Selling on Amazon can be a lucrative venture when done right. If Google is the king of search engines, Amazon is the top e-commerce platform. According to statistics, the platform earns $14,900 every second, $894,000 per minute, and more than $53 million in just an hour. Just how popular is Amazon? Well, 63% of customers start their online shopping search from Amazon. So if you are planning to succeed as an Amazon seller, you need to do it right.
To become successful as an Amazon seller, it is not enough that you just list your products and its pricing on the platform. When done right, 46% of Amazon sellers can achieve an average Amazon FBA success rate of 11-25% with 64% likely to become profitable within 12 months. So if you are already an Amazon seller or planning to become one, this article will guide you on how to succeed as a seller on the platform.
Steps On Becoming A Successful Amazon Seller
- Create an Amazon Seller Account
- Find The Best Product
- Choose Your Sales Channels
- List Items Correctly
- Price Your Items Competitively
- Choose The Right Pricing Strategy
- Look For A Supplier and Supplier
- Identify Your Most Profitable Items
- Focus on Customer Service
- Market Your Products
How To Successfully Sell On Amazon
Amazon is a huge platform for selling different products which can make such a venture a daunting task. In its desire to be “all things to all people”, Amazon has built an unbelievable catalog of over 12 million products. If you include the marketplace sellers, the number increases to more than 350 million products. Whatever it is that you want to sell on Amazon, read on to learn how to become a successful Amazon seller.
1. Create an Amazon Seller Account
Everything starts with creating an Amazon seller account. You may think that it is additional work for you but having one offers a lot of benefits. It only takes a few minutes to do so and it will keep all the necessary information handy for you and your customers. In creating a seller account, you will need to provide the following:
- Bank Details. You will need to provide your credit card details to cover any cost of your Amazon subscription and any advertising costs. This is where your funds will also be deposited into.
- Business Email. If you don’t have one yet, creating one should be the first thing you should be doing before registration. Amazon will be using this email address to email you after you register. Thus you need to make sure that this is active before providing your details.
- Business Details. Aside from your business email address, you will also need to provide your business details such as address, name, and contact information.
- Phone Number. During the registration process, Amazon will contact you so make sure to stay active and your phone is charged and within reach.
- Tax Information. This will include your social security number, company Federal Tax ID Number, and State Tax ID information.
Maybe you are still having second thoughts about creating an Amazon seller account? One of the biggest benefits of being a registered Amazon seller is that it builds your credibility as an Amazon seller. Also, you can leverage the platform’s huge customer base. When shoppers visit Amazon, they are looking for products and not just a specific store.
2. Find The Best Product
Amazon is a great place for selling different products. Perhaps one of your biggest concerns is which product to sell on Amazon. If you don’t have an idea yet about the best product for you, don’t pressure yourself too much. Finding the best product does not happen overnight. It takes time and patience. So here are some tips on how to find the right product to sell.
It is worth noting that while Amazon is a great platform for selling different products, certain items won’t even sell at all. Ultimately, the best products to sell on Amazon are those that make sense for your business. In order to do this, you need to establish a general criteria before looking for specific items such as the following:
- Product Cost. How much is the cost of manufacturing or buying a product wholesale? Ideally, you should look for a product that would sell for roughly four times what it will cost when sold by a wholesaler.
- Sale Price. What is the estimated cost of the product if sold on Amazon? Consider the margin between the cost, Amazon transaction fees, and the sale price for generating a profit. You want to sell products that are not cheap and that you cannot make a profit from them. At the same time, the price should also not be high as it will scare customers away. The sweet spot for product cost is between $10 – $70.
- Shipping. Will there be no problem with shipping or will you need help with fulfillment? If this is the case, you may want to consider dropshipping but make sure to follow Amazon’s rules.
- Competition. Which company will you be competing with? Can you beat or stay competitive with them in terms of quality and price?
- Customers. Will you be able to find your ideal customer or should you still implement branding strategies?
Also, when looking for products to sell on Amazon, pay attention to the following:
- High Demand. Search for products that sell at least 300 units a month. This translates to 10 sales a day which is a good benchmark.
- Low Competition. Look for products that not many online sellers are selling. This will make it easier for your products to show up at the top of Amazon rankings.
- Fewer Reviews. Think of this, if the product you plan to sell has hundreds or thousands of reviews, do you think your product will get noticed? Look for a niche where the top sellers have less than 400 reviews.
