An Introduction to Amazon
Before we dive into the details of selling on Amazon, let’s cover some basics:
- Why sell on Amazon?
- How much does it cost to sell on Amazon?
- What are the start up costs?
- What are the fees for selling on Amazon?
- How much money can you make?
Why Sell on Amazon?
Let’s start with a simple question that many people who consider selling on Amazon struggle with:
Do you actually want to try selling on Amazon? Is it worth it?
Before we can address that question though, you first need to decide what type of business you want to create.
Here at Online Selling Experiment, we focus on helping you build an online retail business for the following reasons:
- You can get started with online retail with any amount of money and you don’t need special skills.
- There is virtually no limit on the future size of your business. Product-based businesses are easier to scale than service-based businesses.
- It’s what we have experience with. Over the past decade, we’ve sold 8+ figures on online marketplaces like Amazon.
The other big factor in our love of online retail is the ability to automate it.
Online retail provides a path to make more money while gaining control over when and where you work.
If this all sounds good and you want to try online retail in general, now we can address the question of whether or not you want to sell on Amazon. Here are 5 big reasons why selling on Amazon can be a great opportunity:
- You’ll get access to hundreds of millions of potential customers from the beginning.
- It’s easy to get started – everything except sourcing the product can be handled by Amazon.
- Related to #2 – Fulfillment by Amazon (FBA) means you don’t have to spend time on order fulfillment.
- Low start-up costs
- You can sell on Amazon AND anywhere else you want. It’s not an either-or decision!
For all the downsides that you’ll hear about regarding selling on Amazon, we’ve found that the upsides far outweigh them. Amazon is the biggest online marketplace in the United States, and the potential sales volume to be gained far exceeds any other option.
For example, Amazon Prime buyers are noted for buying more products each year than the average online shopper, and there’s a lot of them. Back in a 2018 letter to shareholders, Jeff Bezos announced that worldwide there are more than 100 million Prime members!
More recent estimates have that number at over 150 million with nearly 100 million in the US alone! That’s a lot of potential customers.
How much does it cost to start selling on Amazon?
The start-up costs for both online retail in general and selling on Amazon are very low compared to other businesses.
A commonly cited figure for starting a business is $30k, but this figure is highly variable based on the industry you are getting into.
JungleScout recently published a study showing that the average Amazon seller only spends $3,836 to get started!
But a lot of people can’t even afford to spend that. If you don’t have $4k sitting around to invest in a product, that’s okay! The strategies we recommend for getting started don’t even cost this much – in fact, you can get started with less than $100!
Later in this guide, we’ll discuss this more. You should also grab a copy of the book I’m offering about getting your first sale on Amazon.
We’ll also discuss the fees for selling on Amazon – but there are options for getting started where you only pay once an item sells.
How much money can you make selling on Amazon?
The amount people earn selling on Amazon ranges from $0 to many millions. Some people lose money, some people become incredibly rich.
For perspective, we sold $6,507,690 worth of products on Amazon in 2019. On an average month, we sell over $450k in products. That number goes up considerably during Q4 though.
Here’s our Amazon sales dashboard from April 2019, a fairly standard month all things considered.
There are many people who earn a lot more than us, and there are even more who earn less. The big range in potential outcomes has a lot to do with your goals and the strategies you employ. My goal was to fully replace my accounting job, so I worked hard to scale my business to the level it is at today.
One of the biggest keys to early success and then achieving the scale you are after is reinvestment.
For most people, I recommend 100% reinvestment of profits for as long as possible. Most people make the mistake of “paying themselves” too early.
This graph shows how your capital grows over time based on what percentage of profits you use to “pay yourself”. As you can see, keeping 50% – meaning for every $10 you make, you keep $5 – leads to virtually no growth in the beginning. This is a very common scenario because people don’t realize the long-term implications of doing this.
So the amount you can make is nearly limitless. The amount you will actually make depends on how hard you work, how much time you invest, and how much of your profits you reinvest.
Don’t let others fool you – this is hard work and it will take time to be successful.
How Amazon Works
Now let’s take a look at how selling on Amazon works:
- How to create an Amazon Seller account
- Individual vs Professional
- The Amazon “Buy Box”
- Restricted categories, brands, and products
- Amazon fees
- What is FBA? What does it cost?
- Selling internationally
Amazon Seller Accounts: Individual vs Professional
To sell on Amazon, you need to get an Amazon Seller account. This is separate from the account you use to buy things on Amazon, although you can sign up with the same email if desired.
There are two types of Seller accounts: Individual and Professional.
The Professional Account offers a lot of advantages over the Individual account, but it also costs $39.99 a month. Benefits include:
- The ability to earn the buy box
- Option to run promotions
- Bulk-uploading of items from a spreadsheet
- Ability to use 3rd party tools and apps
Of these, the ability to earn the buy box is likely the most significant if you will be selling products with other sellers on the listing. We’ll cover what the buy box is shortly.
Individual accounts do not include a monthly fee, meaning you can create one for free. Every sale you earn with an Individual account includes a $0.99 per item fee that the Professional account doesn’t have though.
So right away, if you plan on selling more than 40 items a month, the Professional account is the better deal even without the extra benefits.
Amazon vs eBay
The mechanics of how a listing works on Amazon versus how they work on eBay are very different.
On eBay, every time you want to sell a new item you create a new listing that is connected to your account. You can list more than 1 “unit” of each item if you have more than 1 to sell, but the listing belongs to you.
So when you search for an item on eBay, you’ll frequently see tons of listings for the same product.
For example, here are the results for the search “Rawlings Official 2019 All Star Game Baseball” on eBay. Even though this is a very specific product, there are 29 total search results and many of these are for the exact same ball.
When you open up one of these listings, you’ll see that the listing is “owned” by one seller.
In this example, the first result for the search led to a listing by a business named “usasportsmktg” that has sold 335 of these baseballs.
So when selling on eBay, one of the big challenges as a new seller is competing with other sellers to be at the top of the search results.
As mentioned before, selling on Amazon is very different.
When you perform a search for a product on Amazon, identical products show up in a single listing even if the sellers are different.
So when you search for “Rawlings Official 2019 All Star Game Baseball” on Amazon, only one of the results is actually for that ball. The rest are for different variations or different years.
When you open a listing, you’ll see that there are multiple sellers offering inventory.
In this case, there are 4 sellers, but for more popular products there can be many more than this. For example, the Settlers of Catan board game has 55 sellers currently offering it for sale!
This is where the Buy Box comes into play.
What is the Buy Box on Amazon?
You may have heard of people talking about “being in the Buy Box” or “gaining the Buy Box”.
Being in the Buy Box means being the seller whose inventory is added to a person’s cart when they click the main Add to Cart or Buy Now buttons.
In the image above, the red box is the Buy Box and the red arrow is pointing to the checkout buttons inside the box.
Below the checkout buttons, you’ll see “Sold by MBM Market and Fulfilled by Amazon”. I’ve highlighted this area with a blue box.
This means that MBM Market is currently “in the Buy Box”. If I clicked Add to Cart or Buy Now, I would end up purchasing their inventory and they would get credit for the sale.
As you can see, there are 53 other sellers also selling this game. You can purchase from one of them by clicking one of the areas it says “New (53)”, but few buyers ever bother to do that. Going with the one in the Buy Box is easier and less time consuming.
You may be wondering how to get in the Buy Box. There are a couple things you should know about “earning the Buy Box”.
First, Amazon displays different sellers for different buyers. They factor in things like whose inventory is closest to the buyer and what the buyer values most based on previous orders (like lowest price vs faster shipping).
Second, Amazon does not release their exact formula but there are factors that are known to be important. These include:
- Shipping methods and if it is FBA or not
- Feedback and other account metrics
What is FBA?
FBA stands for Fulfillment by Amazon. This means that the process of shipping the item to the consumer is managed by Amazon – not you as the seller.
FBA is not mandatory to sell on item on Amazon, but we’ve found that it is usually worth the additional fees that come with the program.
For one, it ends up saving a lot of time over processing all orders internally. Instead, we can box up numerous items in a single shipment to an Amazon warehouse and then Amazon handles all the rest. We’ve sent hundreds of items at a time to Amazon which in turn saved us countless hours processing each item as it sold.
What is Amazon Prime?
Prime and FBA are often used interchangeably, but they are not the same things. FBA is a type of order fulfillment. Prime is a membership that consumers can purchase that unlocks free, 2-day shipping on many orders. Sometimes it even unlocks free one-day shipping!
This fast shipping is usually only available on orders that are fulfilled by Amazon, which is why some people mix them up.
“Seller Fulfilled Prime” is also an option, though this is generally for bigger warehouses and is only open via an application process.
What are the fees for FBA and selling on Amazon?
