Becoming an Amazon seller has lots of appeal, especially for small business owners who don’t have the time, space, or desire to deal with storing and shipping product. If you weighed the pros and cons and decided you’re ready to explore the business side of being an Amazon user, you’re in the right place.
This post will walk you through everything you need to do before you set up your Amazon seller account.
Amazon offers sellers access to a huge retail audience and simple-to-use selling platform. When well-utilized, these tools can help you reach new buyers, increase profits, and grow your business.
Where should you start? First, let's talk about a couple of decisions you need to make before you sign up.
1). Choose Your Seller Account Type
Before you can sell products on Amazon, you have to choose which type of seller account is the best fit for you and your business. It shouldn't be too difficult of a decision, as there are only two options; individual and professional.
What’s the difference, you ask? Here’s how Amazon breaks it down:
Individual Seller Central Account
Best for those who sell less than 40 items per month. No monthly fees, but you pay a $0.99 transaction fee to Amazon + other selling fees.
Professional Seller Central Account:
Best for those who plan to sell more than 40 items a month. $39.99 a month + other selling fees, but there's no per-transaction fee.
While the number of products you sell per month is really just a simple math equation that justifies the professional account fee, there are a few other differences worth noting. Amazon created this comparison chart to summarize what's included with each account type:
Want more info on Seller Central account types? Watch this video.
Once you've decided which account type to use, what should you do next?
2). Figure Out Order Fulfillment
There are two basic ways to handle Amazon order fulfillment:
- Manage it yourself (fulfilled by merchant or FBM)
- Let Amazon manage it for you (fulfilled by Amazon or FBA)
How do you decide which option is best? First, ask yourself; are you comfortable, confident, and capable of handling shipping, handling, and customer service?
If you own an online business and have been doing it all - and doing it successfully - for some time, your answer may be a resounding YES! In this case, sticking with FBM may be a more lucrative choice for you.
However, if your new to online retail, only sell high-value items, or just want to outsource busy work and logistics, FBA gives you that option. Allowing Amazon to handle order fulfillment comes with its fair share of benefits as well. Hey, we never said making these decisions would be easy!
Here's a basic rundown of the pros and cons of FBA:
PRO - EASY FULFILLMENT
Amazon stores your product and manages your inventory (no minimums; can be charged fees for exceeding storage limits)
CON - LESS MERCHANT CONTROL
Inventory management is complicated, and you can’t control what gets sent to customers, customer service, or reviews
PRO - OUTSOURCED LOGISTICS
Amazon handles picking, packing, shipping, and customer service on your behalf, which can save you big-time on overhead
CON - TIGHTER MARGINS
Amazon takes a cut, more direct competition can impact pricing, and return rates may be higher - all things that may lead to thinner profit margins
PRO - BETTER REACH
Sell to Prime buyers, get better shipping rates for non-Prime buyers, and increase sales via ‘buy box’ and repeat business, access more product categories for better targeting
CON - LACK OF BRAND COHESION
Harder for small businesses to establish brand identity and it takes more work to compile details and create marketing for each individual product
According to a 2017 ComScore Key Measure Report, Amazon has over 150 million monthly unique visitors in the US alone. That's a lot of marketing dollars you don't have to spend on web traffic!
But Wait... There's a Third Option
Amazon recently introduced Seller Fulfilled Prime (SFB) - which is essentially a mashup of the two fulfillment options defined above.
SFB allows merchants to manage their own shipping, customer service, and returns as long as they consistently meet Amazon’s standards.
To qualify, sellers must be able to fulfill the Prime promise by providing free two-day delivery. This can be accomplished using on-site warehouse fulfillment or can be managed via a third-party logistics provider.
The path you choose is wholly dependent on what’s most important to you. If you own and operate a well-oiled business machine with relatively thin margins and relinquishing control gives you major anxiety, FBM or SFA may be the best choice. But if you have healthy profit margins, want to reach more buyers, and the idea of outsourcing logistics gets you excited - FBA may be the perfect solution.
Struggling to decide? Consider a hybrid approach. For example, you could:
- Use FBA for low to mid-price items that have good margins, sell relatively quickly, and don’t take much storage space.
- Use FBM or SFA for large, niche, or high-value items, products with thinner margins, and items with a long sales cycle.
This setup gives many sellers the best of both worlds. You can maintain control of high-value inventory items that have lower margins and take longer to sell and still have the ability to build your brand by marketing fast-moving higher-margin items to Amazon regulars.
Want to learn more about the pros and cons of selling on Amazon? Check out this Forbes article.
And one last thing before you get started...
Collect all the info you need to set up your account in one place to save time.
3). Have All This Info Ready to GoWe've all been there. You're cruising right along when suddenly, you need a piece of information secured on a different website behind a password you don't remember. Twenty minutes and a password recovery journey later, you finally get what you need. Don't let this happen to you!
Before you set up your seller account, make sure you have all the essential information you’re going to need ready to go.
- Business name and contact info
(address, phone number, email address)
TIP: Put some thought into your email address
It's not currently possible to transfer ownership of a seller central account from one user (email address) to another. Register with a business email to simplify account management and avoid future headaches.
Tax identification number
business TIN or individual SSN
Bank info (routing and account number)
used to accept payments from Amazon
Credit card information (for payments)
use to cover monthly / transaction fees
Policy information (optional)
for returns, etc. - can be added later
Product details (optional)
categories, images, SKUS, descriptions, etc. - can be added later
Spend some time browsing Amazon before you set up your account and take note of all the product details you'll need to have for each item you plan to sell on the site.
TIP: Don’t Forget About Sales Tax
Internet sales tax laws changed dramatically in 2018 for the first time in decades. Make sure you understand what this means to your business before you start selling on Amazon. Need help? Contact us.
Once you make the decisions outlined above and have all the info you need to set up your account handy, it’s time to take the leap. Head over to the Amazon Seller Central registration page and get ready to start selling!