amazon basics
amazon basics
This guide will help you get started, understand the basics of Amazon
selling, and explain in simple words how it all works.
Contents
Introduction
Business Models
Online Arbitrage
Wholesale
Dropshipping
Retail arbitrage
Private Label
Individual plans are for casual sellers who sell a limited number of
products, while Professional plans are creates sellers with many
products for a monthly subscription fee.
Retail Online
Private label Wholesale Dropshipping
Arbitrage Arbitrage
3. What will I sell?
The next thing you need to do is to pick the products you are going to
sell. Amazon sellers call this process product research.
Typically, you will look for a product with good market demand (popular
with Amazon customers) and low competition (to be able to sell it for
the price you planned). Also, it should not have any problems (be
restricted or have other flags).
Clothing, Shoes
Electronics Appliances
& Jewelry
Most sellers use product sourcing tools to find products for Amazon.
One of the most popular product sourcing tools is Seller Assistant.
4. Where do I get a product?
After you have ensured that the product will sell, you must check it will
generate good profit. You must find a product supplier who offers a
price substantially lower than it sells on Amazon.
You can get guidance on how many units you can sell from the
estimated sales number in Seller Assistant. The general advice is not to
buy too many products (inventory) at the beginning of your journey.
6. How to add my product to Amazon?
When you have a product ready to sell, you must add your offer to
Amazon. The Amazon product page is called product listing, while the
process is to list a product. That is a place where all buyers get all the
details about item when they look for a product on Amazon.
You can either add your offer to an existing Amazon listing (if it already
exists) or create a new one (if a product doesn’t exist on Amazon).
Highly-ranked
keywords
High-quality
image
20+ reviews
4+ star
When you list a product, Amazon will ask you how you are going to ship
it to the customer. That is called the fulfillment method.
You can fulfill orders yourself (with Fulfillment by Merchant, FBM) or use
Amazon's Fulfillment by Amazon (FBA) service, where they handle
storage, picking, packing, shipping, and customer service for a fee.
FBM
Research what similar products are selling for and consider all your
costs (including Amazon fees) to ensure you make profit on each sale.
Use Seller Assistant’s FBM&FBA Profit Calculator.
9. How to know if my product was sold?
If you use Amazon FBA, they take care of shipping orders (buyer’s
purchases) to the customers. You don’t need to know exactly when you
receive each order because you don’t have to send it to the customer.
However, if you are an FBM seller and ship orders yourself, you will
immediately know how much time does it take to timely process and
ship it out. You can get this information in your Seller Central and the
Amazon Seller App.
Amazon takes money from the customers and then pays you what
you’ve earned. They will deposit your earnings from sales into your
seller account, minus any applicable fees. You can then transfer these
funds to your bank account.
Choose the
PARAMETER model
S
Start selling
Selecting the right business model is the key to your success in the long
run. It helps launch, establish, and structure your Amazon sales
correctly.
Now we’ll explore the different Amazon business models and provide
insights to help you choose the one that aligns with all your goals and
strengths.
Online Arbitrage
Amazon online arbitrage (OA) is a business model of buying
cheaper-priced products from one online retailer and reselling them for
profit on another marketplace — Amazon.
NUMBERS PROCESS
>50% makes
21% 5000$ monthly Conduct product
research
out of all sellers
Find product suppliers
MODEL
List products
on Amazon
Beauty Health
Clothing Cell Phones Repeat
Home Electronics
Games Automotive
Sports Grocery
MODEL PROCESS
Professional seller
account
Do product
Buy low price Sell high price
research
FBA
Find suppliers
FBM
List it on Amazon
MODEL PROCESS
Find dropshipping
supplier
NUMBERS
List products on Amazon
~300$
you need to start Receive the order
This model is the least expensive to start. You don’t need to invest in
inventory upfront. Your only costs are Amazon fees and
product-sourcing software.
Retail Arbitrage
Amazon retail arbitrage is a business model where sellers buy products
from brick-and-mortar stores retail stores at a discount and resell them
on Amazon for a profit.
MODEL PROCESS
Install the barcode
scanner
Research the
Big box Discount Department product
stores stores stores
Time-consuming model
It takes much time to physically travel from one store to another in order
to find profitable deals and choose products. You have to scan their
barcodes and check all products one by one manually.
To start retail arbitrage on Amazon, you don’t need much money. You
pay Amazon fees and buy cheaper-priced products to sell on Amazon.
The startup cost can be around $500.
Lower-competition model
A private label product is trademarked, and you have exclusive rights to
it. Therefore, other sellers cannot sell these products, and you can be
the only seller in the Buy Box.