There are a variety of fees that are charged when you are selling on Amazon. Some are required, and others are optional based on the services that you choose to use.
The main differences in the fees that you will pay for selling on Amazon are if you use Fulfillment by Amazon or if you ship items to customers on your own. If you ship directly to customers this is known as “seller fulfilled” or “merchant fulfilled”.
This means there are 3 categories of fees to discuss:
- Fees that are charged regardless of the fulfillment method you are using
- Fees that are only charged to FBA sellers
- Fees that are only charged to merchant fulfilled sellers
An important side note is that a seller can choose to use FBA on some items and merchant fulfill others. This doesn’t have to be an “either-or” choice, you can do both.
We recently published an in-depth look at all the fees associated with selling on Amazon, and we’ll also cover the basics below.
Fees Charged Regardless of Fulfillment Method
The following fees apply regardless of how an item is fulfilled:
- $0.99 per item fee OR $39.99 a month Professional account charge
- Amazon referral fee – between 8% and 15% on the majority of items
- Closing fees on media items (books, DVDs, music, etc…)
- Refund administration fee
The “refund administration fee” is charged when a refund is issued to your customer:
If you refund a customer for an order for which you have already received payment, Amazon will refund you the amount of the referral fee you paid for the item(s), minus the applicable Refund Administration Fee, which is the lesser of $5.00 or 20% of the applicable referral fee. For example, if you refund a customer the $10.00 total sales price of an item in a category with a 15% referral fee, your Refund Administration Fee will be $0.30 ($10.00 x 15% referral fee = $1.50).
Fees Charged For Seller Fulfilled Items Sold
The main additional cost that you will incur if you are seller fulfilling an item is the shipping cost to the customer.
While this isn’t technically a fee charged by Amazon, it’s very important to factor into the equation when evaluating items to sell.
You will be able to purchase shipping directly through Amazon for items sold and have it billed to your Amazon seller account. The cost of shipping directly to the customer will vary dramatically based on the size, dimension, and how far away your customer is.
Expect to pay between $4 and $15 to ship to customers for the vast majority of items.
Fees Charged for Using FBA
Fees that may apply to items Fulfilled by Amazon include:
- FBA Fulfillment Fee
- Monthly Inventory Storage Fees
- Long term storage fees
- Inbound shipping
- Removal & disposal fees
- Returns processing fees
- Fees for additional optional services
The main fee that you will be charged is the “fulfillment fee”.
This is the fee that is charged for Amazon to ship your item to your customer on your behalf. This fee covers the cost of the packaging, the time of the worker who handles putting the shipment together, and the shipping cost. This fee will vary significantly based on the size of the item.
For example, if you were selling Monopoly Ultimate Banking using FBA, you would pay a fulfillment fee of $5.42.
This is a very good rate. If I tried to ship this item through the post office, I would likely pay at least $8.
You can use the FBA Revenue Calculator to see the fees in advance on any item you are considering selling. This makes it so that you can ensure you will be making a profit after all of the costs to sell your items.
What can you sell on Amazon?
Every product on Amazon is broken down into Categories and Sub-Categories. There are more than 20 categories that Amazon considers “open”, meaning you don’t need specific permission to sell in them.
There are also many categories that require approval. In other words, you need to get permission from Amazon before you are allowed to sell a product in them. Only people with Professional accounts can gain approval to sell in a previously restricted or “gated” category.
These Amazon categories require approval and a Professional Account:
- Automotive & Powersports
- Collectible Coins
- Fine Jewelry
- Fine Art
- Grocery & Gourmet Food
- Industrial & Scientific
- Sports Collectibles
- Video, DVD & Blu-Ray
These categories require a Professional Account (but don’t need further approval in most cases):
- Business Products (B2B)
- Fashion Jewelry
- Luggage & Travel Accessories
If you want to offer Professional Services, you must be a qualified service professional. You can learn more here.
On top of category-based restrictions, there are also additional restrictions placed on individual Brands and products, as well as certain categories that only allow new items to be sold (i.e. you can’t always sell an item if it is used, even if you are allowed to sell it new.)
Brand-level restrictions are generally for big brands like Apple, Nike, Bose, and Levi’s.
Product or “ASIN-level” restrictions mean that an individual product is blocked from being sold by resellers. Brand level restrictions are often carried out by blocking all the individual ASINs associated with the brand. ASIN simply means “Amazon Standard Identification Number” and is a unique ID for the product on Amazon.
Can I sell used items?
Whether or not you can sell an item in “used” condition (or any other condition other than “new”) depends on the category it is in.
Categories that allow the sale of used items include:
- Camera & Photo
- Cell Phones
- Electronics Accessories
- Home & Garden
- Musical Instruments
- Office Products
- Toys (note: used items are classified as “collectible” in this category)
- Tools & Home Improvement
- Video Games
You can read more about restricted categories and whether or not you can sell used items in a given category on this page on Amazon.
What is the A to Z guarantee?
The A to Z guarantee is something Amazon offers to buyers of items that are purchased from a third party seller on Amazon. A third-party seller simply means someone who isn’t Amazon, so if you sell on Amazon, you will be considered a third-party seller.
The A to Z guarantee covers both the timeliness of delivery AND the condition of the item.
- You have not received your package and three days have passed since the maximum estimated delivery date or the tracking shows a delivery confirmation, whichever is sooner.
- You received an order that is different than expected and have requested a return with the seller.
- You returned your item with a trackable shipping method and the seller has not issued you a refund.
Having these claims filed against you is bad for your business. They can lead to not ranking as well, not getting the buy box, or even getting suspended in extreme scenarios.
In general, it’s smart to be familiar with Amazon’s condition guidelines and follow them exactly.
Can you sell internationally on Amazon?
Amazon has marketplaces in many different countries around the world. You can set up accounts on as many marketplaces as you want as long as you meet the requirements.
To sell on an international marketplace, at a minimum you will need a tax ID specific for that country. Depending on the country, you may need to register your business there, have a bank account in the local currency of the country, and have a mailing address in that country.
The requirements vary a bit by country but you will be walked through exactly what is needed if you go through the process of setting up an account.
Setting up an account in another country can create some logistical challenges. We focus primarily on selling on Amazon.com, which is the platform in the United States. We aren’t even close to exhausting the opportunity on Amazon.com, so we haven’t expanded to many of the international marketplaces.
That’s not to say it’s not an opportunity, but we’re focusing resources at this time where we are seeing the best potential for expansion.
If you are thinking about adding in a marketplace for a country that you don’t reside in, I’d do an evaluation of if you think you’ve maxed out your opportunity in your home country first.
Countries where Amazon currently has marketplaces include:
- United States
- United Kingdom
- United Arab Emirates
Finding Things to Sell
There are numerous ways to find things to sell on Amazon. In this chapter, you’ll learn about ALL the major ways people are finding things to sell – also called “sourcing”.
- Retail Arbitrage
- Online Arbitrage
- Private Label + Brand Building
Selling an Existing Product vs. Creating Your Own
Many beginners incorrectly assume that they have to come up with a new product to sell – or at least develop a brand – if they want to make money on Amazon. This isn’t true.
In fact, starting off with your own brand and your own products doesn’t make sense for the majority of new sellers. Doing this means that everything you do is more difficult and more expensive.
When you sell an existing product, you get to use the existing listing for that product. You don’t have to do things like:
- Take product pictures.
- Write headlines or descriptions.
- Get the product to rank by getting early sales and reviews.
You get to skip straight ahead to selling.
You also have the added benefit of knowing how well an item is selling and how much you can expect it to sell for.
Amazon provides a “Best Sellers Rank” or BSR to all products which gives you an idea of how well an item sells compared to other items in the same category.
For example, here is the BSR for the ENO Doublenest camping hammock…
Then third-party tools like CamelCamelCamel provide historical price data to give you an idea of how stable an item’s price is.
All of this helps to decrease risk when you are starting out.
Unfortunately, many beginners never realize this. Instead they fall for the marketing hype surrounding private labeling.
The way many new sellers approach private label for Amazon is by doing nothing more than having a custom brand put on an existing product. Little to nothing is altered about the product except for the branding.
In the beginning, people were doing this and making big money. As more and more people do this every day, Amazon is becoming flooded with hundreds of brands selling the same cheaply made products.
The competition is fierce and many private label sellers are frustrated by decreasing profits.
For example, here is the ranking for someone selling a camping hammock that is nearly identical to the ENO Doublenest:
That’s a HUGE drop. From #3,413 in the Sports & Outdoors category all the way down to #175,310. And that is despite the fact that ENO, the more established brand, is selling their hammocks in the $50-$75 range while this contender is priced at… $17.99.
There are many people selling camping hammocks that are doing much, much worse. I saw dozens of listings with no sales that I couldn’t use as examples here because they didn’t even have a BSR (no sales means your product doesn’t’ register with a best seller’s rank).
