Amazon is fast becoming the top eCommerce website due to business upgrades such as content management, inventory management, analytics, audience targeting, and advertising. As one of the top eCommerce platforms, more and more sellers turn to Amazon to improve their sales. However, is it worth it to start your eCommerce business on Amazon?
How to Grow eCommerce Business on Amazon
Before you start piling up on your inventory and decide to sell on Amazon, make sure you are prepared for the logistics. Selling on Amazon is not just signing up for an account, start advertising your products, and selling them. There are a couple of things that you need to prepare for, such as:
- Choosing Between the Individual or Professional Seller Account – How many products do you plan to sell? The answer to this question would greatly depend on which account is best for you. Both account types can list their products in more than 20 categories. Professional sellers, who meet certain requirements, can apply for an additional 10 categories.
If you have less than 40 items to sell, you can sign up for an Individual Seller account which charges you $0.99 per item plus other Amazon fees. On the other hand, if you have more than 40 items to sell, then the Professional Seller account will charge you a flat rate of $39.99 per month plus additional fees. The monthly fee applies no matter how many items you sell.
- Creating Your Amazon Seller Account – Creating an Amazon Seller Account is not like signing up for an email or social media account. You need to have the following:
- A credit card that can be used internationally.
- Bank information that includes the account number and routing number.
- Tax identification information.
- A separate business email account. Each seller central account requires a different email so if you plan to expand to other countries, you have to create another business email for that account.
- Selling as an Amazon Vendor or as a Third Party Seller (3P) – There’s not much to decide on here as being an Amazon Vendor is by invite only. However, if you are one of those who will receive an invite from Amazon, here are some things to consider:
- An Amazon Vendor sells inventory as Amazon. Amazon buys wholesale products from the vendor then lists the items as “Sold by Amazon.” At this point, the seller does not have control over advertising, inventory management, and prices because Amazon already “owns” the products that you sold them.
- An Amazon Third Party Seller sells on Amazon directly to customers. A bit more work is required as sellers have to deal with inventory management, shipping and inventory fees, ads, marketing, and price control.
- Considering the Amazon fees – As an eCommerce business, even if you sell on Amazon, there will always be fees. Much like when you have a brick-and-mortar store, you also get to pay fees and taxes. Among the Amazon fees that you would need to pay are:
- Subscription Fee – if you are an Individual or Professional Seller
- Variable Closing Fee – depends on the shipping details of the product and vary for media and non-media items
- Amazon Referral Fees – fees that you pay to Amazon depending on the product and category
- Fulfillment Fees – fees that are based on package dimensions and weight
- Deciding the Shipping and Fulfillment Option – There are 2 options to choose from: Amazon FBA vs FBM. FBA means Fulfillment by Amazon wherein Amazon handles the handling, packing, and shipping of your inventory. FBA also allows you to sell on Amazon Prime. Probably the best benefit you get from FBA is the faster delivery service.
On the other hand, FBM means Fulfillment by Merchant. This means that as a seller, you are in charge of picking, packing, and delivering the items that you sell. FBM does not give you the option to sell on Amazon Prime. You would also need to find a reliable 3P courier service that can deliver your products fast.
Growing your eCommerce business on Amazon has its perks and downsides. Probably the best thing about selling on Amazon is that it is already an established eCommerce platform that is widely known. There may be fees and additional responsibilities involved such as managing your inventory, responding to customer service messages, and protecting your account health. As opposed to managing your eCommerce website, wherein you have to worry about regular technical maintenance, SEO improvement, and updates, selling on Amazon is not as tedious.
If you want to move forward with your eCommerce business plan, give us a call and we’ll be glad to assist you.
“If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”-Jeff Bezos, Founder of Amazon.com