Higher investment and risks
Compared to other models, starting a private label business takes more
time and effort. You need to select a product and arrange its
manufacturing. Typically, it takes 4-6 months to launch a PL product.
Because a private label brand is new to the market and has no sales
history, it is difficult to predict how well it will sell. Therefore, there is
some risks involved when investing money in a PL business.
Example: If you sell a smartphone, you must list it in the "Cell Phones &
Accessories" subcategory under the larger "Electronics" category.
Some product categories are more popular than others, and you have to
remember that while choosing a product. Below you can find the
categories rated by popularity among sellers.
How to do it. Delete the part of the link, starting with ref= and refresh
the page.
● Step 2. Check a product for IP alerts
Before selling a product you must make sure it doesn’t have any
IP (intellectual property) complaints.
How to do it. You can detect products with IP complaints with Seller
Assistant's IP Alert tool. It shows the red triangle icon if a product has IP
complaints and the type of IP complaint. That means you have to stay
away from that product and brand.
The «good» count of FBA seller offers must range from 2 to 15.
○ The minimum number of 2 sellers shows that a product
is not sold by a brand owner and it doesn’t file IP
complaints if someone else sells that brand’s products;
○ The maximum number of 15 sellers shows that the
competition is too high. If that is the case, the product
price can drop because the sellers engage in a price
war. That means price dumping and low profits.
How to do it. You can see the count of FBA sellers with Seller Assistant.
It shows the count of FBA and FBM sellers on the product and search
pages. The number on a blue background is the count of all FBA or FBM
sellers. The number on the white background next to it is the count of
FBA or FBM sellers offering the Buy Box price +5% (your potential
competitors).
Related: How to Avoid a Price War on Amazon
How to do it. You can see if Amazon is a Buy Box seller with Seller
Assistant. It shows the Red Amazon icon on the product and search
pages.
How to do it. You can see that on the chart integrated within Seller
Assistant (it’s called Keepa charts). If a product is new, the chart will not
show you any data before a certain period.
Related: How to Avoid a Price War on Amazon
How to do it. Seller Assistant calculates how many products you can
potentially sell per month in the Sales field. Drops (BSR drops) show
how many products were sold during 30, 90, and 180 days.
You can also see BSR figures with Seller Assistant. If the BSR number is
green and the arrow beside it points down, the product is a good option
for selling. If the BSR number is red and the arrow beside it points up,
the product is not a good option for selling.
Related: Amazon Best Sellers Rank – Everything You Need to Know
How to do it. Seller Assistant shows the average Buy Box price (Avg
BB), and if it goes up or down compared to a 90-day price (green arrow
up or red arrow down). It also shows the lowest FBA (Min FBA) and
lowest FBM (Min FBM) prices. You can set your price somewhere in
between. You can use this price level to calculate if your product will
bring profit.
If a product has variations, not all of them will sell equally well. If you
want to sell a product with variations, you must select one of the
best-selling variations. However, the BSR doesn’t show which sells the
best because it is calculated for the whole variation family.
How to do it. Seller Assistant’s Variation Viewer lets you quickly see all
variations' rating share, total ratings, and the rating percentage per
variation (Share). The highest percentage indicates the most
profitable variations. Variation Viewer also shows if a variation is out of
stock. (if your Amazon Seller Account is connected to Seller Assistant)
How to do it. Seller Assistant shows a green open lock icon if you can
sell a product and a red closed lock icon if you can’t.
(if your Amazon Seller Account is connected to Seller Assistant)
Also, some are not sold all year round like meltables. Some categories
are processed in special Amazon fulfillment centers, which delays
shipment (oversize, hazmat).
How to do it. Seller Assistant shows all product flags directly on the
Amazon product and search pages.
Seller Assistant flag icons legend
Closed Red Lock icon — you can’t sell the product on your account, or it
belongs to a restricted category;
Red Triangle icon — IP alert;
Red Box icon — the product is oversize;
Red Glass — the product is fragile;
Red Drop — the product is meltable;
Hazmat icon — the product belongs to the hazardous materials;
18+ — the product belongs to Adult goods;
Red Amazon icon — Amazon is a Buy Box seller;
GB — generic brand (you can’t add your offer to the listing).
How to do it. At this point, you will only need an estimated ROI to have
an idea if a product is profitable or not. To calculate ROI, you must know
the Cost of Goods Sold (COG, the product price at the supplier’s site).
You can look up the price at several suppliers and take the average.
Seller Assistant’s Quick Links allow you to quickly search products on
Google, Google Shopping, eBay, Walmart, Target, Katom, The Home
Depot, and Alibaba, and find the suppliers and prices. To do that, click
on the search icon, and in the drop-down, select a website you want to
search the product on. You will be redirected to search results.
