Starting an Amazon business is like running a marathon. A lot of people sign up to join the race but very few make it across the finish line—the finish line being the point where an Amazon store becomes self-sufficient and generates stable monthly revenues.
Each year, seven to eight hundred thousand additional people queue up to join this race. One reason could be that Americans feel reluctant to return to their office routines and pre-pandemic schedules—priorities have changed and online work allows for greater comfort (and in some instances, greater incomes).
If the statistics are anything to go by, then selling on Amazon is a great way to generate an online income and create a digital asset that pays dividends for years to come. The only question is how to start an Amazon business for someone that’s completely new to the platform?
This post is for those new sellers who want to create an automated Amazon business while sidestepping expensive pitfalls along the way.
Lesson number one is to learn the ‘way’ in which you’ll advertise and sell products on Amazon. These ‘ways’ are commonly referred to as selling models and Amazon has 5 of them:
So the first decision sellers need to make is to decide how to sell products on Amazon. Let’s explore each selling model so you can choose the one that suits you best.
Amazon private label is the go-to selling method for third-party sellers because it ticks all the right boxes. In simple terms, Amazon private label is the practice of purchasing ready-made products directly from manufacturers (or suppliers), applying your own branding to it, and listing it for sale on Amazon.
Amazon private labeling also offers the most money-making potential out of all the selling models. Other benefits include untapped product niches and near limitless scalability to make private label the ideal selling method.
Sellers also have the option to apply for trademarks and prevent bad actors from counterfeiting their goods.
Keep in mind, though, that launching private label products requires a few thousand dollars to get started so it may not be suited for those strapped for budget.
Investment required: ★★★★
Time needed to run the business: ★★★
Note: You can start an FBA private label business with less than $1,000 by selling small and low-priced products that come under the Amazon SnL (Small and Light) program. While you’re at it, also check out the Amazon FBA fees page to better understand the cost of selling goods on Amazon.
Amazon wholesale is a popular—and potentially lucrative—selling method that involves purchasing products in bulk directly from the distributor, brand, or manufacturer and listing these products on Amazon at retail prices.
Wholesaling products might seem easier than private label on the surface, but there are a few complexities you should know about:
There’s a high chance that even after receiving a license from the brand, you’ll compete against multiple sellers selling the same product.
For some, boosting product sales comes at the cost of reducing the price. However, if your competitors get the same idea, it could result in drawn out price wars. Such price wars gradually chip away profitability to a point where it’s just not worth doing business anymore.
Investment required: ★★
Time needed to run the business: ★★★
Amazon dropshipping can be best described as a budget-friendly selling model on Amazon; sellers can get started with a few hundred dollars in hand along with a letter of authorization from the supplier or manufacturer.
Here’s how dropshipping works:
Amazon dropshipping frees sellers from the responsibility of storing, handling, and shipping products. Instead, they promote products by creating an online storefront and make profits. Like wholesale, dropshipping success relies on finding high demand and low competition products—but there’s more to it than that.
Because Amazon dropshipping has few barriers to entry (low initial investment, no need to purchase and store bulk inventory, easy to learn), competition is high and viable product niches are few and far in between. A dropshipper has virtually no influence over product quality, branding, and shipping performance.
In order words, a dropshipper’s monthly income hinges on the supplier’s performance. If Amazon deems the product quality or shipping times to be substandard, it could revoke selling privileges or worse, suspend the seller central account.
With so much at stake and so little decision-making power, dropshipping is more suited for sellers who want to earn online rather than those interested in setting up a virtual business.
Investment required: ★
Time needed to run the business: ★★★★
Arbitrage revolves around purchasing products from one store and reselling it at another at a higher price. When you buy items from physical retailers to resell on Amazon, that’s called retail arbitrage and if you purchase goods from, let’s say, Walmart.com, then that’s called online arbitrage.
Arbitrage is defined as the practice of taking advantage of the price difference between two marketplaces. Some consider Amazon arbitrage as a step above dropshipping.
Both retail and online arbitrage are legal forms of doing business on Amazon because once you purchase a product, it’s yours and you’re free to resell it. However, you’re only allowed to resell products in their current condition. So new products must be listed as new and used must be mentioned likewise.
There’s a real risk of purchasing products that turn out to be seasonal or feature low demand, so make sure you do plenty of market and keyword research before diving in.
Investment required: ★★
Time needed to run the business: ★★★★★
A very small percentage of third-party sellers sell handmade products—but there’s a market for it nonetheless. Applicants must meet the eligibility criteria before they’re allowed to list products on Amazon. Some of the rules are as follows:
Handmade products like Art can also be digital, but that deals with a different world of Amazon selling, i.e. digital products. For the sake of simplicity, we’re referring to physical products made by hand.
