What was once a mom-and-pop retail pharmacy in the Bronx is now an internet sensation. They exploded when they started putting their products online 7 years ago.
In case you think this is a Cinderella story, it’s not. Almost 20% of professional Amazon sellers had more than $1 million in revenue last year.
If you’re a small business owner, chances are you’ve considered selling on Amazon at some point in the last decade. After all, Amazon is an e-commerce powerhouse: In a single month of 2017, it garnered 197 million unique visitors.
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In addition to an enormous global customer reach, Amazon’s extensive distribution system and seller tools make it easy for small (and large) businesses to scale beyond what they could do alone.
So now you’re wondering…how do I start an Amazon business? Don’t fear! We’ve created a comprehensive step-by-step guide to get you started. Make sure to bookmark this guide -- we’ll be adding and updating since Amazon continually makes changes to their system.
Amazon is the world's third-largest retailer. It ranked No. 53rd on Forbes' 2018 Global 2000 list of the world’s biggest and most powerful public companies (based on profits, revenues, assets and market value.)
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Amazon sells many products themselves, but third party sellers (outside business like you and I) make up more than half of their annual revenue.
The “buy box” (highlighted in red) rotates between sellers, but offers from each seller can be seen by clicking on the “used & new” link on the sidebar of the page.
Before you run out and list some products, let’s talk about a few things you should do to prepare for your selling journey. Amazon has a steep learning curve, especially if you’re new to e-commerce. Before you jump into the fray, here are a few things to remember:
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An Amazon business will grow as little (or as much) as the time you put into it. Whether you’re out for the big bucks or you just want a side-hustle, decide ahead of time exactly how much you want to put into this business.
Read, read, read. You wouldn’t open an Italian restaurant if you didn’t know anything about pasta. The same goes for Amazon. In addition to this document, here are a few incredible (and free) resources for you to learn from:
Amazon’s Seller Forum -- If you have a question, there’s a 99% chance someone has asked it in the forum. From suspension letters to backend issues, there are hundreds of issues addressed every day within Amazon’s seller message board. Don’t trust everything you read -- after all, there are many sellers who pass along misinformation -- but do use it to gain background knowledge and be aware of common problems. It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.
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Local Meetups -- Did you know almost every major city in the U.S. has regular networking events for Amazon sellers? These sellers are usually more than happy to share their stories and experiences with you. This information is free and having friends in the business can prove invaluable.
Our Blog -- Each week releases exclusive blogs and Youtube videos with a wealth of information on Amazon selling. You can subscribe to our weekly email and our Youtube channel.
The number #1 reason new sellers are suspended is that of small infractions. If you cut corners and try to take advantage of Amazon, the consequences will hit at some point and your account will be penalized, or even terminated. Periodically check Amazon’s selling policies here.
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Before you’re run an Amazon store (or even apply for an account) you need to run a business. There are a few key documents you need to have on hand before creating an Amazon FBA Account.
During the application process, Amazon may not request every piece of documentation but every seller should have these on hand in case Amazon decides to verify or review an account. You’ll need:
The federal government issues a nine-digit number to identify any business operating in the United States. You can get one for free at IRS.gov. You can also use your social security number to create Amazon account -- just be aware that without a business, you can be personally liable for any problems that arise.
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If you plan on growing your business to more than a couple thousand dollars a month, get a professional CPA (Certified Public Accountant) (preferably with e-commerce experience) who will take care of your finances. It’s a small decision that will pay big dividends.
If you’re running a warehouse or anticipate doing more than $10, 000 in sales right off the bat, you’ll need a business liability policy. We cover this in depth here.
Every seller must have a valid credit card on file. Amazon keeps this card info in case you have a negative account balance. Don’t put in a debit card or a prepaid gift card -- Amazon occasionally runs these cards to validate them and will freeze your account balance if they find a card that’s not in compliance with their terms of service.
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Amazon wants to know you’re a real business. Make sure to complete registration in all applicable jurisdictions before creating an Amazon account.
A state tax ID is used exclusively for state tax reporting. They aren't usually requested by other agencies or third parties, but suppliers may ask for it as you're setting up wholesale accounts. You’ll also need a tax ID to file state payroll returns if you have employees.
This is kept on file in case Amazon needs to contact you. It can also be available to your customers if you choose.
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Amazon can only make payments to a valid bank account -- they won’t send money to a prepaid card or through a third party service.
Amazon routinely reviews seller accounts and requests this piece of documentation with name and address visible. Again, they want to know you’re a valid business.
Before starting the “official” process for opening an Amazon account, you need to decide how you want to sell your products. Amazon provides two basic methods, Fulfillment by Amazon (FBA) and
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With FBA, Amazon takes care of almost all of the work. They store, pack, and ship your inventory, as well as handle customer service. If a customer has an Amazon Prime account, they receive 2-day shipping on any FBA product. Since most Amazon customers use Prime, they’re more likely to choose these products, giving FBA sellers a huge edge. As a seller, the only thing FBA sellers are responsible for is shipping inventory to Amazon -- they sort out the rest.
FBM (Fulfillment by Merchant) puts a seller in charge of the whole process. When a customer puts in an order, Amazon will instruct the seller to pack, ship, and upload a tracking number if needed. If a customer needs to return an item, it will automatically come back to the seller.
Using FBM, you typically pay a flat 15% referral fee. It’s important to be aware of FBM shipping costs ahead of time -- an 80lb office chair is much more expensive to ship than a book.
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FBA fees are more expensive (usually about 35% of the sales price for a regular-sized item), but the program frees up a lot of time you would otherwise spend on fulfillment, return, and/or shipping related customer support. We recommend all new sellers start with FBA -- it brings faster sales and generally takes less time and overhead than FBM.
If you don’t have the infrastructure to store your inventory in a house or warehouse, FBM is a bad choice. Your workflow and layout need to be carefully planned to avoid the chaos that can come with storing hundreds (or thousands!) of items.
If your business doesn’t have the manpower to ship every day, don’t consider taking fulfillment upon yourself. Amazon takes late and canceled shipments seriously. One bad move can be the end of your business.
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There are two different types of account Amazon offers it's sellers -- an Individual plan and Professional seller plan. The individual plan is free, but sellers pay a per item fee for each unit sold. The pro plan is $39.99 a month.
Sellers pay a referral fee for each item sold. This fee varies by category but is generally 8% of sale price for electronics and 15% for most other categories. A complete chart can be found here (You’ll need a seller account to access).
Sellers that fulfill items themselves must pay shipping costs out of pocket. This can either be done through Seller Central, which comes directly out of your twice-monthly Amazon payout or independently, utilizing USPS, which can be cheaper in some cases. Some categories (such as books) are eligible for a shipping credit that is added back into your payout.
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More than 60% of sellers use Amazon’s FBA program to warehouse and ship their items. These FBA fees can be broken down into a few categories.
This includes the cost of picking and packing your orders, shipping and handling, and customer service. These fees depend on the item classification which is based on the weight and dimensions of an item being sold. An item
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