8 Top Tips to Become a Successful Amazon Seller
Being an Amazon seller isn’t always easy. There are a variety of things you should keep in mind when starting your business as well as running a successful one. However, Amazon is the go to address for online shoppers and, therefore, a chance any e-commerce seller should have an eye on.
In this blog article we will show you what you should pay some extra attention to when you first get started on Amazon but also when it comes to maintaining and growing your business.
Let’s dive into the first part:
What Does it Take to Become an Amazon Seller?
Requirements of becoming a seller on the Amazon marketplace in the US are for example a valid Government ID, a chargeable credit card, and your tax information. In order to protect customers and businesses from fraud, you will need to undergo the Amazon seller verification process. This is where your ID comes into place.
Before you start your Amazon seller registration process, make sure you have all information ready, in order to speed up the process. Here are a few other things to consider before starting your Amazon seller journey:
#1 Choose From the Amazon Seller Plans
To create your Amazon seller account use the sign-up forms in Seller Central.
When you register for an Amazon seller account you have to pick between two plans: Individual and Professional. While the first option is addressed to beginners, who might just want to see how it feels being an Amazon seller, the second is meant for more advanced sellers. However, as soon as you want to use more features like the option of creating listings in bulk or using Amazon Advertising you will need to use the Professional plan.
Another difference between the two plans is the costs. While you pay a monthly fee of $39,99 for Professional, you will be charged $0,99 per item sold for Individual. So, if you sell 40 or more units per month you are better off picking the monthly fee.
#2 Take Additional Costs Into Account
Amazon merchants have to pay several different fees like the ‘Category Referral Fee’. Depending on the category your products are listed in, you have to pay a percentage of the final price (including shipping costs and any gift-wrapping charges) per sold item.
If you sell a pacifier for babies with a final price of 5.99 you will have to pay Amazon 0.48 (That’s 8%). You can find an overview of all referral fees for 2021 on Amazon’s help pages.
Other Amazon seller fees include, for example, the high-volume listing fees or such for additional programs like Amazon FBA.
A tool that may seem interesting to you as an Amazon seller is the profit or margin calculator. Just insert your costs of the good, your listing price, the category, and the fulfillment method. Be cautious though! This is not reflecting your actual profit! Additional costs, like fees for the Amazon seller program FBA or your seller plan, are not included here.
#3 Find the Perfect Product to Sell
Pick a product that will gain you maximum profits with the lowest effort. While this sounds like the dream of every seller on the planet, there are some conditions your product should hit in order to become the product of your dreams:
- High demand and low competition
- Low costs and great margins
- Small and light
- No seasonal but steady demand
How Do You Find a Perfect Product?
Finding the next trends can be a bit tricky and may seem like magic. Nevertheless, there are some tools that can help you. A free version is Google Trends, for example. It analyzes search inquiries for specific regions and languages and can give you some insights into upcoming trends.
Another tool specifically for you as an Amazon seller is Trendster by Helium10. Here you can analyze a product that you are interested in. It will tell you about the product’s demand, pricing and competition in order to help you identify market trends.
Check the Competition
Once you have found a product with great demand you need to check the Amazon seller side. How many sellers offer this product already? Which price do they set? Is it a very competitive market? If there are few sellers, this product might be worth a try. But if there are already hundreds of offers, you may want to stay out of the competition.
Calculate Potential Profits
If you think the product you’re interested in is a good investment, try to estimate the profits you’ll make by comparing competitor prices to the costs you’ll incur when selling it. In order to maximize profits as an Amazon seller (or a seller in general) try to keep your costs as low and the price as high as possible. Obviously, be realistic here and take customers into account. You will most likely not sell a fork for $5,000 successfully. If you want to set your prices according to the actual demand, a dynamic repricing tool can help you.
By the way, setting the right price is a topic for itself. If you sell your product too cheap, it will not be profitable. If it is too expensive on the other hand, capital lockup is extremely high. The rule of thumb is to set a price between 10 and 30€. In this price range it is also easier to sell, as it encourages spontaneous shopping.