Building your own brand still offers the potential for huge profits, but it isn’t the easy, get-rich-quick scheme that it used to be. To be successful with developing a brand, you need money and experience. And that’s why we recommend starting off with selling existing products.
We’ve organized the various strategies you can use for product sourcing into a system we call the Stairway to 7 Figures.
This approach allows you to focus on building both experience and capital with low-risk strategies when you are getting started. Over time, you add more complex strategies as you have the finances and knowledge to do so.
The beginning steps are flipping and arbitrage. These are two very similar strategies and you can start with one or both of them. Flipping is buying used items locally to resell online, arbitrage is doing the same thing with primarily new items.
People pushing private label and wholesale often look down on these strategies, but the truth is that they are perfect for beginners. They give you a stepping stone to bridge the gap between being a complete beginner and being ready to tackle more advanced strategies.
Flipping is buying used items at local sales like garage sales, auctions, thrift stores, church sales, and flea markets. You then sell the items that you buy on online marketplaces like eBay, Craigslist, Etsy, Facebook Marketplace, and occasionally on Amazon.
Flipping is a great way to gain early cash. It allows you to get started with no money at all if you don’t have any. Last year I had a team member take on a flipping challenge and he was able to generate $2457 in 90 days starting with $0.
While there are people who specialize in selling things like used books on Amazon, in general we’d recommend utilizing the other marketplaces mentioned above as well.
With that in mind, let’s move on to retail arbitrage.
For the majority of people, retail arbitrage is likely the fastest, easiest, and cheapest way to get started on Amazon.
Retail arbitrage is buying items at local brick and mortar retail stores like Walmart, Target, Home Depot, and Walgreens to sell for a profit online.
Retail arbitrage is what I’m best known for because it’s the main strategy I used in the process of scaling my business to 7+ figures.
How Does Retail Arbitrage Work?
The process of retail arbitrage is simple:
- Set up your Amazon Seller account
- Download the Amazon Seller app.
- Use the app to scan products in stores.
- Buy products that match your buying guidelines.
- List them for sale on Amazon!
The Amazon Seller app is a very important tool for retail arbitrage.
When you scan a product’s barcode, the app tells you some very important data about the product. This includes if you are eligible to sell it, what the Best Sellers Rank (BSR) is, what the product is currently selling for on Amazon, and even how much you can expect to pay in fees.
Scanning a product means that you point your phones camera at the barcode on the product. After doing that you will see this:
How Much Can You Make With Retail Arbitrage?
Your earnings potential with retail arbitrage depends on where you live and how many stores you have access to. Sourcing in stores is a time-intensive process, so earnings – especially in the beginning – can take awhile to build up.
With that being said, my business now does 7+ figures in sales just from products sourced via retail arbitrage every year.
$1000+ in profit per month is a good target once you have your retail arbitrage operation fully developed. You can earn a lot more than this if you are doing it full time – especially if you hire people to work with you. But $1000+ per month is doable even on a part-time basis.
Regardless of your earnings here, the most valuable thing you will gain at this stage is experience. Aim to do everything well and maintain steller account metrics with Amazon.
Is Retail Arbitrage Legal?
Contrary to reports that say otherwise, you are allowed to sell items sourced via retail arbitrage.
It is NOT against Amazon policies.
As described above, the Amazon Seller App will tell you if you are allowed to sell an item or not. If you stick to items you are eligible to sell, follow condition guidelines, and otherwise follow the rules, you should be just fine!
Best Stores for Retail Arbitrage
Here is a list of 12 of the best stores for retail arbitrage sourcing:
- Home Depot
- Big Lots
- BJ’s Wholesale Club
Additional Information on Retail Arbitrage
For additional information on retail arbitrage, I recommend checking out the following:
- The Complete Beginner’s Guide to Retail Arbitrage
- Launch Accelerator: $150 in expected profit, guaranteed…
- Online Retail Pro (Lite)
Online arbitrage is very similar to retail arbitrage, except you source from websites instead of brick and mortar retail stores.
There are two big advantages to online arbitrage:
- You have a much wider selection of stores and products.
- You can source at any time from any location.
The downside to this is that the lower barrier to entry means it’s also easier for competitors to find products. We’ve found online arbitrage to be a great supplement to our retail arbitrage sourcing in my business.
How does Online Arbitrage work?
To perform online arbitrage for Amazon, you must:
- Set up your Amazon Seller account
- Search for products online that you can sell for more on Amazon
- Evaluate the profitability of the product using the FBA Revenue Calculator or a 3rd party tool
- Buy products that match your buying guidelines
- List them for sale on Amazon!
The key to being successful with online arbitrage is finding products at a discount that you can sell for more. This can be done by manually comparing the price you can buy an item for to what it sells for on Amazon. This way works but it is time-intensive.
If you are going to take online arbitrage seriously, I recommend investing in tools to make the process more efficient.
Best Online Arbitrage Tool for Amazon
The main tool we use in my business for online arbitrage is called Tactical Arbitrage.
This software will automatically comb through pages of online retailers’ websites, compare prices with Amazon, then give you a list of the items that are profitable. You then have a pre-filtered list of potential products to buy.
If you are interested, you can get an extended free trial with code OSE10 when signing up on Tactical Arbitrage’s website.
Websites to target for Online Arbitrage
The vast majority of retail websites present an opportunity for online arbitrage.
Begin by evaluating websites that you personally shop on, especially if you know how their discount system works.
Maybe you know they send a 25% off coupon code every 3 months, or you know that they clearance products on a certain schedule. If you have knowledge about a site like that, start there.
If nothing comes to mind from that, here are 10 websites I’ve placed online arbitrage orders from:
- Home Depot
- Sams Club
- Sierra Trading Post
- Bed Bath and Beyond
As you are shopping and browsing online in the future, aim to always pay attention when a price feels low, and then look up what it is selling for on Amazon. Over time, you’ll get an intuitive sense of arbitrage opportunities, and you will end up buying items to resell even when you didn’t start browsing with that intention.
Additional Information on Online Arbitrage
For additional information on online arbitrage, read the following:
Wholesale sourcing for Amazon involves setting up accounts with suppliers, distributors, and manufacturers to purchase bulk orders of existing products to resell.
Wholesale is the main business model that stores like Walmart use – they have wholesale accounts set up with the individual brands they carry (Heinz, Dasani, Hot Wheels, etc…), and they place bulk orders to resell the products at their own stores.
You can do the exact same thing, and it can be very lucrative.
Wholesale now accounts for the majority of our sales in any given month or year. In 2019, wholesale represented about 65% of our sales.
The rise of the internet and online marketplaces full of sellers eager to get wholesale accounts has made it more difficult to get them, but it’s also arguably made them even more valuable.
The Secret to Getting Wholesale Accounts
So you may be wondering what we’re doing that is allowing us to get wholesale accounts.
The secret lies in what we call “value adds”.
A “value add” is some way that we’re able to offer extra value over your average wholesale partner. Before we approach a distributor or manufacturer, we take the time to review their business and their current online presence to look for ways that we can improve what they are doing and help them get more sales.
Sometimes these value adds are customized to the business and their unique struggles, but we also have a list of standard “value propositions” or “value props” that we offer to all partners.
Build a Value Prop Website
Another “secret” to our success with wholesale is what we call our “value prop website”. This is a website that we built that showcases our business and the experience we bring to the table.
The website lends credibility to our business in numerous ways, one of the biggest being that it gives us a domain to host our email at. Instead of sending email from a @gmail.com or @hotmail.com address, we can send it from our own address just like we do for email from this website.
For example, our support email address here is email@example.com.
A value prop website doesn’t have to be expensive or complicated. We’ve helped many people build their own with simple tools and a hundred dollars or less.
How to Find Suppliers + Product Research
When you are looking to get started with wholesale, one of the first places that I’d recommend researching is on Amazon.
One of the main things that I would recommend looking for in your research are listings that need improvement. This could be low-quality product photos, a poorly optimized title, or not having the product description filled out.
When a listing has room for improvement, this is a direct “value add” you can provide to help this company.
When you come across opportunities like this where you can help improve their listings, then I’d recommend finding the contact information for the brand owner and reaching out to them. The goal is to let them know about the potential problem you came across with their listing, how they can solve it, and how you can help solve it for them if they choose to work with you.
Approaching things in this way helps you lead with value as opposed to just asking to sell their product. This is the approach we aim to take when finding new wholesale suppliers.
In addition to searching for products that need optimization on Amazon, other ways to find suppliers include:
- Trade shows
- Searching on Google
- Products you come across in retail store
- Products you have sold via arbitrage sourcing methods.
There are many ways to come across potential suppliers. When you do, your goal is to find a way you can set up a mutually beneficial arrangement.
