have some advice to help you out.
9. Are there any policies I should look over before I start selling on Amazon?
Here are some policies you may want to review before selling on Amazon:
- Product detail page rules
- Shipping policies
- Policies and agreements
- Selling Policies
- Prohibited seller activities and actions