7 Things You Need to Know Before You Sell on Amazon

Selling on Amazon may be easy, but it isn’t always a piece of cake. Whilst anyone can create a seller’s account and start advertising their products, making money requires considerable effort. There are millions of sellers competing for a slice of the action on Amazon. It’s not rocket science to figure out that you need more than good luck if you want a reasonable piece of the pie. Here are some of the key things you need to know before you start selling on Amazon.

#1. Understand the Power of the Buy Box

The Buy Box is where the big money is. When a customer clicks on a product page, they have the option of clicking on a Buy Box to see what’s available from other sellers. If your products end up in the Buy Box, there is a good chance that the customer will buy yours over a competitor’s, as long as the price is right. There are many factors that determine which seller wins the battle of the Buy Box. These include pricing, seller history, the number of positive reviews, and how many other offers there are. To maximize your chances of success in the Buy Box, read on.

#2. Choose Your Niche Wisely

Climbing to the top of the pile in a highly competitive niche is nigh on impossible unless you do something to stand out. For many sellers, this involves slashing their prices to the very edge of profitability, but as any savvy retailer knows, embarking on a race to the bottom only benefits the customers. To build a successful business in a competitive niche, you need to do one of two things: sell something unique or be extremely competitive in your pricing. For reasons already discussed, we recommend the former. A far better approach is to avoid a competitive niche like iPhone cases or console games. Instead, drill down into a less competitive niche and find one that’s popular, but not as well serviced. Alternatively, create your own niche if you think there is a demand for your products.

#3. The Approach

There are a number of business models for selling on Amazon. The most effective strategy for new sellers is to look for gaps in the market, the source of cheap products from overseas, and sell them on Amazon. If you can identify a product or niche that isn’t been serviced on Amazon, you can easily build a decent level of sales within a few months. This has the added advantage of building your seller ranking, which boosts visibility further. Building your seller ranking is the key to success on Amazon. Your products won’t be promoted unless you have a good seller ranking. This is where positive feedback really makes a difference. The downside to this approach is that it won’t take more than six months for other retailers to spot that you’re doing rather well selling cheap blue widgets. They will target your products and source cheaper ones to undercut you. This is when you should move on. Always be on the lookout for profitable gaps in the market or underserved niches. If you can evolve to suit the market, you will always be generating profit.

#4. The Benefits of FBA

FBA or Fulfilled by Amazon lets you sell on Amazon without the hassle of maintaining an inventory. Your stock is held in an Amazon fulfillment center and when an order is placed, Amazon ships it out. This offers several advantages. Your products are available to Amazon Prime members and Amazon gives FBA sellers a boost to earn greater visibility. The downside is that you have to pay for the privilege of letting Amazon handle your inventory. You’ll also discover that Amazon alerts other sellers when your stock runs low, so they can compete for the same customers.

#5. Stick to Better Quality Products

Amazon is not the platform for cheap products costing less than $10. Amazon fees are quite significant and cheaper products don’t qualify for cheap shipping, so you will find it hard to make money. Fees are calculated based on the weight and size of a product, so the best way to make money is by selling more expensive items that are reasonably light and small. Tech gadgets are the most obvious category that fits these criteria, but you will soon discover that competing with cheap Chinese imports is a non-starter. Instead, research other niches, as already discussed, and once you find a product that looks like being a good fit, try sourcing it at a competitive price. Alibaba makes sourcing products from overseas a dream, but don’t be swayed by cheap headline prices. Most big discounts are only applicable to bulk orders, i.e. more than 1,000 pieces. Remember that cheap products are cheap for a reason, so given a choice, elect to sell better quality products at a higher price, or your feedback rating will suffer.

#6. Cut Your Costs

It is very important that you keep your costs as low as possible. One way of doing this is not waiting for Amazon to correct their mistakes. If your inventory has damaged or missing goods file a case with Amazon with all the necessary attachments. On the other hand, if you don’t have time to do this yourself you can use a third-party seller tool. For example, AMZRefund is a tool that can help with refunds and save you time and money. In the end, always watch out for incorrect shipping costs reimbursed by Amazon. Surprisingly they often make mistakes.

#7. Read Amazon’s Policies

Don’t get caught out. Read Amazon’s selling policies and stick to their T&Cs. If you fall foul of their guidelines, your seller account will be terminated immediately. Amazon frequently adopts a policy of terminate now, ask questions later. Don’t let this put you off. Selling on Amazon can be very profitable if you tackle the process in the right way!

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