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How To Sell On Amazon Effectively

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How to sell on amazon for beginners

There are many resources available that tell you how to sell on Amazon. We are going to focus specifically on how to sell on Amazon effectively. We won’t be covering the basics of getting an account setup, you can go to Amazon for that.

Rather we are going to concentrate on how to sell on Amazon effectively. What kinds of things to sell, what you can realistically expect, etc. Once you reached the age of 18, you can setup a seller account and get started.

Basics Of How to Sell on Amazon

Amazon is the king of online retailers. What you may not know is that besides selling many of their own items, over 1/3 of the items sold are sold by third party sellers.  Like most other sites, if you sell through them you will pay fees for the service.

There are 2 ways to sell on Amazon. One is that you can list an item and when it sells, you would ship the item directly to the buyer. The buyer pays Amazon and Amazon pays you, after fees have been deducted. If there are any returns, shipping issues, etc. you would need to resolve them with the seller.

The other option for how to sell on Amazon is called Fulfilled by Amazon (FBA). In this setup, the seller sends their products directly to Amazon who keeps them in their warehouse. When the item sells, Amazon will use their distribution system to ship the item to the seller and also handle the customer service and returns if necessary.

The buyer still paying Amazon, and then Amazon pays you after the fees are deducted. Because of the increased level of service, there are a higher amount of fees for selling FBA. However, we’ll make the case that the increased fees are more than worth it.

If you want to sell on Amazon, FBA is the way to go.

Once you’ve signed up for an account, you’ll have the option of using a standard free account or using a professional account. The professional account is $40 per month, and will save you $1 in fees per sale. So the easy question is if you wAmazon Logo - How To Sell On Amazonill sell more than 40 things per month. If yes, then it will save you money to be a professional seller. If no, just stay with the basic account.

Advantages of Selling FBA

I mentioned that the additional fees are well worth it when it comes to FBA. That is because of all the built in advantages that come with selling FBA as opposed to selling out of your house. Here are some of the key advantages:

You Can Sell More. If you’ve sold many things online before, one of the limitations of a one man show is that you end up with a garage full of stuff you are planning to sell. Think how much more you could sell if physical storage space was a non-issue. By sending your inventory to Amazon, you don’t have to worry about where to store it at your house.

You also may feel some pressure if items are sitting in your house to discount your price quickly, just to get rid of it. If you send it off to Amazon, you’ll be more likely to stick to your price since you aren’t being hassled by the item being in your way.

You Can Sell For A Higher Price. People love buying from Amazon. This makes the answer to “how to sell on Amazon” very simple. If you’ve bought from Amazon, you may know the feeling. In fact, many Amazon lovers pay $79 per year to be a Prime member which entitles them to free 2-day shipping and a few other benefits. When you sell FBA, it is very clear to the buyer that Amazon will be delivering the item. This means it is “Prime eligible” which is a big deal for many buyers. They trust Amazon. They don’t necessarily trust Bob’s Car Parts in Carbondale Illinois to deliver their item in 2 days.

Since your item becomes Prime eligible by default, the free shipping works in your favor. Let’s suppose you have 10 boxes of K-cup coffee to sell, and they are listed for $50 each with free shipping. If you were selling this out of your house, you might list it for $42 + $8 for shipping. First of all, if these 2 items were competing, although the cost to buyer is the same, buyers will choose the FBA item 9 times out of 10 based on trust.

For the FBA seller, they probably paid about $10 to ship one case of all the coffee to Amazon. For the sell from home person, not only are they selling for $8 less, but they have to drive to the post office and pay to ship every sale individually, including the materials like a box to put it in. In the end, you’ll likely make a higher profit selling FBA because of this. Here is a breakdown of the fees and another example.

Besides the financial cost, there is a time cost involved as well. In the prior example, you have to make 10 separate trips to the post office. People also are expecting quick shipping, so you need to be ready to fulfill that order within a day or two. There is a much higher burden on you as opposed to doing a “one and done” FBA and forgetting about it.

One other thing worth mentioning is that people will often pay a premium to get something sold FBA. Going back to the same example, in my experience you could list those coffees for $55 – $60 if not more and easily sell them over the individual seller who is priced at $50 total. It may sound hard to believe.

Why would someone pay more for the same exact product? 