Additional Information on Wholesale
For additional information on wholesale, I recommend:
- Intro to Wholesale: Buying in Bulk for Amazon FBA
- Why 65% of My FBA Business Now Comes From Wholesale
- Online Retail Pro
Brand Building + Private Labeling
What is private labeling?
Private labeling refers to having a product manufactured and putting your own brand on it. The product is usually “generic” – meaning it’s not something that you have exclusive rights to sell and other people may already be selling it.
To be clear, you will have full control over any that have your brand, but there are usually other people selling the same object with their own brand.
You can private label almost anything. Cups, notebooks, greenhouses, pet toys – even beer!
To see an example of this in action, try doing a search for “camping hammock” on Amazon. But before you do that, take a moment and think about how many manufacturers you think there are for this product.
When you perform the search, you may be surprised at how many results there are for such a specific product…
But when you take a closer look at the products being sold, you’ll notice that they bear an uncanny resemblance to each other.
This is because the vast majority of these camping hammocks are being made by the same handful of manufacturers. The many dozens of brands you see are all contacting these manufacturers to have hammocks made. This is private label in action.
Finding a manufacturer to have this done is EASY.
We could have our own Online Selling Experiment brand hammocks ordered within a few minutes by heading over to Alibaba, searching for “camping hammocks”, and placing an order.
Here’s what happens when you do that search:
Those pictures look familiar, don’t they?
A lot of private label sellers just repurpose the product images provided by the manufacturer.
The Problems With Private Label
When these systems first started being developed and people realized how easy it was to have products cheaply made overseas, private labeling represented big and easy money. The number of products that offered large profit margins was near limitless, and lots of people cashed in in big ways on this opportunity.
But over time, more and more sellers stepped in to try private label. Tools were developed to make product evaluation nearly automatic. The most profitable opportunities were (and are) snapped up quickly.
Very often when someone finds a new, profitable “niche”, dozens – if not hundreds – of sellers rush in behind them to compete.
As more and more sellers step in to sell the same product, the profit margin goes lower and lower. Sometimes it evaporates altogether because someone decides investing in the product was a mistake and starts selling at a loss to quickly recoup some of their investment.
And as many people will tell you, Amazon frequently becomes a competitor too. They private label just like everyone else, and they have a lot more data to work off when choosing what to sell.
For the most profitable products, they often have NUMEROUS private label offerings. Try searching for something like “bath towels” and see what happens.
Here’s what I found.
And they get to skip straight to the front of the line (top of the results) thanks to “Editorial recommendations” where they are the top 3 brands!
This is the type of stuff you will be up against as a private label seller on Amazon.
Don’t forget that you’ll also be creating and managing your own product pages from scratch and it will be your job to get reviews and early sales to try to outrank your competitors.
This is why I don’t recommend private label for people who are just getting started selling online.
It’s extremely easy to dump lots of money into a product that looks great on paper or in the dashboard in one of the tools, then find yourself months down the road with a lot of camping hammocks in your closet and struggling to generate a profit or even get your money out.
This doesn’t mean developing your own products and brands is out of the picture. We just believe that is better saved for later in your online selling journey. Better to learn the systems with existing products, build up a base of capital, then take the plunge from a position of strength and not as a complete novice.
Success With Your Own Brands
The above problems are specifically associated with private labeling “generic” products just to sell on Amazon, which is what people often mean when they discuss this strategy.
The key to success with developing your own brands is the same as it is with wholesale: adding value.
In this case, you need to be adding value for the consumer.
These are all ways that value can be added:
- Designing new “solutions” and products
- Adding new features to existing products
- Improving the quality of the construction
- Offering better guarantees and customer service
- Offering a more complete product line
The more difficult it is to replicate your “value add”, the better off you’ll be. This prevents other sellers from rushing in and copying you.
Another thing that will likely become increasingly important for brand building is developing the brand outside Amazon. Having a presence on other marketplaces and social media, building out your own website, and even achieving brick and mortar distribution are all things that you may want to consider.
There are lots of tools out there that are designed to help you find the perfect private label product. The challenge with these tools is that many people get access to the same type of data. So if you use them I’d recommend aiming to do some searches that other sellers aren’t.
Common recommendations for a “good” private label product include:
- Sells for between $20 and $50
- Lightweight (under 5 lbs)
- Compact and easy to ship
- Year-round demand
- Good Best Sellers Rank
- Low competition
This is why there are so many people selling water bottles, hammocks, flashlights, and portable speakers.
While products that fit these metrics are definitely appealing, you should always keep in mind the idea of the value add. What are you going to do to differentiate yourself from competitors in a way that consumers will recognize and appreciate?
A good place to start is the interests you already have and the products you already use. As you go through your day-to-day life, keep a log of every time you find yourself disappointed in the performance of a product. This is a potential opportunity to research later. You may find that there are better products out there, or you may find that you’ve stumbled on to a potential winner.
Another option is to do product research the traditional way and make a list of products that are worth investigating further, then look through the reviews for similar products. If the reviews are great, this is a sign that customers are already happy with what they are being offered.
If you find lots of negative reviews, keep an eye out for what customers are saying they want. Is there a weak spot in the design? Does the product fail after a short period of time? Is it just not very good at the job it’s supposed to do?
These may be opportunities!
The most common way to find suppliers for private label is to go to Alibaba.com and search for the product in question like we did with the camping hammocks example above.
If you are looking for a foreign manufacturer, other websites you can check out include:
These are some of the most common sources for private label products, and many people perform searches hoping to find someone listing the exact product they are looking for.
But keep in mind that easily finding a manufacturer offering the product you want means that other sellers can do the same thing.
While they can be more difficult, there are other ways to find suppliers. These include:
- Attending trade shows
- Looking in trade magazines
- Google “<your product> + manufacturer”
- Maker’s Row
Other Things to Consider When Attempting Private Label
The upside to successfully developing a product and brand is that the earnings can far exceed nearly any other business model.
But to realize results like this, you have to do a lot of background work and invest a lot of money.
Here are some other things you’ll need that all cost money:
- Intellectual property protections in the form of a patent, trademark, or copyright
- A professionally made logo
- A website
UPC stands for “Universal Product Code”. You may know them better as barcodes. The best way to do this is by going straight through GS1 US, but it costs more than using a reseller.
When you do the whole process yourself, you get UPCs with a unique company identifier as part of the number that are accepted everywhere.
Some Amazon sellers use UPC resellers without issue, but this can definitely lead to problems. If you are going to buy a UPC I would only go through GS1 as that’s the official way to buy UPCs in the United States.
Additional Information on Private Labeling
We’re working on private label in a big way for 2020. Our goal is to more fully figure out what it will take to be successful with brand building now and in the future, then pass what we learn on to you. We have some exciting experiments that we’re setting up.
Your Amazon Seller Account
In this chapter, we’ll take a closer look at your Amazon Seller account and how you will manage it.
- Creating your Amazon Seller account
- Keeping you account in good standing
- Dealing with suspensions
Let’s take a closer look at your account now…
What do you need to create an Amazon Seller account?
The main information you will need to set up your account is:
- Business information
- Email address
- Credit card
- Bank account
- Phone number
- Tax ID
Your business information and tax ID numbers can be your personal information. For a business name, you can put your own legal name. For your tax ID, you can use your social security number.
Keep in mind I’m not a lawyer or a CPA. Nothing in this post is to be construed as legal or tax advice. My recommendation would be to consult a professional who can get to know your personal situation for advice on these matters.
Amazon also sometimes will request additional information like scanned copies of your passport, national ID, bank account statements, or credit card statements.
They are mainly looking for consistency to make sure you are who you say you are and to prevent scammers or people looking to open up multiple accounts. When you submit documents, you want to make sure your address and name match across the documents and application!
Setting Up Your Amazon Seller Account
To set up your Amazon Seller account, you need to visit services.amazon.com.
Once there, you will see a big button that says “Start selling”:
This button starts the process of setting up a Professional account – the one that costs $39.99 a month.
If you want an Individual account, you have to make sure you do not press that button and instead scroll to find a link that says “Sign up to become an individual seller”:
Once you start the process of setting up a Professional account, Amazon locks the email address you use into that process. We figured this out because many of our students and readers have clicked the link in the picture above but were still asked to pay $39.99 a month.
After working with a student to resolve the issue, an Amazon rep said that the only options were to start over with a new email address or to pay the $39.99 to start the account then immediately downgrade to an Individual account and request your money back.
Common Account Setup Issues
A lot of new sellers get frustrated when Amazon won’t approve their account or suspends their account as soon as they complete the setup process.
Keep in mind, there are two main things Amazon is trying to do at this stage:
- Verify that you are who you say you are.
- Block spammers, scammers, and people with a history of poor account practices from creating a new account.