An easy way to cut costs is picking products that are small and lightweight. You will need less packaging material and shipping costs will not go through the roof either. As an Amazon seller you can also use FBA, meaning that Amazon will fulfill your orders for you. Picking a product that is small and light will also keep your FBA fees under control.
Analyze the Potential Demand
Last but not least: Find a product that is not seasonal like Christmas decorations. You need a steady income, so sell products with a steady demand. In the case of Christmas decorations, it is quite obvious that the demand will be highly seasonal. But what about beachwear? Let’s look at Google Trends:
This screenshot shows how often people searched for ‘bikini’ in Germany within the last 12 months. You can see a definite increase in spring/summer. Taking into account the weather conditions in Germany that is what we would expect to see. The demand for beachwear is rather low when temperatures are low.
Now let’s look at Australia in comparison:
While there still are some changes over time, the interest for the same keyword is much more steady than in Germany. Australia is known for its beach culture and warm weather. It’s reasonable to expect a much more steady demand for beachwear then.
#4 Amazon Seller Wholesale vs Private Label
When you’re thinking about which product to sell, you should also think about how you want to sell it. You basically got two options here: You either resell third-party products (e.g. a bikini from bonds) or you create your own brand. Of course, you can also do both but if you are just getting started with your Amazon journey we recommend you only pick one. You can always expand your business later.
Let’s have a look at some main differences between Private Labels/Brands and Wholesale.
- Capital: You will need a higher budget if you want to sell Private Label. Why? Selling your own brand means that you need to start from scratch: Source a product, develop a design and logo and raise awareness for your product with good advertisement to only mention a few steps.
If you sell third-party products those things are already dealt with by the brand. Who doesn’t know Adidas, for example?
- Time/Effort: While one of the most exciting parts of selling Private Label is building your own brand, it is also one of the most time-consuming parts. We have said this in the paragraph above when we spoke about costs: You will have to develop a Marketing strategy including branding and advertising and put it into place.
- Responsibility: Selling your own brand may include importing goods into the EU or the USA. Make sure to be familiar with all regulations in regards to customs, liability issues, etc. If in doubt, better seek advice from local experts.
- Competition: As you are the only seller of that exact product if you sell Private Label you do not have to compete for the Buy Box. However, there may be great competition within the search results, which is why advertising will most likely be a necessary part of your daily business. If you sell third-party products and you are not the only seller of that product you will have to compete for winning the Buy Box.
Check our blog post for in-depth information about Wholesale vs Private Label for Amazon merchants.
#5 Start Selling on Amazon
So, you’ve got an Amazon seller account and a product to sell, it’s time to start selling! What you have to do now heavily depends on the choice you made regarding Private Label or Wholesale. If you chose the latter and another Amazon seller has created a listing for that product already, you can just add your offer to the existing page.
If you are selling your own brand, you will need to create a new product page. Here are few tips for creating new listings:
- Choose a meaningful product title
- Use Keywords in the title, the bullet points, the product description, and the backend
- Point out the benefits of your product and why it is better than your competitors’
- Take professional pictures of your product
- Use Amazon A+ content
If you need some further information, check out our post about Amazon SEO.
How Do You Maintain a Successful Amazon Seller Business?
So this is it: You have successfully started your own Amazon Business. Congratulations! Now it’s time to optimize and grow your business.
#1 Work on Your Amazon Seller Rating
It provides information about your ‘account health’. If your account is ‘sick’ you may lose the Buy Box or will be ranked lower in the search results. Hence, you will not gain as much profit as you could with a healthier account.
There are several metrics that Amazon takes into account when evaluating a seller’s performance. Always with one goal in mind: Offering the best customer journey possible. Here are some ways how you can improve your seller rating:
Ensure Great fulfillment
When a customer orders from Amazon, he or she has great expectations regarding the delivery: As quick as possible, no defects, no delays, the option to keep track of shipment, and extraordinary customer support.
At the end of the day, that’s what Amazon promises to their clients – and specifically to prime customers. In turn, this is what Amazon expects of any seller on the marketplace.
