Become an Amazon seller: Successfully sell merchandise and private label
Amazon dominates e-commerce in Germany. With a substantial market share of around 68%, hardly any online retailer can afford to ignore this enormous customer base. No wonder that every year a new generation of marketplace sellers starts on the trading platform. However, anyone who wants to become a successful Amazon seller should focus on good preparation. Contrary to popular belief, selling on Amazon is a ± business model that requires corresponding know-how.
Nevertheless: Anyone who wants to sell merchandise or their own brand on the e-commerce platform can easily get started. A seller account can be set up in no time. Below, we would like to provide you with the most important aspects that everyone who wants to become an Amazon seller should know beforehand.
Quick overview: Merchandise vs. Private Label/Brands
What sounds like a matter of faith is more of a decision of personal preferences. Both models have advantages and disadvantages and do not exclude each other in any way. However, there are fundamental differences that speak for or against each type of product.
Advantages and disadvantages of Private Label
Private Label and Brands are usually used synonymously and refer to the sale of products of one’s own brand. Typically, so-called white label products are purchased in larger quantities and provided with one’s own brand design and logo. However, it is also conceivable to have specially created products manufactured. This is, of course, more complex and expensive. White label products, on the other hand, can be produced relatively cheaply, especially in China. However, there are also many opportunities to source products within the EU.
| Advantages | Disadvantages |
| 1. Building a own brand presence possible 2. Economies of scale possible 3. No direct competition on the product listing 4. Access to the product listing and thus keywords and text under one’s own control 5. Large profit margins possible 6. Customer loyalty and repeat purchases possible | 1. Possibly difficult sourcing due to communication problems 2. High risk when sourcing in China 3. Full product liability and declaration of conformity 4. High costs for small quantities for testing 5. Long delivery times, high planning effort for reorders 6. High marketing effort to make brand and product known |
Advantages and disadvantages of merchandise
Instead of the more complex to realize Private Label, those who are to become Amazon sellers can also start with merchandise. This refers to products from more or less well-known brands that are distributed by third-party sellers. Neither are the sellers brand owners nor are they involved in the production of the products.
| Advantages | Disadvantages |
| 1. Sourcing possible in Europe 2. Small quantities possible 3. Fast delivery 4. Product liability and declaration of conformity lies with the manufacturer 5. Communication is usually straightforward 6. Complaints can be easily handled 7. No effort required for product listing 8. Reviews already available for well-known products 9. Low marketing effort | 1. No unique selling proposition 2. Little economies of scale possible 3. Much competition, possibly even with Amazon 4. No access to the product listing |
Special features when selling merchandise on Amazon
While merchandise in one’s own online shop hardly needs to be treated differently than private label goods, there are some special features to consider on the Amazon marketplace.
Amazon does not allow duplicate listings
While on eBay each seller can create their own listing for their products, Amazon aggregates all the same products under the same listing. An already existing product cannot be created again with a separate listing, which can be easily checked through a comparison of the EAN and the brand.
If more than one seller wants to offer the product, both offers are combined into one listing. In this example, over 20 sellers are selling the Bosch drill driver GSR 12V. One seller receives the coveted Buy Box with the yellow buttons, while 20 others are listed inconspicuously behind another click.
Ultimately, the listing is managed by the brand owner or the one who has received the rights for the product setup. They determine how the title, bullet points, images, and description are designed. Any additional seller must use the identical listing if they want to sell this merchandise product on Amazon.
This can be advantageous, as it saves the effort of keyword research, writing a good description, and creating professional images. However, if the author of the listing was rather uninspired, all sellers have to live with the poorly optimized listing.
Customers purchase 90% through the shopping cart field
Behind the cumbersome term shopping cart field lies the yellow button “Add to Cart” or “Buy Now” on the product detail pages. In English, this field is called “Buy Box.” Since this term is much catchier, it has also established itself in the German language among Amazon sellers. Successfully selling merchandise is practically only possible through winning the Buy Box.
