Sell on Amazon: 10 Tips to Make Money
Step 1: Research and Plan Your Amazon Business
Identify Profitable Products and Niches
Begin by using product research tools such as Jungle Scout, Helium 10, or Viral Launch to identify products with high demand and low competition. Look for items with a Best Seller Rank (BSR) consistently below 50,000 in their main category, and check for consistent sales velocity over several months. Analyze product reviews for common pain points that you could address with an improved version of an existing product. Consider niches with evergreen demand (e.g., home goods, pet supplies) rather than seasonal trends. Aim for products that are lightweight and small to minimize shipping and storage costs, and have a retail price point between $15 and $70 for a good balance of perceived value and impulse buy potential.
Understand Amazon’s Seller Fees and Policies
Before sourcing, familiarize yourself with Amazon’s fee structure. This includes referral fees (a percentage of the sale price, varying by category, typically 8-15%), fulfillment fees (if using FBA, based on product size and weight), storage fees (monthly, per cubic foot), and potentially long-term storage fees. Use Amazon’s FBA Revenue Calculator to estimate profitability for potential products. Additionally, review Amazon’s restricted product categories, intellectual property policies, and product safety requirements (e.g., CPSC regulations for children’s products) to ensure your chosen items comply and avoid account suspension.
Step 2: Set Up Your Amazon Seller Account
Choose Your Seller Plan (Individual vs. Professional)
Amazon offers two primary seller plans: Individual and Professional. The Individual plan is suitable if you expect to sell fewer than 40 units per month, as it incurs a $0.99 per-item fee instead of a monthly subscription. The Professional plan costs $39.99 per month but waives the per-item fee and provides access to advanced selling tools like bulk listing, inventory management reports, and eligibility for the Buy Box. If you’re serious about building a business, the Professional plan is almost always more cost-effective and provides essential features for growth.
Complete Account Registration and Verification
To register, you’ll need a valid credit card, a phone number, your tax information (SSN for individuals, EIN for businesses), and a government-issued ID (e.g., driver’s license, passport). During the process, Amazon will prompt you to provide your business name and address. Be prepared for a verification process that may include a video call or submitting additional documents to prove your identity and address. Ensure all information matches your official documents exactly to avoid delays or rejection. This process can take a few days to several weeks, so start early.
Step 3: Source and List Your Products Effectively
Find Reliable Suppliers and Manufacturers
For private label products, explore platforms like Alibaba.com or Global Sources to connect with manufacturers, primarily in China. For wholesale, look for distributors in your region or contact brands directly. When vetting suppliers, request samples to assess product quality, verify their business licenses, and check for certifications relevant to your product (e.g., CE, RoHS, FDA). Always negotiate Minimum Order Quantities (MOQs), unit costs, production times, and payment terms. Consider ordering a small test batch before placing a large order. For dropshipping, integrate with platforms like SaleHoo or Worldwide Brands, but be mindful of Amazon’s strict dropshipping policy requiring you to be the seller of record.
Optimize Product Listings with Keywords and High-Quality Images
Your product listing is your digital storefront. For titles, include primary keywords, brand name, and key product features (e.g., “Organic Cotton Baby Swaddle Blanket – Soft & Breathable – 3-Pack – Unisex Design”). Use bullet points for key features and benefits, incorporating secondary keywords naturally. Write a detailed product description that tells a story and addresses potential customer questions. Use a keyword research tool (e.g., MerchantWords, Ahrefs) to find relevant search terms. For images, use professional, high-resolution photos (at least 1000px on the longest side for zoom functionality) with a pure white background for the main image. Include lifestyle images showing the product in use, and infographic images highlighting features or dimensions. Aim for at least 7-9 images.
Step 4: Manage Inventory and Fulfill Orders
Decide on Fulfillment Method (FBA vs. FBM)
Fulfillment by Amazon (FBA) means you send your products to Amazon’s warehouses, and they handle storage, picking, packing, shipping, customer service, and returns. This grants your products Prime eligibility, significantly boosting sales. Fulfillment by Merchant (FBM) means you store, pack, and ship products yourself. FBA generally offers higher sales volume and less operational hassle, but incurs higher fees. FBM provides more control and can be cheaper for very large, slow-moving, or hazardous items. Many sellers start with FBA for most products but use FBM for specific items or as a backup.
Monitor Inventory Levels and Restock Strategically
Utilize Amazon Seller Central’s inventory reports (e.g., “Manage FBA Inventory” and “Inventory Age”) to track your stock levels. Set up alerts for low inventory. Calculate your daily sales velocity and lead time from your supplier to determine when to reorder. A common formula is (Daily Sales Velocity x Lead Time) + Safety Stock = Reorder Point. Avoid running out of stock entirely, as this can severely impact your product’s search ranking and sales momentum. Conversely, avoid overstocking, which leads to increased storage fees and potential long-term storage fees.
FAQs
Q1: How long does it take to start making money on Amazon?
A1: The timeframe varies widely depending on your niche, product, and marketing efforts. It’s common for new sellers to take 3-6 months to see consistent profits. The initial months are often spent on product launch, optimizing listings, and gaining initial reviews. Building a sustainable income can take 1-2 years.
Q2: Do I need a business license to sell on Amazon?
A2: While Amazon does not explicitly require a business license to open a seller account, it is highly recommended and often necessary depending on your local, state, and federal regulations. Operating as a legitimate business (LLC, Sole Proprietorship, etc.) simplifies tax reporting and can protect your personal assets. Consult with a legal or tax professional in your area.
Q3: What’s the biggest mistake new Amazon sellers make?
A3: A common pitfall is inadequate product research, leading to sourcing products with low demand or too much competition. Another major mistake is underestimating startup costs, including product cost, shipping, Amazon fees, and marketing, which can lead to running out of capital before achieving profitability.
Q4: Can I sell handmade items on Amazon?
A4: Yes, Amazon has a dedicated platform called “Amazon Handmade” specifically for artisans to sell unique, handcrafted goods. It operates similarly to Etsy but offers the vast reach of the Amazon marketplace. You’ll need to apply and be approved to sell in this category, demonstrating that your items are genuinely handmade.