If they are blocking you, the first thing you should do is verify that all the information you’ve submitted matches exactly. When verifying your identity, Amazon is looking for exact matches in spelling, addresses, and other things like this.
For example, you don’t want documents with the following variations:
- Mike and Michael
- 123 Vine St. and 123 Vine Street
Bigger variations are even worse. If you’ve changed your address but the documents you are submitting don’t show that yet, I’d recommend getting the addresses updated first or trying to use different documents that reflect the address you are applying with.
How to Change Your Amazon Seller Account Status From Individual to Pro (or Vice Versa)
To change your Amazon Seller account status:
- Login to seller central
- Go to settings in the top right-hand corner
- Click “manage” in the your services box as shown below:
On the next screen, you will be able to see your current services. If you have a professional seller account currently, you will see the option to downgrade. If you are on the individual seller account, you should see the option to upgrade.
This is the process to change your account type any time you need to.
Managing Your Amazon Seller Account
When you log in to seller central, there are a plethora of reports that you can look at. You can look at reports for virtually any aspect of your business.
To begin with we’ll discuss how to keep your Amazon seller account in good standing.
In the screenshot above, #1 is showing where your unshipped orders will be.
If you are doing any merchant fulfilled orders, this is where they will show up. When they are in the “unshipped” status, the item has been paid for and it’s time to ship it. If you click on the number (it’s currently at 6 in the screenshot above), you will be brought to a screen where you can buy shipping.
Arrow #2 in the performance section is where you will see messages that you need to respond to.
The first is buyer messages, these are messages from your customers. You should respond to all buyer messages within 24 hours of receiving them.
In the performance section, you will also see “A to Z Guarantee claims” and “Chargeback claims”. These are much more serious and should be responded to right away if you receive one. These are generally signs that a customer had a major problem with an order, and it’s important to figure out why and submit any information that is required.
It’s also possible that the buyer is trying to take advantage of Amazon’s system. If you suspect that’s the case, you will be able to submit proof to have the claim removed from your account.
Arrow #3 shows the “account health” section of your seller central dashboard.
No news is good news here. As shown above, there is nothing displaying in this section. This means there aren’t any alerts. If you see nothing here that is ok, but if you see something here other than a green checkmark, I’d recommend looking into what the problem is. If you click on the blue “account health” hyperlink then it will bring you to your account health dashboard where you can review all of your metrics.
When you are logged into your seller central dashboard, there are many other reports and links that you will have available as well. The aforementioned ones are some key ones to be in the know about.
I recommend spending some time checking out all of the features and reports. You will be able to gain some great insights into your business by doing this. The ones I mentioned specifically above are some of the most important for keeping your account in good standing, thus the additional details on those.
What Happens If You Get Suspended
The best way to avoid suspensions is to follow the rules and maintain good account metrics as discussed above.
Unfortunately, sometimes people get suspended despite doing their best to follow the rules and be a good seller. This happened to me temporarily back in June 2015. It was an extremely stressful situation and one that is best avoided!
If you do find yourself suspended, you’ll get a notification from Amazon that gives limited details about the decision and it will be up to you to investigate further and take the necessary steps to address the problems.
When you get suspended, you can appeal the suspension to get your account reinstated – but it can take some time, and it’s never 100% guaranteed that you will get your account back.
The best thing I can recommend is that you read through Amazon’s policies and follow them in good faith. If you do that, even in the unlikely event you are suspended, you’ll almost certainly get your account reinstated. I don’t personally know any sellers acting in good faith who have been permanently banned from selling on Amazon.
One of the biggest mistakes that people make at this stage is deflecting blame. Everyone wants to focus on why the suspension was a mistake and why they as the seller weren’t actually at fault.
I’ll tell you right now that this is a mistake and not what Amazon wants to hear.
You need to take ownership for the situation and explain to Amazon how you will avoid the problem moving forward. They want the problem solved, not excuses.
Listing and Selling Your Items
In this chapter, we’ll explore the process of listing and selling your items.
- Listing your products for sale on Amazon
- FBA vs Seller Fulfilled
- Shipping to FBA
- Amazon Product Promotions & Advertising
Listing A Product That Is Already On Amazon
Listing a product that is already available on Amazon is easy.
To get started, use a computer to go to the desktop version of Amazon’s site and navigate to the product page.
Make sure that the product is an exact match to the one you have! A good way to do this is by searching by the UPC code on the product.
Let’s say you have a hardback copy of The 4-Hour Workweek that you want to sell. Searching Amazon for the UPC on the back of the book (9780307465351) will show you the exact result you are looking for:
When you open that listing, you need to look for a button you may not have noticed before that says “Sell on Amazon”.
You will find the button under the “Other Sellers on Amazon” box on the right side of the page.
If the “sell on Amazon” button is not displaying on a product page, you can also list a product by logging into seller central, hovering over inventory, and then clicking add a product.
This starts the listing process. For a step-by-step walkthrough of completing the entire listing process, check out pages 23-38 in my Get Your First Sale On Amazon book.
FBA vs Seller Fulfilled
When listing your item, a decision you’ll have to make is whether you will ship the item yourself (seller fulfilled) or have Amazon handle the shipping for you (FBA).
We recommend using FBA in the majority of situations. With FBA, you ship multiple items in a single box to the warehouse destinations that Amazon tells you to. From there, Amazon will handle the rest.
The main advantages of using FBA over shipping directly to customers are:
- FBA saves time.
- Prime products often sell for a 5%+ increase over seller fulfilled items.
- FBA products spend more time in the Buy Box.
FBA saves time…
Having Amazon ship each item to customers saves us a huge amount of time. When we use FBA, we are able to send our inventory to Amazon in bulk, and then they ship it to each customer as they buy it. Shipping directly to customers is one of the most time-intensive processes of selling online, so this relieves a significant amount of the workload.
Another major benefit along these same lines is that you aren’t tied to one physical location.
Whether you are at home, working at your office, or on vacation, Amazon will continue to ship your items as they sell. In a nutshell they take the vast majority of the logistics off the plate of the individual seller.
Prime products sell for more…
Items will generally sell for more when sold via FBA versus selling the item merchant fulfilled.
When items are sold via FBA, then Amazon Prime customers receive the same prime shipping benefits as when items are sold by Amazon. The return policy is the same as well. This leads Amazon Prime customers to have more confidence in the offering, and they will know exactly when they will receive the item.
This higher level of confidence often means they are willing to pay a higher price.
In my experience, if we’re selling an item via Prime, we’re generally able to sell for at least 5% higher than the seller fulfilled competition, and very often we’re able to sell for more than 10% above the seller fulfilled competition.
More time in the buy box…
The Amazon buy box is the featured offer on a listing. When a customer clicks “buy now” or “add to cart” on a listing, the seller who is featured in the buy box is the one who will make the sale.
We’ve found that when you are using FBA, your item will be featured in the buy more often than if your item is listed for sale seller fulfilled.
When to fulfill your own orders on Amazon (Seller Fulfilled)…
There are certain situations where we end up fulfilling our own items.
The main one is in December when there is no longer time to get items to an FBA warehouse with time for them to ship out before Christmas. We’ve found that we get more sales and make more money by fulfilling our own orders for a few weeks because this eliminates the time our inventory is in transit to FBA warehouses and allows us to get more items delivered by Christmas.
Situations like this where you have a high-demand product that needs to reach consumers ASAP are the main scenarios to consider seller fulfilling.
Shipping to FBA
The first step in sending products to an Amazon warehouse for FBA is creating a shipping plan. You can create a shipping plan from within your seller account.
Each shipping plan indicates:
- What products you are sending
- How many of each product
- How you will be shipping it
- Whether you want Amazon to label the products for you
If you already have an Amazon Seller account and a product to ship in, you can start this process on your Manage Inventory page.
Labels are needed for identification purposes once the products reach the FBA warehouse. You can label your own products before shipping them, or Amazon will do it for you when the products reach the warehouse for a $0.30 fee per label.
If you are planning on selling a lot of items, it is more economical to label your own products but you need to have the right equipment to do this.
For a step-by-step walkthrough of this entire process, check out this post on creating your first FBA shipment.
What is Commingling?
Commingling means having your inventory pooled with the identical inventory of other sellers with no means of identifying which individual items came from which sellers.
For example, if you and I each sent in a copy of Settler’s of Catan and we didn’t indicate that we wanted the “Amazon Barcode” applied, both copies would end up in the same pool. When one of us sells “our” copy of the game, a copy would be taken from this group pool – though not necessarily the same one we sent in.
The pros of this system are that it can streamline things on the logistics side.
The cons are that this leaves room for other sellers to send in knock-off, counterfeit, or over-graded products and have them ship as your item!
If you want to prevent commingling, go to the FBA menu in Seller Central and set FBA Product Barcode Preference to “Amazon Barcode”.
