How to Start an Amazon Business According to a Successful Seller

The eCommerce industry is exploding, surpassing 4.2 trillion USD worldwide in 2020.

Amazon is the place to be in this market, going from 280 to 386 billion USD from 2019 to 2020. 

To get a better understanding of how to leverage this growth, we spoke with Milos. Milos has been selling on Amazon for a while and knows how to be successful. In this article, Milos shares his expertise so you can learn the ins and outs of starting an Amazon business.

About Milos – A Short Review of His Business and Product

Milos has been in the Amazon and eCommerce business for the past five years. Before that, Milos graduated from business school with a dream of starting his own business and achieving financial freedom. 

Milos started selling on Amazon in the Spring of 2017 – laying the groundwork for the business in 2016. His unique brand sells printed shower curtains containing motivational quotes that customers can read while showering.

This product stood out and helped Milos and his team secure a high number of sales. His success continues, and his products are still listed on Amazon to this day. 

Why is Amazon the Best Place to Start Selling?

Amazon is an excellent place to start your own business because of how easy it is to start. With the right strategy in place, you can start selling the next day. 

If you want to get a feel for running an eCommerce business, you can release a small number of products on Amazon to get started. On Amazon, traffic is easy to generate using Amazon Sponsored Products advertising, which will set you off on the right foot.

If you don’t have money to invest in warehousing and shipping, the Fulfillment By Amazon (FBA) program will handle it for you. FBA handles all of your logistical needs, letting you focus on the strategy behind your products. 

How Much Does it Cost to Sell on Amazon? 

Serious sellers will want to invest in becoming a Professional Seller, which will cost $39.99 per month. Additional costs include advertising, fulfilment costs (shipping and storage), referral fees, and fees for purchasing inventory.

We asked Milos a few questions to learn more about the cost of selling on Amazon:

How much money do you think you need to start an Amazon business?

“It depends on what you are doing, I would say that you should not spend more than $1000 initially. The initial goal is to simply test out if what you want to sell is something that people would buy.

It might happen that you do really well with your first batch and you might have to invest more heavily in the second one, which is sort of the best-case scenario. It’s good to have contingency plans, for example, how much are you going to spend on PPC and how many sales you expect in return in order for the product you are selling to be viable – also how much of an investment you might need if it sells well.

Overall, you don’t need a lot of money to get started. If you start doing really well, you want to have some funds set aside to facilitate your initial growth.” 

Were there any unexpected expenses?

“…I think we were very naive in thinking that our regular PPC spending would be much lower or that we wouldn’t even have to invest money in PPC for a long time. It quickly became apparent that you need to constantly advertise and manage your spending…

It’s extremely rare for you to just naturally rank up using only SEO, and even if you do you would not be maximizing your growth. When it comes to any other aspect of getting started, there are no surprises in terms of the cost of manufacturing the initial batches of products and getting them to FBA, the price quotes you get are what you pay, and you can easily plan accordingly. You will need some money for some software and possibly some services if you cannot handle them yourself, like graphic design, SEO, photography, etc.”

Milos also took the time to share the importance of additional expenses that most sellers don’t think about. These expenses include:

Milos reminds us of the importance of continually spending money on PPC. While Amazon SEO can be great, it’s essential to diversify your promotional methods. 

How to Start Selling on Amazon – The Milos Example 

Below, we go through a step-by-step process you can follow to start a business on Amazon. We also sprinkle in quotes from Milos to draw on his expertise throughout the example. 

#1: Choose the Product

The first step to planning any retail business is to choose your product. Your product choice may depend on many factors. 

You don’t necessarily have to be passionate about the product you are selling, but it does help when you work with it every day. Many people are more passionate about the results of selling the product than the actual product itself. 

When choosing a product, you can use the Amazon Trend Report, Google Trends, and Pinterest to narrow down some general ideas. You can also search on Amazon or use available analytic tools on the market. 

Milos shared his experience on finding products to sell with us:

How did you find products to sell?

“It was extremely difficult to find the right products back when we started. We were trying to follow the principles of what constitutes a good private label product. That it was simple, light, small without any moving parts, and one we can customize in such a way that we can stand out in our market. 

At the time, there was a lot of guesswork in knowing what Amazon research tools to use to find these types of products. We started with this old tool called TeraPeak. It offered stats for sales volume however it was using data from eBay.

Many other Amazon sellers were using tools like this at the time. But now there are much better tools available. We eventually found AMZScout and its suite of tools that use real Amazon sales data to provide better research capabilities. Now, we recommend other new sellers to use these tools to improve product research.”

When it comes to what to look for in a product, Milos says to pay particular attention to these specific traits:

It’s important to ask these five questions about any product you consider selling. If it isn’t a tiny, light, customizable piece, you may want to consider other options.

Once you address the initial five questions, you can make detailed judgments. For example, Milos suggests that you should look for “relevant interests or designs” that are related. 

Milos uses competitive sales information from the AMZScout Product Database to see if a product meets these criteria. With the Product Database, you can quickly scan millions of Amazon products and filter the results by the more important characteristics.

Using the AMZScout Product Database, you can also filter results based on revenue or sales to find those with high-profit potential. Additionally, you can filter by size to find small products with low shipping costs.

Once you do your research and narrow down your product category target, you can continue to create an Amazon Seller Account. 

#2: Open a Seller Account

Once you’ve decided on a product to list, it’s time to open a seller account. To create an account, you’ll need the following things:

Bank account information must be confirmed through a direct connection. You can simply do this online with some banks, but it typically requires a bank statement to verify your account ownership. 

Amazon also requires you to take a front and back picture of your ID if you have a driver’s license. During this process, they will schedule a video call with you, and you will need to have physical copies of your banking documents and IDs handy.

