How to Become a Profitable Amazon Seller

BRIAN EDMONDSON

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How to Become a Profitable Amazon Seller

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Table of Contents

Updated May 14, 2021

One of the biggest advantages you have as an internet entrepreneur starting out today is that you don’t have to figure everything out for yourself. There are so many tools and resources to help guide the process, community forums to ask questions, share advice, hear stories, and examples of profitable online businesses to follow.

Also, you can leverage one of many existing and established online platforms as a selling marketplace to make your business start-up quick and easy, without the need to create your own website, online store, or ecommerce site. In fact, these third-party services could form the basis for your venture in the long term.

The undisputed most powerful online selling platform today is Amazon, accounting for nearly 39% of all ecommerce retail sales in 2020, at over $260 billion, and still growing in 2021.1 By 2026, analysts predict Amazon's overall revenue will double.2 Over the years this one-time bookseller has become a dominant online retailer, selling everything from toilet paper to tennis shoes to high-end electronics.

In addition to retail, Amazon has branched into multiple industries. It has its own entertainment streaming service through Amazon Prime, offering syndicated shows, as well as its own proprietary movies and tv shows.3 It partners with tech companies to sell kindle tablets and accompanying e-books or subscriptions. It even has bricks-and-mortar retail stores now. And, not to mention, it acquired the grocery store mega chain Whole Foods.

Such massive growth points to a strong and innovative company. And while that certainly is positive, it’s not why you, as a solo Internet entrepreneur, should be interested in Amazon.

The Opportunity for Amazon Third-Party Sellers

One of the more subtle features of Amazon’s business model is that it allows people to sell products on its site, which means you can take advantage of this brand name’s tremendous reach and influence. They’ve been offering this opportunity in “third party selling” since 2006.4

If you go this route, you’ll be in good company. As of the first quarter of 2021, third-party sales became a majority, with roughly 55% of sales on Amazon are made through third-party sellers.5 In its 2020 Small Business Impact report, Amazon revealed it shipped out more than 3.4 billion third-party items in just one year, between June 2019 and May 2020—and this was during a pandemic no less.6 So it’s plain to see that buyers do trust and buy from third parties.

Even if you already have your own website and ecommerce store you may want to consider expanding your distribution into Amazon. You'll be able to reach more potential customers and increase sales of first-time customers who may be leery of shopping on a lesser known website.

It’s a lucrative opportunity—third-party sales account for billions in sales each year. You could take a slice of that pie and make your own five or six-figure income as an Amazon Seller.

And it’s easy too. Using Amazon’s “Seller Central” dashboard, you’ll be able to manage an online business without your own website and letting Amazon handle all the “grunt work.”7 (It’s certainly okay to have a website, or a blog, or active social media presence—just be sure to send potential buyers to your Amazon page.)

The Advantages of Selling on Amazon

The big advantages to being an Amazon Seller:

Traffic: For every month in 2020, Amazon.com was visited over 2 billion times—in some months it was more.8 Not every visitor will be in the market for your product, of course, but you'll be in a prime position for those who search for products in your niche, and are ready to buy. As mentioned above this can be a great way to reach new and first-time customers.
Ready-made storefronts: By utilizing Amazon's seller platform, you won’t have to worry about setting up an online shopping website.8 You can simply fit your products into existing templates for maximum functionality and quick display.
Shipping and fulfillment: Rather than purchasing postal supplies and building shipping procedures from scratch, you can follow the online dropping business to let Amazon's systems handle the orders, delivery, etc.9
Customer loyalty: One of the biggest hurdles facing any new internet entrepreneur is getting prospects to trust them enough to actually buy something. When you operate under the Amazon umbrella, there’s already a built-in level of trust.

How to Start Selling on Amazon

Once you’ve made the decision to sell your products through Amazon, it's time to take care of formalities. You'll need to create a seller profile, add your products, and attract customers. Amazon has guides to walk you through each step, but you can expect the following:

Choose and pay for a plan, either by each individual sale, or as a subscription model with the Professional plan.
Decide on a strategy, whether selling your own brand, or reselling others.
Create a seller account, where you can identify your business and streamline payment processes.
Add your products, with detailed descriptions and any technical specifications required.
Set pricing, and attract customers through one of Amazon's many marketing add-ons.10

You do have to fit into one of almost 70 categories in order to be a third-party seller. Some of the more common and most profitable categories are clothing, healthcare, beauty products, baby products, jewelry, home and garden items, cell phones, and electronics, though just about anything you’d want to sell is covered.10

Fulfillment by Amazon

The hassle-free way to sell on this site is to become an Amazon FBA Seller.

