How to Sell on Amazon

Why an Omnichannel Mindset is Important for Your Business

As online sales grow, businesses are adopting an omnichannel mindset, integrating multiple channels like brick-and-mortar stores and online platforms. This approach ensures every customer touchpoint is accounted for, allowing for consolidated and streamlined business operations, including Amazon sales.

Things to Consider Before Selling on Amazon

Is your business a good fit for Amazon?

Assess if your business and product types are suitable for Amazon's marketplace. Conduct thorough product and keyword research. While Amazon has a vast audience, competition is high, so ensure your business can stand out.

Almost anyone can list products for sale on Amazon.

The ease of listing products on Amazon leads to significant competition. Analyze your competitors and determine if your business can effectively compete and outsell others.

Amazon wants sellers to use Fulfillment by Amazon (FBA).

FBA automates order fulfillment and shipping. While optional, Amazon prefers sellers use FBA. Be aware that Amazon's terms of service may affect specific delivery models.

Amazon owns the customer relationship, not you.

Understand that Amazon manages the customer relationship. This can be beneficial due to Amazon's reputation, but if your business relies on unique customer interaction, selling on Amazon might not be ideal.

The Different Business Models for Selling on Amazon

• Reseller: Involves retail arbitrage, buying low and selling high on Amazon. It's fast but time-consuming.
• Private label seller: Sells third-party produced products under their own brand name, leveraging larger markets.
• White label selling: Adds a brand name to generic products, saving on manufacturing and design.

Determine Your Amazon Selling Strategy

There are two primary ways to sell on Amazon:

1. Sell directly to Amazon.
2. Sell on Amazon yourself.

Consider the following when determining your strategy:

Sell directly to Amazon.

This approach aligns with Amazon's growing direct catalog. Amazon handles forecasting and marketing, reducing the burden on new sellers. Items sold directly by Amazon often sell faster and at higher prices.

Selling on Amazon.

Selling on Amazon yourself can be a starting point or a complement to selling directly to Amazon. It can help maintain competitive pricing and prevent stockouts due to algorithm changes.

Digital Goods

Amazon is a strong platform for selling digital goods like music, software, eBooks, and podcasts, with dedicated marketplaces like the Kindle store and Amazon Music.

Services

Professional services, from appliance repair to auto mechanics, are also lucrative options on Amazon. Ensure your service offering aligns with market demand.

Who is your customer?

Identify your target audience and their location. A solid customer base is crucial for success.

What are you capable of?

Honestly assess your business capabilities and avoid over-ambition. Understand your constraints.

What is best for your product?

Determine your product's goal and category. Research Amazon's categories to find the best placement for profitability. Specificity can help, but avoid getting lost in the shuffle.

What is your positioning?

Understand your market position and whether there is demand for your product. Analyze best-selling products and categories to gauge market potential.

The Multiple Costs When Selling on Amazon

• Direct costs: Acquisition costs per SKU, including shipping, manufacturing, or purchasing.
• Indirect (overhead) costs: Warehouse costs, utilities, insurance, bookkeeping, payroll, business travel, corporate tax, product samples, and web development.
• Amazon fees: Sales commission, fulfillment fees, selling fees, FBA fees, FBA inbound shipping fees, commission on returned products and refunds, storage fees, and return shipping and disposal costs.
• Handling returns: Costs incurred from write-downs or write-offs of returned products that cannot be sold as new.

Identify Trends That Can Cost Money

Returns.

Monitor return rates and associated costs. Some products may have high return rates, while others are write-offs. Consider pushing some return costs onto suppliers.

Stockouts.

Prevent stockouts by managing inventory effectively. Consider increasing customer demand, seasonal variations, and supplier complications. Building a buffer stock can help but incurs storage fees if products don't sell.

Changes in Demand Resulting from Competition.

Monitor sales volume, price changes, and sales velocity. Adjust pricing based on competition and consider diversifying your product portfolio to mitigate risk.

Ecommerce Business Metrics You Should Know

Key Performance Indicators (KPIs) are vital for evaluating business success. Important KPIs for Amazon include:

• Inventory to sales ratio: Indicates overall inventory health and sell-through rate.
• Inventory turn: Measures how often inventory is sold and replaced. Low turnover suggests poor sales or excess inventory.
• Gross Margin Return on Investment (GMROI): Evaluates inventory profitability. A GMROI greater than 1 indicates profitable sales.
• Cash-to-Cash Cycle: Measures the time it takes for invested capital to convert to cash through production and sales. A longer cycle ties up cash flow.
• Days of Inventory (DOI): Shows the average number of days an item is held before sale, crucial for managing order quantities.

