Small Business

How to Become a Top Amazon Seller

Selling on a large platform like Amazon can be highly lucrative but also very competitive. There are a number of best practices and tips to keep in mind as you compete to improve your Amazon business. Our guide provides a comprehensive overview on how anyone can become a top seller on Amazon.

If you want to sell products on the Amazon Marketplace, the process can be as simple as signing up, paying the appropriate fees and listing your wares. While Amazon is an option for selling products online, it’s not your only one: eBay, Etsy, Walmart Marketplace and Overstock are just a few additional places. According to Amazon, the average U.S-based small and medium-sized business made more than $90,000 in 2018 using the platform. But of course, there are some costs you’ll need to consider.

6 steps to become an Amazon seller

There are 6 necessary steps you must take to set up your seller account, list products and get them in the hands of your customers, and of course, collect your revenue.

1. Know what you’re selling.

As tempting as it can be to jump in and open an Amazon Seller account, you should take a moment to know exactly what types of products you plan to sell. This step sounds obvious, but Amazon has rules dictating which products do and don’t need prior approval. For example, you may sell new and used electronics without meeting any special requirements, but if you want to sell those electronics through Amazon Renewed, you’ll need to meet certain criteria.

Amazon offers all sellers the option to choose between more than 20 product categories. Professional Sellers have more than 30 product categories available to choose from. Keep reading to learn the difference between these two types of accounts.

  • All product categories
  • Amazon device accessories
  • Amazon Kindle
  • Automotive & powersports
  • Baby products (excluding apparel)
  • Beauty
  • Books
  • Business products (B2B)
  • Camera & photo
  • Cell phones
  • Clothing & accessories
  • Collectible coins
  • Electronics (accessories)
  • Fashion jewelry
  • Fine jewelry
  • Fine art
  • Grocery & gourmet food
  • Handmade
  • Health & personal care
  • Historical & advertising collectibles
  • Home & garden
  • Industrial & scientific
  • Luggage & travel accessories
  • Music
  • Musical instruments
  • Office products
  • Outdoors
  • Professional services
  • Shoes, handbags & sunglasses
  • Software & computer games
  • Sports
  • Sports collectibles
  • Tools & home improvement
  • Toys & games
  • Video, DVD & Blu-Ray
  • Video games & video game consoles
  • Watches

2. Choose your account type

You’ll have two types of account options when you register for an Amazon Sellers account:

  • Individual Sellers have no monthly fees to pay, but instead pay $0.99 per item sold. They will also pay a referral fee for each item sold. Most items have a minimum referral fee of 30 cents per item, but this fee can be higher based on a sliding percentage scale.
  • Professional Sellers will have to be ready to pay a $39 monthly fee, as well as the referral fee for each item sold. That monthly fee comes with some perks: You will be able to customize your shipping rates, earn top placement on product detail pages and you’ll have no per sale closing fees. Not to mention, you’ll gain access to order reports and tools that assist with inventory.

If you’re unsure of which plan is best for you, Amazon recommends utilizing the Individual plan if you intend to sell fewer than 40 items each month. The pricing listed above for both selling plans does not cover the costs of packaging, shipping or fulfillment, which we’ll talk about in more detail, below.

3. Register and get started

Once you create an account on Seller Central, you can hit the ground running. Seller Central is the web interface where you’ll manage your account. Once you register, you can start listing your products. When you’re ready to register, you’ll need the following information at your disposal.

  • Business name
  • Address
  • Contact information
  • Credit card with valid billing address
  • Phone number where you can be reached throughout the registration process
  • Your tax identity information

4. List your products

Once you’re registered, you’ll be able to list your products onto the Amazon Marketplace catalog. You can do so one at a time. Those with the Professional selling subscription can take advantage of Amazon’s bulk uploading tools and add large batches of items.

In order to list items on Amazon, you’ll have to report how many items you have available to sell, what condition the products are in and the shipping options available to customers. If you’re listing a product for the first time, you’ll have to identify the UPC/EAN and SKU. You’ll also have to identify product attributes like a title and description.

