Adaobi Silva

A Complete Guide to Making Money via Amazon. Amazon is noted to be the world’s biggest online retailer. Not only is it the fastest growing global ecommerce market, it is also a great avenue to make money. Its share of e-commerce market as at the year 2021 is expected to reach 50%. And with this, the number of third-party sellers on Amazon keep on increasing. Amazon provides a great opportunity for those who are ready to enter into e-commerce. It is time for you to get onboard as well and make money. This article delves into the ways in which one can utilize Amazon and make money. It also touches on the process of selling on Amazon FBA, pricing and the capital needed to commence into this market. Selling on Amazon FBA Amazon notably has one of the best fulfillment networks worldwide. With the Amazon FBA (Fulfillment by Amazon) program, you are allowed to sell on Amazon, and without having to take care of the fulfillment. Once the items are in Amazon’s fulfillment centers, and a customer orders for an item, Amazon picks, packs, ships, as well as tracks the item order for you. Order returns, refunds and customer service are also included in this program. All these however, come at a price. Amazon charges fees for inventory storage space and order fulfillments. An added benefit of the FBA is that there is no charge for Amazon prime members, who enjoy two-day shipping. With the Amazon FBA, you are sure of scaling your business and getting access to more customers. However, let’s consider the necessary procedures to take in other to start selling on Amazon. How to Sell on Amazon To begin your journey to selling on Amazon, the first thing to do is to set up a seller account. You do this by going over to Amazon Services and clicking on the ‘Selling on Amazon’ link. Then you select between ‘Sell as a Professional’ or ‘Sell as an Individual’. Amazon charges for both options. As a professional seller, you get charged $39.99 per month whereas as an Individual, it costs $0.99 per sale made. If you are a beginner, it is best to start selling s an individual. The next step is to fill out the required information and enter in a credit card that can be charged internationally. The most common being the Visa or Mastercard. If you are signing up from outside the United States, you will be required to use a local bank in your country that supports ACH (Automated Clearing House) to enable you receive electronic transfers from Amazon. Your home address for receiving your personal mail and your local phone number with your country’s prefix will also be required. In addition, you will also need to get a US Employer Identification Number (EIN). Having set up your seller account, you need to understand exactly how the Amazon FBA program works. How does Amazon FBA Work? Once you have decided on your niche and the items you want to sell on Amazon, you then add these items details into your Amazon account including details such as their titles, images, prices, descriptions, and all other specific information as may be required by Amazon. After your items are listed, they are packed and shipped to an Amazon FBA warehouse. Once the items arrive at the warehouse, Amazon does a verification and sorts your inventory ensuring the items were properly delivered and in good conditions. After this sorting, and making sure the items have been properly entered into the Amazon database. The items listing gets activated, and once activated your seller name becomes visible on the items detail and then you can begin to sell your items. When an order gets placed, the item is then immediately processed and prepared for shipping. Amazon takes care of the fulfillment and the order can be shipped as Prime Two-Day Shipping. When it comes to Amazon FBA, for the first 14 days after you start as a seller, Amazon settles your account and every two weeks you get paid. The Amazon FBA program has it benefits. It is convenient for you as a seller since Amazon takes care of the storing, shipping, customer service and even returns and refunds thereby freeing you up to focus on sourcing for your items, generating sales and growing your business. Also, your customers on Prime Membership enjoy the Amazon Prime Two-Day Shipping. After taking a look at Amazon FBA and how it works, it is time to look at the cost involved. What is the Cost of Selling on Amazon FBA? Amazon FBA is pretty cost effective. If you are registered as a professional seller on Amazon and you are paying the monthly $39.99, then you can avoid the $0.99 per item fee charged to individual sellers. It is advisable that if your items monthly exceeds 40, then registering on Amazon FBA as a professional seller is the best option. However, if your items per month is going to be less than 40, it is best to start as an individual seller. There is also the Amazon Referral Fees. Sellers are required to pay a referral fee on each item sold. This however depends on the nature of the item being sold. For instance, when it comes to Music, Software & Computer/Video Games Amazon charges a 15% referral and for Personal Computers 6% referral fee. These fees eventually add up over time, hence it is advisable to sync up your Amazon listings using an ecommerce platform so as to sell your items both from Amazon and your website. Also, these ecommerce platforms help you sell on various social media channels like Facebook, Instagram, and others. How to Choose Products to Sell on Amazon. Making money on Amazon, depends largely on the type of product you decide to sell and also how distinct your brand is. When you engage in the sale of simple commodities, it is going to be very difficult to make your brand stands out from that of the other sellers. The necessary strategy to employ in this case is private label. You need to create private label products. This is done either by creating your very own custom products or by rebranding an already existing product. By rebranding, this is the case where products created by third-party producers, gives you the option to sell these products under your very own brand name in addition to your personalized logo. This private label method is the most advisable strategy and the reasons below are proof. What are the benefits of Amazon Private Label Products? 