3. Choose Your Sales Channels
In order to determine your sales channel, it is important to first identify your target audience. You could use your own website or design and build an e-commerce store from scratch or use a tool like Amazon Store Builder to create a new website designed specifically for that. These tools are loaded with built-in features like processing payments, managing customer reviews, and others. It also has a dashboard for tracking sales, reviews, prices, and other performance metrics.
You can focus on a single sales channel or combine several. Experiment to see what works best for your business model. Although your business is online, you can use offline channels to give it a boost. Most customers spend a lot of time on social media channels like Facebook, Instagram, and others so it might be wise to include it as one of your sales channels. You can use social media for advertising, communicating with customers, or publishing content.
Another effective sales channel is livestream. You could use channels like YouTube or Facebook to post the actual product or tutorials on how you can use it. It is estimated that live streaming will be worth $35 billion in the US by 2024. Live shopping saw an increase at the height of the COVID-19 pandemic and it is estimated that live commerce sales could account for 20% of all e-commerce.
4. List Items Correctly
This is self-explanatory because you do not want to see your product in the wrong category. Ensuring that your products are listed and ranked in the category where they should be can help increase your sales. Proper item listing does not only mean putting products in the right category but also following the proper format in listing your item. This means optimizing your product listing to boost its search engine rankings.
Creating top-notched content can help increase the overall sales of a product by 3-10% on average. This is because there is high customer satisfaction because they know that they are buying the right product. Even if the product is listed in the right category, the customer may not be able to find it if it is listed too broadly. That is why you should be as specific as possible for customers to locate your product effortlessly. If you are selling a brand or manufacturer, make sure to include it in the listing because your product will not be listed by Amazon if it does not mention your brand or manufacturer.
In addition, you should also optimize your listing with the right keywords in order to boost their position in search results. The listing should be comprehensive and accurate. The product should match the description. Doing otherwise would increase your seller order defect rate (ODR). The listing should be accompanied by the right image as well. As they say. “What you see is what you get.”
5. Price Your Items Competitively
You want your products to be at par with the competition in terms of cost. If your price is too expensive, you are unlikely to get many sales. On the other hand, if you are priced too low, your potential profit would suffer. The key is to find the sweet spot between the two. Of course, there are factors that can affect the pricing but you do not want to be the cheapest.
At the end of it all, your aim is to encourage customers to regularly buy from you. Here are the steps on how you can ensure that your products have a competitive price.
Calculate Your Costs
Before deciding on whether to increase or lower your prices, you will first need to consider the costs you incurred in the manufacture of goods and services. Consider different expenses like manufacturing and marketing as well as insurance and salaries. Check whether the prices you will charge is enough to give you a decent margin ranging from 20% to 40% above cost value, which is regarded as a good return.
Research The Competition
Make a competitor analysis. Check out who’s offering similar products and the prices they charge. Visit their website, talk to suppliers, or conduct mystery shopper surveys. This will help determine whether your prices are right for the market or if you have proper merchandising to achieve maximum sales.
Make A Loss
Look for a product that is not in itself profitable but attracts customers. By increasing the sales of your pricier products you can effectively offset any loss.
Be Unique
Despite the competition, there will always be something unique about your product offering. Focus on what customers like about your product. Chances are they will be willing to pay more to keep on enjoying it.
Don’t offer too many incentives
This is a common tendency especially if you want to encourage large orders because you are just new to the market. However, offering too many incentives will only eat into your profit.
Vary Price Offerings
Varying your prices in different channels can also be a good option in staying competitive in terms of price. For example, you can lower your products on your website than on your physical store because there are fewer overheads.
6. Choose The Right Pricing Strategy
Your pricing strategy will depend on the item you are selling. A luxury product requires a different pricing scheme than a bargain one. While it is unlikely that your product will switch from luxury to bargain and back, you can vary the pricing strategy to meet market demands. Here are the 5 most common pricing strategies:
Cost-Plus Pricing
Some businesses and consumers that cost-plus pricing or mark-up pricing is the only scheme. It takes into consideration the different costs for the unit to be sold with the addition of a fixed percentage to the subtotal. One of its benefits is that it can be simple and time-saving. However, it does not take into consideration the consumer.
Competitive Pricing
In competitive pricing, you want to make sure that you stay on top of competitor pricing and make the necessary adjustments. Competitive pricing can involve one of three approaches namely cooperative, aggressive, and dismissive. In cooperative pricing, you match what the competitor is doing. On the other hand, in an aggressive stance, your mindset is if the competition increases, your pricing will remain the same. If they reduce their pricing, you will reduce your pricing even more. Meanwhile, dismissive pricing is an approach wherein you price as you wish and do not react to what the competition is doing.
