Marketplaces are taking over the market, so far-sighted entrepreneurs should start developing these sales channels. Considering that digitalization has made it possible for Russians to produce and sell products remotely, and abroad, we will analyze how to sell goods on Amazon while sitting at a home computer .
Why are entrepreneurs interested in Amazon?
Every entrepreneur can start selling on Amazon from Russia, which is the main advantage of the trading platform.
Algorithm showing how to sell your products on Amazon
But the marketplace attracts the attention of businesses with many other advantages, namely:
- Huge audience: 28 million people visit Amazon every day, making about 14 million orders.
- The economic crisis does not affect sales, because the marketplace has 18 independent sites in different regions.
- Most buyers of the marketplace live in developed Western countries and have a high income.
- Amazon can take care of all the logistics from receiving the goods from the supplier to handing it over to the buyer.
- Reliability, transparency of rules and tariffs, timely payment.
- Relatively small investment to start selling even under your own brand.
- No need to have an office, warehouses and the like.
- Availability of popular positions from any niche.
- The ability to sell your handmade products on Amazon.
- There are no costs for the creation and promotion of an online store.
Many Russians are hesitant to sell on Amazon due to poor knowledge of the English language. Entrepreneurs are also worried about the many necessary actions that need to be taken before the product appears on the site. But the path will be mastered by the walking one, and our article will help you achieve your goal.
Cooperation schemes with Amazon
Logistics is one of the most difficult elements of trade, especially international. That is why the marketplace did everything that it was convenient for the seller to sell on Amazon himself. The company offers two options for cooperation:
- FBA (fulfillment by Amazon) – fulfillment from Amazon;
- FBM (fulfillment by merchant) – fulfillment from a merchant.
Fulfillment is a complex of operations from the moment an order is placed on the website until the buyer receives the package.
The FBA service implies that Amazon takes care of the following logistics operations with the goods:
- acceptance from the supplier (the supplier must be able to label products according to the rules of the marketplace);
- verification, marking, placement in the warehouse (after all checks, the product card on the site becomes active);
- payment acceptance;
- placing an order, packing a parcel, addressing;
- delivery to the buyer;
- work with documentation and returns.
It is FBA that allows you to sell on Amazon from Russia without any hassle.
When working under the FBM scheme, the seller takes care of all the logistics. Amazon in this case performs only the following functions:
- places a product card on the site;
- accepts the order, sends information about it to the seller;
- accepts payment.
Thus, when using FBM, the entrepreneur himself stores the goods, forms parcels and delivers them.
The vast majority of sellers on Amazon use the FBA scheme. It is economically feasible to deal with logistics independently only for large companies operating simultaneously on various international marketplaces.
How do I select a product to sell on Amazon?
Placing your products on the site is not enough – you have to buy it. Moreover, offering the buyer the best-selling products on Amazon is not a good idea, because serious competitors will crush you.
Amazon Product Rating Analysis
What to do? To select a profitable product category, you must adhere to the following rules:
- there should be competition in the chosen niche, but not much;
- the optimal price of goods for beginners is 25-200 dollars;
- BSR (bestsellers rank) should be at least 3000 for three models from different manufacturers;
- the product should not compete with analogues from popular world brands;
- the difference between the selling price on Amazon and the price from several suppliers must provide a margin of at least 50% and cover all marketplace commissions;
- you should not choose poorly transportable and bulky products, for example, fragile things;
- do not sell products that can be bought at the nearest stationary store.
There are a number of categories, such as alcohol, plants, jewelry, which are not allowed to be sold on Amazon. It is advisable to familiarize yourself with the current list of prohibitions in advance.
We are looking for a supplier
Most often, suppliers for Amazon are searched for on the Alibaba marketplace. At the same time, it is advisable to request a price from several companies at the same time in order to understand the market situation.
Product search on Alibaba website
In addition, you can use sites such as 1688.com that allow you to compare wholesale prices for similar products on different marketplaces.
At the first order, it is advisable not to pay an advance payment of more than 50% of the contract amount. The rest can be paid after the production of products and its inspection. Entrepreneurs should be prepared to fork out for the delivery of 2-3 product samples or order from a third-party company for $ 200-300 to check the goods directly at the manufacturer’s warehouse.
And remember that you should not contact suppliers who respond to you with formulaic phrases or ignore emails altogether for several days.
Amazon trading strategies
On Amazon, you can sell both your product and third-party products. Depending on the source of supply, entrepreneurs can use several trading schemes on the marketplace:
1. Dropshipping. Assumes logistics according to the FBM scheme, but with a nuance. It consists in the fact that the goods, after placing and paying for the order, are sent to the buyer directly from the seller’s supplier. In this case, the parcel must be packed according to the rules of Amazon. The seller does not contact the product at all.
2.Private Label/Own Brand. Items are sold under the seller’s own brand name, but may actually be manufactured by a third party manufacturer. Such products can be sold by both individuals and legal entities. According to this scheme, you can sell hand-made goods on Amazon.
3. Retail arbitrage. In fact, this is the resale of goods that are sold at a lower price on other marketplaces or on Amazon itself. You can buy products cheaply with a promotion or a discount coupon. The competition in retail arbitration is very high.
4. Publishing business. You can sell both your own books and texts from third-party publishers. The advantage of this direction is the absence of a subscription fee. In fact, you are not buying anything from anyone, but simply trying to sell an electronic product. For $150-300, you can order a book on popular topics from freelancers.
Less popular strategies are wholesale (Wholesale) and the sale of designer digital products (Merch by Amazon).
