March 16th, 2023
In 2023, almost every successful brand you see sells their products on Amazon. From up-and-coming third-party sellers to established companies looking to expand their customer base, the world’s largest online marketplace recruits around 3,700 new sellers every day.
With a staggering track record, 200 million customers worldwide, and a constant influx of new brands popping up on Amazon daily, it may be time to consider whether selling on Amazon can be profitable for you.
Amazon Selling Options
Before you decide what the future holds, let’s quickly review the 8 key types of sellers on Amazon:
Types of Sellers
- 1st Party Sellers
These sellers must be invited by Amazon to sell on Vendor Central, also known as Amazon Vendors. They sell their products directly to Amazon. Amazon takes responsibility for retail sales and pricing on the marketplace.
- 3rd Party Sellers
These independent sellers offer a variety of new, used, and refurbished products to Amazon customers. Their items may be displayed as “Sold by Merchant and Fulfilled by Amazon/Fulfilled by Merchant”.
- Amazon Individual Sellers
These sellers pay $0.99 every time they sell an item. Amazon collects a referral fee on each sale, which is a percentage of the total transaction. This percentage varies by product category.
- Amazon Individual Sellers
- Amazon Professional Sellers
The Professional plan costs $39.99 per month, no matter how many items you sell. Amazon collects a referral fee on each sale, which is a percentage of the total transaction. This percentage varies by product category.
- Amazon Professional Sellers
- Private Label/White Label Sellers
Private label products are made or manufactured by one company and are then branded, marketed, and sold by another retailer under their own brand label. Similarly, White label products are made or manufactured by one company and then rebranded and sold to multiple retailers.
- Private Label/White Label Sellers
Fulfillment Options for Third-Party Sellers
- FBM (Fulfillment by Merchant)
FBM sellers list products on Amazon marketplace but handle all of their own storage, shipping, and customer service.
- FBA (Fulfillment by Amazon)
FBA sellers send products to Amazon warehouses for order fulfillment. Amazon is responsible for storing, picking, packing, shipping, and providing follow-up customer support.
Find Your Niche
For sellers on Amazon, finding a way to stand out in the crowd is the key to success. While many new sellers try to emulate the content of other successful brands in their product category, this can ultimately pit you against brands with a much stronger presence and arsenal of reviews.
For example, if you’re selling toothpaste and you use the same language, imagery, and pricing as Colgate, who will most customers choose? The household name with thousands of reviews or the unknown brand with a similar product and price? In order to develop a competitive edge, it’s important to establish what makes your products unique.
A niche market is a specific segment of a broader marketplace, such as Amazon. Knowing your niche can help you develop a strong game plan, establish a noteworthy presence in a less competitive category, and position your business perfectly so you can attract new customers that are likely to make a purchase.
With the right approach, you can cultivate a sales flow that is consistent and profitable to make money on Amazon. When developing your strategy and choosing products to sell on Amazon, some things to consider are:
- Are my products easy to find in any local store?
- Are they simple, affordable, and practical to pack, ship, and use?
- Are my products difficult to manufacture, sell, or stock?
- Can I price these products competitively while still accruing a significant profit selling on Amazon?
- What is the perceived value of my products?
- How well do similar products sell on Amazon?
- Will these products draw repeat customers, or are they trendy or seasonal one-time purchases?
Avoid selling products that are difficult to fulfill or assemble. Some high-end products may look like your golden ticket, however, if they are fragile, heavy, or prone to quality issues, you’ll end up dealing with poor reviews, returns, and losses.
For new and existing sellers, getting your product pages in the best shape possible is one of the best ways to boost visibility and drive sales. Optimizing your Amazon listings can improve your Click-Through-Rate and Conversion Rate while adding credibility to your brand.
Whether you optimize in-house or enlist the help of a professional, updating and upgrading your listings can have a significant impact on your organic rankings and sales. Let’s break down the anatomy of an optimized listing:
- Utilize relevant keywords
Start with conducting keyword research. This will tell you what search terms customers use when looking for products on Amazon.
Incorporating these keywords into your listing can drive sales, help your product rank higher in Amazon search results, and boost visibility.
- Write strategic copy for the title, bullet points, and descriptions
A strong, well-written product listing utilizes keywords, gives detailed information about what your product is and what it does, and anticipates common customer questions.
Creating highly-informative content can help shoppers feel confident making a purchase and may even cut down on returns and poor reviews.