Amazon has developed an algorithm that calculates which offer is displayed in the Buy Box based on various factors. The factors of this algorithm are secret, but there are some clues as to which metrics Amazon uses for the calculation. Certainly, the total price, i.e., the product price plus shipping costs, shipping speed, available inventory, and overall seller performance influence which offer wins the Buy Box.
All offers that are not in the Buy Box are summarized in an inconspicuous list that buyers can view with a click on “All Sellers on Amazon” (see image above). However, 90% of all orders are placed through the Buy Box. Therefore, anyone who wants to become a reseller on Amazon should engage with how the Buy Box can be won most effectively.
Both aspects primarily apply to merchandise. Private label products, on the other hand, are generally considered independent products and can be entered as a new listing by the Amazon seller. However, this does not mean that there is no competition. It merely shifts to the search results page, where the listing must achieve a good ranking to attract the attention of potential customers.
Become an Amazon seller: What you should know
With the described special features, it is clear that there is significant competitive pressure on Amazon. However, the e-commerce giant offers immediate access to the largest customer base in online retail. Not utilizing this resource is not an option for most aspiring Amazon sellers. However, if crucial mistakes are made from the very beginning, the entire business can be at risk. With the following tips, we would like to help you experience a successful first year on Amazon instead.
For better orientation, we have divided the following part into different sections of the product life cycle.
#1 Before Sourcing
To become a professional Amazon seller, you logically need a product that you can offer. In addition to complying with legal requirements, product selection is perhaps the most important step that you should not rush. Take more time rather than less to make all the necessary preparations.
Market and competitive analysis: Competition and sales potential
If you do not have a product yet or are currently considering sourcing a new product, you should definitely look at the existing competition and the sales potential.
In doing so, you can pursue two fundamental strategies:
The following matrix provides a first overview:
| low competition | strong competition | |
| high sales potential | invest immediately | only with competitive purchase prices |
| low sales potential | test with small quantity | Hands off! |
Pay special attention to whether Amazon is a competitor in the competitive analysis. There are exceptionally attractive goods where Amazon almost never loses the Buy Box. Competing with the online giant here is – to put it positively – very bold.
Also find out how many and which competitors already offer a similar product to the one you are promoting, how often it sells, how the product page is designed, etc. The more information you gather, the clearer the picture you will get of the market. For more information on market analysis, see here: These tools will help you with market analysis.
Diversification: Develop product range
With Private Label, you should offer only a few different products at the beginning in order to leverage economies of scale as much as possible with low startup capital. This is different for branded goods. Since economies of scale hardly come into play anyway, it makes sense to offer many different products in small quantities.
There are two main reasons for this.
Therefore, it makes sense to start with branded goods to get to know Amazon. Try to acquire as much knowledge as you can. Once you have built a good foundation, you can launch your first private label product.
Calculate product costs correctly
“Since too many sellers do not correctly factor all incurred costs into the selling price, I regularly see retailers overestimating themselves in the price war to remain profitable.”
James Thomson
former Head of Amazon Services
There is hardly anything worse when selling on Amazon than underestimating costs. Due to the high competition, one must enter the market with competitive prices. If you do not keep an eye on your cost structure, you quickly end up selling at a loss. This must be avoided at all costs.
What does your product really cost until it reaches the customer? Of course, everyone is aware of the purchase price. But what about the other costs? Packaging costs, shipping fees, rolling fees or transport insurance, possibly FBA fees, the Amazon commission in the respective category, as well as the packaging and shipping fees to the customer. Have you also considered allocating personnel costs, office rents, storage fees, energy prices, etc. to your product prices accordingly?
All of this must be included in the total price of the product if you want to become a successful Amazon seller or retailer. Additionally, there is your profit margin, as you also want to make a living. Once you have considered all of this, add the value-added tax of seven or 19 percent.
Meet legal requirements
Amazon is not a legal vacuum, and you as a retailer are responsible for ensuring that you comply with the legal regulations of the respective country in which you sell. Especially if you act as an importer in the EU with Private Label, you should definitely seek support from a professional at the beginning. Selling products from other manufacturers is usually somewhat less complicated, but you should also inform yourself well here. In any case, you must…
#2 Sell on Amazon
So you have sourced the products at a competitive price. What now? Be aware that you are dependent on the profit from the Buy Box. No Buy Box, no sales. Therefore, it is necessary to do everything to win the Buy Box. This is more difficult with branded goods than with private label products.
