Businesses used to cost a fortune to start, especially those that required selling physical products. It was almost a given that you’d need dedicated physical store space in order to sell.
With the advent of the internet, however, alternative retail business models can thrive. Armed with the right knowledge and readiness to embrace new and innovative ways of doing business, you can make a fortune by selling products online.
Here at ASDAL, we help you streamline your Amazon operations with a smart digital infrastructure. Here are some tips that I’ve suggested selling on Amazon.
Amazon Selling Platform
Amazon has been in existence for 25 years now and has since grown to become the world’s lead e-commerce selling platform.
More than 197 million people a month visit Amazon from various devices, including smartphones, tablets, and computers to make a purchase or search for products. This translates to nearly half of all online e-commerce sales occurring through the platform!
Although there are other e-commerce platforms through which customers can purchase products, none comes close to the popularity and trust that Amazon enjoys from its customers and retailers across the world. To help put this in perspective, the above number of monthly visitors on Amazon is equivalent to eBay, Apple and Walmart combined – which are Amazon’s top three competitors.
Amazon currently has approximately 95 million Prime subscribers and growing. They’ve built a loyal following of repeat buyers and it’s one of the reasons that makes selling on Amazon the best option for your business.
That said, it clearly makes business sense to have a basic understanding of how the Amazon platform works in order for a vendor or retailer to maximize their online selling potential with the platform.
Some of these tips are designed to help online entrepreneurs see where opportunity on Amazon currently lies and what tools to use to build a brand reputation as a successful Amazon vendor.
A few ways to Sell on the Amazon Platform
One Amazon business model that has proven to be useful and profitable with minimal capital requirements is dropshipping.
Dropshipping occurs when a retailer sells products without the responsibility of carrying an inventory or shipping the goods to the customer. In this case, the manufacturing, inventory, and shipping are handled by the manufacturer. This process allows people like you to focus on pioneering an excellent product while allowing Amazon to take care of logistics.
The drop shipping model benefits both the manufacturer and the retailer. The manufacturer is able to move more inventory by increasing distribution outlets through retailers locally or globally while keeping the distribution cost low. The retailer has access to the manufacturer’s online product catalog to choose what items they would like to sell on an online platform like Amazon. This is supposed to save the drop shipper warehousing cost.
If you’re dropshipping on other platforms such as eBay, or Etsy, you have to take care of advertising costs as well as handle customer issues such as complaints and product returns. With Amazon, its world-class support team takes care of this. Once a product is sold via an online shop, the manufacturer will ship the product to the customer’s address.
Amazon offers two types of dropshipping business models.
- Self-fulfillment Amazon dropshipping
- Fulfillment by Amazon is also known as FBA
Amazon self fulfill drop shipping
This is the conventional way of using dropshipping from Amazon. You’d handle every aspect of the business except the management and fulfillment of inventory.
Benefits of drop shipping with self- fulfilling Amazon
- No carrying inventory – The business model is less risky as the vendor does not hold the inventory. It also means low overhead costs as there are no warehouse fees to pay for and hardly any employee salaries to contend with for handling the inventory.
- Focus is on selling – This model helps the vendor focus on marketing and selling and they don’t have to worry over inventory handling.
- Easy market test – Since the vendor is not holding the inventory, they can easily test the market by seeing which products are performing well while removing those that are not from their catalog without suffering any losses. Sales performance reviews are just one of the many capabilities of the ASDAL platforms.
- Minimal start-up required – the vendor will only pay for goods after they have sold, meaning that one can start selling online with very little capital.
The only downside to this model is that the responsibility of processing orders, paying taxes, and handling complaints is the retailer’s responsibility.
For self-fulfill accounts using Amazon credited carriers, Amazon takes about 15% of the profits per item for shipping and handling. To a brand, this may initially sound like a high cost. But when you, the brand, decide to absorb the handling and shipping yourself, it soon becomes abundantly clear that outsourcing these services through Amazon is only a fraction of what it would cost otherwise.
Amazon FBA drop shipping
One could say that FBA is a more refined model of traditional drop shipping.
Amazon offers the FBA service option to its vendors meaning that Amazon will handle warehousing, shipping, and managing all customer relations. This includes handling returns on your behalf.
This model has many perks, the chief among them being the consistency in smooth service. With Amazon handling storage, shipping, and the often sticky business of customer service and returns, you can sit back and watch the profits trickle in.
