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If you run your own online store or are venturing into online sales, you shouldn’t leave Amazon out of the equation. But first, it’s important to understand how to properly use the technical advantages and the reach of Amazon as a seller and what the prerequisites are.
- What are the pros and cons of selling products on Amazon?
- Options for selling on Amazon
- How much does it cost to sell on Amazon?
- How to sell products on Amazon, step by step
- Tips for Amazon sellers
- Amazon alternatives
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What are the pros and cons of selling products on Amazon?
As things stand, Amazon is and remains the market leader and largest marketplace in e-commerce. The US marketplace, along with the German marketplace, are the most important sales markets for Amazon. This monopoly position is probably the most decisive pro for anyone who wants to sell products online.
Here are the most important pros and cons when selling products on Amazon.
As an Amazon seller, you’ll have automatic access to Amazon’s huge existing customer base. What’s more, you don't necessarily have to operate a separate online store.
These are the top pros when it comes to selling on Amazon:
- Globally networked digital and logistical infrastructures
- Wide reach and visibility through Amazon search engine optimization
- Wide range of shipping and payment options
- Connection to international Amazon marketplaces
- Outsourcing of transport, storage, and logistics possible through the optional Fulfillment-By-Amazon (FBA) program
And don’t forget that Amazon is a popular and trusted brand with excellent recognition value.
The cons of selling on Amazon is the percentage sales fee, which Amazon charges depending on the seller tariff and product groups. This can range between 8 and 20 percent. There are also shipping and storage fees to factor in when using FBA, as well as costs for returns and disposal.
The size and reach of other Amazon sellers can also become a con, as it’s a competitive market with many similar goods. You should also consider the workload that comes with presenting and editing your product pages, as well as the general dependence on Amazon. Seller accounts may be blocked for justified or unjustified reasons.
Options for selling on Amazon
Before you begin planning, you need to pick a seller account. For this, Amazon offers two plans at sell.amazon.com:
|Sell less than 40 products monthly||Sell more than 40 products monthly|
|No additional tools or programs needed||Access to sales reports and Amazon APIs (interfaces) like the Sales Partner Interface (SP API) for payment reports, orders, and statistics|
|No long-term or fixed selling strategy||Integrate start-up programs like Launchpad or Handmade|
|Selling fee of $0.99 per item sold||Monthly fee of $39.99, but no fee for individual items sold|
Another option is the paid service Fulfillment by Amazon (FBA), which can increase sales by up to 37 percent, according to Amazon. With FBA, Amazon takes care of all the logistics, including:
- Tracking packages
- Customer service
- Returns and refunds
Another option is Amazon Vendor Central, an invite-only portal from Amazon for larger manufacturers and brands. In this case, Amazon buys products and takes over the sale and shipping. The con is that it’s not easy to get out of the commitment. In addition, there’s a strong dependency on Amazon with customer service and customer contact running primarily via the sales platform and manufacturers indirectly becoming suppliers.
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How much does it cost to sell on Amazon?
The cost of selling on Amazon depends on various factors. Here are the most important ones.
Seller plan price
Different fees apply depending on the plan you choose. With the basic Individual seller account, you pay $0.99 per item sold plus a pro-rata sales fee of between 8 and 20 percent depending on the category of goods. With a Professional seller account, the flat fee per item sold is waived. Instead, you pay a monthly fee of $39.99 plus VAT and a percentage sales fee.
For each item sold, all sellers incur percentage sales fees that are automatically calculated based on the total price. The fee is determined by the percentage Amazon has set for the product category. It generally ranges between 7 and 20 percent but can be as high as 45 percent in the “Amazon Devices Accessories” category. The minimum sales charge per item sold is 30 cents. In the “Media” category, a closing fee may be added.
If you ship your own products, Amazon’s shipping costs are based on the product category and shipping method.
Fulfillment by Amazon fees
If you want Amazon to handle shipping, storage, transportation, customer service, and returns, choose the FBA program. In outsourcing the process to Amazon you’ll incur the following costs in addition to the percentage sales commission and the basic seller fee:
- FBA shipping fee (flat rate): You pay flat storage and shipping fees depending on category, goods size, quantity, condition, and storage requirements.
- FBA storage fee: Amazon charges storage fees based on the daily storage volume (cubic meters per month) and whether it’s peak season or not.
- Disposal/return fee: For returns, Amazon charges 20 percent of the sales commission. If returns can’t be processed, additional costs will be incurred for disposal or returns.
If you want to achieve greater reach with your products, you can use Amazon Ads to place ads or have advertising campaigns run by marketing specialists. Amazon distinguishes between self-service and managed service.
