Can you make money selling on Amazon? We recently analyzed exactly what it will cost to sell on Amazon when you’re getting started, and it really adds up. The competition is infamously high, too. Are these challenges so great that anyone without a corporate budget couldn’t hope to make a profit there?
The Obstacles to Succeeding on Amazon
New Amazon sellers certainly have their work cut out for them.
For starters, Amazon Prime is immensely popular, and many buyers will only buy from Prime listings. However, your products will only be eligible for Prime if you use Fulfillment by Amazon. That comes with a whole mess of fees.
Amazon also has higher fees than eBay even if you don’t use FBA. Additionally, there are more of them, and they’re more complicated and confusing.
Next, you sometimes have to deal with restrictions like Amazon setting your shipping charges for you.
Then you have to contend with the intense competition. Hordes of other sellers have already established themselves, and new ones are coming in every day. To make matters worse, Amazon itself is always expanding the list of products it sells directly.
For a newcomer, these challenges—especially when combined with the normal difficulties and expenses involved in starting any ecommerce business—can seem like obstacles as daunting as the Himalayas. But like the Himalayas, they can be crossed.
How Can You Make Money Selling on Amazon?
There are three things you need to succeed: knowledge, business savvy, and the right tools for the job.
If you don’t understand Amazon, you can’t hope to make money there. Lucky for you the Internet is full of advice from veteran sellers.
I recommend you start by reading “How to Sell on Amazon for Beginners.” It will walk you through the basics of selling on Amazon and link you to additional helpful resources.
On top of that, spend some time in the Amazon seller forums. Talk to other sellers and learn from their mistakes so you don’t repeat them.
For learning Amazon’s rules, nothing beats going to the source itself. The New Seller FAQ is a great place to start.
When you understand how Amazon works—its rules, best practices and quirks—you’re much less vulnerable to unpleasant surprises. Start selling blindly and you could end up making no sales or getting slapped with nasty things like A-to-z Guarantee claims. Do the research first and you’ll steer clear of the graveyard of would-be sellers who didn’t bother.
Succeeding at selling anything requires you to buy low, sell high, market effectively, and manage your time well.
To buy low, you need to master the art of product sourcing. We cover this in the second half of “How to Make Money Selling on Amazon.”
You’ll also need a tongue that’s silver enough to renegotiate prices with suppliers—at least once you’ve established a relationship with them and can afford to buy in larger quantities. The big money on Amazon is made by those who negotiate very low prices to buy their stock in bulk.
Sell High / Market Effectively
Selling high and marketing effectively go hand-in-hand. You can’t charge high prices unless you can make buying from you seem like a better idea than buying from the guy who’s charging a lower price.
The biggest key to success here is a high Amazon seller rating. Many shoppers will pay a little more to buy something from someone with better reviews. Why compete on price when you could compete on service?
If you’re selling a product that isn’t already listed on Amazon, you’ll get to create the listing for it and really set it apart. Make sure you create a description and photos of equally high quality—consider hiring a professional writer and product photographer. See “Amazon Seller Tips: Become a Cyborg” for more info.
Sometimes, you’ll have no choice but to compete on price, especially when you’re getting started. Just use low prices as a last resort rather than your go-to strategy.
Manage Your Time Well
Many entrepreneurs hesitate to hire anybody. But it’s very important to ask yourself, on a regular basis, “Could I make more money if I paid someone else to do this?”
You don’t necessarily need to hire full-time employees right away. You can simply hire contractors to handle things like writing descriptions, taking photos, uploading products, or providing customer service. Fiverr and Upwork are great places to hire remote workers.
Automation can also save you an enormous amount of time. Which brings us to our next topic:
The Right Tools for the Job
When you first start selling on Amazon, the tools you need will be pretty basic: good lighting, a camera, and a white background if you’re taking your own photos; a spreadsheet program; packaging supplies; etc.
But as your operation grows and becomes more complex, you’ll also need more advanced tools.
You can manage a 500-SKU inventory with a spreadsheet—but do you really want to update hundreds of cells every day? You’ll eventually need to hire someone else to manage that part of the job. Or you could just have everything tracked automatically—on Amazon and on any other marketplaces you decide to sell on—with an inventory management platform like Volo Commerce.
Customer service can also become an enormous problem for large-scale Amazon sellers. A high-quality CRM like Desk.com or Zendesk gives you the power to answer customers in a fraction of the usual time.
The bad news: standard email forwarding from Amazon to CRM platforms will just give you unthreaded messages with jumbled and incomplete data. The good news: we created an Amazon integration to solve this problem. ChannelReply + Desk or Zendesk = much less time spent on customer service!
Setting the right price is one of the greatest challenges facing Amazon sellers. Amazon changes prices 2.5+ million times every day, and you can bet the other sellers you’re competing with will try to outdo your price as well. You can easily spend your whole day nudging your prices up and down and never get ahead.
Save time and sell higher than ever with the help of automated repricing software. Feedvisor uses algorithmic repricing to sell your inventory at the highest effective price. Wiser reprices based on advanced rules that you can control.
Are These Tools Cost-Effective?
Any one of these tools can save you as much work as a full-time employee or even more. And there are plenty of other options out there—including a number of ecommerce shipping solutions.
These won’t all be cost-effective when you are just getting started. However, they will ensure that a growing Amazon business grows in profits rather than costs. I recommend bookmarking the ones that seem too expensive now and going back once your operation has gotten bigger.
Can you make money selling on Amazon? Absolutely. With sufficient knowledge, a touch of business savvy, and the right tools, you can find your place in the world’s most popular online marketplace and reach a truly massive audience.