Interested in selling on Amazon? What is an FBA or a Private Label Product? Which products are in demand on Amazon? What commission should you expect?
Work your magic to generate revenue. We’ll answer the most common questions that trouble entrepreneurs before joining Amazon.
Table of Contents
Selling on Amazon: Give it a go
Clients often ask whether it’s worth joining Amazon. The answer is absolutely yes! Monthly traffic reached the 200 million user mark in 2020. Turnover has surpassed $300 billion and it continues to grow year-on-year.
Where there is growth, there is a chance for success. What is more, the turnover mentioned above is not generated by Amazon, but by the sellers on it.
Almost everything can be found on Amazon except houses, cars, cigarettes and live animals. These categories are excluded from sales.
You can sell worldwide through Amazon. There are 16 websites with different endings depending on the market they are for. The latest addition is Amazon in Poland.
The primary market for most sellers is the United States. The European market is dominated by the UK, Germany, France, Spain, the Netherlands and Sweden.
Amazon opeterates 16 country-specific sites.
What Are the Selling Options on Amazon?
Selling or reselling? You either have your own product or you operate as a reseller (selling other brands’ products). A specific original product on Amazon doesn’t just mean a product that comes from your workshop.
Whichever category you have a product from, be prepared for a stiff competition.
Your own product
In this case, you are selling on Amazon a product that you make yourself or someone else makes for you. These are called Private Label Products and have a unique EAN code. You list them under your brand name and offer them to your customers.
What falls under the category of Private Label Product?
- Original products
- Improved existing products
- Existing products to which you have just added your brand name
Competitors also have “unique products”
Naming a product your own takes on a whole new dimension on Amazon. Private Label Products cover a much wider range of goods than expected.
For example, you’re selling your own cosmetics brand, so you have original merchandise. If you offer regular makeup brushes that someone else makes and you just slap your brand on them, you have original goods as well. Amazon identifies both as unique products.
Selling goods from a supplier
The second way is to sell goods that you buy at lower prices from a manufacturer or supplier. Your goods are definitely already on Amazon. You will be listed as a seller with the same product.
At this point, the direct battle for customers begins. You are competing in particular:
- Price of the product
- Price and speed of delivery
- Availability of the product
- Your rating as a seller
What does reselling on Amazon really look like?
For example, you are selling a Huawei P30 Pro with a particular specification. From the picture below, you must compete for customers with nine other sellers.
A sample of reselling on Amazon. It can be a tight race.
Logistics and Storage of the Goods: How does it work?
You have two options to choose from. Either you pick the goods yourself (FBM, Fulfillment by Merchant) or you leave everything in the hands of Amazon (FBA, Fulfillment by Amazon).
Fulfillment by Merchant (FBM)
Here you have your own warehouse. You stock the goods yourself, or stock them with your own suppliers. Once the order is received, you ship the goods directly to the customer. You are responsible for packing and shipping, but you have the customer’s contact information. It can be used for remarketing.
Fulfillment by Amazon (FBA)
The second type of picking is much more popular. In this case, you or your supplier will bulk load the goods into Amazon warehouses. Amazon then packs and ships the goods after the order is placed.
The shipping cost is usually less than FBM, and delivery is relatively fast. Have you ever heard about Prime Shipping? Amazon usually delivers the goods within two days. However, with FBA you don’t have customer outreach, benefit from remarketing or a more personal approach.
Amazon gives preference in organic search to FBA sellers. It’s logical. You are paying Amazon for storage and logistics, and thus bringing Amazon additional profit.
How Much Money Can You Make on Amazon?
Most sellers really do make money, the data is supported by research. Nearly 75% of sellers make more than a thousand dollars a month.
Average monthly seller earnings on Amazon.
The amount of your earnings depends mostly on the strategy you choose. Amazon is not making a smaller ecommerce store in the country. You need an initial strategy to sell your products. It most often consists of perfect product listing combined with promotional pricing and PPC advertising.
Get a preliminary idea of your earnings directly on Amazon.
The cost calculator for selling on Amazon estimates your sales margin.
Why Doesn’t Everyone Sell on Amazon?
Does it all sound too good to be true? In addition to its enormous potential, Amazon hides a number of pitfalls.
First of all, you go through a rather complicated registration process. You choose between a professional and a basic sales plan. If you have your own brand, you have to register it.
Building a name and brand takes time and it is quite challenging. There is the constant risk of having your account blocked for violating the terms and conditions. Solving customer problems is not in your hands.
There is an unwritten rule: Amazon and the customer are always right.
Commission up to 15%
The administrative hurdles are not the only hardship. Count with a commission you pay to Amazon on every single item sold. Depending on the product and the segment, it can be up to 15% of the order.
Furthermore, there is a payment for the Amazon account management. If handling customer support on your own, it has to be good, fast and in the language of the country.
Benefits of Selling on Amazon
In general, customers are quite buyer-friendly. Amazon is a great platform to test your products and processes in foreign markets (especially in Western Europe and the US). When expanding into the German market, Amazon is often a necessity.
By joining Amazon, you get a new relevant sales channel without the need to build and finance your own eshop.
An Amazon Specialist Can Do Wonders
Are you serious about doing business on Amazon? Connect with people who have experience with sales. They know all the pitfalls and know how to deal with unfair practices of competitors.
Because of our clients interest, we have created a special service to support sales on Amazon. We will help you with:
- Analysis of the potential to expand
- Creating a return address
- Providing local customer support
- Importing and listing products
- Launching sales or optimising your account and products
If you are attracted by a global pitch and believe in your product, don’t hesitate to come sell with us. Globally and without the annoying restrictions of a domestic market.
Thanks to the Dexfinity editorial staff for creating this article
Proposal: Petra Dudášová, Mário Ráth
Writer: Adriána Černáčková
Feedback: Mário Ráth, Martin Bartl
Translator: Mária Streďanská
Publisher: Róbert Hošták
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