Account Types and Merchant Requirements
You can sell your product on Amazon using two types of accounts:
- individual. There is no subscription fee, with each sale Amazon charges a commission of $0.99. A maximum of 40 sales per month is allowed. Advertising features, analytical tools and many automation modules are disabled in the account. There are restrictions on the sale of certain categories.
- professional. The seller pays $39.99, while the account has no restrictions under the general rules.
If we talk about requirements for sellers, then Amazon requests documents that identify the seller and confirm his legal status. Additionally, certificates and other papers relating to the product, its characteristics, trademark, and so on may be required.
It should be borne in mind that when a company operates under the FBA scheme, it is necessary to additionally legalize its financial activities in the United States, obtain an EIN or ITIN certificate, which takes at least six months.
Step by step guide on how to sell on Amazon
There are plenty of tutorials online on how to get started selling on Amazon. If we summarize them, then the process of starting sales for beginners will be reduced to registering an account and filling out a product card (provided that logistical tasks are excluded from the field of view). It is these two main stages on the way to making a profit that will be discussed further.
How to register on Amazon
To sign up for an Amazon account, follow these steps:
1. Go to the main page of the marketplace and click on the “Start here” link.
2. Fill in the name, password, email.
3. Collect the puzzle.
4. Confirm email.
5. Enter a phone number.
6. Confirm phone number. Everything, the account is registered!
Then you can go to your profile and fill in all the other fields that are not required for registration. To fill out product product cards, you will need to provide Amazon with documents to verify your identity.
Create a product card
Let’s take a look at the steps to create a product card:
1. In the seller’s account, click on the “Add a product” item.
2. We are looking for our product in the Amazon product catalog or, with a new product, click “I’m adding a product not sold on Amazon”.
3. Fill in the fields of the card, depending on the choice in the previous paragraph, set the price, select the delivery method.
4. Save the card.
There are a number of requirements for filling in the fields:
- Each word is capitalized.
- The maximum number of characters in the title is 200.
- The product must be captured on a white background and fill more than 80% of the photo area.
- Products are described in short, clear sentences.
- Information is entered in English.
- After saving the card, you can wait for the first orders.
Opening accounts and legalization of activities
Most entrepreneurs sell products on Amazon just like regular individuals. This facilitates sales and further withdrawal of funds, but is not a completely legal practice from the point of view of Russian law.
Profit from the marketplace can be withdrawn in three ways:
- To a bank account, commission 2%.
- On a bank card, a commission of 2%.
- Payoneer account, commission 1%.
Also, to avoid problems with the tax office, entrepreneurs should pay income tax at the rate of their country.
With law firms, everything is more complicated: they must have a bank account in the United States, and they are required to pay taxes. In this situation, one cannot do without the services of third-party companies.
Withdrawal is not available until identity verification
The complexity of registering companies leads to the fact that many start selling as individuals, and with an increase in turnover, they are already registered as legal entities. However, in this situation, there is an additional possibility of double taxation when money is received in the seller’s home country.
How much money can you make on Amazon: do we count income and expenses?
According to unofficial statistics, a quarter of all active sellers on Amazon earn more than $100,000 a year . But this study only looked at accounts that update their grocery lists at least once a month.
The seller’s costs can be divided into fixed and variable.
Fixed costs:
- Account fee: $39.99 per month or $0.99 per sale.
- The cost of the product, multiplied by at least 100-1000 (it is unlikely to break even with less sales).
Variable costs:
- Percentage of sales. In most cases, the trading platform takes 15% of the amount.
- Fulfillment services, the cost of which strongly depends on the characteristics of the product. For example, the cost of the FBA service for clothes is in the range of $2-4 per item. Details can be viewed at the link.
- Subscription to applications for researching your trading niche – from $ 40 per month.
- Professional photos – from $20.
- Physical inspection of products – from $ 100.
- Formation of the UPC code (barcode) – $ 5.
- Opening a bank account in the USA – from $50.
- Giveaway samples to gather feedback.
- Copywriting services for writing product descriptions.
- Advertising – usually $1-2 per click for inexpensive products.
The approximate budget for the start of sales is presented in the table. The most expensive thing will be to start selling your goods on Amazon under your own brand.
Sales launch costs for different strategies
It is not worth hoping for a payback of the project within 1-2 months, usually beginners begin to receive their first profit in six months or a year from the start of their activities.
Possible difficulties at the beginning of sales
Even if an entrepreneur follows instructions on how to sell on Amazon, problems can arise in the sales process. The most common difficulties are:
- The wrong choice of keywords in the description can lead to the absence of the product in the search results. To avoid such situations, it is advisable to let English-speaking translators read the texts of product cards.
- The product does not appear on the 1-2 page of search results. In order for your card to be in the top, you need to intensively use marketing tools: reviews, keywords, improving your own rating, organizing sales, distributing coupons. If you do not do this, your competitors will, who will receive all the profits.
- Refusal to accept products at the Amazon warehouse. The reasons may be different, but in the end, your supplier may also refuse to pick up the goods without additional payment. Therefore, it is advisable to choose experienced suppliers and negotiate return conditions with them in such situations.
- Refusal to verify the identity to which the account is registered. If you do not have real estate and live unofficially in a rented apartment, then it is likely that your passport data will not be approved. Amazon doesn’t trust people if they leave little legal and financial footprint in society.
All of these problems are solvable, the only question is the amount of money and time spent on getting out of a difficult situation.
Keyword selection in Google Ads
In conclusion, we advise you not to despair if the first sales do not go as well as planned. Study statistics, analyze competitors, experiment, and you will definitely get a profit worthy of the effort expended.