5. Ship orders

Once your products have sold, you’ll have the option of either fulfilling the order yourself, known as Fulfillment by Merchant (FBM) or allowing Amazon to fulfill and ship the order through its Fulfillment by Amazon (FBA) program. The pros and cons of this program will be outlined in the next section.

6. Get paid

You’ve done the work and now it’s the time to collect. Amazon makes this part simple by directly depositing your money into your bank account. Amazon pays you when your seller account is settled and you have a positive balance. It will notify you when your payment has been sent.

Note that it can take up to five business days for the money to appear in your bank account after a payment is initiated.Unfortunately, Amazon cannot make seller payments to a credit card or online payment system like PayPal. In order to get paid, you will need to provide a valid bank account as the “Deposit Method” in your Amazon Seller account settings.

FBA vs. FBM

You did the selling, now is the time to actually fill the orders. As we mentioned earlier, Amazon gives you two choices:

Fulfillment by Merchant (FBM): You fill the order yourself, what Amazon calls Seller Fulfilled Shipping.

Fulfillment by Amazon: Or you can let Amazon do the heavy lifting. When Amazon fills an order, that process is referred to as FBA. With FBA, you will ship all of your products to an Amazon fulfillment center where Amazon will store them for you until they sell. This allows Amazon to pick, pack, ship and provide customer service for the products you sell. If you need help preparing your products to ship safely, you can choose to have Amazon preferred prep and shipping supplies sent to you.

Which one is better?

Cost and convenience are two of the main factors to consider when deciding between FBA and FBM. For those with a high volume of products, having Amazon manage your inventory can help save time and money, allowing you to allocate those resources to growing your business. There will be no need to rent, organize and search through your own warehouse for products. You’ll also save time by not having to prepare and ship the packages yourself.

But FBM may allow you to keep more money in your pocket: you would avoid the expense of shipping items to an Amazon warehouse. You will also have control over your customer service experience. Another benefit will be packaging and shipping orders only when you need to, which can help save money for new businesses that aren’t making a large quantity of sales.

What about Prime?

Existing FBM sellers have access to Prime shipping, but as of publication, new sellers had to join a waiting list. If you choose to utilize FBA, however, Prime customers will get fast and free shipping for your products. Non-Prime customers can still qualify for free shipping on select orders. In order to estimate the total cost of your combined FBA fee expenses, Amazon created a calculator that you can reference here.

How much does it cost to sell on Amazon?

As you can see, costs vary based on the type of seller plan chosen and your fulfillment preferences. The best one for you comes down to how many items you plan to sell and if you’re willing to pay a premium for convenience.

ExpenditureFees
FBA Shipping$2.41 to $137.32 per unit
FBA Storage$0.69 - $1.20 per cubic foot
Seller AccountProfessional Seller: $39 per month Individual Seller: $0.99 per item sold
Referral FeeMost items have a referral fee of a minimum of $0.30 per item

Optimizing your listings

Finding success on Amazon takes more effort than just learning how to sell on Amazon and listing your items. You’ll have a better chance of improving your sales if you take the following steps towards optimizing your listings.

Check orders daily. Amazon will send you an email whenever a product is purchased, but it’s best to do your due diligence and double check your orders each day. That way nothing slips through the cracks, and your customers won’t experience delays.

Be broad. Don’t narrow your access to customers by choosing a super specific store name. Originality is not your friend on Amazon, which essentially functions as a shopping search engine. Choose a broad store name that corresponds with the items you’re selling, but doesn’t limit your selling options.

Ship quickly. If you choose to handle your own shipping, do so promptly after you receive an order. It’s best practice to ship media items within two business days and other items on the specified availability date your customer was informed of when they made a purchase.
Restock your inventory. By keeping your inventory stocked, you won’t have to cancel orders because you forgot to update your inventory. Canceling orders can lead to negative customer reviews.

