7 Things to Consider Before Becoming a Seller on Amazon Selling on Amazon can be an amazing opportunity for an ecommerce business, but there are some things sellers need to know before they jump in.
By Ruslan Fazlyev Edited by Amanda Breen
Opinions expressed by Entrepreneur contributors are their own.
From the first item sold online in 1995 to becoming the largest online retailer, the growth of Amazon has transformed how we do business and how we shop. The typical ecommerce company needs its own website to draw in customers, sell products, ship orders and provide support. A seller listing products in the Amazon Marketplace, on the other hand, accesses both an array of Amazon services to facilitate sales and its mass supply of users.
In the U.S. alone, 150 million users made Amazon the most popular shopping app by a landslide, and small and medium-sized U.S. businesses on Amazon sell more than 4000 items per minute. But, while it opens doors to opportunities for everyone, not everyone finds success on the other side. Libraries of books exist to teach you not only how to sell, but also how to make money on Amazon. If you're thinking about getting into bed with Amazon, here are few things you should know.
1. Amazon has a lot of fees
Amazon needs to make money like any other business. For every income opportunity offered, expect there to be something in it for Amazon too. Their Fulfillment by Amazon (FBA) program, for example, gets your product to more customers, but setup, receiving and storage can cost hundreds, or even thousands, of dollars in fees. Find out exactly what Amazon will charge to get your products to your customers before you sign up so that you can recalculate your profit margins rather than being surprised by them down the road.
Related: What Comes Next for Ecommerce and Digital Retail?
2. Competition is fierce
With 1.5 million active sellers and counting, competition is inevitable on Amazon. It's essential that you make an effort to stand out. Take your unique seller information and research the Amazon Marketplace to find your niche. If you're building a brand, file for trademarks on your brand name and notify the Amazon Brand Registry to protect it. If you want volume, get ready for a price war, but still, standing out from your competitors can give you that extra advantage to come out on top.
3. FBA always wins
The Fulfillment By Amazon (FBA) program lets you store your product in bulk at Amazon fulfillment centers, where they handle shipping your orders for you. As a perk, your product is listed as Prime Eligible, accessing a pool of more engaged shoppers. Your order volume will skyrocket, but at a cost. The FBA fees bring down your margins. So, while you may end up preferring to fulfill orders yourself and make more money, you can never compete with your own FBA listing. This can take away your independence as a seller, so consider it carefully before you sign up.
4. All buyers like a unique selling point
When the process of purchasing provides a better experience for your customers, even on Amazon, this unique selling point (USP) can determine if they shop with you or a competitor. Whether it's a witty product description, free bonus or better warranty, something in your selling point should make your customers love buying your products. Read reviews or ask for customer feedback, then use this insight to figure out why people choose your products. Embrace this USP as part of your brand.
Related: What Is the Secret of Amazon's Huge Success? Jeff Bezos
5. Amazon is global
Your customers are anywhere your product is needed, so think beyond the borders of your own country. No matter where you are, Amazon can ship your products anywhere, which means there are places where you could be selling, but aren't. You have the ability to access more consumers and bring in more sales, so do the work and research potential international markets to make the most of what Amazon has to offer.
6. Listing doesn't guarantee a sale
Amazon makes it easy for anyone to list a product, and anyone, in theory, can find it, but Amazon is huge, and listing a product doesn't mean it will sell. Don't expect to go from zero to hero just by creating an account and listing your product. Use the tools mentioned above to research the search and sales volume of your competition. Optimize your listing. Run ads through Amazon's advertising platform. Sales will come from the efforts you put into making them.
Related: 4 Pillars of the New Ecommerce Frontier Entrepreneurs Need to Embrace
7. Opportunity abounds on Amazon
Even given all the hoops you have to jump through, the biggest benefit of selling on Amazon is that it really does offer amazing opportunities for anyone willing to put in the work. If the margins and competition don't drive you crazy, the volume, scale and resources available are unmatched. It might be the perfect marketplace for your products, but with so many options, tools and services available, take the time to research them all to find what fits best for you.
Not every ecommerce business lists on Amazon, and not every Amazon seller has his or her own ecommerce site. Both are viable options for conducting businesses online, but stay alert to new opportunities for growth that come with emerging technologies. If the first 30 years of Amazon have taught us anything, it should be to pay attention to the new ways of doing business because the next one might be exactly what your business needs to thrive.