In this model, the vendors will have to send all their inventory to the nearest Amazon fulfillment center. After that, it’s just managing the online shop and ensuring your products get visibility on Amazon’s platform through various SEO tactics. To do this, you can use ASDAL’s keyword research and Amazon optimization capabilities. FBA drop shipping is even more ideal for businesses who want to prioritize building a strong brand name.
Benefits of the FBA Amazon service option
- One can expand their inventory and sales faster by outsourcing packaging, employees and shipping.
- Amazon’s 24/7 customer service on all FBA service products
- An automated model that allows a retailer more time to focus on marketing, sales and scaling the business
- Products on FBA are avaIlable to prime customers for the same, one and two-day shipping. This is significant because Amazon has more than 95 million prime subscribers
Now that you have a general idea of owning a successful online business by retailing via Amazon, the next step is to choose which one of the above business models would work for your products. If you are hard-pressed for capital, you can always start with self-fulfilled Amazon orders through conventional drop shipping.
If you have accrued some capital to cover operational costs, the FBA Amazon service is highly recommended because it gives you more freedom to concentrate on the core business issues of your store. It’s advisable that one start slow to test the waters and system. You can always scale up gradually as you get a better grasp of the concept.
We’d recommend FBA, but what’s the cost?
There’s always the nagging question behind a brand’s mind, what’s the catch?
With Amazon, the definition and terms of the FBA service are very clear and transparent and the brand is not blindsided in any way.
One can sell under FBA on an individual or a professional seller account plan. Selling on an individual FBA account is almost free. The fees that you would pay to Amazon per product sold is higher, since it includes a flat fee of $1 dollar after accounting for shipping and handling fees.
The professional seller account attracts a monthly subscription of $39.95, but incurs a far much lower percentage per item sold after removing of shipping and handling costs.
Logically, it makes sense to go for an individual account if a person foresees selling less than 40 items per month. However, if you are a brand or building a brand with sales projections above 40 items per month, then it makes better sense to subscribe to the professional plan.
All this starts with setting up an Amazon Seller Account
Setting up an Amazon seller account is a very straightforward process that’ll take about 10 minutes online to get done. You’ll need the following:
- Business EIN or a valid social security number
- Short online tax interview (for Amazon tax reporting purposes)
- There will be more additional information to complete as well as a short survey.
Once set up, its time to start selling. Self-fulfill vendors still stand to make a decent profit by using independent carriers for delivery of Amazon purchases. Alternatively, they can use Amazon credited carriers for even lower carrier rates.
Anyone can opt for the FBA Amazon service option irrespective of whether you hold an individual or professional seller account plan. To enjoy the benefits of this option, you will have to send all the inventory to a fulfillment center by Amazon warehouse.
Under the FBA service option, after you’ve sent products to Amazon, they’ll store the products in their fulfillment center stores. When a customer purchases the products via the Amazon online platform, Amazon will pick the purchased product from the warehouse and deliver to the customers’ address. This is what they mean when they say Amazon will handle storage, shipping, customer care and returns on behalf of the vendor. For many Brands on Amazon, Amazon FBA is the height of efficient and stress-free selling.
Have good products to Sell on Amazon.
The best products to sell on Amazon are those that do well on the platform and there’s a myriad to choose from.
Because the needs of any market are fickle, there’s no right or wrong product to sell on Amazon. However, there are a number of tools that brands who Amazon can take advantage of to see what products are likely to be in demand at a given time in the marketplace. For example, you can research Amazon bestsellers, and use ASDAL to view your performance in comparison to competitors. Through this, it’s possible to uncover trending niche products that can be procured or drop-shipped at reasonable costs.
Amazon’s diversity of products on sale is dynamic and expansive. While 25 years ago, Amazon started as an online bookstore, it has evolved into an online platform with a vast choice of products ranging from electronics, fashion, tools, as well as second-hand items.
Most entrepreneurs who have done very well for themselves selling on Amazon would advocate for independent private label brands. This is because the latest Amazon features seem to be favoring private labels more than ever.
My personal selling preference is developing a private label product.
- Private label- researching and acquiring unique products that someone then sells on Amazon under their own private label or brand.
Private label defined
The heart of the private label business model is selling products manufactured by a third party but with your logo on them.
Does private label, or white label, have an edge over the other methods of FBA Amazon selling?