I was skeptical at first too, but at this point I’ve seen it myself time and time again. It all goes back to trust and reputation. If something goes wrong, people know that Amazon will take care of it. They also know Amazon has mastered the distribution process and will have that item on its way quickly. That certainty has value; a dollar value.

 You Don’t Deal With Customers

One of the biggest hassles for many is dealing with customers themselves. If the item doesn’t arrive on time, something goes wrong, they have a question, sending confirmation emails, etc. the customer is coming to someone for help. If you are the seller, you would be doing all this work. When you sell FBA, Amazon takes care of all of that. This is great for your peace of mind and your time.

What Can I Sell?

Nearly anything. The cool thing about Amazon is that most of the time (ignoring books, which are super competitive) you are selling items that are brand new. This isn’t like eBay or Craiglist where you are selling a bunch of used stuff. You really should just be looking for anything you can sell to make a profit.

The simplest way to find products to sell on Amazon is to get products at wholesale and then sell them at retail price. The key is to deal with a reputable wholesaler – not a “middle man”.

Here is an example of a legit wholesale source.

Another way to source products is finding deals locally. Target, Sams Club, Big Lots, etc. are all great places to find items on sale or clearance that are going for a much higher price on Amazon. You will no doubt be skeptical at first and think, if I can get this at Target for $10, why would someone buy it on Amazon for $30. Here are a couple reasons:

1. People are lazy sometimes. They Google search some item they want, Amazon is the first thing to pop up, they trust Amazon and the convenience of buying it without driving around town to find it in a store.

2. There are gaps in the market. Just because an item doesn’t sell well at your local Target, doesn’t mean that this item wouldn’t sell for retail price at some other location across the country. How would someone in Minnesota be able to get to a clearance item at a Target in Miami? They can’t, which is why they might buy it on Amazon.

3. Similar to above, not everything is available everywhere. There are some regional specific items that people can’t get where they live, so they’ll gladly pay more to get it online. A great example is the grocery Trader Joe’s. They have a cult-like following, and are very sporadically located around the country. They have house brands with many unique items, and they don’t sell their own products online. Therefore, if you live 4 hours from a Trader Joe’s and really want something like their cookie butter, Amazon is your only realistic option.

As a general rule of thumb, if you find something to buy for $10 you need to be able to sell it for $30 on Amazon. You can estimate $10 for the product, $10 for Amazon fees, and $10 for profit. This is a good goal to shoot for. Here are some specific examples of how to sell on Amazon by buying products you can find all around you.

Tools, toys, food, household items, or anything else that you find way below retail; these are all things you can sell on Amazon.

Real Examples Of How To Sell On Amazon

The first items I sold were actually K-cup coffee boxes from Sam’s. I made a small profit on them, but they had a really high sales rank. To give some specifics, they were Starbucks K-cups for about $36 at Sams and were selling for about $55 on Amazon. This was a tighter margin than I would recommend, as I stood to profit about $5 per box. I went for it, since the sales rank was about 2,000, which is really high. I bought just a couple to try it out, and shortly after they arrived at Amazon they sold, almost immediately.

I’ll spare the details on shipping things to Amazon, but in summary you walk through the Amazon seller site and find the item you are going to sell. You set your price, and select that you want to sell FBA. Amazon will tell you where to ship it, and you can pay for UPS postage at their rate – print your label, box it up, and send it in.

The first big win I had on Amazon also came from Sams, and it was a Sharper Image foot massager. At the time, there were no FBA sellers and the lowest price + shipping was around $80. I bought 2 of them from Sam’s for about $48, just to try it out because it had a great sales rank. These 2 sold within a couple of days at $84, which profited me about $10 per item. At this point I was becoming a believer, even though I only made about $50 profit on my trip to Sam’s. For some reason I went crazy and bought every massager they had – which was about $1,000 worth.

Another nice benefit of FBA which ultimately saves you money, and makes the fees totally worth it in my opinion, is that you can ship cases of items together. Here is a real example of how this worked in my favor.

I used big shipping boxes I had bought at Walmart and shipped 5 massagers in a box for about $10 each. If I’d have sold those same 5 massagers individually and had to ship them to buyers on my own, not only would I have to go to the post office 5 times and buy 5 boxes, but I would have probably paid about $10 per box for standard shipping. Shipping it all to Amazon at once lets you charge more, because you are competing against people who have to charge that extra $10 – 12 for shipping.

