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As the world’s leading e-commerce platform, Amazon is a veritable discovery for both aspiring and seasoned entrepreneurs who are in dire need of a digital platform where they can sell and exchange goods in a convenient and optimal way. With the implementation of its FBA (Fulfillment By Amazon) system, Amazon has moved forward with revolutionizing the digital commerce industry. This is what makes this e-commerce “venue” so appealing to online business owners, driving them to begin working with this viral platform.
That being said, starting an Amazon business seems to be the dream of every progressive entrepreneur of today, doesn’t it? At the same time, this entrepreneurial venture remains a little intricate even for the forward-thinking and daring business people of today.
Making the first steps to your Amazon business looks like quite a straightforward and effortless process. However, it does entail certain difficulties and sometimes gets pretty challenging for online marketers. Still, there’s one irrefutable argument on the behalf of this winning e-commerce giant: the great benefits of having a business on Amazon make it definitely worth trying and inspire entrepreneurs to keep moving through the obstacles they face when pulling all the stops to make their Amazon business a success.
In this all-embracing article, we’ll lay out the guidelines, steps, and recommendations on how to start an Amazon business. Do pay heed to our expert guide!
How Much Does Starting an Amazon Business Cost?
Amazon is a highly beneficial and groundbreaking online business platform. It aims to create a favorable environment for talented entrepreneurs to start up a business there. In this regard, the platform has developed a user-friendly, credible system of costs that doesn’t make marketers go into the red in the long run. Starting a business on Amazon is a lot cheaper than many believe it to be. With its FBA program, Amazon enables beginning entrepreneurs on a budget to create a fully-fledged, up-to-date business project. Besides, the platform offers its Amazon loan program that is a great opportunity to help enhance sales and also help in the overall promotion of the brand.
In the land-based market, you would have to give up huge funds and colossal effort for making something of their projects. Amazon’s FBA, on the contrary, provides you with the opportunity to compete with the world’s largest brands online at a pretty reasonable cost. Let’s try to dissect the major costs for creating an Amazon business.
As a rule, the biggest sums are spent on manufacturing, which includes the costs for start-up and the ongoing production. At the stage of manufacturing, your first step needs to be finding the manufacturer. You can consider the Alibaba platform, which offers hundreds of thousands of acclaimed manufacturers who will sell samples to you for a relatively low price. On average, the fee per sample is $100, so you can do the math and calculate an approximate price you’ll wind up paying
Now, it’s time to move on to photos and videos. Supporting your Amazon start-up project with professional photo and video content will only do you good. Impressive, compelling content will help you communicate your business message to the potential customer, drawing more users to try out your product. There are reliable and multifunctional services where you can track down professional and well-reviewed freelancers that can do magic with photo and video content for your business at a reasonable cost. Among such useful online platforms, there are Fiverr, Craigslist, Upwork, Freelancehunt, etc. The average price that photo and video content will require you to pay is $500.
Another substantial unit you’ll need to splurge on is your Amazon Professional account, which costs from $40 per month. Of course, you are always free to opt for selling via an individual account, but it charges you with $1 per each item, so you’re better off choosing the one we mentioned first.
Finding the Niche
Your profits as an Amazon seller relies heavily on how successfully you’ve chosen your niche. What is a niche on Amazon, then? It’s a specialized subcategory of products characterized by certain factors such as type, target audience, genre, and many other significant aspects that make a niche so special and distinctive. For example, the category “Books” that brings together all the literary creations sold on Amazon has a somewhat narrower, more specific subcategory dealing with postmodern literature. So, fiction and documentary books classified as postmodern form the niche of postmodern literature that Amazon sells. And, for many digital marketers, vending literature can be the best business to start on Amazon!
Why is it vital to stick to one niche when selling on Amazon? The thing is, by narrowing down the category you vend in, you can more accurately and effectively focus on important aspects of selling such as the quality of goods and delivery, instead of dispersing your strategy, time, effort, and other major tools of running an Amazon business on the products from varying subcategories and categories.
Now, let’s come to grips with how to find your Amazon niche. Here’s a list of recommendations you need to follow when selecting the niche.
1. Know what you like
First of all, you are expected to know what you’re really interested in and knowledgeable about. Selling the products you yourself would use and are familiar with very well largely multiplies your chances of winning the hearts of your potential customers. Your knowledgeability and passion for the niche you’ve chosen are bound to be mirrored in how you communicate with buyers, what quality you provide them with, and how good the product you sell is at large.
2. Consider the profit margin of the product
When deciding on the niche, it’s also crucial that you take into consideration the profitability of the product that belongs to a niche you’re considering. In fact, there are several factors that define the profitability of the product: Amazon fees, advertising, and shipping. These critical factors should be noted when you are trying to determine the product margin.