Load up on good reviews. Having good customer reviews will make selling products on Amazon easier. By providing your customers with high quality products, shipping in a timely manner and having strong customer service, you are more likely to get good reviews. Amazon will send an email to each customer after they receive a product to encourage them to leave a review, so do your best to make sure it’s a positive one.

Amazon alternatives

Before creating an Amazon Seller account, you should consider your other options. Amazon is not the be-all and end-all of e-commerce platforms. You should look into these other options before you jump into selling on Amazon.

eBay

This worldwide marketplace provides access to over 180 million shoppers worldwide. It only takes minutes to upload products and is an ideal website to sell gently used or antique items. Amazon only allows you to sell certain items used. It costs nothing to list up to 50 products per month on eBay, and starting at 35 cents after that point, but you will typically pay a 10% selling fee based on an item’s selling price.

Is it better to sell on eBay or Amazon?

Unlike Amazon, where prices are set, sellers may host auctions on eBay. Customers can bid on items, which can potentially raise prices quite high. eBay also has a “Buy It Now” function which allows the seller to set a fixed price and for a buyer to purchase a product immediately without waiting for an auction to finish. But the platform lacks a fulfillment service — for now. The company announced plans to launch its Managed Delivery service in 2020.

Etsy

Etsy is designed for artists selling handmade goods as well as vintage and customizable items, though Amazon offers a separate marketplace for artists as well, called Amazon Handmade. This platform hosts more than 33 million buyers around the world and in 2017, shoppers spent more than $3 billion. Listing an item costs $0.20 and you’ll pay a 5% transaction fee and a payment processing fee once your item sells.

Is it better to sell on Etsy or Amazon?

If you want to be appreciated for your artisan craft, you may be better off choosing Etsy. But for larger sellers looking to sell mass produced commercial goods, Amazon will likely be a better fit. Etsy also does not offer convenient services for sellers like assistance with shipping or storing inventory.

Overstock

With over 30 million unique visitors each month, Overstock is another platform that offers flexible partnership options to global artisans, small business owners, farmers and more. Overstock offers customizable partnerships that it advertises as flexible and simple. As an Overstock Partner, you’ll also have access to tools that assist with business reporting, analytics and SKU building. However, you’ll need to fill out an application in order to find out specifics on pricing.

Is it better to sell on Overstock or Amazon?

Selling on Overstock requires a few more steps than selling on Amazon. In order to be eligible to sell on Overstock, you must be able to drop-ship, meaning a store doesn't keep some products it sells in stock, but purchases them from a third party once a purchase is made. The third party then ships it directly to a customer. Overstock sellers must also have a U.S.-based warehouse, are currently selling online and can ship non-less-than-a-truckload (LTL) orders within one business day. Individuals can not sell goods on Overstock.

Other FAQ

How does Amazon make money?

Amazon profits by charging sellers a fee to sell their goods on the e-commerce platform. The company charges either a monthly fee or per-item selling fee depending on which type of selling plan each seller chooses. It also profits from its inventory, fulfillment and shipping services.

Is it profitable to sell on Amazon?

The short answer? It can be. There are more than 2.5 million third-party sellers on Amazon, according to e-commerce intelligence firm Marketplace Pulse. Amazon said in its 2018 annual report that “third-party sellers are kicking our first party butt,” accounting for $160 billion in sales that year. That translates to great opportunity for small businesses, but also a great deal of competition on the popular site.

Do I need a business license to sell on Amazon?

Amazon will not require a business license from its sellers, but it’s possible your city or state might require one, even if you work from home. A business license or permit may be required so your town knows what business activities are happening within its limits or your state is aware for taxation purposes. A good place to start is to find your local Small Business Development Center.

Jacqueline DeMarco

Jacqueline DeMarco is a writer and editor based in Southern California. She has written on everything from finance to travel for publications including The Everygirl, Apartment Therapy, and LearnVest, among others. She shares all of her work on her personal website jacquelinedemarco.com