Amazon is one of the world’s largest companies and it is especially dominate in the American market. In fact, in 2018 Amazon accounted for almost half of American ecommerce. With so much business being done on Amazon, more and more people are turning to the site to make money. Now, over 50% of all Amazon sales come from third-party sellers.
But while selling online in general is fairly straightforward, Amazon has some unique features which make selling on its site a bit different from most e-commerce. So, how do you make money on Amazon?
How To Start Selling On Amazon
To get started selling on Amazon, you first need to create a seller account. When setting up your account, you can choose between an Individual account or a Professional account. The Individual account is free to create and maintain, but you will pay $0.99 for every item sold. The Professional account has a $39.99 monthly fee, but there is no additional fee for each item sold. So, if you are planning on selling more than 40 items per month it is better to have a Professional account.
For both types of accounts, referral fees and variable closing fees still apply. Referral fees are what Amazon charges for connecting you to a buyer for your items, and they are typically about 15% of the selling price. Variable closing fees are typically only applicable for media items. For more information about selling fees on Amazon, you can see their Fee Schedule page.
Another option for selling on Amazon is to create an Amazon Store. An Amazon store allows you to sell multiple products and associate them with your ‘brand’. If successful, an Amazon Store can help you to create a strong customer base who trust and repeatedly buy products with your brand. In addition, having an Amazon store gives you access to data insights that can help you become more efficient in your selling strategy. You can learn more about creating an Amazon Store here.
Creating A Listing That Gets Your Product Sold
Listing your product on Amazon is relatively simple, but getting it sold can be more complex. There are several ways in which you can increase the likelihood of your products getting sold more quickly and in higher numbers so you can make money on Amazon.
First, make sure you are selling something people want to buy. While this may seem obvious, it’s actually not for many new sellers. Trying to sell an unpopular or unfamiliar product is going to be much harder than selling something that people are already actively buying.
Next, make sure that your listing is top quality. Provide plenty of details about your product, and describe it in detail, including measurements, color, intended use, etc. Also make sure to answer any question that may come in from potential customers. This can help you get new customers, both by converting the person asking the question and providing information to future customers who may have the same question.
Finally, and one of the most important things, is to make sure the photos for your listing are top quality. Your photos are probably the most important consideration for most customers, so your photos can make or break your selling success. In fact, photos are so important that it might be worth hiring a professional photographer for your item.
Promoting Your Product
There are also several options for promoting your Amazon listing to increase sales. While these do cost money, they can be great for getting the initial traffic for a new Amazon seller or listing.
First, you can advertise your listing on Amazon using Sponsored Products. Sponsored Products are shown in prominent positions on the Amazon search results pages, giving your products very high visibility to potential customers. You can set up Sponsored Products using keyword or product-targeted ads to make sure you are reaching your target customers. The cost for Sponsored Products is based on how many clicks your ads get, not how many sales you get. So, it is important to keep an eye on how many actual sales you are getting from each click for which you are paying.
A second option is Sponsored Brands. Similar to Sponsored Products, Sponsored Brands create prominent advertisements on Amazon search results pages. However, Sponsored Brands feature not only one product, but several products along with a custom headline, brand logo, and ad creative. Sponsored Brands can link to individual products but can also take customers to a custom landing page or your Amazon Store.
A third option for promoting your listing is to use Amazon Coupons. While coupons are not as helpful in getting customers to your product listing, it can definitely help in converting customers from just viewing your product to buying it. Amazon Coupons are just like any other coupon – they give customers a discount on the selling price when activated. It’s effectively a way to have a ‘sale’ on your products so that you can get more customers to buy it.
Fulfillment by Amazon
Another way to make money on Amazon is to use Fulfillment by Amazon (FBA). FBA means that you have Amazon pack and ship your items for you. So, instead of having to pack and ship products yourself you send your product to Amazon before making a sale, and then don’t have to put in any additional effort when your product is sold. Amazon charges you a storage fee for holding the item, and then the usual fees if you item sells.
FBA is a great option to increase your sales on Amazon because many customers prefer FBA items. For one thing, it allows customers to get Amazon perks such as Prime 2-day shipping, free returns, Subscribe and Save, etc. Another major consideration is that customers see FBA as having Amazon’s ‘brand’ behind it – and all the consumer trust behind that brand. So, FBA is a way for you as a seller to ‘borrow’ Amazon’s brand power and customer loyalty for your own products.
FBA also helps you save money when fulfilling Amazon orders because you don’t have to worry about shipping small, light items that sell for low prices but have high shipping costs. Here, you get to take advantage of Amazon’s world class logistical network.
In summary, using FBA can help you both increase sales and lower your fulfillment costs – a double benefit!
How Much Money Can You Really Make On Amazon?
So, now that you know how to make money on Amazon, the question remains: how much money can you actually make? Well, the answer is: a lot! There are many people who make hundreds of thousands of dollars from Amazon every year. Amazon gives you access to hundreds of millions of customers, so you can truly become a runaway success if you can find products people want to buy.
But the key to making money on Amazon is volume. You need to sell thousands of products, and maybe tens off thousands of products, every year to make a good living off of it. One reason why you need to focus so much on volume is that one of Amazon’s key attractions to customers is their low prices, so you will have to price your items low to get them to sell. And, even then, Amazon will take on average 15% of that low price. So, to overcome these low prices and Amazon’s cut, you’ll need to have very high volume. If you can find products to sell in mass and manage the logistics of shipping them all, you really can make some great money on Amazon.