Costs for the Amazon seller account and more.
Becoming an Amazon seller incurs costs. The investments you should expect cannot be answered universally, as this depends on many different factors. However, it is definitely possible to start with less than 1000 euros.
However, there are some fixed fees. These include:
Detailed information on all fees you can expect with FBA can be found here: Overview of all FBA costs.
Qualify for the Buy Box
In order to win the Buy Box at all, as a seller you must meet certain performance criteria:
These metrics are truly the bare minimum. Even if these numbers are achieved, winning the Buy Box is by no means guaranteed. Therefore, try to perform as well as possible. The better your performance, the more likely you are to win the Buy Box.
Offer Prime to buyers
The Prime program offers Amazon customers, in addition to its own streaming platform, guaranteed fast shipping. Offers that qualify for Prime are marked with the small Prime logo.
Amazon even offers its own Prime filter on the search results page, which hides all non-Prime offers. For this reason alone, you should aim for Prime, as customers like to use this option. Additionally, Prime offers tend to land in the Buy Box more often.
There are two ways for you to use Prime:
For a few years now, Amazon has expanded the Prime program to allow sellers to ship goods from their own warehouse. However, a few performance criteria must be met, which are quite demanding. Therefore, consider carefully whether you want to sell your branded goods through Amazon’s Prime program. For those who are just starting on the path to becoming a professional Amazon seller, this option is probably not feasible due to a lack of their own warehouse and logistics. More information can be found on the official Amazon page.
Amazon FBA
The acronym stands for “Fulfillment by Amazon”. On the marketplace, offers that are shipped via FBA are recognized by the note “Shipped by Amazon”. Those who use FBA send their own goods to an Amazon fulfillment center. From there, the items are distributed and stored. When a customer purchases the product, all processes run through Amazon. The seller does not have to do anything further at this point. Even customer service is handled by Amazon.
Thus, selling within the Amazon FBA program offers several advantages:
Here you can find more information about Fulfillment by Amazon: How does Amazon FBA work?
Use a repricer
Even if you have your goods shipped by Amazon and meet all the criteria for the Buy Box or a good ranking, there is still one factor open that often determines success or failure: the price.
Further up, we described how important cost calculation is already during product selection. If you know all your costs and have made a solid calculation, you now know exactly in which price range you can operate profitably. Theoretically, you would now have to keep an eye on the market situation day and night and constantly adjust your prices to the changing prices of the competition.
By hand, this is hardly possible. Instead, it is better to use a repricer. Some work on a rule-based system, which you should rather avoid. Because with that, you set a rigid guideline – for example, “always five cents cheaper than the lowest competitor price” – and trigger a harmful downward spiral until you ultimately sell below your profit margin or lose the battle because you cannot sell cheaper.
Dynamic repricers operate much more cleverly and truly help Amazon sellers adjust their prices while still selling at a profit, instead of having to offer their goods at increasingly lower prices.
An AI-supported repricer like the SELLERLOGIC Repricer for Amazon works with the goal of achieving the optimal price in the Buy Box. It adjusts the price according to market conditions to win the Buy Box, but then further optimizes the price to achieve the highest possible price and thus the maximum margin.
Marketing strategy: PPC, bundles, and more
Consider how you want to promote your product now. You will hardly be able to do without advertising through Amazon Advertising. Especially when launching a new product, Sponsored Product Ads are very helpful. But also explore the many other options that Amazon now offers.
To avoid competition, you can offer product sets, also known as bundles. For example, a gaming mouse and a gaming keyboard could make a sensible bundle. Since these two products are created on Amazon with a common new EAN, you have no direct competition for the Buy Box as long as other sellers do not create the same bundle.
#3 Analyze product performance
Not all commercial goods can be sold equally well on Amazon. Usually, 20% of all products generate 80% of the revenue. Some products sell so poorly that they negatively affect your profitability. This is something you must absolutely prevent.