There are no obvious downsides to selling handmade products. The most that can be said is that it’s an exclusive club for people with a talent for handcrafting products. For everyone else, the other four selling methods are more than enough to earn money on Amazon.
Entrepreneurs looking to start an Amazon business should choose Private Label. That’s because Amazon private label offers many benefits like:
There’s an abundance of free FBA seller resources readily available online that will help you become a better Amazon seller!
Yes, you can sell products on Amazon’s global marketplaces from the comfort of your home. Just sign up for a new Amazon seller account and keep the following information on hand to complete the registration process:
After filling in all the details, Amazon will send you an email to complete the verification process. Once that is done, you can start selling on the largest marketplace on Earth!
Based on the strengths and weaknesses of each business model, it’s clear that the best way to do business on Amazon is through private label. But before you learn how to start an FBA business from scratch, it’s important to understand how fulfillment works.
Sellers have two options when it comes to shipping out orders: the do-it-yourself route otherwise known an FBM or Fulfillment by Merchant or you can outsource the entire shipping process (and customer support) to Amazon thanks to a program called Fulfillment by Amazon or FBA.
Without delving into the finer details, here’s how both fulfillment methods work:
If you choose FBA, you’ll have to pay a flat fee on each sale. Still, most private label sellers prefer FBA because it makes running an Amazon business much easier, despite the added costs.
The next section of this blog focuses on teaching new Amazon sellers how to start a business from scratch. To keep things simple, we’ve broken down the Amazon seller journey into 5 steps. Each step also includes a practical demonstration so no matter what product you end up selecting and launching on Amazon, you’ll know what to do.
The act of finding a product to sell on Amazon is called product or keyword research and forms the foundation of an Amazon business.
That’s because with a mediocre product, you could implement the best marketing strategy, create an outstanding product detail page, run ads on social media platforms and still not make decent revenues.
After all, what good is a product if people don’t want to buy it? It’s imperative that you spend time researching a ‘winning’ product. A ‘winning’ or launch-worthy Amazon product has the following traits:
Keep these points in mind when you start hunting for products to sell on Amazon.
Now then, where and how do we find the right Amazon FBA product?
There are a myriad of free how-to blogs and YouTube video product research guides, some of which provide excellent value. However, we want to find viable products without spending weeks or months researching or paying Amazon product hunters to do it for us.
Instead, we’ll rely on a well-known product research tool called Niche Finder (part of ZonGuru’s seller toolkit). As the name suggests, Niche Finder identifies product opportunities based on a niche score—the higher the score, the more viable the product.
Niche Finder pits each product (or keyword, i.e. the search term used to find products) against the Amazon product research criteria we just discussed and assigns it a percentage-based score out of a 100.
Let’s see the tool in action.
Start by selecting your target Amazon marketplace and also your preferred product category.
As an example, we selected the Home & Kitchen, Office Products, and Patio, Lawn & Garden categories. You can select more or all of the categories listed in the drop-down menu.
Next, we applied the Easy Starter filter—it’s ideal for sellers who want to launch their first product and are operating on smaller budgets. You could also add the keyword if you have a particular product in mind. But because we’re interested in finding the ideal Amazon FBA product right away, let’s just hit the search button.
Right off the bat, Niche Finder helped us uncover dozens of amazing products. Hover over a keyword (as shown in the image above), to obtain valuable insights about the product like average product rating, average sales, the required launch budget, etc.
Use the Niche Finder tool to reduce the time it takes to find viable Amazon products down to a few seconds.
After finalizing your product, the next step is to identify reliable manufacturers that can mass produce these goods.
Note: Niche Finder’s Advanced Mode filter allows users to look up super niche products!
Thanks to Niche Finder, you now have a great product in your hands. We now enter the second phase starting an Amazon business: sourcing product suppliers (or manufacturers).
Ever since the internet created a sort of global village, it became possible to locate and get in touch with quality product manufacturers around the globe. Your best bet would be to find manufacturers located in China—it’s where every other FBA Amazon business sources their products from.
To get in touch with these manufacturers, head on over to Alibaba.com, a platform that connects third-party Amazon sellers with reputable product suppliers and manufacturers. However, truth be told, finding the right manufacturer, i.e. someone capable of producing quality goods on time and according to your specifications takes time, effort, and interpersonal skills.
Like Niche Finder, there’s a tool for discovering the best product manufacturers on Alibaba.com in a matter of seconds, and it’s called Easy Source.