Long story short, this time I decided to test the theory I discussed earlier to see if people would pay a premium to buy from the only FBA seller. I priced them at $99 this time, and gradually they began to sell. After about 10 days, I kept getting emails of items sold and they were going pretty quickly. At $99 I was profiting about $25 each. However, I jumped my price again to $119 and sold the last 3 at that price, profiting $45 each. All in all, I made about $450 in profit on the massagers and they sold within 2 weeks.

Another big success I had was actually a book set I bought on Amazon, and then shipped it back and sold it on Amazon. I know that sounds crazy, but sometimes Amazon will have such a great deal that this is possible. In this case, the product was an Ivy & Bean kids book set. Dealnews is where I usually check in on a daily basis to see if there are any deals across the web that I shouldn’t miss out on.

On this morning they reported that Amazon was selling the Ivy & Bean box set of all 10 books for only $9. This was 90% off what the price had been the day before. I checked all the individual books for sale on Amazon, and most of those were about $9 a piece, new. Encouraged by my foot massager experience, I went big and bought 25 sets.

I got the boxes of books in 2 days, opened them and put the stickers on each item that you have to in order to mark your inventory, and shipped them right back to Amazon. They were in my possession for about 3 hours. A couple days later I had the set for sale for $49, while Amazon had bumped its price back up to $99.

I figured that other people would do the same thing, so prices were temporarily low as people will always get in price wars down to the bottom. Since I had the advantage of selling FBA, I wasn’t too concerned with time passing by. The month to month storage rates are very reasonable. I sold a set or 2 within the first few weeks, but this would would take awhile to turn around.

All in all it took me about 6 months to sell all 25 sets, but I was profiting over $25 on each sale, for doing virtually nothing. The key is to be patient when it makes sense. In this case the books weren’t going to expire, and for an item like this demand isn’t likely to fall off the table. I didn’t want to compromise my margins, so I just waited out some of the low ballers at a price I was comfortable with.

Where Do I Start?

At this point you are probably convinced that Amazon has the potential to become a full-time job, but more realistically can be a source of part-time or extra income for people at any age. Here are some tips for how to get started selling on Amazon:

  1. Apps make life easier. That means, you should really have a smart phone to maximize efficiency. The quickest way to find things to sell is to go out to stores like those mentioned above and scan barcodes to see what that item sells for on Amazon. If you want to jump in with both feet, there is an app called Profit Bandit on iPhone that will scan items and tell you all the pertinent information you’ll need to make a decision. This app is about $15. You can also use Amazon’s own app, but it wasn’t built with sellers in mind and it takes a little longer to find out what you need to know.
  2. Know what to look for. I mentioned this in the last point, but you need to know that an item has the potential to sell well. How do you know this? One key is the sales rank. Amazon publishes this, and the lower the number the more frequently it has sold recently. Here is a post about sales rank that describes it well. Another thing is how many other sellers are offering the item. If you are the only FBA seller, that is ideal. If there are other FBA sellers you should plan on matching their price. You also should focus on items that are smaller/lighter when possible. Amazon has higher fees for items that are bulky and heavy, so you would need to have a higher margin.
  3. Buy boxes at Walmart. I’ve found that getting shipping supplies is most affordable here, and you will have to get the boxes to ship things out to Amazon.

Other Tools and Resources on How To Sell on Amazon

Here are some great books and other resources that can take you more in depth on how to sell on Amazon. Many of these I have used myself.

SaleHoo – A site for finding wholesale products. This can cut down on time spent searching for deals and will allow you to scale your business.

Retail Arbitrage – A book by Chris Green who is kind of the godfather of selling FBA. A lot of great insight.

FBA Recipe For Success – 2 working mothers who have found Amazon success have written a 130 page e-book with all the details on how to be successful.

FBA Forum – Users share ideas and questions about selling FBA

Camel Camel Camel – Not sure what the deal is with the name, but it is a great tracker of historical prices on Amazon. Find out if the price you see currently is relatively low or high, and setup alerts.

Profit Bandit – This is the iPhone app (also on Android) I mentioned earlier. It does all the math for you so you can know what your profit would be assuming the item sells for its current price. This saves you a ton of time.

If you have any questions, please let me know in the comments below and I’d be happy to help.

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