Get rid of unprofitable products
This does not mean that you should immediately sort out all the other 80% of the product portfolio, as you would still lose 20% of the revenue. However, streamlining the assortment can significantly increase profitability.
Conduct a regular ABC analysis in which you categorize your products into A, B, and C based on performance. Pay particular attention to the C products and be honest with yourself about whether the effort justifies the return. You can make this process even easier by getting support from specialized services.
Accept help, use useful tools
In order to compete for the Buy Box or a good ranking price-wise, you often only have the purchase price that you can actively influence. That is why it is so important to know your cost structure even before sourcing. Unfortunately, many Amazon sellers do not know what costs they actually have and therefore often cannot assess whether a product is worthwhile or is actually being sold at a loss.
Therefore, rely on professional services from the very beginning that will make your work extremely easier. Many are not as expensive as you might think and take some of the manual work off your hands. At the same time, they help you maximize your profits on Amazon.
Keeping track of your income and expenses is essential. With SELLERLOGIC Business Analytics for Amazon, you get a simple and transparent solution to visualize your data and maximize your profit. Thanks to the intuitive dashboard, you have the most important KPIs such as profit and loss data, revenue, and ROI available at a glance and can conveniently monitor your business at the account, marketplace, and product level. The data is updated almost in real-time, allowing you to respond directly to changes thanks to the advanced algorithm.
Decisive advantage: You can quickly identify which of your products are real profit killers and eliminate them. Instead, focus on your bestsellers and gradually improve the profitability of your business.
Recognize the end of trends early
Trends are a blessing for your sales. If you jump on the bandwagon in time, you can make good money from it. The problem with trends is that they eventually pass. Reordering at the wrong time can turn a trending product into a complete dud. Or what do you think, how many Fidget Spinners or Bubble Teas are still being sold?
Therefore, closely monitor your sales figures and prefer to reorder fewer products if you see signs that the market is saturated. For this, tools like Google Trends or the search volume of search terms in your keyword tools can be helpful.
Conclusion: Becoming an Amazon seller made easy?
How can you sell on Amazon? We have answered this often-asked question in this article. The high competition can indeed be intimidating, but Amazon offers enough services and programs to sell successfully on the marketplace. It is necessary to understand Amazon and meet all the requirements. When combined with your business acumen, a stable cost calculation, and a solid selection of tools, nothing stands in the way of success in e-commerce.
Frequently asked questions
As long as you have registered a business and meet all legal requirements, you can easily create a seller account on Amazon. To become a vendor on Amazon, you just need a product. However, you do not have to become an inventor. You can also become an Amazon seller without bringing your own products to market. This model is called trading goods.
Opening an Amazon shop is free for anyone with a “Professional” seller account. This, in turn, costs 39 euros per month.
Yes, as a private individual, you can sell on the Amazon marketplace. A basic account is free, but Amazon charges 0.99 euros per sold product. Anyone who wants to sell more than 40 items per month needs a professional selling account, which costs 39 euros per month.
Small to medium Amazon sellers may only generate a four- or five-digit amount per year. In contrast, large or very large marketplace sellers can earn several million through Amazon. Depending on the product range, business concept, commercial skill, and talent, practically anything in between is conceivable.
It is possible to build a profitable Amazon business with less than 1000 euros. However, the necessary investments vary depending on the starting situation, product category, growth rate, etc.
The basic account is free, then 0.99 euros are charged per ordered product. The professional Amazon seller account costs 39 euros per month. Additionally, there is a sales commission, which usually ranges between seven and 15 percent of the product price.
Yes, private individuals can also sell on Amazon. However, a seller account is still required, and corresponding Amazon fees apply. Therefore, other platforms like eBay or classifieds have become more established in this segment.
To become an Amazon seller, you need a solid understanding of how the marketplace works, commercial skills, some startup capital, and a lot of enthusiasm, as an Amazon online shop is a full-fledged business and should not be underestimated in terms of effort.
Image credits in the order of the images: © VLA Studio – stock.adobe.com / © Werckmeister – stock.adobe.com / © Sundry Photography – stock.adobe.com / Screenshots @ Amazon
