A Step-By-Step Guide to How to Make Money on Amazon Selling Products [2023]

Selling on Amazon can be an easy and lucrative way to make extra cash or even a living. If you’re interested in how to make money on amazon selling products, here’s what you need to know about setting up your seller account, finding products, and getting customers to buy from you.

The potential for making money by selling on Amazon

Selling on Amazon has become a popular and lucrative business opportunity for entrepreneurs and small businesses. With over 2.5 billion active users worldwide and a vast product selection, Amazon has created an enormous market for sellers to tap into. In fact, according to a report by eMarketer, Amazon accounted for over 39% of all U.S. e-commerce sales in 2020.

The potential for making money on Amazon is significant due to the platform’s vast reach and user base. Sellers have access to millions of potential customers. Amazon’s sophisticated algorithms and marketing tools make it easier for sellers to reach these customers and drive sales. In addition, Amazon offers a range of seller tools and resources that can help businesses optimize their sales and grow their business.

Another factor contributing to the potential for making money on Amazon is the low barrier to entry. Unlike starting a traditional brick-and-mortar business, selling on Amazon requires relatively low startup costs and minimal upfront investment. This makes it an accessible option for entrepreneurs and small business owners starting out.

Overall, the potential for making money on Amazon is significant and growing. With a massive user base, a wide range of products, and seller tools and resources, Amazon is an attractive option for entrepreneurs and small businesses looking to grow and succeed.

Understanding the amazon marketplace

Understanding the Amazon Marketplace is a critical component of success for those looking to make money on Amazon. The Amazon Marketplace is a complex and constantly evolving platform, and sellers must understand its rules, fee structures, and best practices. This section provides an overview of the different types of seller accounts available on Amazon, a detailed examination of the Amazon seller fee structure, and an introduction to the various seller tools and resources available to help businesses grow and succeed on the platform. By understanding the Amazon Marketplace deeply, sellers can set themselves up for success and increase their chances of making money on Amazon.

Types of seller accounts

There are two main types of seller accounts on Amazon: Individual and Professional.

  1. Individual Seller Account: This type of account is designed for casual sellers who plan to sell a limited number of items per month. Individual sellers pay a $0.99 fee per item sold and do not have access to some of the more advanced selling tools and resources available to Professional sellers.
  2. Professional Seller Account: This type of account is designed for serious sellers who plan to sell more than 40 items per month. Professional sellers pay a monthly fee of $39.99 and have access to a broader range of tools and resources, including Amazon’s advertising tools, analytics, and order management systems.

Individual and Professional seller accounts provide access to Amazon’s massive customer base. Still, the Professional account is generally a better option for businesses that plan to sell many items or need access to more advanced tools and resources.

Overview of the amazon seller fee structure

Amazon’s seller fee structure is designed to generate revenue for the company while providing sellers access to its platform and customers. The fees that sellers pay vary depending on the type of seller account and the type of product being sold.

  1. Monthly Subscription Fee: Professional sellers are required to pay a monthly subscription fee of $39.99. This fee gives them access to various advanced selling tools and resources, including Amazon’s advertising tools, analytics, and order management systems.
  2. Referral Fees: Amazon charges referral fees for each item sold on its platform. These fees vary by product category and range from 6% to 45% of the item’s sale price. For example, a seller who sells a book may be charged a 15% referral fee, while a seller who sells a jewelry item may be charged a 45% referral fee.
  3. Fulfillment by Amazon (FBA) Fees: Sellers who use Amazon’s Fulfillment by Amazon service are also charged additional fees. These fees include storage, picking, packing, and shipping fees.
  4. Additional Selling Services: Sellers may also be charged additional fees for using optional selling services such as Amazon’s advertising tools or Amazon’s professional photography services.

Sellers need to understand the Amazon fee structure to factor the costs into their pricing and make informed decisions about their selling strategies. Additionally, by staying informed about changes to the fee structure, sellers can ensure that they are continuously operating profitably.

Research your product and the amazon market

Before selling on Amazon, you must understand the market and research the products you want. This includes researching pricing, demand, competition, potential profit margins, and other factors to help you decide which products to select. Consider using tools such as JungleScout to assess your product’s potential for success and make informed decisions.