This means that all your orders are “Fulfillment by Amazon.” In other words, Amazon handles the shipping, delivery, and, if need be, returns and refunds or exchanges.9 You don’t have to keep or manage inventory either. You simply send your items (which you’ve bought wholesale) to one of Amazon’s many warehouses around the country. Then every time someone places an order, the warehouses act as middleman to receive the order and ship it out for you.

It’s a convenient business model that allows you to focus on marketing and increasing your take-home revenue.

How to Be Profitable as an Amazon Seller

Keep in mind that even though Amazon makes the process of selling easy, you'll still have to put in the work to make your products sell. In order to make good money as an Amazon Seller, there are a few things to keep in mind.

Be a Proactive Marketer

First and foremost, you can’t simply list your products on Amazon and then hope for enough people to stumble across them. Unlike a traditional brick and mortar business the old adage of "build it and they will come" doesn't necessarily hold true. You should be marketing your business on social media, on your blog, by sending emails to your network, or any other method that is suitable for your product. You can also incorporate tools and apps designed to enhance user engagement with your product, like chatbots or surveys.11 You may choose to create a unique social media account just for your product, and attract followers with contests or promotions. Tag your product in attractive images, and add links back to your Amazon Seller page.

Pick the Right Niche

When running a business on Amazon, you have to sell products that people are actually interested in. It's important to stay informed about trends in your industry, and reflect that in your business's online presence.

If you already have a product or a full business, you've likely spent some time developing its value and are familiar with your target buyer. If your offerings fall within one of Amazon's popular categories, then you have a head start in finding the right audience. But if your product is obscure, you may be able to improve visibility (and sales) by linking it to a more popular category.

For long-term financial success, you’ll want to focus on products in markets that are always strong, like weight loss, natural health, self-development, yoga, consumer electronics, baby items, and others. A good way to gauge a profitable market is to check Amazon itself—what are the bestsellers? Remember it's a good idea to stay in a big mainstream market that will continue to have demand for years to come.

Be Competitive and Know Your Competition

It always pays to see what others are doing in your niche. See how they’re pricing their products, what type of marketing they’re using, how they are presenting and describing their products, how frequently they offer new products. Even if your Amazon store is doing well, there's no guarantee it’ll stay that way. To avoid stagnation and stay profitable, it's essential to keep up with the market.

A great way to do market research, especially on Amazon, is to read the positive and negative customer reviews. Find out what people hate and what people love about certain products then be sure that you meet those needs and avoid the pitfalls.

Maximize Profits

You might start small with just one product on Amazon, and if you're lucky it might be a one-hit wonder. Realistically, if you want to really make some money you’re going to have to expand to sell a whole range of items. Again, study the market to see what’s selling well, and apply what you learn to your business to create additional or accompanying products.

It’s also important to take advantage of busy buying seasons. Traditional retailers make the bulk of their money each year around the holiday season, and it's no different for online sellers.12 In fact, online retail has even developed its own "holidays" for shopping (like Cyber Monday, after Black Friday). Make sure you’re well-stocked to handle a flood of orders.

If you're looking to compliment your online sales with a side-gig, there’s a way to pay yourself twice. By joining Amazon’s Associate's program, you can include affiliate links to your own products in your marketing. So when someone buys your product, you get not only get the profit from that sale, but also the referral commission.13

Next Steps to Amazon Seller Success

Selling on Amazon is a great way for new online entrepreneurs to get started in this market. It takes the hassle out of selling online. Let somebody else do the hard work of shipping and managing inventory for you. And put a trusted brand to work on your behalf.

Put it all together and you have a recipe for five or six-figure income each year.

Frequently Asked Questions

Selling on Amazon may sound like the solution to your online sales, but don't lose sight of the big picture: Amazon, like any business, aims to make money off the service they offer third party sellers. In exchange for access to their platform, it's important to understand the tradeoffs.

How Much Can You Make Selling on Amazon?

There are many factors that will affect your success as a third-party seller on Amazon—the popularity of your products, pricing, competition, marketing efforts, etc.—but almost half make between $1000 and $2500 per month, once they're up and running.14

What Are the Top Products Selling on Amazon?

The top selling products vary by year, season, trends, but Amazon keeps a constant tally of the most popular items if you're looking for a snapshot view at any given moment.15 Over time, toys and games, electronics and gadgets, books, and clothing, have been consistently high.16

Are There Fees for Selling on Amazon?

Yes, you do have to pay a fee for the privilege of selling on Amazon. If you sell more than 40 products a month, you'll qualify for the professional plan, and you’ll pay $39.99 per month, as well as other fees for things like Amazon personnel handling your products. You can opt for a more modest plan, and pay $0.99 per sale, as well as other fees.17

Of course, if you compare these fees to the traditional model of having a brick and mortar business with rent, utilities, employees, etc. there really is no comparison to how inexpensive this really is. In many cases, this is cheaper than renting a table at a flea market

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