You have three options for your fulfillment:
- Do It Yourself (called Fulfillment By Merchant): In this scenario, you will take care of all steps yourself. You store the goods, prepare them for shipment, choose a shipping partner, deal with returns and customer inquiries. You are in full control of all processes but your products will not get the prime badge.
- Let Amazon Do It (called Fulfillment By Amazon): You pay Amazon to take over all those steps for you. Starting from storing your inventory over managing your orders and finally managing the returns. The prime badge will be displayed for your products.
- DIY and Get The Prime Badge (Amazon calls this ‘seller fulfilled prime’): You are in charge of your fulfillment. However, you have to hit some of Amazon’s criteria. Therefore, you have to undergo and pass a trial season in which the online giant tests if your skills are worth the prime logo. Amazon will also provide you a list of shipment partners you will be allowed to pair up with – others are not accepted!
Which method you should choose depends on your business needs and skills. Be aware though that an Amazon seller using FBA will be preferred for the Buy Box, as Amazon knows it can rely on its own fulfillment. To get started with Fulfillment by Amazon as a seller, use the login for the Seller Central and easily activate FBA for your products.
Also keep in mind that the Prime Logo will give you access to a huge target group. In April 2021 Amazon declared they had more than 200 Million Prime customers worldwide. Many of them filter the search results for Prime products. If your products are Prime eligible they will not be shown then whatsoever.
Amazon FBA as a Problem?
Even though Fulfillment by Amazon helps the seller to ensure the best fulfillment and customer support, there is also the other side of the medal. You can find several complaints about the service in the Amazon seller forum. As processes in the Fulfillment Centers sometimes get a bit confusing, problems like missing inventory may occur. However, detecting FBA mistakes can become quite tricky, as you have to compare up to 12 reports in order to find an issue.
Of course, you are eligible for refunds if there are problems with your inventory. In Amazon Seller Central you can request your refunds by entering the corresponding FNSKU. The reimbursement claim will then be checked by Amazon. In case your request will be declined, you can contact the Amazon seller Support team and try to hand in further details about the issue.
This manual procedure is rather slow and in most cases not as effective as it could be. But the right tools for an Amazon FBA seller can help ease up the process. SellerLogic Lost and Found analyzes all FBA reports in order to find hidden reimbursement claims and prepares all relevant information for you. In case Amazon does not accept your claim in the first place, our Customer Success Team will support you with the ongoing communication with Amazon.
The Importance of Amazon Seller Feedback
Let’s go on to another important Amazon seller metric: Reviews. Customer feedback is crucial for any online seller. Shoppers cannot test out the product they are about to buy like they can at a shop. Instead, they need to rely on what the seller says about the product. To be fair, this may not be the most neutral presentation of it.
This is where customer reviews come into place. Those represent actual customer experiences and help future shoppers to draw their own conclusions about the product itself but also about the Amazon seller.
The online giant knows how much shoppers care about product and seller ratings and therefore takes those metrics very seriously. If an Amazon seller gets bad reviews his or her seller performance goes down as well. Hence, the offers will not be ranked well in the search results nor are the chances of winning the Buy Box.
Now you may think, you should receive more and better reviews. If so, make sure to play by the rules! Amazon is strictly against any form of review fraud and has closed down hundreds if not thousands of Amazon seller accounts due to that issue. Check our video if you need more tips on how to get more reviews without risking your account being suspended:
Always Take the Right Pricing Decisions
The most important metric when it comes to winning the Buy Box is the final price. Although it’s rumored that the lowest price wins, that is actually not the case. Instead, the perfect combination of the final price and the other metrics will be rewarded with the Buy Box. So, you might actually be able to sell at a higher price than another Amazon seller on that listing.
Let’s look at an example. Seller A has great metrics, delivers on time, with next to no defects, and sets the price of 5,99 on Amazon. Seller B, on the other hand, sets a price lower than that but lately only a few of his deliveries were on time. When confronted with that issue by customers, seller B was unfriendly and didn’t answer customer inquiries within 24 hours. Even though this seller undercuts seller A, the Buy Box may still be given to A, as the overall performance is better for the customer.