How to Sell Successfully on Amazon

Key steps to selling successfully on Amazon include:

Utilize Amazon Seller Central.

Amazon Seller Central is a portal for managing your Amazon business, including your selling account, product information, and payments. Understanding its features is invaluable.

Optimize your product detail page.

Optimize your product detail pages for Amazon's organic search results. This is crucial as most sales originate from product searches.

Set your pricing correctly.

Accurate pricing is essential to avoid losses or unsold inventory. Aim for profitability and maximizing profits by considering all costs.

How to calculate your Amazon floor price

Determine your floor price by considering costs such as product acquisition, shipping, customs, payment wiring, Amazon commissions, FBA fees, customer return fees, returns-related fees, and variable overhead allocation costs.

How to find your upper price limit

To rank on page one of Amazon search results, evaluate competition by searching keywords and reviewing pricing. Ensure your prices are within a reasonable range, not exceeding the highest price on page one by more than 20%.

Keep your prices stable.

Stable pricing builds customer trust and a sustainable brand. While cutting prices may be necessary, focus on achieving organic sales with a decent profit margin.

How to Drive Traffic to your Amazon Products

Effective strategies to drive traffic include:

• Build an email list: Collect customer emails through website sign-ups or packaging to boost sales.
• Run targeted Facebook ads: Utilize Facebook Ads to reach specific audiences and drive traffic to your product pages.
• Use Amazon Sponsored Product placements: Bid on relevant search terms to increase impressions and page views.
• Point all product links to Amazon: Direct traffic from your website, social media, and email newsletters to your Amazon product pages to improve search ranking.
• Get your products in the hands of influencers: Collaborate with YouTubers, bloggers, and social media influencers to generate reviews and increase visibility.
• Maximize your product packaging: Use packaging to advertise your business, offer discounts, and encourage customer reviews and word-of-mouth marketing.

Create effective Google Ad campaigns.

Google Ads is a powerful tool for promoting products on Amazon. Focus on brand names and long-tail keywords for specific campaigns.

Craft exceptional product detail pages.

Optimize product detail pages with clear titles, informative descriptions, featured offers, high-quality images, and step-by-step guides for complex products.

How to Get Real Amazon Product Reviews

Authentic product reviews are critical for conversion rates. Strategies include:

• Email your customers after purchase and ask for reviews: Use tools like Feedback Genius to automate review requests.
• Use positive seller feedback to get good product reviews: Encourage customers who leave positive seller feedback to also write product reviews.
• Comment on reviews: Engage with reviews, especially negative ones, to build trust and improve conversions.
• Ask customers who email you for feedback: Politely request reviews from customers who express satisfaction.

How to Provide Outstanding Customer Service

Exceptional customer service is a key marketing tool on Amazon. Focus on:

• Start your customer service on your Amazon product page: Comment on reviews, answer questions in the Q&A section, and manage seller feedback.
• Answer your customers quickly and generously: Respond to emails within 24 hours, provide solutions in the first reply, and be generous.
• Be responsive on your social media channels: Engage with customers on social media with quick, helpful replies.
• Provide a FAQ section and contact form: Offer resources on your website to answer common questions and facilitate easy contact.

How Does BigCommerce Integrate with Amazon?

BigCommerce offers an easy-to-use, seamless integration with Amazon. This allows you to list products directly from the BigCommerce control panel, with centralized inventory management and order processing.

The Final Word

Don't be intimidated by Amazon's scale. With over 300 million active customer accounts and 1.9 million selling partners, selling on Amazon is more accessible than ever. BigCommerce can help you tap into Amazon's potential.

FAQs About Selling on Amazon for Beginners

• Is selling on Amazon free? No, Amazon collects a referral fee per sale, varying by product category (8% for appliances to 45% for device accessories).
• How much capital do I need to start selling on Amazon? Choose between the Individual Plan ($0.99/item) for fewer than 40 units/month or the Professional Plan ($39.99/month) for more than 40 units/month.
• What are the best products to sell on Amazon? Popular categories include Toys & Games, Electronics, Camera & Photo, Books, Clothing, Home & Kitchen, and Pet Supplies.
• Can small sellers sell on Amazon? Yes, as long as you can cover the required fees, you can sell almost anything using the Amazon Seller app.