Price Skimming
Price skimming involves charging a high price at first and then lowering it over time. This can be implemented if you are introducing a new innovative product that has no competition. Once the market of the new product becomes saturated and sales dip, you start to lower the price to target a more price-sensitive market segment.
Penetration Pricing
If you are in a market selling similar products and prices are customer-sensitive, offering significantly lower prices can make your products stand out. You can encourage customers to try your brand and make it in demand. This could result in an economy of scale and reduce your unit cost.
Value-based Pricing
With this pricing scheme, the perceived value to the customer is primarily based on its suitability to the needs and wants of each customer. When your pricing does not work, the answer is not just to lower it but determine how it can better match customer value. You may need to alter your product to make it more suitable for the market.
7. Look For A Supplier and Shipper
Finding a supplier is vital to Amazon selling success. You want to make sure that you have enough stock in your inventory to keep delighting your customers and ensure their loyalty. Ask for several quotes from different suppliers. In searching for a supplier, always keep in mind that the cheapest is not always the best. At the same time, finding a supplier does not mean spending an arm and leg on manufacturing and shipping.
Don’t aim for the highest quality product that will make a little difference in your overall product experience. It also does not mean that you should go for the cheapest material for the cheapest price which could result in a flimsy product. Common sense dictates that you should go for a quality product with affordable manufacturing costs.
Shipping time can make a huge difference in a successful Amazon selling venture. 83% of shoppers consider free delivery as the most important factor when ordering online. In addition, 54% of online shoppers abandon their shopping carts due to delivery costs. Fulfilling orders yourself can be a challenge and you have the option to outsource order fulfillment and ensure that your customers stay happy and keep doing business with you.
8. Identify Your Most Profitable Items
Just how important is it to identify your profitable items? Well because they will contribute to growing your business. Knowing your most profitable items will help make an informed decision in the future. In addition, it will help you optimize your marketing strategies. In addition, it will help you allocate your marketing budget and increase your marketing investment in the process. So how do you identify your most profitable items? Here are the factors to look out for when determining product profitability:
- Cost-Benefits Analysis. In this method, you compare the costs associated with the manufacture and marketing of a product to the potential revenue.
- Break-Even Analysis. Here you calculate the number of units of a product that must be sold to cover the costs of production and marketing. By determining the break-even point, you can determine where your product becomes profitable,
- Margin Analysis. In margin analysis, you calculate the profit margin of a product by deducting the production cost from the selling price.
- Return on Investment Analysis. In this method, you calculate the ratio of the profit generated by the product to the investment made on it. Calculating the return on investment can help you determine profitability compared to other investment options.
- Market Share Analysis. This method calculates the percentage of a product’s sales within a specific market or industry.
9. Focus on Customer Service
You may have the best products on Amazon but if it is not delighting the customers, it does not mean anything. The golden rule for success in Amazon selling is to be customer-centric. Start with them and work backward. Pay close attention to customer reviews. According to a local consumer survey conducted by Bright Local, 49% of consumers trust reviews as much as personal recommendations from friends and family members.
As much as possible, try to answer questions and reply to feedback. This is your opportunity to build rapport with a potential buyer. It does not matter if it takes a few hours or a day to respond, the important thing is you should not let questions sit unanswered in your inbox for days or even weeks. Customers want quick answers to their queries so you need to address them as soon as possible.
Another way to become customer-centric is to reward your most loyal customers. If you get regular orders from these customers, you need to make them feel appreciated. You can give them a simple note or offer them small discounts or a bonus gift for their order. This will encourage them to keep coming back. Also, you need to make sure that your customer is really benefiting from your product.
10. Market Your Products
To stay competitive and break through the noise, you need to market your products to the potential market. Marketing your product will depend on how your potential customers view your product. Surely you want your customers to look as awesome as possible, don’t you? Here are some guidelines on how to give your product a WOW factor to customers.
Your product listing plays a crucial role in making your products visible to potential customers. It should be optimized to ensure conversion and increase your sales in the process. Optimizing your listing means using the top keywords, using bullet points, product descriptions, and images.
The keywords you use for your products will help ensure that your product will appear on the top pages of search engine results. There are keyword search tools that you can utilize online to boost your product listing. This will help you target the right audience without second-guessing,
Your product listing should be accompanied by professional-looking photos. It is best if you hire a professional Amazon photographer. They know the rules and requirements that Amazon implements. At the same time, it will help take off the stress from your hands.
Amazon is like a huge jungle. You need skills and knowledge to ensure that you survive in the jungle. These tips will help you become successful in your Amazon selling venture.
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