How to Create a Listing for a New Product On Amazon
Here is how you start the process for listing a new product on Amazon (i.e. one that isn’t already listed).
- Log in to Amazon Seller Central.
- Click “Inventory”.
- Click “Add A Product”.
- Click “Create A New Product Listing”.
This starts the process –-now you have to fill in all the details. The first step is selecting the category and sub-categories it belongs to. You’ll also need:
- A product title
- A description
- A UPC
- Product dimensions + weight
- Variation details
Amazon Product Promotions & Advertising
To help boost your sales on Amazon, you can run promotions on your products. You can also pay for ads.
Running a promotion can help boost your chances of making a sale when a customer is looking at your item on Amazon. The options that Amazon provides for promotions you can run on your items include:
- Social Media Promo Codes
- Percentage Off
- Buy One Get One
Social Media Promo Code
This allows you to create a custom coupon code that you can share with others. Amazon will provide you with a dedicated link to the page as well to help you promote it.
You are able to pick what type of discount you offer, and how many are able to be redeemed.
This promotion type is designed to incentivize customers to purchase multiples. For example, you can run a promotion to offer 10% off if customers purchase 2 items and 12% off if they purchase 3 or more items.
You can customize the discount percentage and purchase quantity required for customers to be eligible for the discount. This is a promotion we use fairly often in my business and it helps generate more orders of multiples.
Buy One Get One
This promotion type allows you to setup offers where if a customer buys one item they get the next one free or discounted. You can also set it up so customers have to buy multiple units to get one free. So you can do buy 3 get 1 free, or any combo that you’d like.
How to Set Up A Product Promotion on Amazon
If you would like to set up a promotion on an item you are selling on Amazon,
- Login to seller central.
- Hover over the advertising tab
- Click on promotions.
Amazon Sponsored Product Ads
Another way you can get more exposure for your items is to use Amazon Sponsored Product ads. This is an optional service that allows you to pay for additional exposure to generate more sales.
Amazon Sponsored Products show up in both search results and on product pages.
Amazon provides the ability to run automatic campaigns and manual campaigns. In an automatic campaign you set the bid amounts, set your budget, pick the products you want to advertise, and then Amazon will choose the targeting for you. If you run a manual campaign, then you will choose your own targeting options.
You can learn more about in our guide: How to Create Amazon Sponsored Ads and when you should.
Pricing Strategies on Amazon
The way you price your items on Amazon will have a huge impact on your profitability. After the items you source, pricing is the next most important factor in my opinion.
My default recommendation with pricing is to price in line with the competition if there are other sellers on the same listing.
To do this, find the lowest price offer using the same fulfillment method that you will be using, then match their price or add 1%.
For example, if there is a seller on a listing at $49.99 selling the item FBA, and you will be selling the item via FBA as well, I would price between $49.99 and $50.49.
When you set your price to match or price above the other sellers on the listing, you avoid something known as the “race to the bottom”. The race to the bottom happens when multiple sellers on the listing are constantly trying to be the lowest price on the listing. This can turn into an endless battle and erode all of the potential margin.
An example of how this goes:
Seller 1 is priced at $19.99, seller 2 prices at $19.95, seller 1 lowers their price to $19.89, seller 2 lowers their price to $19.75, and on and on, and before you know it there is very little margin left.
Pricing at or a bit above the competition helps to maximize the margins you will see on sales.
Here are some other tips I recommend when you are pricing on Amazon:
- If in doubt, start by pricing in the high end of the range you are considering. You can always lower your price later if needed.
- Compete only with items that are the same fulfillment method as yours.
- Factor the current season into your pricing decision. Some items will be selling for dramatically more when they are in season compared to other times of the year.
- Review your pricing often. I’d recommend multiple times per week as the market prices on items change regularly.
These tips should help you to get started pricing in a way that will generate sales and will maximize your profits.
Answering Customer Inquiries on Amazon
One of the things that you are required to do on Amazon is respond to messages you receive from your customers on Amazon. Amazon’s guideline is that you need to respond to 90% of messages within 24 hours. My recommendation would be to respond to all messages within 24 hours, and ideally faster.
You will be notified that you have a message to respond to in a few different ways. You can turn off any redundant notifications so that you only receive notification about each customer message in one place. Here are the notification options:
- Receive an email
- Push notification in the Amazon Seller Mobile App
- When logging into Seller Central on a desktop
Any of these 3 options will work just fine, just pick the option that works best for you. If you receive a message, it will show up in Seller Central here:
In the screenshot above, you can see that I don’t have any messages outstanding that need to be responded to. If there are messages to respond to, you will see the number of messages you need to respond to. Click on the number and you will be able to respond directly within Seller Central.
When a customer message does come in, the main thing to do is respond within 24 hours. Be as helpful and courteous as possible. Do what you can to answer their questions or solve any problem they might be having, and you’ll be good to go.
After the Sale
Once you get a sale, the work isn’t done! In this chapter, we’ll look at what happens after your item sells…
- How to find out if your order sells?
- Shipping if seller fulfilling
- Getting reviews + review rules
- Dealing with scammers
- How do you get your money?
How to Find Out If Your Item Sells
If you receive a seller fulfilled order, you will receive an email every time that you receive an order.
Your email will say “sold, ship now” and have the details on the item. Then you will be able to login and purchase a shipping label to ship the item to the customer. You can also set up alerts on the Amazon Mobile App to receive a push notification every time you receive a new Seller Fulfilled sale.
The process for FBA orders is slightly different.
You will not receive an email until the item has actually shipped. At the time the item is shipped, you will receive an email that says “Amazon has shipped the item you sold”. They will then deposit the payment into your Amazon Payments account.
The main difference for FBA is that the customer order will show up in your seller account before it actually ships. To see your real-time sales, you will need to go to log in to seller central, go to orders, and manage orders.
On this screen, you should be able to see a tab that shows “all orders” which will show you everything that is sold regardless of the current status. Orders that are showing up as pending are sold but have not shipped yet. There is also a tab on this screen to view only pending orders.
For FBA orders, you can do the same process in the Amazon Seller App. Navigate to orders and then update your filters to the status you want to view.
An important note is that the sales summary that you see on the Seller Central dashboard or on the Amazon Seller App home screen will include pending sales in the total.
Now that you know how to review your sales, try not to check them too often 😉
Shipping Seller Fulfilled Items
When it comes to shipping your items seller fulfilled on Amazon, you might be wondering:
- How long do you have to ship the item?
- How much will the shipping cost?
We’ll answer both of those questions in this section.
Once you receive a seller fulfilled order on Amazon, you will have 2 business days to ship the item.
Here’s the way it will look in seller central when an order comes in:
You can see that this order sold on March 20th, which was a Friday. The deadline to ship this item is March 24th, which is a Tuesday. Regardless of what time the item sold on the 20th, the ship by date would still be Tuesday.
2 days is the default requirement for handling time. If you want to update this, you can do so in the shipping settings. You can do this by going to settings in the top right-hand corner of your seller central account, clicking on shipping settings, and then updating your shipping templates.
The price that you will pay for shipping a merchant fulfilled item is based on:
- The dimensions of the shipping box you are using.
- The weight of the shipping box.
- How far the package is traveling from your location.
The larger your items or the farther you have to ship an item, the more expensive it will be.
When you sell an item, you will be able to purchase shipping for the item directly from Amazon. You will also be able to compare the rates offered from multiple different carriers to get the best deal. Let’s take a look at a couple of examples.
A box that’s 12″ x 8″ x 5″ weighing 2 pounds, shipping from Minneapolis to Salt Lake City:
A box that’s 12″ x 8″ x 5″ weighing 10 ounces shipping from Minneapolis to Salt Lake City:
So you can see the box is the same size in both cases, but a substantial difference in weight leads to a significantly lower price. On every item you sell, it’s important to compare the prices and choose the optimal shipping method. Generally this will be the lowest cost, but could vary depending on your shipping offerings.
In my business, we do a lot of merchant fulfilling of toys and gift items every December.
There are quite a variety of weights and sizes of these items. I would estimate that on 95% of the items we sell, we are paying between $4 and $12 for shipping. This could vary for you, especially if you sell very large items.
The main thing I would recommend is to estimate your shipping costs in advance.
USPS, UPS, and Fedex all have online tools that will allow you to do this. When using the estimation tools, I recommend inputting a zip code that is one of the furthest points you would have to ship to.
We’re located in Minnesota, so when estimating shipping costs, we put in a California zip code. Keep in mind that Amazon has partnered rates with all of these carriers, so you’ll almost certainly end up paying less when buying the shipping through Amazon.
Here are some tips on keeping your shipping costs low:
- Whenever you ship an item weighing less than 1 pound, use USPS First Class Mail.
- Utilize USPS Flat Rate Products.