3. What about the product’s weight and size?
Logistics and shipping problems have always been around in the Amazon environment. For this reason, you must pay close attention to these aspects as you take a close look at your potential niche. Yes, selling a product with the excess size and that is hard to lift can entail additional charges and brings you a lot of troubles. Thus, the shipping amount will jump, too, which may subject you to substantial financial losses.
4. Use Amazon product research tools
To find out what niche fits you best as well as how lavish the assortment of Amazon niches is, you need to utilize the product research tools that this platform features. Amazon tools will help you navigate the platform and discover the niches its products are classified into, drawing conclusions about what segment you’d like to make money in.
Guide to Launching an Amazon Business
As was mentioned earlier, starting an Amazon business is quite a complicated process. But its complexity lies more in the number of stages it consists of rather than the realization itself. Yes, to make your Amazon entrepreneurship a top-notch digital project, you must include several critical steps in your online business undertaking.
1. Understand what Amazon is about
The foremost thing you need to do before starting an Amazon business is grasping the grand image of Amazon: what this platform is aimed at; why its role is so large in the modern e-commerce industry; and what value it has for today’s online entrepreneurs. Discover the platform before making money with its help.
2. Dive in the paperwork
Prior to creating an FBA account, you need to possess all documents that validate you as an officially registered entrepreneur. Amazon functions based on totally new, progressive principles that share very little with the outdated model of running a business in the non-virtual world. Still, working with this platform does require users to gather the necessary documents and only then proceed with their Amazon business projects. To have a business on Amazon you need:
- Federal tax ID or social security number;
- A tax professional;
- A credit card;
- A business license;
- State tax ID;
- Phone number;
- A utility bill
3. Create your Amazon account!
Now that you have collected all key documents for starting your Amazon career, it’s time to create your account. The first thing you need to do on your way to selling on Amazon is to follow this link which is the starting point of your business activity. The registration form may seem somewhat complex at first sight, but, in reality, it’s a neatly organized and all-encompassing questionnaire that requires only the important information from you, your entrepreneurship history, and the details that the system can use when creating your profile as an entrepreneur.
4. Choose the method of selling
Basically, there are four main ways of vending on Amazon. They are as follows:
- Online or retail arbitrage;
- Private labeling;
The first method, online or retail arbitrage, is the practice of buying an item on one market and then selling it via Amazon at a higher price. In sales, arbitraging has numerous benefits that marketers receive from price differences existing between two markets; the arbitrage on Amazon is especially profitable and easy. In retail arbitrage with Amazon, you are expected to purchase a product on a land-based market and sell it via Amazon. This activity is highly popular among sellers today as it allows them to greatly capitalize on the considerable imbalance.
When it comes to online arbitrage, marketers buy goods on an online platform similar to Amazon and sell it via Amazon in the end. This type of arbitrage is no less effective than the one mentioned previously. However, it requires much time from business owners they spend on seeking the goods they are interested in.
Dropshipping is an insanely popular practice among digital sellers thanks to the advantages it gives them. It’s relatively new and belongs to the latest Amazon business ideas that keep catching on avid entrepreneurs. Dropshipping is the process of delivering products from the manufacturer to the customer directly. Using the dropshipping model, the seller doesn’t keep goods in stock. Instead, they buy products from the third party and order shipment to the customer. It’s worth stressing that this method of selling is highly competitive among online entrepreneurs due to the number of sellers who adopt this practice in their businesses.
Private labeling is attaching the name of the retailer to the product, not that of a manufacturer. To do private labeling in your Amazon best business, you need to find a generic product and designate them with the name of your own brand of your product line. The benefits you can gain from private labeling are huge and attractive, but it consumes big investments and much time — most suppliers, for instance, won’t ship goods from overseas in small quantities, which puts sellers in unfavorable conditions and prevents them from organizing deliveries overseas if the number of goods seems insufficient to suppliers.
As for wholesaling, this activity is widely recognized by many online sellers. This practice is about selling goods in bulk. Wholesaling is so appealing to customers because it’s easy to scale. Yes, as compared to other no less beneficial selling methods, wholesaling takes up far less time and sources to be scaled. While requiring some substantial financial resources, this activity is still cheaper than, for example, private labeling. For many, marketers, however, the biggest challenge in wholesaling lies in finding good suppliers. The more products they display, the more reliable suppliers they need.
Drawing the Line
The Amazon culture of selling introduces adept entrepreneurs to a plethora of tempting, unprecedented opportunities in building and promoting their businesses. Running a business on Amazon means keeping pace with the hectic yet rewarding rhythm of modern e-commerce life. Making a deal with Amazon, the leader of the eCommerce industry, is a pretty straightforward and extremely beneficial process, where everything relies on your talent, knowledge, and professional dignity.