Are you ready to start selling on Amazon? Here are 8 steps to take to make sure you’re all set and ready to make money.
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When it comes to building an Amazon business, there’s more to it than just finding and selling a product.
Since an Amazon business is a real business, there are a lot of things that you will need to consider and prepare for. If you don’t, it’s likely that you will hit some roadblocks that you didn’t prepare for.
In this article, we’re going to talk about the 8 steps you need to take before selling on Amazon. If you do all these things, you will easily overcome some of the common stumbling blocks people encounter when first starting their Amazon business.
Whether you’re just starting to think about selling on Amazon or are already in the process of getting signed up, nailing all 8 of these steps will ensure you have a smooth ride. Let’s get started!
#1: Get a Pro Merchant Account
While a Pro Merchant account is not free, it is necessary to have if you want to become a successful Amazon seller.
One major reason to get a Pro Merchant account is because it is a requirement for winning something on Amazon called the ‘Buy Box.’ This is the little ‘Add to Cart’ box that you see when you click on a product listing.
The way this works is that 80% of sales are awarded to the seller in the Buy Box, so whoever occupies the Buy Box will always have the upper hand compared to other sellers in the same listing.
The best part is that, once you have a Pro Merchant account, the items that you sell are now eligible for Prime Delivery.
This means that, when a member of Amazon’s Prime program places an order on your listing, they will enjoy the benefit of quick delivery service, such as one-day delivery and one-day shipping.
And Amazon prioritizes sellers who have Prime delivery to win the Buy Box over ordinary sellers.
With this advantage, you now get to compete with sellers who have better customer feedback than you. This is because the Buy Box doesn’t show how many reviews a seller has, and discloses very little information about the merchant themselves.
This is crucial. Since, when you first start out, you won’t have any reviews, you can leverage the Buy Box to make sales and gain feedback.
Even though it costs money to open a Pro Merchant account, we strongly recommend getting one instead of having a free seller account because you’ll make more money.
#2: Have the Right Documents Ready when Applying for an Amazon Account
When creating your seller account, Amazon will require two important documents.
- Photo of a national ID, like a passport or driver’s license
- A bank statement that has your address
Preparing both documents is super simple. Simply use your phone camera to take a picture of your national ID and login to your bank and download your latest bank statement.
Then, during the registration process, upload both of these documents when Amazon asks you to do so.
#3: Act Fast, Don’t Wait!
Amazon is constantly changing and evolving. The truth is that these changes are usually designed to make the barrier to entry harder, not easier.
For example, back in 2014, Amazon changed their Personal Care category from an unrestricted category to a restricted one.
Since 2016, Amazon no longer allows new FBA sellers to send in their first shipment during the fourth quarter of the year.
These are just two of the many changes Amazon has made over the past years and they are constantly making more every year. Because of this, it’s vital to act fast and sign up to be a seller so that conducting business is an easier process.
Think about it. If you had signed up to sell on Amazon before they restricted the Personal Care category in 2014, then you would have had less issues selling in this category.
And in 2016, if you were an established FBA seller before they implemented restrictions, you would have had no problem sending in shipments during the fourth quarter.
The point is that the sooner you create an account and start selling, the easier it is. So don’t wait, act now!
Also, don’t be afraid of restrictions. They work in your favour. Restrictions wipe out illegitimate sellers and lowering seller competition.
#4: Pick your Amazon Business Model
Before selling on Amazon, you need to choose a business model that will help you make sales.
There are many models to choose from. Some of them include private labelling or dropshipping.
These are both example of great business models to choose from, but keep in mind that each still have pros and cons, that will be more or less favourable to you.
Because of this, it’s important to choose a model that suits your skills, life balance and access to resources.
For example, private labelling has the advantage of having Amazon fulfil your orders for you, so you don’t have to do the physical work of picking and packing orders.
But on the other hand, private labelling has a big start-up cost, making the barrier of entry higher for somebody who doesn’t have a lot of money to invest.
With dropshipping, you only order a product after it has been paid for, which dramatically reduces your risk of investing in inventory that doesn’t sell.
On the other hand, with the dropshipping model, you are required to place each order made by a customer, which limits the time you have to work on other parts of your business.
The point is, you should research business models and determine which one suits your personal needs. This will make your business more manageable and fun!
#5: Get a Credit or Debit Card
As a seller on Amazon, you’ll be required to pay fees that Amazon charges you for using their platform.
While a Pro Merchant account subscription is one of the fees, there are other fees you are required to pay such as a ‘fulfilment’ fee and a fixed ‘pick-and-pack’ fee.
It’s important that you have either a credit or debit card to be able to pay these fees and to avoid any issues that may occur from not having a card. Prepaid debit cards and Payoneer cards are not legitimate options.
#6: Make a Plan to Manage Your Cash Flow
Not many people mention this, but it’s a real biggie.
Before you sell anything on Amazon, it’s crucial that you have a plan in place for how you are going to pay for the items that you are selling.
Why? As a new seller, Amazon holds any money you have earned in sales for two weeks. So, if you are private labelling and making hundreds of sales within the first few weeks, you need money to purchase new inventory to replenish your stock.
There are two ways you can do this. The first option is to save up a bunch of money before you start selling so that you can pay for new inventory while you wait for Amazon to release your funds.
The second option is to simply use a credit card! This is probably the easiest method to dealing with cash flow. Once the two-week period is over and Amazon releases your funds, you can easily pay off the credit card.
Understandably, if your credit score is not high enough, it won’t be easy to get your hands on a credit card.
If this is the case for you, we suggest using a debit card while making it a priority to build up your credit score.
#7: Check if the Category You Want to Sell in is Restricted
While some categories like Home & Gardening are easy sell in, other categories are restricted and require you to submit an application before allowing you to sell products in them.
The process for being able to sell in a restricted category varies and requires you preparing different types of documents and information.
If you want to learn more about Amazon’s restricted categories, here is a video we created that specifically discusses how to sell in restricted categories.
#8: Set Aside Time Every Week to Grow Your Business
Considering this will soon replace your day job, it’s important to make growing your business a priority.
Scheduling time during the week to build your business ensures that you are able to manage orders, answer customer emails, and continuously grow your business.
Understandably, there will be times where you just don’t feel like it, like when you come home from work feeling really tired. An easy workaround solution is to wake up one hour earlier in the morning and use this time to manage your business.
The main point here is to be consistent otherwise your business will stagnate. It’s better to dedicate one hour per day to growing your business than putting in one straight week of hours every two months.
Growing a business while holding down a full-time job isn’t easy, but it’s something that every successful Amazon seller has had to go through at some point in their life. At the end of the day, the rewards are well worth it!
If you want to learn more about starting an Amazon business while having a full-time job, read this article.
The Bottom Line
In the beginning, building an Amazon business, or any other business, can be a nerve-wracking ride. Following the 8 steps outlined in this article will help you prepare for the ride and ensure that you start out on the right foot.