- Self-service: If you’re taking marketing into your own hands, you’ll get access to Amazon Advertising Console. Here you can choose advertising media that you configure according to your needs and requirements. You can advertise products, categories, or keywords in this way. Sponsored ads are billed per click.
- Managed service (Amazon DSP): Here you leave the selection and booking of advertising campaigns to Amazon’s marketing experts, at a fee. Since the minimum spend is $50,000, this service is only suitable for large sellers.
How to sell products on Amazon, step by step
Follow these steps to successfully get started selling on Amazon.
How to prepare for selling products on Amazon
- Product idea/sales strategy/logistics: Decide what you want to sell and whether you want to be a manufacturer/supplier or primarily a seller. For example, you can sell homemade items or products from other manufacturers. If you want to outsource logistics, you need suitable fulfillment partners. You can also try Amazon’s optional FBA program.
- Competitor analysis and target audience: Learn about your competition and successful pricing models in the same category and position yourself in the market. Define which target group(s) you want to address.
- Business plan and financial plan: If you want to sell products on Amazon professionally and not just as a side hustle, you need a business plan and a realistic financial plan. The business plan includes product ideas, sales and marketing strategies, a definition of your target group, business goals, and possible risks. Ideally, it serves as a basis and guide for Amazon sales. The cost calculation for Amazon fees incurred as well as the costs for manufacturing and logistics are especially important.
- Marketing strategy and tools: Make the most of tools and strategies like Amazon e-commerce tools to maximize your chances of becoming a successful seller. Sponsored ads, social media marketing and Amazon keyword tools for Amazon SEO can boost your profits and your Amazon rankings.
- Business registration: If you want to sell items on Amazon on a regular basis and on a large scale you probably need to register a business and register on local and state levels.
How to become an Amazon seller
- Chooser your Amazon seller plan: Your Amazon plan choice depends on the size and scope of your online business. When you create it, you provide required information about yourself, your business, contact details, and payment methods.
- Choose between Fulfillment by Amazon or Fulfillment by Merchant: Decide if you want Amazon to handle all logistics and customer service via FBA or if you want to take care of fulfillment, logistics, and shipping as a merchant.
- Name your seller account: Give your seller account a distinctive, appropriate name. It should be catchy and professional, as it will be displayed on the detail pages of your products as well as in your Amazon store.
- Add your products: Once you’ve created your seller account, you can start listing products in the Seller Center. Product listing is free regardless of the number of products. Here you can also manage orders, inventory, product information, images, videos, prices, and offers. If you sell under your own brand, you must register it with Amazon.
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Tips for Amazon sellers
Despite Amazon’s many cons, your online store isn’t guaranteed to be a success even with good products. But it helps to take advantage of the Amazon algorithm, develop suitable strategies, and generate more reach and sales.
- Maintain your Amazon store: Regularly update product information and provide high-quality product images, generate positive reviews, and drive traffic through Amazon advertising or social media.
- Collect positive customer feedback: Positive reviews generate trust in your products.
- React to negative feedback: Address negative reviews, contact customers, and offer replacements or returns. In the best case, customers may change their negative reviews or delete them.
- Make the most of Amazon SEO: The Amazon SEO tool helps optimize keywords, measure the success of your keyword strategy, and analyze the competition.
- Set up ad campaigns: Use sponsored ads to improve your products’ reach and visibility.
- Adjust prices to categories and competition: Make sure that your prices are reasonable, not too low and not too high, so as not to scare off customers or sell yourself short. Include pricing strategies of competitors as well.
- Add special offers and temporary free shipping: Take advantage of promotions or limited/seasonal offers for free shipping.
- Use Amazon Marketplace Web Service (Amazon MWS): Analyze and optimize your store by analyzing data on orders, sales, inventory levels, and customer buying behavior.
- Ship via FBA with Amazon Prime: If you don’t have logistical resources, you can optimize your sales strategy with FBA. With FBA, you benefit from Amazon’s logistics and shipping structure and take advantage of the renowned Prime shipping.
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Even though Amazon is the most successful online sales platform, there are other interesting ways to sell products online. The following Amazon alternatives are worth checking:
- Launch your own online store and manage B2C, order and sell processes, and online marketing via your own platform. Create a matching domain through which your store is made public.
- Create your own website with an online store, for example with WordPress and a WordPress plugin like WooCommerce.
- Use dropshipping and sell others’ products in your online store.
- Sell your products on Instagram.
- Try one of the other major online selling platforms like eBay, Alibaba, or Etsy.