- Utilize USPS Regional Rate Products.
- Utilize USPS Priority Mail Cubic.
- Be willing to ship through the shipping carrier that offers the lowest price.
- Use the smallest possible shipping box. Using too big of a box leads to unnecessary extra costs.
Getting Reviews + Review Rules
Reviews are an integral part of the buying experience on Amazon.
Getting more reviews on your products will be very important if you are selling your own branded products. If you are selling existing products that already have listings on Amazon, then getting more product reviews will not be as important of a process.
Amazon has some very strict guidelines in place regarding reviews. Reviews have been abused significantly in the past, so Amazon has taken fairly drastic action to remedy the problem. As a result, getting reviews is not something you want to be bending the rules on.
Here’s a screenshot of current Review Policies:
Getting reviews without breaking Amazon’s rules ultimately boils down to getting sales and then requesting those buyers to leave a review for your product.
The main inputs you can influence here are the number of sales that you get on Amazon and the way that you word your requests to leave feedback.
A certain percentage of all buyers will leave feedback, so getting reviews is a function of getting enough sales.
Many sellers when they are launching a new product on Amazon will sell the products for a very discounted price to get initial sales. Doing this will typically get a batch of reviews coming in.
Other programs you can look into include the Amazon Vine Program, and the Amazon Early Reviewer Program. These are legitimate ways to get early reviews on your products.
Overall reviews are not something to mess with. Be sure that you are in compliance with Amazon’s policies, as the downside to gaming the system can be very high.
Dealing With Scammers
When it comes to selling on Amazon, a concern that some new sellers have is how to deal with scammers on Amazon.
I’ll begin with the note that the overwhelming majority of the time, transactions go exactly as planned. The number of times you will run into someone trying to scam you is very small. It might happen on 1 in every few hundred orders.
It’s still good to be aware of some of the things that scammers might try to pull on you. Here are a few to watch out for:
Saying they never received an item even though the tracking number shows delivered.
When tracking shows the item was delivered and we receive a message from the buyer like this, we will respond asking for them to check a few things first. The message we send back includes to make sure they check with neighbors, an apartment manager if they have one, their local post offices, and includes details on how to file a missing mail claim with the carrier if needed.
After sending this message, the vast majority of buyers are able to locate the item.
Pulling a “switcheroo” on a return.
This one can happen on FBA orders or on merchant fulfilled orders. It involves a customer buying your item, requesting a return, and then sending a different item back. On seller fulfilled orders, you can resolve this directly with the buyer.
On an FBA order, you will need to open a case with Amazon with proof.
Requesting a change of address.
When you sell an item on Amazon that you are seller fulfilling, Amazon requires you to ship it to the address the customer provided. Some unscrupulous buyers will message you to request to change the address. Then you’ll send it to the new address, and then the buyer will file a claim saying they never received the item.
If a buyer reaches out to you for something like this, refer them to Amazon’s customer service to get their shipping address updated on the order.
Those are a few of the types of scams to be aware of. There are other things that you may run into. My best advice is to pay close attention any time things feel a bit off. Read up on relevant policies if in doubt. If you do these things, you should be able to avoid many things scammers may try to pull.
How do you get your money after the sale?
Arguably the best part of selling on Amazon is getting paid. That’s why we do it, right?!
When you sell on Amazon, you will have a balance in your “Amazon Payments” account. It will look like this:
There will be 2 main sections of this report. The “standard orders” section, and the “invoiced orders” section. Standard orders are ones where customers paid for them at the time of purchase.
Invoiced orders are typically for business customers and are much less common.
When a balance shows up in a blue, that is how much is currently owed to you. If a balance shows up in red, that is how much you currently owe Amazon.
Amazon will add to your balance every time they ship an FBA order on your behalf, anytime you ship a merchant fulfilled order, or anytime they reimburse you for a mistake they made. The most common example of getting paid for a mistake by Amazon is if they damage or lose a unit of your inventory.
Amazon will subtract from your balance for their fees and for customer refunds.
Your Amazon payments balance will accumulate and be deposited to your bank account every 14 days. You will typically see the funds available in about 2 business days from when the transfer is initiated.
Note: for sellers that sign up during certain time periods, Amazon will provide them with the ability to request a payout on a daily basis. Most accounts don’t have this, so if you do, consider yourself lucky.
Get Your First Sale on Amazon
This chapter is a condensed version of my book of the same name, Get Your First Sale on Amazon.
I’ll be listing this book for sale on Amazon later this year – right now you can get a copy of it for FREE.
Your feedback will also help get it ready to be published!
It’s very easy to over-complicate things, especially something as big as starting a business.
What happens to most people who do this is that they keep delaying in the name of waiting for a better time or giving themselves more time to do research.
This chapter will simplify the process of getting started down to 5 very simple steps that you can follow, in order, to get your first sale.
My experience working with thousands of other people suggests that doing this will greatly increase the odds you follow through and get to the point that you are actually selling a substantial volume.
You can get these steps completed in the next week, maybe even sooner! Start now!
5 Steps to Getting Your First Sale…
Here are the 5 steps to take to get your first sale on Amazon:
- Familiarize yourself with the sourcing strategies on the Stairway to 7 Figures.
- Set up your Amazon Seller account.
- Source your first product via retail or online arbitrage.
- List the product for sale via FBA.
- Send the product(s) to an FBA warehouse.
Sound easy? That’s because it is!
There is no excuse for not getting this done in the next week. By dedicating just a few hours, you could have your first product listed for sale and be in line to earn your first profit on Amazon.
Remember, EVERYONE starts with 0 sales and the first step is Sale #1.
A Step by Step Beginner’s Guide to Getting Your First Sale on Amazon
We’ve already covered everything you need to know to accomplish the 5 steps listed above, but if you want additional details you should download a copy of my book now.
The book is organized around this concept, with each chapter focusing on one of these steps.
I will be listing this book for sale on Amazon later this year. Right now I’m making it available free to readers of this blog.
Ready to Get Your First Sale on Amazon?
Follow a step-by-step process for getting your first sale. Everything you need to know is included and condensed into this FREE, 40-page E-book!
Want to sell 6, 7, or even 8+ figures a year? In this chapter we’ll talk about the strategies that will make that possible.
- Adding sourcing strategies
- Hiring people + automation
- Leveraging tools and services
How to Increase Sales on Amazon
The strategies you can use to increase your sales on Amazon fall into two categories:
- Things you can do that generate quick results.
- Things you can do that generate results over time.
While you may look at those options and think you’d much rather focus on the quick results, the long-term strategies are the ones that drive the biggest gains over time. So a healthy mix of both types of strategies is called for.
Increasing Amazon Sales Quickly
Here are some of the top ways you can increase your Amazon sales in the near-term:
- Upgrade to a Professional account
- Use a repricing tool to ensure competitive pricing
- Leverage FBA to offer Prime benefits on orders
- Optimize product listings (if selling your own products)
- Run a product promotion
- Set up a Sponsored Product Ad
All of these can give a quick boost to sales and should be a part of your ongoing strategy.
Long-term Strategies for Increasing Amazon Sales
The strategies discussed above can give a boost to your existing sales, but they generally aren’t going to be the difference between getting a few sales a month and building a business that replaces your job.
The three biggest strategies and principles to scaling your Amazon to the point that it is generating 6+ figures a year are:
- Consistent reinvestment over time
- Expanding your sourcing strategies + product offerings
- Automation + delegation
Consistent reinvestment over time…
How and when you withdraw money from your business has a direct effect on your sales.
The more you withdraw to “pay yourself”, the less you have to reinvest. The less you reinvest, the slower you will grow.
If your goal is to replace a job, reinvest as much as possible until your business is generating enough monthly profits to support you.
Reinvesting 100% of profits is ideal. Adding to your capital from an external source like paycheck is even better.
The key principle to understand here is compounding returns. Every dollar that you reinvest into your business is a dollar that can earn profit in the future.
If you invest $1000 into inventory and average a 25% ROI on those products, you’ll have $1250 after selling them. That’s $1000 that you started with and $250 in profits.
If you reinvest that whole $1250 into more inventory and get another 25% return, you’re now up to $1562.50. Since you had an extra $250 to invest this time, your profits grew to $312.50.
But let’s say you were excited about that $250 in profit and used it to go out or even buy some extra groceries. No big deal, you can earn that again next month, right?
Yes – but this habit leads to much slower growth. Keeping all your profits for yourself (no reinvestment) means no growth.
The graph below gives you an idea of how different levels of reinvestment will affect your profits over time.
Keep in mind this is a simplification of how things would work in real life.
The graph shows what it would like like if you used all your capital to buy inventory AND sold it all to get capital + profit back each month. In real life, things aren’t this clean. Some investments may only take a week or two to see profits, while others may take a couple months. It also takes time to find inventory to invest in.
