Whether you’re trying to get an extra source of income or wish to boost the sales you’re already getting on your eCommerce store, Amazon can provide you the opportunity to obtain a continuous stream of revenue. You can make just a couple hundred dollars or build a six-figure business from scratch; it’s all up to you and the effort you’re willing to put into your Amazon strategy. And the best part? There’s a chance to sell pretty much anything. From used products to vitamins—there’s a buyer for any product.
If you’re new to the platform, don’t worry. Amazon has a low barrier to entry and a fast setup that make it ideal for businesses of all sizes. Unlike with some eCommerce stores, it doesn’t require expensive designers, developers, or several hours of testing to create a live store. It just takes good market knowledge, the ideal product, and product data optimization.
The key is to use guides such as this one to learn as much as possible, beat your competition, and avoid wasting money on silly mistakes. The market is really competitive, and the more you know, the better equipped you’ll be to win over the competition. In this guide, we’ll go over types of accounts, an overview of selling fees, how to find the best products, and tips for getting set up. So, let’s get started!
Choosing a Selling Plan
Amazon offers 2 selling plans: individual and professional. Below, you’ll see a breakdown of each plan’s pros, cons, and fees.
Individual Seller Plan
This plan has no monthly subscription fee, but you have to pay a $0.99 per item fee. This is ideal just for testing because the professional account offers more benefits than this plan and practically pays for itself if you sell more than 40 products per month.
- Useful to get acquainted with the system and testing if it’s to your liking.
- Can’t sell in restricted categories.
These types of categories require an approval process, but they are not available for approval if you’re using this type of account. Examples of restricted categories are beauty, collectibles, and fine art.
- Can’t upload multiple products listings.
With the professional selling plan, you get the option of uploading multiple listings with inventory file templates. These are Excel spreadsheets that contain various columns for describing and listing products. Unfortunately, this option is not available under this plan.
- Doesn’t include reporting features and can’t use 3rd party integrations.
- Not eligible for the Buy Box.
This is a huge con! This box accounts for 90% of sales on Amazon. Thus, if you’re not eligible for it, you’re wasting potential revenue.
Professional Seller Plan
This plan has a monthly subscription fee of $39.99 but has no per item fee, unlike the individual seller plan. It’s recommended for all merchants that are serious about selling on Amazon since it offers more benefits than the individual plan. If you’re planning to sell 40 or more items per month, this plan is your best bet.
- Eligible for the Buy Box
- Can upload multiple products
- Can use 3rd party integrations
- Offers advanced reporting features
- Not ideal for sellers that are just looking to sell a couple of items per month since it has a paid subscription.
As mentioned before, when selecting your selling plan consider the amount of product you want to sell. If less than 40, the individual plan is right for you; if it’s more, the professional plan is ideal. I’d only recommend the individual plan for testing. You can always switch your plans at any point.
Understanding Amazon Selling Fees
Listing products on Amazon is free, but you’ll have to pay fees once your products are sold. The usual fees are: shipping, referral, and variable closing fees. If you’re an FBA seller, you’ll have to pay an additional set of fees we’ll discuss shortly. There is no per item fee unless you have the individual seller plan. Also, note that Amazon automatically takes their fees from your revenue and disburses the rest to your account. See breakdown below of all fees with their respective details.
Shipping fees: These fees vary according to product category and shipping service. To qualify for 2-day shipping, you must be selling on Amazon for at least 90 days, and you are required to abide by certain standards. For example, you must have less than a 1.5% cancellation rate and have 10 or more orders in the past 30 days across all shipping options.
If you decide to fulfill your orders with Amazon (FBA), you’ll get additional fees related to fulfillment, storage, and optional services.
Referral fees: You must pay this fee for every product you sell. The fee is calculated differently for media and non-media products and, also, varies according to the product category. Many products are also assigned a per-item minimum referral fee. In that case, you’ll have to pay the greater of the referral fee or the per-item minimum referral fee.
So, if you’re selling a handbag that costs $20 and that product category has a 15% referral fee and a $1 per item referral fee, then you’ll only pay the referral fee ($3) because it’s higher than the per item referral fee ($1). The per item referral fee is not to be confused with the per item fee charged by the individual selling plan. They are two different fees; the referral fee is charged to every seller, regardless of their account.
If you’re curious about how these fees are calculated, for media products the referral fee is calculated by product price excluding taxes collected by Amazon. For non-media products, the referral fee is calculated based on product price.
Variable closing fees: These vary according to product category and shipping service.
Fully understanding the costs involved in selling an item on Amazon really opens your eyes about how important pricing and product selection are as a seller. Take the time to calculate costs to figure out if you can be profitable. Otherwise, you’ll be wasting your time selling for a very small profit, or, even worse, end up with no profit whatsoever.
Additional Fees Charged When Using Fulfillment by Amazon (FBA)
About FBA: Stands for Fulfillment by Amazon. Amazon just helps sellers fulfill the orders, but they don’t own the seller’s products. In other words, you’re not selling your products to Amazon; they are just the middleman between you and the buyer.