If both sellers now have the same rating, the price will determine who wins the Buy Box and any price change might change who is the winner. Let’s assume seller A wins the Add to Cart field with a price of 5,49. Now seller B undercuts that price by 0,50 and the Buy Box will move over to B.
This is common practice for most Amazon merchants. There are millions of price changes every day on the marketplace. If you want to win the Buy Box you need to check and adjust your prices 24/7. In most cases, this is impossible, which is why we recommend using a repricing tool for every Amazon seller.
You can find in-depth information and further criteria for a healthy account on Amazon in our post.
#2 Accept Amazon’s Terms and Conditions and Play by the Rules!
This might seem a bit out of place here, but the Amazon seller Policy is of great importance and should not be left out. When you sign up to become an Amazon seller, you have to accept the terms and conditions. Any violation may result in your account being deactivated or even closed down. If you want to learn more about how to prevent it check our 6 tips on how to avoid suspension of your Amazon seller account.
Amazon’s seller Code of Conduct as well as all policies on the marketplace ensure safer and better shopping for customers.
#3 Get Help From the Right Tools
Maintaining a successful seller business on the marketplace takes a lot of time and effort. But here’s some good news for you as an Amazon seller: The right tools can help you save time and money!
You will be overwhelmed by the sheer volume of tools that promise you to become a more successful seller. However, not every tool is suited for every situation. If you are only using FBA and your supplier sends your products to Amazon’s Fulfilment Center straight away, an inventory management tool will not ease up your life whatsoever.
However, there are some tools that we think every Amazon seller should use, in order to maintain a successful business:
- An Analytics tool,
- a dynamic Repricer and
- (for FBA sellers only) an FBA reimbursement tool.
With these three tools, you’ve got the basics covered. Use your Analytics tool to observe the market as well as your own performance and find out how you can improve. Tools like Sellics also offer functions like SEO-optimization, PPC Management, and Product Research.
No matter if you are selling wholesale or Private Label, a dynamic repricer can help every Amazon seller. We pointed out before how important it is to always set the perfect price. But as this task takes up way too much time to do manually you should get a repricing tool to set your prices according to your wishes automatically. A good repricer should offer different strategies for you to choose from, so you can make sure it fits your business goals.
Last but not least every Amazon FBA seller should use an FBA reimbursement tool. Otherwise, you lose your money! On average sellers lose 6,480.90 € every year from unclaimed reimbursements. While you have enough time for other important jobs, the software analyzes all your reports and finds claims up to 18 months retroactively.
Unfortunately, we cannot go into detail at this point but you can find more information about Amazon seller tools here.
It takes a lot to become and maintain a successful Amazon seller business. You need to plan the costs, pick a seller plan, find a product, analyze the market, etc. All of this just to get started. Once you’ve got everything set up, you have to grow your business. A lot of new jobs like working on your seller metrics will come into place then.
Even though this is a whole lot of work, it can be worth it. At the end of the day, Amazon is the go-to address when it comes to online shopping and has immense potential for brands and retailers.
Make your life easier by getting help from Amazon seller software tools, that will save you time and money. However, ensure that you only use the tools that you actually need. Otherwise, you will pay for nothing.
Frequently Asked Questions (FAQs)
People selling on Amazon have to face several fees for their activities on the marketplace. There are a lot of different fees for Amazon sellers like the fees for the professional selling plan. Additional fees are the ‘category referral fees’ which will be charged as a percentage per sold item. If you want to use extra services like Amazon FBA, you will also be charged fees for that.
Amazon charges their sellers an extra fee per sold item, called the ‘Referral Fee’. Depending on the category the product is sold in, the fee lies between 5 to 45% of the final price.
No. You have to pick between two plans: Basic and Professional. With the Basic tariff, you will be charged 0,99 per sold unit plus the referral fee. The Professional option costs 39,99 per month plus referral fee but you will not be charged extra per sold item.
In the Amazon Seller Central merchants can manage their Amazon businesses. This is where you create listings, manage orders and inventory, as well as your Amazon Advertising or FBA. Everything that affects your business on Amazon has to be organized in the Seller Central.
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