The 7 Things You Need to Know Before Selling on Amazon in 2021
Ready to take the leap and start your Amazon business? We've been building and growing Amazon FBA stores for years. Here's our 2021 guide to getting started.
October 20, 2021
Let’s face it: physical retail sales have been plummeting for a long time, and COVID may just have been the final nail in the coffin. Online sales have sky-rocketed over the past 18 months, seeing over a 40% increase in 2020 alone. If you’re looking to launch a new business, there’s only one place to do it - online.
Even more compelling than the growth of online sales is the concentration of that growth within one platform. Amazon Marketplace has accounted for close to one-third of all e-commerce activity within the U.S. in the past year.
While many have criticized the unbalanced success of Amazon sales compared to smaller businesses, there’s a lot of room for ordinary individuals, entrepreneurs, small businesses, and new sellers to thrive by taking advantage of Amazon FBA.
Amazon has become less of a brand, and more of a search engine and delivery service. Companies from all over the world - big, small, and in-between - can become highly profitable simply by listing their products on Amazon's marketplace.
If you’re looking to get in on the action, you need to be aware of a few things.
Drawing on that experience, here are some critical steps that I would suggest your brand take before you're ready to start selling on Amazon in 2021.
- How Amazon Seller Central Works
- What FBA Brings to the Table
- How to Manage Your Own Business
- The Value of Quality Market Research
- The Importance of Creating and Protecting Your Brand
- How to Maximize Your Listings
- Why You Shouldn’t Reinvent the Wheel
Let’s dive in.
Understanding Seller Central
Seller Central is the hub that you gain access to once you sign up as an Amazon seller. When you have an Amazon seller account then you need to operate this seller central. This is where amazon sellers can access all their stats, products, inventory, reviews, etc. Getting a Seller Account is the first step to launching your business on Amazon.
Amazon has two membership options for Seller Central accounts. You can choose between an individual account or a professional account. Individual amazon account is perfect for those who have a small business and are simply looking to expand their audience to include Amazon customers. This will allow you up to 40 items per month and charge you $0.99 per selling product, rather than a monthly fee for selling products.
However, if you are looking to build and scale an online business or take an existing, larger business to the next level - you’ll need a professional amazon account. The professional seller account will cost you $39.99/monthly amazon fees but give you access to the tools you need to grow a truly thriving Amazon store.
Before you even consider jumping into business on Amazon, it’s best to evaluate your goals and determine what a good starting point is for you to choose the right membership and model for your online store.
What FBA Brings to the Table
FBA simply means “Fulfilled by Amazon,” and is a must-have if you want to see your business thrive and to provide great customer service. While it is possible to sell on Amazon and handle inventory/shipping details yourself, using FBA gives you the freedom to be more hands-off with minor details so that you can focus on taking your online store to the next level.
Amazon FBA sellers ship their products directly to an Amazon fulfillment center. They handle labelling, packaging, storage, and shipping. They also receive payments from your customers and disperse payments to you on a biweekly basis. On top of all this, Amazon will handle customer service and returns.
While there are fulfillment and storage fees involved, the benefit far outweighs the cost of utilizing FBA. Your products will be Prime Eligible, they’ll ship fast, and you won’t have to worry about the headache of inventory.
For the vast majority of entrepreneurs, this is the best option. For a smaller business individual seller with physical retail locations looking to expand to Amazon after start selling, FBA still should not be overlooked - but may not be quite as necessary to sell on amazon.
Managing Your Business
It can be confusing to start a business online. There are many different options of how you can structure yourself and how you can choose to handle the organizational side of things. At the basic level, there are a few things you’ll absolutely need before you can open a seller account to sell on Amazon.
These would be:
- A bank account and routing number
- Contact information
- Government issued I.D.
- Credit card
- Tax details
However, depending on how far you want to scale this business, you may want to consider registering yourself as a formal business entity to handle taxes and liability. If you decide to sell privately without any business structure in place as a private label seller, you’ll need to handle all income as self-employment income and deal with taxes accordingly.
This is a popular choice for those just getting started - but once you have more skin in the game it’s worth looking into forming an LLC or even simply formally registering as a Sole Proprietorship and registering a “DBA” (doing business as) to become a professional seller.
Make sure you have a bank account and credit card specifically set aside for your business on Amazon and other sales channels. Don’t use your personal financial accounts when setting up your customers' shop or online store. Whether you choose to register as an entity or not, a disorganized business cannot grow.
Maintain a card and account specifically for your store, and track all income/expenses from product sales and sponsored display ads of your professional seller account.
