Selling on Amazon has never been more attractive to both established and new brand owners alike. Sales on Amazon can make a large portion of a company’s total overall revenue sales due to the massive amount of traffic that Amazon provides.
Last year’s sales were estimated at $386 billion worldwide.
But while Amazon can be wonderful, it can also be a frustrating place to sell. There is a steep learning curve learning how to navigate selling on Amazon.
Amazon expects you to understand the platform, how it works, and the rules before you begin selling.
Failure to completely understand what Amazon expects from you as a seller can have your account banned or your products restricted.
In this column, you’ll learn:
- The 4 different ways you can sell on Amazon.
- How to calculate your fees for selling on Amazon.
- How Amazon Prime Offers work.
- What Amazon FBA is and how it works.
- How to monitor your account health.
- All about safety and compliance requirements.
- How to get started and list your first products on Amazon.
In addition to reading this article, we recommend that you use the resources linked throughout Amazon’s help pages to help you better understand how to succeed as an Amazon seller.
4 Ways to Sell on Amazon
When you go to Amazon.com as a buyer, you see that you can buy everything from your Kindle books to your child’s favorite toy all in one location.
However, on the backend, Amazon.com is made up of multiple platforms. These individual selling platforms cater to different types of sellers.
There are four primary ways to sell on Amazon:
- Seller Central
- Vendor Central
- Kindle Direct Platform (KDP)
- Merch by Amazon
This is the primary selling platform for most sellers with physical products.
On Seller Central, you set the price of your products and you determine the inventory level. Seller Central accounts can be opened by anyone, and no invitation is required.
It is available only through a direct invitation from Amazon.
On this platform, Amazon remains the seller of record and determines the price and how much of your inventory will be available on the platform.
Kindle Direct Platform (KDP)
This platform is for the authors. You can list both your Kindle books and paperback works through KDP.
The program formally called CreateSpace has been merged into the KDP platform. Each sale generates a royalty from the Kindle Direct Platform.
Merch By Amazon
It has been primarily promoted to influencers such as musicians, and video game artists, as it allows them to self-customize their merchandise.
If you are doing print on demand, then Amazon Merch is the platform that you will be focusing on.
Understanding Amazon Fees
Before you begin selling on Amazon, make sure you understand the fee structure.
This allows you to determine whether you will be able to sell your item profitably on Amazon.
For example, on Seller Central, for items that are about the size of a bread box and around $25 in price, Amazon will take about one-third of the total selling cost.
However, the fee structures on Amazon vary depending on the type of platform, the category, and the size of your product.
Below are the fundamentals for calculating your fees to sell on Amazon.
Common Ways Amazon Fees Are Structured
Fees are going to be individually calculated based on your specific contract with Amazon. You need to look at your co-op contract to identify your fee structure.
If you’re entering into a Vendor Central arrangement, then Amazon will generally ask for a wholesale price for your products.
It will also deduct additional fees such as co-op marketing fees, shipping allowances, and chargebacks.
Kindle Direct Platform (KDP) and Merch
KDP and Merch by Amazon are both royalty-based with the amount depending on the type of product.
There are a variety of components to the fee structure for KDP. You can look in Amazon’s help documentation for the current fee structures.
There are two components that make up fees on Seller Central:
- The Referral Fee is the percentage of the total cost of the item being sold depending on the product category. This fee is charged regardless of whether you ship the item yourself or if you use Amazon’s FBA program.
- Fulfillment by Amazon Fees are the cost to pick, pack and ship your item from Amazon’s warehouse and send them to the customer. The FBA fee is only applicable if you’re using Amazon’s fulfillment network. However, it is based on the dimensions and weight of your products.
There are two ways to calculate the fees for Seller Central. One is to use the Amazon FBA revenue calculator to determine what fees your products would have.
Additionally, there’s a Fee Preview Report available in the report section to help you determine what the fees will be for products listed within your account.
Remember, Amazon FBA fees include:
- The cost to ship the item to the customer.
- The box the item is shipped in.
- Picking and packing items for the customer.
- And any customer service related to that particular sale.
Understanding Amazon Prime Offers
Amazon customers love Amazon Prime.
For customers, it means that they get their products quickly and they have an expected level of customer service they’re going to receive from Amazon.
The trust that Amazon has built is more accessible when your item is available as a Prime offer.
In our experience, taking a product that didn’t have a Prime offer and making it available via Prime sometimes increase the sales of that product by over 300%.
Eligibility will depend on the type of product you are selling, and under which program you are offering it.
Making Your Products Available via Prime
All items sold through this platform are automatically available through Prime and no additional actions are needed.
Kindle Direct Platform (KDP)
Any items listed through Create Space and Merch are automatically available with Prime offers and no additional actions are needed.
There are two ways currently to have your products available with the Prime badge on this platform.
- FBA – The most common is to use Fulfillment by Amazon Network (FBA). With the Amazon FBA program, you ship your products to Amazon, and Amazon ships those products to the customer once that product sells.
- SFP – The other option is to use Seller Fulfilled Prime which is a program that was available to Amazon Seller Central sellers several years ago. If you already had Seller Fulfilled Prime on your account, you should still be able to use that for your offers. However, if you don’t have that on your account, you can sign up to join the waiting list for when the program reopens to new users.