Then, you can quickly calculate ROI with Seller Assistant’s FBA&FBM
profit calculator. It will be displayed on the Amazon product pages. Aim
for Return on Investment (ROI) above 10% to ensure profitability.
How to find your product supplier?
After you made sure the product you plan to sell meets all the above
criteria, you have to look for a reliable supplier who offers low prices for
your product. That will give you a good profit when you sell your
product on Amazon.
Finding a product and its supplier for your chosen product is called
product sourcing.
You can conduct product sourcing in several ways. The two most
popular are called – direct and reverse sourcing.
Other reasons to use this method are if a supplier offers you large
discounts for bulk deals, or if you know that the supplier is reliable and
delivers orders to Amazon’s fulfillment centers fast.
Direct sourcing step-by-step
Delivery time
Consider how long it takes for your supplier to deliver new inventory.
Take into account this lead time into your calculations to avoid
stockouts.
Research competition
Analyze how many units competitors have in stock. This can help you
determine a strategic amount to order without overstocking. Seller
Assistant’s Stock Checker shows how many product units are available
in stock.
● Step 3. Find your product in the list, select condition, and click
‘Sell this product.’
● Step 2: Enter the product name and confirm the primary product
category specified by Amazon (or change it).
Fulfillment by Merchant
This method works well for sellers who don’t have many orders and
can take care of packaging and sending them on their own. However,
you must remember to package (prepare) your orders securely and add
all necessary barcodes and labels. Another common reason to use FBM
is when you sell bulk or other non-standard products and Amazon
fees are high.
MODEL PROCESS
Choose the
Client Supplier
fulfillment option
Receive an order
Handle customer
service
Hand- Hard- Meltable
Made to-ship
How Amazon FBM Works
● Step 1. Choosing FBM
When adding a product offer in Seller Central, under "Inventory > Add a
Product," select "I will ship the item myself" in the Fulfillment Channel
section. This indicates you'll handle shipping instead of Amazon's FBA
service.
● Step 2. Inventory storage
With FBM, you're responsible for storing your products. This could be a
dedicated warehouse, a spare room, or even your garage.
● Step 3. Packing and shipping
Once a customer buys your product, you're responsible for securely
packaging and shipping it to them. Ensure you use appropriate
packaging materials and choose reliable shipping carriers.
● Step 4. Customer service
You'll have to handle all customer inquiries and issues, from answering
questions about the product to resolving any problems that might arise
after the sale.
Fulfillment by Amazon
MODEL PROCESS
Add inventory to FBA
A customer
makes an order
Manage
inventory
Fulfillment Customer
service
FBA is when you send your inventory to Amazon's warehouses, and the
platform handles the picking, packing, order shipping, and customer
service on your behalf for a fee.
With FBA, Amazon handles your logistics, saving you time and hassle.
However, keeping track of your inventory levels and ensuring you're
sending enough stock to Amazon's warehouses to replenish your stock
is still important. Also, you must take care of shipping inventory to
Amazon’s fulfillment centers.
Note. Amazon will ask you a question about your fulfillment method
when you list your products, and it’s necessary to select FBA or FBM.
You can change it at any time if you need.
Related: How Does Amazon FBA Work. Is Amazon FBA Worth it?
How to choose between FBA and FBM?
If you are not sure what is better for you: FBA or FBM, look at these
factors to pick the best fit for your business.
Go for FBA
● If you sell many products
FBA can help you handle large order quantities you can’t manage
yourself. Amazon's fulfillment centers ensure efficient picking, packing,
and shipping, freeing you to focus on growing your sales.
● If you do not have experience with fulfillment
Amazon has strict packaging requirements. If you fail to prep your
inventory in line with their rules, they will charge you extra for prep
services. That can also create unnecessary delays. If you are not sure
how to prepare your products, you can use Amazon’s services.
● If you don’t have a place to store inventory
If you don’t have a warehouse where you will keep your products until
they are purchased, Amazon will store them in their fulfillment centers.
However, you must remember about the storage fees.
● If your products have standard-size tiers
FBA works best with products that fit within their standard size tiers.
Amazon charges bulk and heavy products differently from standard
items, and the fees are much higher.
Go for FBM
● If you have slower-moving inventory
For products that don't sell quickly, FBM can be more cost-effective.
You avoid storage fees associated with slow-moving items in Amazon
warehouses.
● If you have logistics expertise
If you have experience in packaging, shipping, and customer service,
you can save money by handling fulfillment yourself with FBM.
● If you have an existing shipping partner
If you already have a reliable shipping and delivery partner, FBM allows
you to leverage their services and potentially negotiate better rates
than FBA fees.