Whether you’re registered as a business or not, taxes will be more complicated when you have an online business than working for a “regular” employer. Getting your taxes done professionally or utilizing an online tool like QuickBooks is a great option if you’re not used to handling these kinds of finances.
There’s more to your business than just the paperwork. Nobody gets anywhere without a clear vision of the destination. Your business (no matter how you formalize it) needs a clear financial assessment/realistic budget, financial goals, a business schedule, and a plan of attack for marketing/product research. Take the time before you start to get these things in place.
The Value of Quality Market Research
One of the biggest mistakes that new e-commerce entrepreneurs make is forgetting to do quality market research. If you don’t take the time to investigate what products are worth your time, what selling items you should select, you will have failed before you’ve even started.
When you decide to sell products on Amazon or other platforms in the same period, you have to do some market research so that you can have the product ideas. By doing this you can understand that which product sales.
Market research is not an easy task. Amazon has become a highly saturated search engine and it is typical to have dozens of pages of results for the same item. The key here is to find a niche with high search traffic and low competition.
Once you’ve found a niche like this, the process of choosing quality products that can be sourced for minimal cost and sold with a high-profit margin begins.
You’ll also need to find competitors who offer similar products and track their sales/success over time, to get a feel for what your loyal customers are looking for and how they are buying.
Oftentimes sellers are not naturally gifted in this arena. Your talents may be in marketing and e-commerce, but not so much in research and analytics. If this isn’t your thing - outsource the market research portion of the process to a professional who can get you started on the right foot.
The Importance of Creating and Protecting Your Brand
Branding cannot be ignored when you sell on Amazon. People are picky - and they will not buy just any product. Customers on Amazon look at more than just reviews to decide if your product is viable. They examine the logo, the quality of the pictures, the descriptions - everything is under a magnifying glass when there is such an abundant source of products.
Your product needs to stand out with clear, crisp, and captivating branding. You want your customer to feel like you are organized and consistent across the board. This builds trust and allows your customers to latch onto your label as one they can come back to, time and time again.
To help generate brand awareness more quickly, you should create an active social media account for audience engagement. You could also allocate a sizable marketing budget for Amazon ads.
I've found that Sponsored Product Ads are the highest converting ad types on Amazon, but Sponsored Brand Ads and Sponsored Display Ads are perfect for generating sales can convert your selling items into the best sellers.
Creating a powerful brand in today’s digital world is not enough. You also need to know what tools there are to protect your brand. Amazon has their own form of brand protection called Brand Registry. As you gain success, enrolling in this program will become a must.
Maximizing Your Listings
There is a science behind getting your listing on the first page of an Amazon search. To master this science, you need to understand how to use every field within a product listing and how to make the most of your words with SEO. Each one of the fields shown below requires optimized, specific terms to get you at the top of the search.
I recommend using an e-commerce platform that syncs with your Amazon listings so that you can sell both from Amazon and your website. Not everyone who is gifted in the branding and administration necessary for launching a business is also gifted in SEO and maximization.
You can take marketing courses, pay for services to do the work for you, or (and of course, I’m a little biased here) take the easy way and let a mentor show you how to do this step by step, with unlimited support along the way.
Don’t Reinvent the Wheel
Selling on Amazon is entirely possible for anyone, no matter what their experience level. But it can be overwhelming if you’ve never done it before. There are plenty of professionals who have turned the art of Amazon's success into science and are eager to share their knowledge with the next generation of e-commerce business owners.
Don’t reinvent the wheel. Take advantage of the people who have gone before you and learned exactly what it takes to do this well. At EcomHub, we’ve developed a variety of resources to help you do just that. If you’re not quite ready to commit to something more solid, check out our YouTube Channel and Podcast to get some more in-depth information on how you can build your Amazon store and scale it to the next level successfully.
It’s not complicated. All you need is a little bit of start-up capital, commitment, and a willingness to learn from those who have gone before you.
Selling on Amazon is a no-brainer for any e-commerce entrepreneur desiring to make their profit online. This platform isn’t going anywhere, and it offers countless opportunities for new businesses. Before you’re ready to jump into an Amazon business, however, make sure you understand these 7 essentials to give yourself a good foundation. And of course - consult the experts when necessary.
David Zaleski is an entrepreneur, Amazon seller, and the founder of EcomHub. He's been operating in the eCommerce space since the age of 14 years old. At the age of 18, he started his own Amazon business with just $4,800 in start-up capital.See more posts from this author