Is FBA Still Worthwhile?
Using Amazon’s FBA network program can be frustrating. There are increased costs and a lot of restrictions about what is allowed to be sold and how much inventory you can hold.
Sometimes that leaves the brands wondering whether FBA is still the right choice for their products.
If you have a direct competitor either on your listing or a similar product that has an FBA offer, customers will more than likely pick the Prime offer over yours.
The exception to this is during times when Amazon’s warehouses are extremely backed up — during the initial lockdowns for COVID-19, for example.
For most products using Amazon’s FBA program, it is not only going to be effective and help you scale but it is also going to help significantly with your ability to convert consistently on Amazon.
There are some very large or very expensive items that might not make sense to list with an FBA offer. However, for 90% of products, you should at least test seeing what difference your product sees with a prime badge.
Know Amazon’s Rules
Amazon has a culture internally where it expects sellers to understand and comply with the rules before engaging on their platform.
If you have not read Amazon’s 14 Guiding Principles, they can help you to understand how the internal company culture affects many of the policies on Amazon.
The first principle is customer obsession. Most of Amazon’s policies are centered around positive customer experiences.
While they can be frustrating as a seller, they ultimately are designed to protect the audience of the platform.
The second principle is ownership. Amazon expects sellers to know and be responsible for understanding the platform rules before they begin selling.
When you are selling on Amazon, saying ”I didn’t know the rules” is never going to be a reason to get reinstated if your account becomes suspended or somehow flagged for violation.
It is very important that you review the guidelines for Amazon not only for your specific category or in any programs that you might be using like FBA, but also to make sure that you review the restricted product sections and understand what special programs are available to you.
Amazon created Seller University to walk you through some of the basics for understanding how to sell products on Amazon.
In the Amazon help section, you can also look at the specific rules for selling products and lots of different types of products as well as the requirements for most special programs.
In addition to looking through the Seller University, some important area policies to make sure that you have read and understand are the policies around FBA shipments including the prep requirements.
Amazon has quite a few products that are either restricted or require specific approval or safety or compliance documentation if you upload it before you can begin to sell those products. It is very important that you go through the restricted products.
Some brands will come to us after being suspended. They try to sell the restricted product because they saw other sellers on the platform selling that same product.
Just because another seller has an item available doesn’t mean that they just haven’t gotten caught with the violation.
Or, they may be on a special program like the FBA Hazmat program which would allow them to sell products that might still be restricted for your account.
Amazon is very particular about the way that they want their images and the rules for the way the content is created.
If you are in a fashion category, it is important that you review the style guidelines to make sure you not only understand the requirements for images.
Also review the specific requirements for your category, which can vary in a way that you have to present and compose your titles and include what kind of variations are available for your products.
Watch Your Account Metrics
If you’re selling on Seller Central, you need to consistently monitor your account health.
In Seller Central, Amazon provides a dashboard for this.
Recently, Amazon added new components to the Seller Central platform that you also need to check regularly, as well.
In addition to the account performance, you also need to strictly check weekly the Voice of the Customer and inventory performance index if you’re utilizing FBA warehouses.
Understanding Safety and Compliance Requirements
For a long time on Amazon, very little safety testing was required to have your products available on the marketplace.
However, due to the changes in case law and changes in policy, Amazon is now very particular about the kinds of products that are available on the marketplace.
If your product is in regulated categories such as toys or children’s pajamas, you need to make sure that you understand what safety testing is required for your products to be sold on Amazon.
If your product is a topical cream, for example, make sure that you have the correct FDA allowances and you’re not making any prohibited health claims.
Be prepared that Amazon may ask for your compliance paperwork and may restrict your selling privileges until they can be produced. This now includes having the proper liability insurance for your products.
The EPA has been actively watching Amazon to prevent the sale of unauthorized pesticides, which means Amazon’s rules around pesticides have been increasingly frustrating for many sellers.
Make sure that you completely understand the Amazon Pesticides Policy before you begin to write the title and bullets or create images.
Any mention of anything to deter pests would classify your product as a pesticide and will require an EPA registration number.
Getting Started: Your First Amazon Listings
Once you’ve taken the time to understand the fee structures, how Prime offers work, and what Amazon expects from you as a seller, you can begin selling on Amazon.
The first steps are going to be to creating your new account and listing your products on Amazon.
How to List Your Products on Amazon
You are able to list an offer on an existing listing or to create new listings on Amazon as a professional seller.
When you’re creating your product listings on Amazon, there’s a lot of videos and tutorials that are available on the web.
I recommend that you stick as much as you can to Amazon-provided documentation or tutorials that link to active Amazon terms of service.
The Amazon platform has changed dramatically over the last 5 years. Older articles and tutorials may provide outdated information that could put your account in jeopardy.
If you’re looking at resources on Amazon, check to make sure that nothing has changed on the platform.
There are also lots of Facebook groups and Reddit groups that you can find to help get additional up-to-date information on how to sell on Amazon.
Amazon details out in Seller University how to list your products, send a shipment to FBA, adjust your prices, and read many of the reports provided for sellers.
There are also many consultants and agencies that help brands launch their products on Amazon.
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