● If your items are unique or non-standard
If you sell handcrafted or exclusive products, you may want to buy
custom packaging, while Amazon offers standard solutions. Then you
can fulfill these products yourself. Also, if your products have
non-standard sizes or require special handling, third-party solutions
may be cheaper than Amazon.
If you want to get profit from sales, you must price your product in such
a way that it includes the profit you want to get, the cost of the item
you resell (Cost of Goods Sold, COG), Amazon fees, shipping and
handling costs (fulfillment), and other expenses.
On the other hand, your price must be competitive. That means it must
be attractive to Amazon customers. It can be equal to 2-3% or higher
than the Buy Box price.
Therefore, to set the «good» price, you must maintain the balance
between your costs and profit on one hand, and the Amazon Buy Box
price, on the other hand.
When you calculate your selling price, you must include such costs as
COG, all Amazon fees, shipping and logistics, and sales tax and VAT if
applicable.
Amazon fees
All Amazon sellers selling plan fees and referral fees. Also, there are
optional fees. You pay them if you use additional Amazon services.
● Selling plan fees
○ The Individual plan costs $0.99 per unit sold, and the
Professional plan costs $39.99 per month, no matter
how many units you sell;
○ The Professional plan will save you money if you sell
more than 40 units per month.
● Referral fees
The referral fee is paid for each item you’ve sold on Amazon.
The fee is a percentage and depends on the product category.
Most referral fees are between 8% and 15%. However, in some
categories, like Amazon Device Accessories, it hits 45%. In some
cases, a minimum referral fee is applicable.
● Other fees
Amazon may charge you other fees in some categories (Closing fees for
selling media products), High-volume listing fees if you have more than
100,000 products listed, and Refund administration fees if the customer
asks for a refund.
● Logistics costs
Logistics costs are expenses for preparing orders (packaging and
labeling) and delivering them to the customer (FBM sellers) or Amazon’s
fulfillment center (FBA sellers).
○ Shipping to Amazon and prep center costs (FBA)
Shipping to Amazon includes the cost of shipping from
the supplier to the Amazon fulfillment center.
■ Prep center fees
If you sell many products, you can use a
specialized service - preparation (prep) center.
The prep center is a service provider preparing
your inventory for fulfillment according to
Amazon standards. Prep center fees vary
depending on which prep center you use.
○ 3PL costs (FBM)
3PL is a third-party logistics service provider preparing
your inventory and shipping it to the customer.
● Sales tax and VAT
○ Sales tax for Amazon sellers is typically collected by
Amazon on behalf of sellers. But in some cases,
depending on where your business is located, you will
need to collect it yourself;
○ VAT (Value Added Tax) is paid when you sell
internationally.
Profit
Profit is calculated the selling price minus COG, referral fees, FBA fees
(for FBA sellers), monthly storage fees sales (for FBA sellers), tax and
VAT (if applicable), and logistics (3PL) costs (for FBM sellers).
Profit
ROI
ROI (Return on Investment) is the profitability of investment expressed
as a percentage. ROI is calculated profit divided by COG, sales tax, and
3PL costs and multiplied by 100%. A «good» ROI is more than 10%.
Net Profit
100
Total Investment
including cost of inventory,
equipment, and marketing
and advertising costs.
Margin
The profit margin shows the profit percentage generated by sales. It is
calculated profit divided by price and multiplied by 100%. A «good»
margin is 10-15%.
Net Profit
100
Price
Margin
It’s important to set the break-even in such a way that you won’t lose
money when you reprice the
You have two options: products fulfilled by Amazon (FBA) and products
fulfilled by sellers (FBM). You can quickly calculate product profitability,
fees, and logistics expenses for FBA and FBM separately.
Steps to calculating product price
● Step 1. Set your desired price
Seller Assistant shows you the maximum FBA and average (over 90
days) Buy Box prices (the best price offer). Click the small arrow beside
the “Price” to set the Buy Box +2, 5, and 10%.
You can get this information in your Seller Central Order and the
Amazon Seller Mobile App.
How to check product sales in Seller Central?
To check when a product sells in Seller Central, from the Menu, go to
Orders > Manage Orders.
In the Manage Orders, you will see the customer orders in ‘Pending.’
After Amazon confirms the purchase, the status will change to
‘Unshipped.’ That means it’s time to ship the order.
To get paid for your sales, you must add your bank account and a valid
credit card to Seller Central. That is where Amazon will send your
payments. Your account must support Automated Clearing House
(ACH) transactions.
You can see how much and when Amazon pays you on the Payments
dashboard and Payments report.
3-5 business days
Try it now, register for our 14-day trial, and grow your Amazon business
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