Make Money on Amazon: Top 10 Things to Know
Step 1: Understand Amazon’s Business Models
Research Popular Amazon Selling Methods
Before diving in, familiarize yourself with the primary ways people make money on Amazon. The most common and often most lucrative is selling physical products as a third-party seller. This encompasses strategies like retail arbitrage (buying discounted items locally and reselling them on Amazon), online arbitrage (buying discounted items online and reselling them on Amazon), wholesale (buying products in bulk directly from brands or distributors), and private label (creating your own brand and manufacturing products). Beyond physical goods, consider services like Kindle Direct Publishing (eBooks), Amazon Associates (affiliate marketing), or even Amazon Mechanical Turk for micro-tasks.
Identify Your Niche and Product Type
Success on Amazon often hinges on finding a profitable niche. Don’t just pick a random product. Research categories with high demand and relatively low competition. Use tools like Jungle Scout, Helium 10, or Viral Launch to analyze product sales data, keyword search volume, and competitor listings. Look for products with average monthly sales of at least 200-300 units, a selling price between $15-$50 (to allow for healthy margins after Amazon fees), and manageable size/weight to keep shipping costs down. Consider product types that solve a problem, have unique features, or cater to a specific hobby or demographic.
Step 2: Choose Your Amazon Selling Strategy
Decide Between FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant)
This is a critical decision impacting your operational workload and customer experience. With FBA, you send your inventory to Amazon’s fulfillment centers, and Amazon handles storage, picking, packing, shipping, customer service, and returns. This grants your products eligibility for Prime shipping, which is a significant conversion booster. FBM means you store your inventory yourself and are responsible for all aspects of shipping and customer service. FBA typically incurs higher fees but offers unparalleled convenience and access to Prime customers, while FBM provides more control over packaging and shipping costs for specific types of products (e.g., very large, fragile, or custom items).
Consider Amazon Dropshipping or Merch by Amazon
While FBA/FBM are traditional product selling methods, Amazon offers other avenues. Dropshipping on Amazon involves listing products you don’t physically hold. When a customer buys, you purchase the item from a third-party supplier (e.g., AliExpress, another retailer) who then ships it directly to your customer. Amazon has strict rules against dropshipping from other retailers where the packaging indicates the original seller. Merch by Amazon allows designers to upload custom artwork for t-shirts, hoodies, pop sockets, and more. Amazon handles production, shipping, and customer service, and you earn a royalty on each sale. This is a low-risk, no-inventory model ideal for artists or those looking for passive income.
Step 3: Set Up Your Amazon Seller Account
Register for an Amazon Seller Central Account
Navigate to sellercentral.amazon.com and click “Sign Up.” You’ll need a valid, internationally chargeable credit card, a phone number, your bank account number and routing number, and your tax information (U.S. Tax ID or Social Security Number). Choose between an Individual plan ($0.99 per item sold) or a Professional plan ($39.99 per month, regardless of items sold). The Professional plan is recommended if you plan to sell more than 40 items per month, as it unlocks advanced selling tools, reporting, and eligibility for the Buy Box.
Complete Necessary Tax and Payment Information
During the registration process, Amazon will prompt you to complete a tax interview. For U.S. sellers, this involves providing your Employer Identification Number (EIN) or Social Security Number (SSN) to fill out a W-9 form. Ensure all information is accurate to avoid delays in account verification and disbursements. You’ll also need to link your bank account for receiving payments. Amazon typically holds funds for a week or two after a sale before disbursing them to your linked bank account, so factor this into your cash flow planning.
Step 4: Source and List Your Products
Find Reliable Suppliers for Your Products
Sourcing is critical for profitability and product quality. For private label or wholesale, consider platforms like Alibaba.com for manufacturers (ensure you request samples and perform quality checks), or wholesale directories like Worldwide Brands or SaleHoo. For arbitrage, you’ll be sourcing from local retail stores (Walmart, Target, Kohl’s) or online retailers (clearance sections, flash sales). Always verify supplier legitimacy, negotiate pricing, and establish clear communication channels regarding product specifications, lead times, and quality control. For private label, consider third-party inspection services like SGS or QIMA before products leave the factory.
Create Optimized Product Listings with High-Quality Images
Your product listing is your storefront. Start with a compelling title (including main keywords, brand, and key features). Write benefit-driven bullet points that highlight what the product does for the customer. Craft a detailed product description that tells a story and answers potential questions. Most importantly, invest in high-quality product photography. You need at least 7-9 images: a main image with a pure white background, lifestyle shots showing the product in use, images highlighting features, and potentially an infographic. Use Amazon’s A+ Content (formerly Enhanced Brand Content) if you are brand-registered to further enhance your product page with rich media and storytelling.
FAQs
Q1: How much money do I need to start selling on Amazon?
A1: The initial investment varies significantly based on your chosen strategy. For retail/online arbitrage, you might start with as little as $100-$500 for initial inventory. For private label, which requires larger inventory buys, professional photography, and potentially branding/packaging design, expect to invest $2,000-$5,000 or more. Remember to factor in Amazon’s monthly Professional Seller fee ($39.99), product costs, shipping to Amazon (if FBA), and advertising budget.
Q2: How long does it take to start making a profit on Amazon?
A2: This depends on your product, marketing efforts, and initial investment. Some arbitrage sellers can see profits within weeks of their first sales. Private label can take 3-6 months to become consistently profitable as you optimize listings, gather reviews, and scale advertising. It’s not a get-rich-quick scheme; consistent effort and optimization are key.
Q3: Do I need a business license to sell on Amazon?
A3: Amazon itself does not typically require a business license to open a seller account, especially for individual sellers. However, your local, state, or federal government might require one depending on your business structure and location. It’s highly recommended to consult with a legal or tax professional to understand the specific requirements for your business in your jurisdiction. Many sellers start as sole proprietors and register as an LLC later.
Q4: What are the biggest challenges for new Amazon sellers?
A4: New sellers often face challenges with product sourcing (finding profitable, high-quality products), understanding Amazon’s complex fee structure and policies, managing inventory effectively, dealing with competition (especially from established sellers), generating initial sales and reviews, and effectively using Amazon’s advertising platform (PPC). Patience, continuous learning, and adapting to Amazon’s evolving marketplace are crucial for overcoming these hurdles.