- You’re eligible to offer free 2-day shipping to Amazon Prime members. This is a great benefit since most buyers shop with Prime memberships and love the fast and free 2-day shipping. This membership has jumped to over 80 million members
- It can help you save time and space. Leaving the fulfillment to Amazon will help you save precious time to focus on growing your business. It can also help you sell products that may take up too much space in your office, warehouse, or home.
- Besides fulfillment, Amazon will also help you skip the hassle by handling any returns.
- Allows you to fulfill orders from other channels
- If you can’t turn around your inventory fast enough, you’ll be charged an additional fee. Also, you have to take these extra fees into consideration when determining profit. Your products have to be affordable enough to absorb these fees and still be able to make a profit.
About FBA Fees: Amazon charges various fees for fulfilling orders. These fees vary according to media versus non-media products, item’s weight, and storage time length. See below for the breakdown and details of recently changed Amazon FBA fees:
Fulfillment Fees Standard Non-Media:
Fulfillment Fees Standard- Size Media:
Monthly Inventory Storage Fees:
Inventory Placement Services:
See examples of fees applied to different products here.
FBA vs. MFN
We all know the benefits of FBA: It helps win the Buy Box, helps sellers save time by taking care of fulfillment and shipping, etc. However, FBA may look good on paper, but it’s not the best option for every seller. MFN or Merchant Fulfillment Network—when you ship Amazon orders directly from your own home or warehouse—works better than FBA for some cases. You have to evaluate the pros and cons of each to make a smart decision.
One of the ways to assess if FBA or MFN is right for your business is to compare costs. By comparing costs, you’ll be able to see if you can afford to pay for FBA fees and if you’ll be able to make a profit using this fulfillment method. Use this calculator to compare costs and discover if FBA makes sense for your store.
Another thing to consider is how fast you’ll be able to turn around products. Since Amazon charges additional fees for long storage, FBA may not be the best choice if you don’t know how fast you’ll be able to sell new products or if you have no turnaround history to make accurate estimations.
Furthermore, take into account that FBA may result in lower profits per product due to its fees. On the other hand, it can also help you sell more products by offering more appealing shipping options (2-day shipping) and offering higher chances of getting the Buy Box.
How to Find the Best Products to Sell on Amazon
Finding the best products to sell can be challenging; however, knowing what works and using online tools can help make it feel less daunting. Some of the tools you can use to find good potential products are the following: Google Keyword Planner, Google Trends, and Merchant Words. All of those tools are free, but there are other more advanced ones that require payment.
There are several physical attributes that are preferred in the ideal product. One of them is weight. Look for a product that is light in weight (around 2 lbs.). It will help make the shipping more affordable and allow you to get cheaper pricing in the FBA program.
Another point to consider is fragility. Select products that are not easily breakable; this will prevent returns from customers who receive broken products. Most importantly, you’ll want to find products that are in demand and which can be profitable. Otherwise, you’ll end up with a bunch of inventory nobody wants to buy.
The two most common ways to get products is with retail arbitrage or to source them from China. If you’re sourcing products from China, visit Aliexpress or Alibaba to compare prices and discover which products have a good potential to be profitable after considering all costs. If you’re sourcing through retail arbitrage, make sure you use the Amazon seller app to see pricing on the go.
Tips for Getting Set Up
Now that we have a better understanding of all the fees involved and how to select a good potential product to sell, let’s delve into details of how to set up product listings.
The product title gives customers a better idea of the product you’re selling. It helps users make differentiations among the same type of products. For example, if someone is searching for “headphones” and all the images look similar, titles would help that user figure out which listing he or she should click on.
Take the image above as an example. Just by reading the headlines, I can tell that if I’m looking for Bluetooth headphones, probably the last option is my best bet. As a seller, you have to keep these things in mind to create product titles that are useful to the user and to increase clicks to your listing. Amazon recommends including all the following attributes in your titles:
- Product line
- Key ingredient
Bullet Points and Product Description
The user has already clicked on your listing, so he must think your product may be what he’s looking for. Now, is your job to assure the user that your product is better than your competitors. Bullet points and product descriptions can help you get this job done.
Provide additional product features, such as fabric materials, dimensions, and compatibility with complementary products. Also, give them ideas on how the product can benefit their life by solving a problem.
In the product description, you can provide more of a story on how the product can be used and benefit the user’s life. Also, keep in mind that providing enough useful information will help you prevent any misunderstandings that can lead to bad reviews or returns.
These are the keywords that will help Amazon know which searches should retrieve your listings. Start by doing research to find out what keywords people are using to find products like yours. Tools such as keywordtool.io can help you get this done.
Then, build your list, including as many relevant keywords as possible. Don’t worry if your list doesn’t look sales-like; they will live in the backend, so your customer won’t be able to see them.
Amazon knows that good images sell. That’s why it enforces its own set of image requirements that all sellers have to follow. For the most part, it consists of having a white background (RGB values of 255, 255, 255), images should be 1000 pixels or larger in either height or width to enable zoom function, having the product fill 85% or more of the image, and no watermarks.
These guidelines help the platform look uniformed and consistent. Otherwise, different background colors or product photo qualities would get too distracting for buyers. If you’re taking your own photos, consider investing in an affordable photo kit. It will help get better lighting and focus on all your images.