Using the Easy Source tool is, well, pretty easy. Just type in your main keyword (the search term buyers use to find your product) and hit Search. As an example, let’s go with the keyword that popped up in our Niche Finder search earlier: a magnetic fidget pen.
Easy Source filters hundreds of search results and shortlists suppliers that are:
ZonGuru’s Easy Source tool does most of the heavy listing. Still, it's best practice to shortlist 5-10 suppliers and vet them further via direct messaging or even better, video calls.
Inquire about the minimum order quantity (the minimum number of units the manufacturer is willing to produce and ship over), flexibility (how willing the supplier is to make changes to the product based on your feedback), and commitment (ideally enter into a contract stipulating a no price-change clause for at least 6 months).
We recommend going the extra mile and ordering product samples from prospects. Compare these samples with the top competitors in your product niche to determine product quality. Some Amazon sellers hire local, on-the-ground product quality inspectors to routinely visit the manufacturer’s premises as part of quality control. If your budget allows, you could do the same.
With the product finalized and suppliers ready to produce the first batch of inventory, it’s time to create and polish your Amazon storefront, i.e. the product listing or product detail page.
Visitors that click on an Amazon product ad or search result are redirected to the seller’s product listing. The product listing page contains all the information buyers need to make purchasing decisions including images and infographics. An optimized product listing has two main attributes:
The technical and qualitative aspect of product optimization are like two sides of a coin; one side wins favor with Amazon while the other enhances your brand image and compels visitors to purchase your product. Get both aspects right and you’ll soon overtake the competition to reach the number one spot.
Here’s a product listing (a dog poo bag) that’s nails the qualitative aspect—well written copy that informs readers what the product is about and also incorporates relevant keywords or search terms like “doggy bags”, “premium pet poo bags”, and “dog wipes”.
A quick way of discovering relevant and high search volume keywords to add within your product listing is by using the free keyword research tool: Keywords on Fire.
Then, head on over to the Love-Hate tool which scours dozens of products, analyses product copy, and reads through positive and negative feedback to inform users what terms buyers ‘love’, i.e. they would like to see in your product, and which terms they ‘hate’—pain-points other sellers fail to address.
Let’s use the same keyword (dog poo bag) and create a new session within Love-Hate to see what buyers want and don’t want from a dog poo bag.
Based on the results, a seller about to launch a product within the dog poo bag niche learns that their target audience wants:
What sellers don’t want is:
New sellers can convey this information to manufacturers and ensure their product has all the strengths of competitors’ products and none of their weaknesses!
Use the Love-Hate tool in tandem with the free Keywords on Fire tool to create awesome product listings. Remember, the more optimized your product listing is, the higher it will rank for relevant search terms!
When crafting your product listing, implement the following best practices mentioned by Amazon:
Now, on to the last step of starting an Amazon business.
After completing the first 3 steps, you have a solid product in hand, a reliable supplier capable of producing and shipping inventory, and an Amazing product listing. All that’s left is to reach out to potential buyers!
Third-party sellers advertise products using PPC or Pay-per-click ads. There are three types of Amazon PPC ads you can run:
The most commonly used type is sponsored products. These ads target relevant search terms and increase product visibility by appearing on top of search results. New sellers rely on sponsored ad campaigns to bring in those early sales and get the ball rolling.
Because you’ve stuck to the listing optimization strategy mentioned in the previous step, your product listing should be good enough to convert leads into sales. But you should still target and rank for as many relevant keywords as possible.
Another important ranking metric is positive customer reviews—it lets Amazon know your product is liked by customers and is worth pushing up the rankings. An easy (and legal) way of bringing in positive customer reviews is by using ZonGuru’s Review Automator tool.
The Review Automator tool sends review requests to buyers through Amazon’s official communication channel. It’s a set-it-and-forget-it user engagement tool that increases positive feedback and is a valuable addition in Amazon sellers’ arsenal!
This wraps up our how to start an Amazon business blog—it was a big one, but we hope you learned something new and use this knowledge to set up a thriving and profitable Amazon FBA business.
Before you leave, one last piece of advice.
The Amazon marketplaces undergo several changes—both big and small—to provide a better shopping experience and to also make selling easier. Selling policies get revamped, ranking strategies become outdated, and what works today might not work so well tomorrow.
Apart from the various ZonGuru tools mentioned throughout this blog, we also provide live weekly training sessions to new sellers looking for guidance and mentorship. Each session offers a chance to learn more about Amazon selling and keeps you updated with the latest selling techniques.
Each session is conducted by successful FBA sellers and participants get to ask questions and become a part of the conversation. Sign up today and become a part of a tight-knit community of successful sellers!
Discover opportunities. Maximize your sales. Grow your Amazon business!