Market research techniques

Market research is essential to making money on Amazon by selling products. It involves gathering and analyzing data about a target market to understand consumer needs, behaviors, and preferences. The following are some of the most common market research techniques that Amazon sellers can use to inform their product sourcing and pricing decisions:

  1. Keyword research: This technique uses tools to identify keywords and phrases that potential customers use when searching for products on Amazon. By understanding what keywords customers use, sellers can optimize their product listings to increase visibility and sales.
  2. Competitor analysis involves studying competing sellers’ products, prices, and sales strategies. By analyzing their competitors, sellers can identify market trends, consumer preferences, and opportunities to differentiate their products and improve their sales.
  3. Customer reviews: This technique involves reading and analyzing the reviews left by customers who have purchased similar products. By understanding what customers like and dislike about similar products, sellers can identify opportunities to improve their products and increase customer satisfaction.
  4. Sales data analysis: This technique involves analyzing sales and consumer behavior data to identify market trends and consumer preferences. By understanding sales patterns and consumer behaviors, sellers can make informed decisions about product pricing, marketing, and other strategies.

Using these and other market research techniques, sellers can gather valuable insights to inform their product sourcing and pricing decisions. These help sellers make more informed and profitable decisions on Amazon.

Considerations for product selection

When selecting products to sell on Amazon, there are several important factors to consider, including:

  • Demand: It is essential to choose products with proven market demand. By researching sales data, customer reviews, and market trends, sellers can identify popular and in-demand products.
  • Competition: It is also important to consider the market competition level. Suppose many sellers are offering similar products. In that case, differentiating your products and standing out to customers may be more challenging.
  • Margins: The profit margins on different products can vary significantly. Choosing products with sufficient margins is critical to ensure that you can profit while offering competitive pricing.
  • Cost of goods: The cost must also be considered when selecting products to sell. You need to ensure that you can acquire the products at a reasonable price to make a profit after paying for shipping, storage, and Amazon’s referral fees.

Sourcing products and managing inventor

Once you have selected your products, you need to source them and manage your inventory effectively to maximize your profits on Amazon.

  • Sourcing: There are several ways to source products for your Amazon business, including manufacturing your own products, buying products from wholesalers or distributors, or sourcing products overseas.
  • Inventory management: Effective inventory management is critical to success on Amazon. You must ensure that you have enough stock to meet customer demand but not so much that you tie up too much capital in inventory. You can use Amazon’s inventory management tools or third-party software to help you manage your inventory effectively.
  • Fulfillment: You can choose to fulfill orders yourself or use Amazon’s Fulfillment by Amazon (FBA) service to handle storage and shipping for you. Whichever option you choose, it’s important to have a plan to ensure that orders are fulfilled quickly and efficiently

Create a seller account

The first step in selling on Amazon is to create a seller account. This is where you will enter your personal information and payment information so that Amazon can pay you for the items you sell. You will also have to provide a valid method of payment, such as a credit card or bank account, to receive customer payments. Once your account has been created, you can begin listing and selling products on Amazon.

Set up your payment information and tax details 

You will need to enter your payment information before selling products on Amazon. This is done through the Payments tab in your seller account settings. Once you have entered your payment information, you can also set up your tax information. That is for Amazon to collect and remit applicable taxes for sales in various jurisdictions. Please ensure that all the information provided here is accurate and complete, as this is essential for successfully selling on Amazon.

Register as a professional seller 

Professional sellers must register for an Amazon account and link their bank or payment information before making money from selling products. You can do so by going to the Amazon Payments Center, where you will find all the tools you need to get started as a professional seller. They are the following: 

  • setting up sales tax collection and payment, 
  • calculating fees, 
  • setting up payment methods like SEPA Instant Bank Transfer or Direct Deposit, and 
  • registering with different marketplaces.

Choose fulfillment by amazon or merchant fulfillment

When selling products, you can sell them either through Fulfillment By Amazon (FBA) or Merchant Fulfillment. With FBA, you can list your products on multiple marketplaces. Amazon will store and ship your items while also providing world-class customer service. For Merchant Fulfillment, you’ll handle all the logistics of storage, packing, and shipment yourself while benefiting from Amazon’s marketplace reach.

Recap on how to make money on amazon selling products

In conclusion, selling products on Amazon can be a lucrative business opportunity for those who are able to find the right niche, source their products effectively, and market them well to customers. However, there are also many challenges to overcome, including competition, shipping logistics, and navigating Amazon’s complex fees and regulations.

If you are interested in making money on Amazon by selling products, it’s important to do your research and create a solid business plan. Make sure you understand the market, your competition, and the products you want to sell before getting started.

If you have any questions or concerns about starting an Amazon business, we invite you to leave them in the comments section below. We are here to help and answer any questions you may have.

Check this out to know more about How to Launch Products on Amazon and Scale Your Business.

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