If you have not noticed by now, the online retail market is dominated by Amazon.com. The e-commerce giant had nearly $178 billion (USD) net sales in 2017, according to Statista, a jump of close to $42 billion from 2016 net sales. These couple of sentences should have already convinced you to get on the train before it sets off without you.
With this being said, if your business isn't part of the Amazon.com marketplace, you would want to consider reading a long to find out how to set up your store and additional insights for your business. Hopefully we can help you start your new journey or help you grow.
How Much Money Do You Need To Sell On Amazon
There are currently five costs associated with starting an Amazon business. These figures can range depending on how much you’re willing to invest. This list is a good indication for what you will be needing and what we have used when first starting out:
Buying Initial Inventory ($150+)
Opening an Amazon Account ($39.99)
Buying UPC Codes ($5-$10)
Investing in Product Photography (Free – $300)
Creating a Logo and Product Branding ($20-$40)
Total Amazon Business Lean Startup Cost: $200 – $500
Opening up an Amazon Account
To sell on Amazon, you can go through the following steps:
Step 1: Go to Services.amazon.com
Step 2: Scroll down and click the “Selling on Amazon” link.
Step 3: Select between “Sell as a Professional” or “Sell as an Individual”. As a beginner we recommend selling as an individual. Amazon charges $0.99 per sale. For a professional seller account Amazon charges $39.99 per month.
Step 4: Fill out the required information and once you’re done then you’ve officially become an Amazon seller. It is that simple!
Read on to find out about the different ways to selling on Amazon!
Selling Through FBA vs FBM on Amazon
FBA means Fulfilled by Amazon, you sell it and Amazon ships it. The seller sends bulk products in Amazon’s fulfillment centers for Amazon to pick, pack, and ship products once sold.
FBM means Fulfilled by Merchant and the seller lists the products on Amazon while handling storage and all aspects of order fulfillment. You sell it, you ship it.
If you are just fresh out of the gate, you most likely do not know what direction you would want to go to. No fear, we came up with a list that you will need to ask yourself (or business) in order to evaluate picking between FBA or FBM. Here they are:
Can we ship at a low cost? Can increased shipping volume discounts translate into more profit?
How much per unit will it cost to ship units to Amazon? How popular is the item?
Will there be any additional monthly or long-term storage fees?
Can the increased price still compete with FBA to offset additional fees?
What will we be the ROI for both avenues of selling? (FBA & FBM)
Knowing these questions will definitely put you in the right path, but if you still need additional help setting up we are here.
Understanding Fulfilled By Amazon
With Amazon's Fulfillment by Amazon, or FBA, business program, you'll pay Amazon different fees and mostly for convenience. The FBA program takes on logistical tasks for your business, such as storing your products in fulfillment centers, packaging, shipping your orders, and customer service. How much the FBA program will cost you depends on your product's size and weight, along with the type of FBA services you use, you can expect to pay 6 to 20 percent of your sale, with 15 percent being the typical amount the retailer takes. Make sure you pick the right product(s) to sell and or know how to advertise the right way by taking advantage of social media and or other platforms.
There are other benefits to consider with the FBA program, too. Amazon Prime members can pay for products without being charged extra in shipping fees. Eventually you can qualify to have your account badged as a FBA seller without even using Amazon's warehouses! That is a whole other topic, but just know this tip. Having that badge will make your products more attractive than competitors who aren't in the FBA program.
Understanding Fulfilled By Merchant (You)
As an FBM seller, you have greater control over your shipping rates. Which is great because this can be adjusted easily according to your margins. Since the seller is purchasing the shipping from UPS or FedEx directly, increased volumes and discounts can translate into more profit. Many shippers are able to utilize ground or home delivery services to deliver packages within 2 days, but buyers that live further distances will require shipment by express which can fluctuate in price.
Using UPS published rates would not work for the smaller seller fulfilled prime shipper because any profit would be eaten up by shipping costs. But if you have a larger volume discount with FedEx or UPS, this could work. UPS and FedEx will lower your 2nd-day air discounts to make the rate more competitive with ground pricing. Just give them a call to see what works best for you in the long run.
Now get to selling on Amazon! This is some vital information that will help you succeed on this ultra-highly competitive market front. Do not be discouraged if sales are not doing well for the first couple of months. This is a learning stage for you and your business and the only way it to go up. Keep learning and leverage Amazon's Pay-Per-Click feature that allows you to advertise on the platform. If you need any help with these we specialize in this area and much more!
We wrote a similar article called, "This Is Why Your Business Should Sell On Amazon." Check it out to learn more!