Amazon has made it simple for everyone to start an online business.
If you have the right documents on hand, the registration process for creating an Amazon Seller Central account can be completed in under an hour.
Yet, the choice to sell on the Amazon marketplace shouldn’t be based on the ease of account creation.
Why? Because selling on Amazon has some involved processes beyond the initial steps that you need to make sure you are on board with. You’ll need to think about copyright issues, supplier relationships, competition, and more.
Even if you’re comfortable with Amazon as a customer, the way the platform functions for sellers is quite different. As such, it makes sense to make absolutely sure that the channel is a good fit for your business and that you’re ready to make the leap to becoming an Amazon seller.
With that in mind, here are seven questions to ask yourself before signing up to sell on the Amazon marketplace.
1. Will I Sell More or Less Than 40 Products a Month?
New Amazon sellers will need to choose an account type during the signup process. You can either opt for the Individual Seller account that will charge you $1 per product sold, or the Professional account for $39.99 a month. The primary difference between the two is the total expense.
If you expect to sell a minimum of 40 products a month, then choosing the Professional account will be the most cost-effective option. However, if you just want to get a feel for the marketplace with a few products at first, you might want to go with an Individual account for starters. Of course, you can always switch to the Professional account when you start selling more units.
2. Do I Have to Get My Products Ungated?
Amazon places restrictions on who can list products in specific categories. For instance, businesses wanting to sell products in the Streaming Media Players category will need to meet certain requirements before they’re approved to sell in that category. Requirements can range from sending a sample item to Amazon to sharing an application form and other information about the item.
Put simply, if the products you want to sell fall under a gated category, you’ll need to get familiar with Amazon ungating. You can learn more about the products and categories requiring approval here.
3. Is My Product or Branding Unique?
Unless you’re planning to sell a new type of product, you’ll discover that Amazon is filled with merchants targeting the same customer persona with similar offerings. Therefore, it’s important to evaluate whether or not your product will be able to find its footing in the market. Conduct a SWOT analysis for your product and the competition so you can make calculated decisions.
However, don’t give up if you’re unable to manufacture/find a unique product to sell. A lot of Amazon sellers rely on their branding to stand out from the competition. You, too, can become a reputable merchant by offering unique packaging, infusing creativity in your marketing campaigns, and providing excellent customer service.
4. Do I Have the Resources to Manage All Aspects of Order Fulfillment?
There are two ways you can fulfill orders on Amazon:
- Via your own shipping carrier
- Via Amazon FBA
If you’re planning to fulfill orders by yourself (what Amazon refers to as “Fulfillment by Merchant”), make sure that you have the resources to efficiently manage the entire process. Because you’ll be responsible for storing, packing, and shipping your items, you’ll need access to a warehouse, a reliable packaging vendor, and a third-party logistics company. If these resources are already available at your disposal, you’ll save on the storage and fulfillment costs associated with Amazon FBA (Amazon’s own fulfillment service).
With that said, merchants selling high volumes at low margins can still opt for Amazon FBA. Fulfillment by Amazon shifts the responsibility of storage and fulfillment from the shoulders of the merchant to Amazon. However, we strongly encourage you to check out its pricing before you make a decision. It’s also worth mentioning that arranging your own fulfillment provides an opportunity to develop an independent brand that won’t be affected by potential changes in Amazon FBA’s policies.
5. How Will I Market My Product on Amazon?
Once you’ve created a Seller Central account, you’ll need to think of ways to give exposure to your products. One way to do this is to run an Amazon PPC campaign. Pay-per-click places your items in front of general or highly targeted audiences, depending on the objective you chose for your campaign. However, not every seller has the budget to run paid ads, so make sure you’re getting the listings right to improve your chances of attracting customers’ eyeballs.
What can you do to increase the appeal of your listings? Create enticing, easy-to-read descriptions, elegant images, and product videos. Additionally, include keywords and FAQs to ensure your products appear when people enter relevant queries in Amazon search.
Pro tip: Sellers with reviews are much more likely to attract customers than sellers without reviews, so make sure to request a review from your first few customers.
6. Do I Need to File Taxes on My Amazon Earnings?
Amazon is under an obligation to submit Form 1099-K for U.S. taxpayers who earn above $20,000 in unadjusted sales or conduct more than 200 transactions per year. If you expect to have more than 50 transactions in a year, you’ll need to submit your tax information to the company. Make sure that all of that information is accurate, because any errors will prevent the form from being submitted, resulting in potential penalties from the IRS.
It’s also important to note that Amazon automatically tracks the gross earnings and number of transactions from your sales activity, removing any need for you to do manual calculations. Hence, if your activity is above the mentioned thresholds, you’ll receive a form via post or email.
Non-U.S. Taxpayers are required to submit Form W-8BEN. Also, the submission has to be made regardless of any exemption or reduced rate of withholding.
7. Does Amazon Have Any Brand Protection Measures in Place?
Because counterfeit and trademark violations are big issues on Amazon, it’s important to know what the company is doing to protect the business of legitimate sellers. Fortunately, Amazon’s Brand Registry program offers an excellent way to secure your brand against knockoffs and other fraudulent practices. Amazon says that those enrolled in Brand Registry report fewer infringements than those not enrolled in its program. The company also offers an easy way to report violations.
Additionally, Amazon offers “Transparency codes” to help brands validate the products received by their customers. Brands registered with the company’s Brand Registry program can put Transparency codes (a form of serialization) on their packaging, which consumers and U.S.-based FBA warehouses can scan to validate an item’s authenticity before buying or shipping.
Besides all of that, Brand Registry offers powerful reporting and search features to help sellers identify potential breaches. For instance, you can use the Registry’s image search tool to report product images that feature your logo or mimic your brand’s images. Overall, registered brands can take several measures to keep their reputation and authenticity secure.
Once you’ve answered these questions, you’ll be able to decide if you’re ready to sell on the world’s biggest marketplace. If you lack the resources to cover a few key areas, you can always get started on a smaller scale and then expand in the future. By taking small, calculated steps that are supported by sound decision making, you’ll be able to grow your Amazon brand.