Amazon will also send you a postcard with a code on it. This code will confirm your physical address and will provide further proof of identification. 

After you’ve finished this verification process, you’ll be able to access Amazon Seller Central. Amazon Seller Central will allow you to create product listings and descriptions. Best of all, it will set the stage for your next step: Sourcing a product. 

#3: Source the Product

Your next step is to find ways to source your product. Product sourcing comes in many different forms. Here are the most common forms of product sourcing:

• Wholesale – Selling products on wholesale is when a seller finds an established brand and sells their product. In this case, you are the intermediary between the product seller and the customer.
• Dropshipping – Dropshipping is when the seller (you) doesn’t stock their own products. Instead, the seller is considered a marketer for a third-party entity, with little control over the product.
• Private Label Selling – Private label selling is when a seller reaches out to a manufacturer to produce a product with your branding on it. There are entire websites (like Alibaba) devoted to this practice.
• Retail Arbitrage – Retail arbitrage is when a seller buys several products at local retail markets, at a discount, and resells them through online marketplaces for a profit. 
• Online Arbitrage – Online arbitrage is buying products online at a discount and reselling them in other marketplaces for a mark-up. 

Once you decide how you want to source your products, the next step is to become competitive as an FBA seller. 

#4: Become an FBA Seller

Becoming an FBA seller simplifies the shipment handling process. It also gives you the best potential Amazon rank available. 

After logging in on Amazon Seller Central, add your products and check the menu where you specify FBA inventory. After completing this step, you can then ship your products to an Amazon Fulfillment Center.

Amazon has different requirements depending on the size of your shipment,  Make sure to follow these quick guidelines regarding your shipment: 

• Ensure here is a scannable barcode on the outside with your Fulfillment Network Stock Keeping Unit (FNSKU)
• Each variant will need a different FNSKU
• Obscure any existing barcodes (before you add your barcode)

While FBA selling includes excellent logistical management, you will still have to manage your inventory. Milos shares his experience with this below:

What are your responsibilities in this business? Did you use Amazon FBA or handle logistics by yourself?

“We used FBA, but using FBA doesn’t mean that you can just not think about the logistical side of things. Planning your inventory is so crucial, and nothing could’ve prepared me for that. You need to at least have some idea of how long your inventory will last and order more inventory accordingly while also making sure you can afford it.

There is also the issue of how many units of which product to order, how many items you would need to order so that you can have a large enough batch to get a lower price from your supplier. Figuring out this balancing act for each individual product is a real challenge. This is something we all worked on together, my personal responsibility was to handle the PPC, which has eventually become my expertise.“

#5: Add Products (Your Product Listings)

Part of establishing an FNSKU is creating a product listing. When creating your product listing, it’s crucial that you are aware of target keywords. Amazon SEO is vital in this case. Milos shared his experience with us regarding this: 

If you had a chance to start over, is there anything you would do differently? 

“In hindsight, you can always find things you would do differently since you learn a lot about Amazon by doing it. In terms of any major decisions, I don’t think so. I wish I understood how PPC works better and that I had the necessary SEO skills, but you do learn that over time, and you adjust.

I guess if there was one thing I wish I’d have done differently, I guess I would have liked not to sell a product that’s in such a super competitive niche since it was really a struggle to get your slice of the pie, but still, it was a challenge I enjoyed taking on.” 

Utilizing analytic tools and looking at your competition is a great way to develop your Amazon SEO skills, with your goal being to meet buyer intent as much as possible.

You can meet buyer intent by focusing on long-tail keywords. These keywords provide as many details as possible for the prospective buyer in the search. 

#6: Promote Your Products 

Amazon PPC is necessary for your products to gain exposure. We’ve already stated the importance of diverse advertising, which must have continuous investment, but here’s Milos perspective:

Did you promote the product?

“Of course, back when we started, it was the Wild West when it came to promotion. A lot of things that are forbidden by Amazon now are being used by new sellers left and right, like giveaways and buying reviews. We, fortunately, did none of that since it was obviously an enormous waste of money, and logically it was not a really productive way of thinking. Since even if you artificially manage to bring yourself to page one, there is no guarantee that you will stay there and keep your organic ranking.

This is why for the most part, we stuck to the good old-fashioned Pay Per Click, and it worked pretty well for us. We did also run some Facebook campaigns and other social media promotions and even got some minor partnerships and mentions, but we can confidently say that PPC is the greatest factor that contributed to our growth.“

It’s always best to stick with something you know how to do, and by using Amazon Sponsored Products advertising, you can get a good start. 

One option to promote off-site content is to branch out into Facebook.Facebook might have a better target audience for you when developing that all-important website later, 

Promoting your products always comes first, but you eventually need to consider a long-term strategy. However, never underestimate the importance of “old-fashioned” PPC ads.

Conclusion 

On our final stop for this interview, we asked Milos one last important question:

Any tips for beginners?

“It’s all about finding the right product, don’t be in a rush to start selling. You can do everything else perfectly and still fail unless you get a product that you are confident about. Of course, there is never any guarantee that any idea will succeed and be worthwhile.

However, with a good product, you can afford to not get everything right from the start and still pull through. If you don’t sell something people want to buy, no amount of skill or effort would be able to compensate for that.” 

Milos managed to overcome an overpopulated niche by standing out with a unique offering. He explained that sellers will face significant challenges related to inventory planning, but that skill set grows with practice. 

It’s essential to plan everything out before you start it, and you’ll need to prepare for the many what-if scenarios in the process. By having this plan ready, you’ll be able to respond to all challenges effectively and with ease.