How to Start an E-Commerce Business on Amazon in 5 Simple Steps

Why You Should Start Your ECommerce Business on Amazon

Amazon is a great platform for ECommerce beginners for a number of reasons:

1. It gives you instant access to customers who are ready to make a purchase. They already know what they are looking for and this is incredibly beneficial for small businesses who want to grow their brand.

2. Amazon is known for its credibility and buyers are more likely to buy from a platform that they can trust.

3. If you choose to sell with Fulfilment by Amazon (FBA), you’ll never have to worry about the logistics aspect of your business as they are able to pack, ship, and provide customer service for all your products.

Now that you know the benefits of this platform, we created this guide with step-by-step instructions on how to start your own eCommerce business on Amazon.

How to Start an E-Commerce Business on Amazon in 5 Simple Steps

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1. Find Products to Sell

There are many popular ways to source products to sell on Amazon but if you’re just starting out, you might want to consider some of these low-cost options first:

• Retail Arbitrage

This refers to sellers who buy products in retail stores at drastically reduced prices and resell them on Amazon. Sellers who do this keep a sharp eye out for retail clearance and inventory reduction sales both online and in retail stores. It’s not easy to figure out which products are profitable at first but you’ll get better as you go along.

• Handmade items

If you’re planning to sell products that you make yourself, you should take time to understand Amazon’s seller fees for handmade goods to ensure that you’ll be making enough profits. The other challenge is ensuring that you can keep up with production once sales for your products begin to take off.

• Dropshipping

Dropshipping is a popular method because your vendor only charges you for the item when someone orders it making it a low-cost and low-commitment way of selling. However, dropship products tend to bring in low profits after paying your Amazon seller fees. Apart from that, you also have no control over defective products, inventory shortages or late shipments so make sure that you find a dropship vendor that is reputable and reliable.

2. Set up your Amazon Seller Account

There are two types of Amazon Seller Accounts to choose from: Individual and Professional.

• The Individual Plan costs nothing to set up but you’ll have to pay S$1.07 every time you sell an item.

• The Professional Plan offers more features but costs you S$32.05 per month no matter how many items you sell. (Psst, fees for the Professional Plan will be waived until 31 December 2020 so you should take this opportunity now!)

It’s important to take note that for both plans, Amazon also collects a referral fee for each sale, which is a percentage of the total transaction depending on the product category.

With these two plans, Amazon gives you the flexibility to sell one item at a time or as many as you possibly can. Think about which plan is better for your business but don’t worry if you change your mind as you can change plans at any time.

3. Create your product listings

After setting up your account, you need to create your product listing. You can either match an existing listing if somebody else is already selling the same product on Amazon or create a new listing if you are the first or only seller for that product. It’s important to make your listings accurate, concise, and understandable so that your customers will find it easy to find your products and be more inclined to purchase them.

4. Manage your inventory

Amazon will actually lower your Seller Rating for not shipping an order for an item that you state as in-stock. To ensure that your seller ratings remain high, remember to keep your inventory updated regularly. Amazon automatically reduces your inventory count as your products sell so it will be easier for you to take note of the amount of stock that you have.

5. Fulfill your orders

Your Seller Rating will also be affected if you don’t fulfill your orders in a timely manner so make sure that you choose a method that is suitable for your business. There are 3 ways you can do this:

• Fulfillment by Merchant (FBM)

Many Amazon sellers start out by shipping their orders themselves and you can choose to charge for shipping or to offer it for free. However, this means that you’ll have to settle the packing materials and logistics on your own.

• Third-Party Fulfillment Partner

Another way is by using an outside fulfillment company that can handle the packing and shipping for you. This is usually for eCommerce businesses that sell in high volume and use other platforms apart from Amazon. It might not be a cost-effective solution for small businesses that are just starting out but it is a good option to know once you want to scale up your business through other eCommerce platforms.

• Fulfillment by Amazon (FBA)

With Fulfillment by Amazon (FBA), you can ship your products to Amazon and they will help to stock, pack, and ship your products for you. This comes with additional FBA fees but you also get to enjoy perks that can boost your sales such as free shipping for Prime members and higher rankings for product listings.

Amazon is an incredibly accessible platform that makes it easy for anyone to cash in on the eCommerce boom. But ultimately, if your goal is to maximize your net profits and grow your business into a full-scale success, creating a business account that allows you to manage your business finances on the go will give you an edge over your competitors.