- Increase the number of reviews
No doubt about it, developing a strong arsenal of reviews increases your chances of snagging the sale. From email newsletters requesting feedback to Amazon programs like Early Reviewer or Vine, creating a strategy to boost reviews can have a significant impact on your progress and help you make money on Amazon.
After all, 84% of shoppers trust online reviews as much as personal recommendations. The more positive reviews you have, the more likely shoppers are to buy.
- Include high-quality product images and videos
We live in a fast-paced, visual world. Most online shoppers are quickly scanning listings for information, so making yours pop with high-quality photos, videos, and graphics can set you apart from the competition and add credibility to your brand.
Images should provide detailed information that helps shoppers feel confident about their purchase. Highlight a variety of features, showcase your products and packaging from different angles, and capture them in action with striking lifestyle photos.
- Pack and Ship Like a Pro
Running a successful ecommerce store is more than just developing a strong product and selling strategy. To perfect your process and profit selling on Amazon, make sure you have a cost-effective packing and shipping strategy in place. Sometimes, these end up being make-or-break details down the road.
Consider shipping in smaller packaging whenever possible. If you can reduce your packaging, your shipping charges will go down, and your profits will rise! If you’re shipping your own products, look into all the available carriers and packaging options.
Don’t forget to consider how your packaging may affect product quality and customer satisfaction. No matter how many sales you snag, if you’re also raking in returns and poor reviews, your brand will suffer.
- Fulfillment by Amazon or FBA
If you haven’t considered FBA (Fulfillment by Amazon), it may be worth it to dig a little deeper. While FBA may be a bit more costly for new sellers, they win the Buy Box more frequently because they can offer Amazon’s Prime shipping option and access to Amazon’s shipping and fulfillment networks worldwide.
FBA’s pay-as-you-go model means you are charged for storage space and all fulfilled orders. The cost of shipping is included in your fees, and there is no extra charge for Amazon’s beloved free Two-Day Shipping.
Amazon also handles all follow-up customer service, which can be a major bonus for smaller companies and busy brands that are selling on more than one platform.
- Perfect Your Pricing
In 2023, Amazon’s fees have increased, making it difficult for sellers to accrue the profit they have in previous years. While it’s usually best to keep prices competitive, finding your sweet spot may take a little work. For new and seasoned sellers alike, experimenting with pricing can often yield surprising results.
While a price increase may cost you some customers, it could also potentially attract new ones. Some shoppers associate higher prices with superior quality and value. While it’s important to keep a close eye on the results, making small incremental changes can give you a better understanding of the market and your place in it.
When evaluating pricing, it’s important to consider your product category. If you’re selling highly competitive products like paper towels or dish soap, raising prices may alienate the average customer. To find the best pricing strategy, do some research or enlist the help of a reputable Amazon account management team.
- Keep an Eye on Ads
Ever hear of the “set it and forget it” model of advertising on Amazon? Neither have we, because it quite simply doesn’t work.
To make money on Amazon, check your advertising often to make sure it’s not costing you more than you’re making. While ads can account for a large portion of your traffic and sales, when left unchecked, they can also deplete funds unnecessarily.
If you’re new to Amazon advertising, you should start by finding out which options are right for you. An Amazon consulting firm can break down your options and make suggestions based on your budget and brand goals. From here, you can either oversee your own ad campaigns or have a professional monitor your account and keep you informed on the results.
From Sponsored Products to Sponsored Brands and Video Ads, there are campaigns for businesses of any size. Delegate a person or team to monitor your ads, create a consistent schedule for checking in on your ad performance, and be open to making changes as needed.
Is it Possible to Profit on Amazon?
With higher fees than ever before and a constant influx of new competition, getting started on Amazon can be a daunting prospect for any seller. However, unlike any other platform, Amazon provides sellers with a huge customer base that is eager to buy and continues to grow by the day.
That certainly doesn’t mean selling on Amazon is the right path for every brand. Consider whether your products fit the bill by researching other Amazon sellers in your product category. Is there room for growth? Can you quickly fulfill orders and keep enough inventory in stock? What do the common customer concerns, questions, and reviews look like?
While there is no cut-and-dry answer to whether Amazon is right for you, partnering with a reputable ecommerce consulting agency can help you develop the best strategy for your business. From overseeing ad campaigns to developing cutting-edge creative content, our experts at Awesome Dynamic offer a wide range of services for ecommerce sellers. Whether you’re an existing Amazon seller looking to boost profits, or a beginner exploring new opportunities, book a free consultation to learn more about how we can help.