1. Relieves the stress of sourcing for products When it comes to private label products, you get to source for and obtain a large quantity of products and at no stress. 2. Price Control When you adopt the private label method, your Amazon listing becomes your direct responsibility. And in this case you have control over the price of your products. 3. Better Return on Investment (ROI) Another great benefit of the private label method is that it is best for predicting sales on the Amazon FBA. This is because you have more control over your brand image and eventually gets to decide the price at which to sell your products, thereby enjoying a better Return on Investment. How to Price Products for Amazon Seller Central In picking the right product, consider the product that will yield substantial profit and one which can accommodate your ability and the brand image you are trying to put out. The simplest way to begin creating product ideas is to determine the type of product you are keen on and do well to check products where the companies have their sponsored listing. This is because, instances like this show that the brands are more than eager to spend cash on these products with the goal that it might be a good sign of Return on Investment. 1. Using Product Research Tools The product research tool you decide to use influences your search on the right product to sell on Amazon. The purpose of these product research tools is to help you filter through products so as to determine which best suits your selected category. AMZ Scout, Unicorn Smasher and Jungle Scout are some of the best product research tools to use for Amazon. The mistake that most sellers on Amazon make is pricing their products either too low or too high. When the price of your product is too high, buyers are likely not going to consider buying your products. And if the products are too low, it may diminish the perception of your brand’s image. You however will generate lots of sales but then it would not be enough to maintain profitability because your profit margin has been reduced. 2. Understanding your Gross Margin and Cost of Goods Sold When you begin to understand your gross margin and the cost of goods sold, then you should as well understand the price point that gives rise to your competitiveness and profitability. When you see gross profit margin, it simply means the amount gotten when cost of goods sold (COGS) is subtracted from total revenue, divided by total income. The top number in the equation, which is the gross margin, is the total number of revenue minus the cost of goods sold (COGS). However, this is what the formula looks like when it comes to Amazon: Gross Profit Margin = Total Revenue – Cost of Goods Sold (COGS) – Amazon Referral Fee. After all Amazon fees and associated costs have been deducted and you can still maintain a 20-30% margin, then you are good. So, endeavor to check the category of your Amazon product referral fees products, and be sure you have a perfect understanding of your cost of goods sold (COGS) when you are about to conclude your pricing method. 3. Keep a Close Watch on your Competition As a seller, when selling in a competitive market like Amazon, you should sell your products at the same price as your major competitors or a bit lower. It is paramount to never forget and ensure you consider the Amazon storage fees. In this instance, you can reduce prices to secure your position with Amazon. There is no pricing manual when it comes to deciding a pricing strategy in Amazon. So, try to experiment a bit and ensure there is minimal risks involved before you delve full force. Always remember to keep profitability and sustainability in an equal footing/balance. How Much Money do you need to sell on Amazon. When it comes to Amazon and selling on Amazon, you do not require a lot of money before starting your sale. Though once you start selling on Amazon, there are certain areas you are bound to most likely spend money. 1. Inventory Your inventory at the start of your Amazon selling can either make or break your journey as an Amazon seller. So it is crucial to make the right choice of products to deal with. The price range of $150 - $500 is a good start for the cost of your inventory once you begin. In so doing, you are guaranteed enough stock to last for a while instead of just quickly running through your inventory. Make use of the Amazon FBA calculator to estimate the value of your chosen products in the long run. That is after the operational fees has been deducted by Amazon. This ensures you having a substantial profit potential. The Amazon Seller App is also a good tool to use in anticipating such a profit. Instead of going ahead to use all your money in one product that might not be profitable in the long run, it is always good to go with at least two to four copies of about 20 distinct products. 2. Cost of Setting up an Amazon Account As has been stated earlier, you will need to set up an Amazon seller account. Here, you decide whether you want to sell as a professional or an individual. If you decide to sell up to 40 products and above, the professional seller account is the best option and Amazon charges $39.99 monthly whereas for the individual seller account, Amazon takes $0.99 for each item sold. 3. Cost of UPC Codes In generating an Amazon proprietary barcode ‘FNSKU’, the use of UPC is vital. The FNSKU is a mandatory code which is printed on your product package. And to get this FNSKU, a Global Trade Identification Number (GTIN) will be required by Amazon’s TOS. The intial registration cost is at $250 with an additional yearly $50 renewal fee. 4. Product Imaging When it comes to increase in sale of products, image quality plays a very important role. It is to your best interest to ensure your products are properly photographed. 5. Branding, Logos and Trademark If you have adopted the private label method and are a private label seller, getting a registered trademark is paramount. You also need to create an outstanding brand and design a company logo to appear more professional. In conclusion, Amazon gives you the best option to make money. Follow the guidelines, do your product search and begin to make money.