Although Amazon has made its marketplace welcoming for newcomers, starting as a new seller can be extremely overwhelming. It only takes a few minutes to sign up and a couple of more to get the product listings live on Amazon.
But the idea of which business model suits the best for me, getting products sourced, shipping, and packaging, among other aspects, makes it look like a daunting task. But, if you have the right guidance then getting started on Amazon isn’t that difficult as it sounds.
In this ultimate guide, we will walk you through the entire process.
Let’s get started.
Choosing the Right Amazon Business Model
Amazon offers different business models to sellers to choose from. They include retail arbitrage, online arbitrage, private label, and wholesale selling.
You need to choose the business model that suits your style and preference.
- Retail arbitrage or reselling is the process of buying products from a retail store at a low price and selling them on Amazon at a high price to make a profit. With retail arbitrage, you are basically flipping the merchandise, leveraging the market inefficiencies. If you are selling retail arbitrage, you need to find clearance items on sale from sources like Walmart, Target, Home Depot, etc. at a lower price and sell them on Amazon at a higher price. The key is to buy low. It is very entry-level and doesn’t require any minimum investment to start. However, it is one of the tedious ones since you have to storm store after store to find clearance items on sale, which is often time-consuming.
- Online arbitrage is similar to retail arbitrage, but you find clearance items on sale online. There are plenty of Amazon business tools available to make your online product sourcing easier. With these tools, you can easily find a profitable product without having to physically visit every store in your locality.
- Online arbitrage is the best way to expand your inventory, and you can source at any time. The products ordered can be directly shipped to Amazon FBA warehouses with proper packaging. However, you need to be cautious of the product quality since it may not match the listing. Moreover, there is also the possibility of ending up with too much inventory.
- Private label selling is the most preferred Amazon business model due to the fact that it allows you to establish yourself as a brand. It works in a way that you buy a product and then rebrand it make it your own. In most cases, products are sourced from China since it is the biggest resource for Amazon sellers. The products are generic, so you have to rebrand it with your logo, name, and market it as a brand. If you are able to find a less competitive niche, you can make a fortune out of your private label selling. One of the biggest pros of private label selling is that you can have multiple product lines under a single brand with more control over the prices.
- However, it requires a decent investment. For starters, you have to buy products in bulk and spend generously on marketing your product. The success and failure of your private label selling depend on your product. You need to pick a winning product. Here, you have to take the help of a quality Amazon seller tool like SellerMotor. It can help you find products that are high in demand but low in competition. After picking a product, research on it, basically its flaws. This will allow you to customize your product according to your customer requirements.
Sign Up for Amazon FBA
Now that you have picked a business model to start selling on Amazon, you need to sign up for the most lucrative Amazon platform – Fulfillment by Amazon (FBA). It is the best way of doing business on Amazon, as everything from storing your inventory to shipping your product, handling returns, etc. are done by Amazon itself. Here is how it works:
- You send your inventory to an Amazon FBA warehouse. The fulfillment centers are spread in acres and store millions of products.
- Your products are sorted according to the product category, and if anything happens to your product during handling, Amazon will reimburse the price of the damaged product.
- When an order is placed, everything is handled by Amazon, including the transaction.
- The dedicated Amazon staff will pick your product from the shelf, packs it into the Amazon box, and ships it to the dedicated address on your behalf.
- Once your customer receives their order, Amazon will perform a follow-up with the customer to ensure that they are happy with the product and service.
While Amazon does all the tedious chores, you have to work towards improving your business strategies in order to survive the competition.
You will have to:
- Pick the right products. As a beginner, you will find hundreds of sellers selling the same product. It doesn’t matter whichever business model you choose, if the product you pick is weak, then you have no chance of success. You need to pick a product that will actually generate sales.
- Optimize your listings. Your product must appear at the top of the Amazon search engine results. For this, you need to optimize everything from your Amazon SEO, product title, product description, product features, product images, etc. Here, you will have to strategically place profitable keywords everywhere so that it can attract your target audience.
- You will always have to keep your inventory in stock based on the demand. You would not want to lose customers just because you ran out of inventory.
- You will have to go the extra mile when it comes to marketing your product(s). You would not want your product to get lost among the millions of other products. In order for your product to reach the right audience, promotion and advertising are important. You can leverage Amazon PPC to get your product noticed. It requires a little work, but it is possible.
As a beginner, you need to do a little research on how Amazon as a marketplace works. While doing so, it is extremely important that you choose the right business model to sell your products. Each Amazon business model is different, so you need to work accordingly. Using the right set of tools can help you make informed decisions.
This was our beginner’s guide to selling on Amazon FBA. If you have any queries regarding the topic, feel free to ask.