We’ve already covered the benefits of selling on Amazon: done-for-you SEO, the fact that you get to skip building a website, and customer trust are just a few. But even with all of those advantages, you can easily lose money if you don’t know what you’re doing. We put together this guide on how to sell on Amazon for beginners so you could jump over the pitfalls and go straight to making a profit.
1. Decide What to Sell
This might be the biggest challenge of selling on Amazon for beginners: finding something worth selling.
How to Determine If Something Will Be Profitable
Amazon generally takes about a third of a product’s price in fees (as we’ll discuss in Choose a Selling Plan below). You also have to worry about the price of buying or making it.
If it costs you $10 to buy that book, and one-third of the price ($5) to sell it on Amazon, then you aren’t going to make any money with each sale.
On the other hand, if you’re digging up copies for $4 each, then you get to take home $6 on each $15 sale. Not a bad deal for you!
Note: We're keeping the descriptions of expenses simple here. Read "The Full Cost of Selling on Amazon" if you want an in-depth explanation of the costs involved.
Where to Buy Products to Sell on Amazon
If you aren’t making your own products, a great way to find profitable items is to buy wholesale. You can go to brick-and-mortar retailers like Costco for starters.* Then just compare their prices to those of similar products (or even the same product) on Amazon to find out if you could resell them for a worthwhile profit.
You can also try buying from wholesalers online or even directly from manufacturers. Just be warned that the Internet is LOADED with scams. It’s a good idea to use a trusted source of suppliers like SaleHoo or Alibaba and do some extra investigating to avoid getting burned—though that does mean additional costs that will eat further into your profits.
*Reselling products labeled "Not Marked for Individual Resale" is a legal grey area. Check for such labels and think twice before listing.
How to Make Sure Something Will Sell
Look for things that are already selling on Amazon. If the product is up on the site and has no reviews, then it probably doesn’t sell well. If it has dozens of five-star reviews and half the sellers are out of stock, then you’re practically guaranteed to make loads of sales—if you can compete with the other sellers on price and/or rating.
A good rule of thumb is to look for products with at least 15 or 20 reviews. That means there are lots of buyers and a real market for the product.
You can also try selling something that nobody else has listed. Just be judicious about how much you spend on these things, and try test-selling a few before investing hundreds of dollars in purchasing them en masse.
Want more info? Learn more about deciding what to sell on Amazon.
2. Choose a Selling Plan
Amazon offers two selling plans:
This is the closest you can get to selling for free on Amazon. You have no monthly fees. However, you’ll have to pay $0.99 per sale, then a referral fee of 15% or so, and if you’re selling media items like books and video games, a “variable closing fee” of about $1.35.
Let’s go back to the $15 book. Your fees would total $4.59, and then you would be done paying Amazon.
If you sold 10 of these books in a month, you would get $104.10 (minus how much you paid for them) and pay Amazon $45.90. If you sold 100, you would get $1,041 and pay Amazon $459.
Choose this plan if you will sell lots of items every month. When you use it, the $0.99 fee per sale disappears. However, the other fees are still there, and you have to pay $39.99 monthly.
You will lose money if you don’t sell at least 41 items. Using the example above, 10 sales of the book would get you just $74.01 while $75.99 would go to Amazon. In that case you would’ve been a lot better off using the Individual plan.
But once you start selling a lot, it really pays off. 100 sales would cost you $399.99—meaning that you have a profit $59 higher than if you’d used the Individual plan.
Which Should I Choose?
It’s a good idea to start with the Individual plan if you aren’t selling for a major company. See if you can hit 41 sales a month first. Once you pass that number, you’ll know that the Professional plan will be more profitable and you can make the switch over.
The one downside to starting with the Individual plan is that you’ll give up your opportunity to get a free month as a Professional seller. If you feel confident about beating 40 sales in your first month, you might want to jump straight to using a Professional account instead.
Finally, some products can only be sold by Professional sellers. If you want to sell food or collectibles, you have no choice but to sign up for a Professional account.
3. Plan Your Shipping
Will you handle your own shipping, or use Fulfillment by Amazon (FBA)?
If you decide to ship products on your own, you will have many more logistical difficulties. You have to figure out storage, and you need to process all of your orders on your own.
On the other hand, you get much more control over your costs. FBA would charge you for storage every 30 days. They would also charge you for the handling on their end, and you need to pay to ship the item to their warehouse.
Managing your own shipping and handling is frequently cheaper. That means you can charge less for your product or take more money home on every sale.
Read more about shipping and handling costs to make a more informed decision.
Using Fulfillment by Amazon means that your fees continue to stack up. You have to deal with storage fees, weight handling fees, “pick & pack” fees and possibly more, on top of the costs of shipping the product to Amazon rather than directly to the customer.
The Fulfillment by Amazon Revenue Calculator indicates that for a 2.4-pound hardcover book, FBA fees will be about $2.36. That means we are now paying $5.96 per $15 sale with the Professional plan.
Change that to a 67-pound mini fridge and the FBA costs alone go to $55.36.
It really starts to add up. But it also comes with some major advantages: your product becomes eligible for Prime, making it more appealing to customers; you don’t have to worry about storage; and you don’t have to do nearly as much running to the post office. The easier logistics and improved sales can make up for the higher costs.
So Which Is Better for Me?
Those who want the maximum level of control and the highest profit potential will generally be better off shipping on their own. Those who want fewer headaches and prefer more total sales to higher profits per sale should probably use FBA.
Either way, as long as you follow the tips above, you should be able to make some good money!
For more advanced options, read our article on ecommerce shipping solutions.
4. Sign Up
Select your selling plan and complete the sign-up process. Amazon will walk you through all the steps of creating a seller account.
Once you’ve signed up, you’re ready to start selling! Go and list your carefully picked products and let the sales start rolling in. With a little luck, you’ll be well on your way to building an ecommerce empire.
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