It also assumes 25% profit on investment. In real life, that number may be higher or lower. We aim for more like 35%.
But even with these limitations, the graph still does a very good job at showing how big of a difference there is between reinvesting your profits and keeping them to pay yourself. Like I mentioned above, adding in a little extra – even just $100 a month – can make a big difference in growth.
The main thing to understand is that the more you take out now, the longer it will take to achieve long-term goals like supporting yourself. While not paying yourself can feel like you are “missing out” on money, you’re just setting yourself to earn more in the future.
Expanding your sourcing strategies + product offerings
Earlier in this guide, we discussed what I call the Stairway to 7 Figures.
In my experience, this is the best way to approach the development of your Amazon business. It allows you to start small with minimal risk, then expand your business as your experience and capital grow.
As you add each additional sourcing strategy, your potential profits grows significantly. While we generate over 7 figures a year just from retail arbitrage, I’ve been doing this for well over a decade. Wholesale sourcing now accounts for over 65% of our sales, and for most people expanding to wholesale once they have some experience selling online will lead to the strongest growth.
Regardless of what level you are at on the Stairway, expanding your product offering then doubling down on your best sellers is also a smart move.
At the wholesale stage, this means implementing systems to continuously bring in new partners and tests to figure out which products are leading to the highest sales. When you identify items that sell consistently, you want to prioritize allocating your capital to buying these items, as selling the same product over and over again carries much less risk than testing out new products.
At the brand building stage, this means identifying products closely related to ones you are already offering and expanding the presence and authority of your brand by offering a more complete product line.
Automation + delegation
I would not have achieved the success I enjoy today if I had not leveraged automation and delegation strategies.
The basic idea here is that you want to free up your own time to dedicate to the highest value activities you could be doing. What this is will vary over time, even on a day to day basis. But the point remains, the more you focus on the most important and most valuable tasks, the more you will earn.
To be able to do this, you need to build systems, leverage tools, and hire other people when tools can’t do the job.
Tools for Selling on Amazon
We’ve discussed numerous tools already. This chapter will review those that we’ve already discussed and introduce some additional options that should be on your radar as you grow.
- Tools & supplies for all Amazon sellers
- Retail Arbitrage tools
- Online Arbitrage tools
- Wholesale tools
- Private Label tools
Tools & Supplies for All Amazon Sellers
Shipping Scale – This is needed to determine the weights of the boxes that you will be sending to Amazon as well as shipping to customers. You could get started with a bathroom scale initially, but getting a dedicated shipping scale is a good idea. The one I linked to is good for starting off and is generally about $18.
The one I use is about $42 and you can check it out here.
Printer for shipping labels: you will need access to a printer for the shipping labels for your boxes. There’s a few options here:
- Use a printer that you already have. Technically Amazon requires that you use a laser printer to avoid the possibility of ink smearing. So if you have an inkjet printer, you want to be careful but if you tape completely over the shipping labels then you should be just fine. I can’t officially recommend starting off with an inkjet printer, but that’s what I did right away when I was getting started and it didn’t cause any problems for me.
- Office Max / Office Depot / Fedex Office / Most UPS Stores – All of these stores offer the ability to print for a relatively small fee and will get the job done if you are looking to keep costs to a minimum getting started.
- Dymo 450 XL – This is a dedicated shipping label printer. This is 1 of 2 different models that we use in my business. Using a printer like this is quite a bit more efficient and you are also are compliant with Amazon’s requirements. The price of this is usually between $150 and $180 so it’s a decent sized investment.
- Zebra LP2844 – This is also a dedicated shipping label printer. This is the 2nd type of label printer that we use in my business. This model is no longer made new, so I recommend buying a used or refurbished if you go this route. These aren’t quite as user friendly as the Dymo, but you can usually pick up a used one between $110 and $130. I have a slight preference for the Dymo as you are able to get it new, and it’s a bit more user friendly. Overall though either of these 2 label printers will get the job done if needed.
Shipping Tape – I now buy this from Uline, but when getting started I would buy from Amazon. If you want guaranteed quality I would go with Scotch or Duck Brand. If you don’t need the highest quality tape (in my opinion you don’t) then you can buy one of the 6 or 12 packs of a random brand for $1 to $1.50 per roll. Tape is also easy to buy at stores like Walmart, Target, Home Depot, etc if you just want to start with one roll.
USB bar code scanner – This will help you dramatically speed up the time it takes to list items for sale on Amazon. With the USB bar code scanner you are able to connect it with your computer and then scan the bar code of products as opposed to entering it in manually. You can manually enter in the UPC / bar code of products when listing items for sale, but the amount of time that this will save you is well worth the investment in my opinion. The one I use is linked and is generally available between $14 & $16.
Scotty Peelers – this tool definitely isn’t required, but it makes life easier. It is designed to help remove pricing stickers from products. They are much easier than removing stickers with just your fingers. With the metal ones be very careful as they are extremely sharp.
Heat Gun – another product that is not required but makes life easier. If you need to remove a sticker from a box, or from an item in a durable box this will help. All you do is point the heat gun at the label for a few seconds and it will loosen the adhesive making it much easier to peel off. I’ve linked to the one I use, but there are other options out there as well. If you have a hair dryer you can achieve a similar function, but those are not as high powered as a heat gun. If you do use one be careful as they are extremely hot and can cause damage to packaging if you aren’t careful.
Retail Arbitrage Tools For Amazon Sellers
Amazon Seller Mobile App – This is a free app directly from Amazon. It will allow you to scan products with your phone for retail arbitrage, and allow you to do just about everything you can do on a desktop computer. Essentially it allows you to manage most aspects of selling on Amazon from your phone. Regardless of the sourcing method you are using, I’d download it.
InventoryLab & Scoutify – These are included with the same subscription. Scoutify is a retail arbitrage scanning app. It will provide you with some user friendly tools that the Amazon Seller App does not have. InventoryLab is a software to help you list your items for sale, manage your accounting, determine your profitability on items sold, and much more. They offer a 30 day free trial, and you can learn more here.
Online Arbitrage Tools for Amazon Sellers
Tactical Arbitrage – This tool helps to automate the process of online arbitrage. In a nutshell the way it works is it allows you to pick one of the 1,000+ retailers it is compatible with, and then go item by item automatically and compare the price on that retailer’s website to what it’s selling for on Amazon. Items that meet your criteria are added to a list for your review. So rather than filtering through products manually, you get a short list of potential online arbitrage purchases. This only scratches the surface of what the software does, but in a nutshell this tool makes online arbitrage significantly more efficient. You can sign up for an extended free trial by using code OSE10 when signing up HERE.
Revseller – This is a chrome extension that helps to reduce research time by displaying sales rank, category, and profitability at the top of each product page directly on any item you are looking at on Amazon. You can check it out and sign up for a free trial if interested HERE.
Wholesale Tools for Amazon Sellers
Price Checker 2 – Price Checker 2 specializes in the evaluation of wholesale price lists. You are able to upload a list of prices and UPCs and then the software will go through and show you key data on each one. This includes: profit, return on investment, sales rank, and much more. Rather than looking up items 1 by 1, you are able to look up thousands in just a few minutes.
Tactical Arbitrage – In addition to the online arbitrage features mentioned above, Tactical Arbitrage has a wholesale price list evaluation tool. It allows you to upload a list of products and it will pull all the details for you that you need to make a buying decision.
Restock Pro – This is a tool that will help you manage your wholesale inventory. The software links up to your Amazon account and will keep track of your inventory levels by supplier. You set in the software how many days of supply you want on hand, and the software helps make that happen. When you are running low it will tell you when to reorder products so you don’t sell out. Once you have more wholesale inventory than you can easily keep track of a tool like this really helps.
Tools for Amazon Private Label Sellers
Jungle Scout – Jungle Scout aim to be an all in one solution for Amazon sellers looking to build a brand on Amazon. They have tools to help sellers with the following: product research, finding suppliers, sales analysis, listing optimization, launch assistance, and more.
Helium 10 – They provide a variety of software tools for sellers, and aim to be an all in one solution. Their software includes tools that can help sellers with: product research, listing optimization, competitor analysis, identifying reimbursement opportunities, and more.
Viral Launch – They provide a suite of software tools designed to help sellers build and scale their own brands. Their software helps with product discovery, listing optimization, ppc management, and they have services to help you launch as well.
The above tools are some of the main tools that I think are worth considering investing in as you build your business. For a complete list of tools that I use in my business, check out my resources page.
Now we'd like to hear from you!
We hope you found this guide helpful. Comment below and tell us:
- What’s your next step?
- What goals do you have?
- Is there anything else you wish we included in this post?
Don’t forget to download Get Your First Sale On Amazon for a step-by-step guide that will help solidify what your learned today and turn it into action!