If you’re launching your own company, you’ve likely considered leveraging Amazon, thanks to its robust infrastructure and far-reaching distribution network.
And you wouldn’t be alone in utilizing the retail giant’s platform. In May, Amazon reported that more than one million small businesses in the United States — and more than two million worldwide — sell their products on its online marketplace.
If you’re ready to start your own business on Amazon, consider this checklist to set yourself up for success.
[Read: 7 Ways to Make Money Online and With Free Apps in 2018.]
Familiarize yourself with the basics. In a nutshell, you can sell your wares on Amazon as a professional, indicating that you plan on selling more than 40 items a month. Alternatively, you can sell as an individual, and list fewer than 40 items for sale each month. If you list yourself as a professional, you’ll pay Amazon $39.99 a month, in addition to other selling fees. If you sell as an individual, you’ll pay Amazon $0.99 per sale, plus other selling charges.
As for selling fees, you can expect to pay 6 to 20 percent of your sale, with 15 percent being the typical amount the retailer takes. Consult the retailer’s “Selling on Amazon Fee Schedule” page for additional information.
With Amazon’s Fulfillment by Amazon, or FBA, business program, you’ll pay Amazon even more. The FBA program takes on logistical tasks for your business, such as storing your products in fulfillment centers, packaging and shipping your orders. 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, but generally, you can expect to pay several dollars to Amazon per item that you sell — or even hundreds if you sell pricier items, like furniture.
There are other benefits to consider with the FBA program, too. Amazon Prime members, for example, can pay for products without being charged extra in shipping fees, making your products more attractive than competitors who aren’t in the FBA program. Plus, by being in the FBA program, Amazon handles product returns, so you can spend more time on other facets of the business.
Kathleen Kobel, who runs Kobel Consulting, a Chicago-based agency that consults companies that want to sell products on Amazon, strongly urges business owners to use the FBA program. “It will save you time, money, hassle and it will help your organic search and sales rankings,” she says. “Just make sure to monitor your inventory so you don’t get any long-term storage fee charges. To put it simply, you’ll get more sales if you use FBA.”
Stay wary of scammers. Be skeptical about paying money for courses that promise to teach you how to sell products on Amazon. For instance, in July, the Federal Trade Commission filed charges accusing Jessie Conners Tieva, a former contestant on the NBC reality show, “The Apprentice,” for conning people. Allegedly, consumers paid Tieva thousands of dollars for business courses and seminars that taught them how to make money as a third-party Amazon seller.
Instead, look for trusted resources before starting your business on Amazon. “Spend time reading Amazon’s help articles, and do some thorough online research on your specific category before setting up. Amazon has different rules and limitations depending on what you’re selling,” says Jordan Barnett, owner of Kapow Meggings, a company that sells men’s leggings, based in Casper, Wyoming.
[Read: 7 Side Hustles That Could Be Big in 2018.]
Gradually build your business. “Don’t launch too many products at once,” Kobel advises. “It’s much easier to focus on a few [products] at a time and get those dialed in and optimized first,” Kobel says. “Then, move on to the next batch of products in your line, and so on. Managing too many listings at once makes it more difficult to get good systems in place to automate and optimize your listings and store.”
The more you sell, the more opportunities you have to make mistakes and learn from them. So, first successfully sell a few items, and then branch out, Barnett says. “Amazon spams you with tons of upsell and cross-sell emails. At first, stick to the basics and don’t try to do everything at once. They push very hard for you to fulfill with them, making it seem like you won’t succeed unless you do,” Barnett says. Follow your intuition and only turn to FBA when you’re ready, he cautions.
Don’t bank on your business collecting passive income. To maximize success, you’ll want to continually tinker with and improve your product, regardless of its placement on Amazon.
“Don’t set it and forget it. You may get some initial sales [of your product] to your store, but that won’t last if you never do any improvements. You get what you put into it, so make sure you analyze the data and do continual optimizations of your listings and ads, or you’ll never keep up with the competition on Amazon,” Kobel says.
To enhance your listings, Kobel suggests ensuring you provide first-rate images of your products, and encourage consumers, particularly repeat customers, to leave reviews of your product to persuade other prospective buyers.
Cultivate positive reviews. Once you get started on Amazon, aim to offer excellent service, even if you encounter a difficult customer. For instance, if you receive a series of unsavory reviews, you may consider replying and apologizing to a consumer for his or her negative experience.
“The customer is always right when selling on Amazon. Take the loss if you have to,” says Yungi Chu, the owner of HeadsetPlus.com, based in Redwood City, near San Francisco. Chu says his company has been selling products on Amazon for five years.
“If you get too many bad reviews or too many customer complaints, Amazon will punish you in your performance score, your store will lose visibility and position,” Chu says. If the negative reviews pile up, Amazon will kick you off, Chu says. “So it’s not worth fighting with an Amazon customer. Amazon will always stand behind their customer, unless the customer is blatantly wrong or abusive.”
[See: A Guide to Launching Your Side Business.]
In short, while you will need to put in time and energy to get your business off the ground, with Amazon’s resources — including a built-in marketplace and a far-spanning distribution network — you may have more success than you would as a conventional retailer.
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How to Start a Profitable Business on Amazon originally appeared on usnews.com