The answer to that question is yes. The private label business model has an edge over other methods and here’s why:
- Better profits – if a brand is looking for predictability and high margin profits per item, it’s hard to go wrong with this Amazon selling method.
- Control of price points – in wholesale and arbitrage methods, there’s always the nagging worry of overpricing or underpricing competition. With private labels, you have full control of their Amazon listing and therefore is free to set the pricing as they see fit.
- Brand control – you can help shape the branding of your product so that it resonates best with your target customer. This ability to control the brand and product experience end to end is lost in the other methods.
Private label also involves less work in sourcing for products. Unlike arbitrage and used books, you don’t have to find numerous sources to stock up an inventory. By identifying a suitable product, one can buy in bulk from one supplier and have a full inventory.
How you can create their first private label product
Venturing into private label FBA selling is not difficult.
However, one needs a few pointers on how to identify a product that has high chances of selling. Here’s an outline of some simple steps that will guide you on how to get started selling on Amazon using the private label method.
Do your research
While it may be tempting to go after private label trending products, it’s not recommended.
This worked earlier when the concept of private labeling was still new. But with today’s cut-throat competition, it’s almost impossible to compete on pricing trending items and it quickly means a race to the bottom as one cannot out price competition.
A proven way to go about product selection for private labeling is making a data-driven choice based on the current market indicators. This may seem like a lot of tedious work, but you’ll be surprised at how quick and easy it can be if you have the right tools. Software like ASDAL helps brands quickly identify what products are in demand in the market but with low competition. However, our system works better with brands already selling on Amazon as opposed to just starting.
Such software uses a key metric found on Amazon product pages known as BSR or Best Seller Ranking. Each product on Amazon has a BSR. The lower the BSR on a product the more it sells. That information is useful in getting an average sales performance for other given products.
These tools make it simpler to identify, with a good level of accuracy, what products are currently in demand on the market and allows you to see the level of competition on the same.
2. Sourcing for the product
For private label selling, one has to source the products through the manufacturer. After you’ve identified what products to focus on thorough research, one of the best places with hundreds of manufacturers that are willing to accommodate private label sellers is Alibaba.
3. Create a new listing
It’s time to create a new Amazon listing. That part is crucial so you should familiarize yourself with how best to create a killer listing on Amazon.
4. Shipping the product to an Amazon warehouse
The private label FBA seller business model is streamlined to run on autopilot. To make the most of FBA selling, one will need to ensure that the product is shipped from the manufacturer to Amazon. Once the merchandise has been received an Amazon storage facility, you can move on to the product launch.
5. Launch and advertise your products with a few clicks
Now that the products are safely in the capable hands of Amazon storage, you can launch and promote the product online. Using services such as ASDAL will help the merchandise entice bargain buyers.
Social media such as Facebook and Pinterest help sell the merchandise through advertising campaigns. Amazon sponsored ads are effective and economical for quick visibility of products. However, it’s worth noting that Amazon sponsored ads are only available to professional Amazon seller account holders.
Although the heavy lifting is being done by Amazon’s selling systems and algorithms, your responsibility is to ensure that your inventory is always replenished and well-stocked.
Amazon: the Best Ecommerce Platform?
There’s money to be made from online selling provided a vendor is on the most visible platform with the densest organic traffic and has identified a product(s) that is high in demand and low in competition.
There is no e-commerce platform that best meets those standards like Amazon.
A distinction between eBay and Amazon
Although it’s already established that out of all the online marketplaces, Amazon takes the lion’s share of the market every year, eBay is considered another giant e-commerce platform. While eBay is also effective in online selling, the two platforms are fundamentally different.
eBay was founded as an auctioning site. That has remained its core identity, although it has diversified in product offerings through the years as online selling gradually become a mainstream shopping avenue.
Selling on eBay means all selling responsibilities are on you. That includes selling products, customer care, as well as shipping and anything else that involves running your business. You’re likely to put in a lot of work with minimal profits to show for it.
On the other hand, Amazon provides options such as FBA, where a vendor’s products can sell almost on autopilot provides they have fulfilled all Amazon FBA requirements. It’s like having a shelf in a supermarket, and you have to do is keep replenishing the stock on that shelf when it gets depleted.
Everything else is taken care of.
Given that Amazon provides a business model where all the hard work such as selling, customer care, shipping, and even returns have been handled on the brand’s behalf, such a model can only translate into more profits and less work. Check out ASDAL to see how our platforms can help you streamline your Amazon assortment.