It’s a new year, and your goal is to start your small reseller business. You’ve never had a reselling business before, either online or IRL. Should you jump right in and start your first hustle on Amazon? Short answer, no. Long answer, no.
Why not start where most online shoppers go?
Real talk, Amazon dominates the online shopping market. They sell just about anything and everything, and have even expanded into selling groceries and online streaming content. Amazon makes up nearly 60% of the US ecommerce market, making it the place to be if you want to sell things online. However, everyone knows that fact, so Amazon’s marketplace is flooded with sellers trying to catch the eye of this large buyer audience.
Five things to consider
Competition is fierce. Amazon has many, many, many resellers as well as its own products available on the platform. Presentation, searchability, availability and price are often key to standing out from the crowd and making the sale. Amazon has various seller metrics and search engine preferences that affect a seller’s placement on category pages and search results. Getting this right for maximum exposure takes time, practice, and/or professional help.
Fees, and fees and more fees. Unlike some of the app based reseller platforms, Amazon fees can get you coming and going. The standard Amazon seller account charges sellers $0.99 per each sale, plus a referral fee that varies by product type. For example, the referral fee for clothing is 17%, and the fee for handbags is 15%. A professional Amazon seller account is $39 per month, plus the referral fee.
If you want to see how much…or how little you would make from trying to sell on Amazon, try their profit calculator (try it as a guest).
As a newbie reseller, you may not have your selling niche figured out yet, or a reliable source of products, two key things you will need to be successful on the Amazon marketplace.
Shopper expectations. Amazon shoppers expect a smooth professional experience. Amazon structures its seller metrics to hold sellers to those expectations. Sellers are expected to ship fast, respond to issues and questions fast, and have excellent products. Sellers that don’t live up to these expectations often suffer from bad reviews and Amazon warnings – either of which can kill your small business in its crib.
As a newbie seller, you may not yet have the good seller habits like consistently packaging items correctly for shipment, ship quickly and stay on top of shopper communications. Practice these skills on a more forgiving marketplace before diving into selling on Amazon.
Strong return culture. Amazon has convinced shoppers that returning online purchases should be hassle and cost free. Some sellers, especially in the clothing and electronic categories, can have return rates of over 20%.
Amazon shoppers have zero issue with returning your item because they changed their mind, or they decided it’s too “yellow”, or because it arrived on a day ending in “y”. Many also have zero issue waiting until the 29th day of the 30 day return window to start a return, and then return your item with 29 days of wrinkles and a pungent tire smell after sitting in the trunk of their car balled up in a shipping box in the heat of July. All of these behaviors are common, and will cost you time and money.
As an Amazon seller, you will need to build in the cost of returns into your business costs. The products you choose to sell will need to have enough profit built in that you can absorb the cost of shipping and products lost to bad returns.
Build up your business fund reserves and take the time to find more profitable items for your Amazon store before launch. You may find that some items are perfect for selling on Amazon and some on Ebay and others on Etsy or Poshmark.
Strict rules for product type and brand. Amazon strictly polices what you sell on its platform. Unlike most of the “app first” reselling platforms, where a seller can just throw up a listing of 5 brand new Michael Kors handbags purchased real cheap at an outlet sale, on Amazon, you must first have applied for that category.
Amazon has many “gated categories and brands”. For a gated category or brand, sellers will need prior approval from Amazon before listing an item from that brand or selling products in the restricted category. As part of the application to sell in some categories or brands, you will need to show receipts for your product sources (and no, the store receipt from the Last Act at Macy’s won’t cut it). Violation of the brand rules can lead to loss or your account.
Don’t be discouraged
There’s plenty of money on Amazon for everyone, and as a new seller, there’s room for you too. Just be a little patient and get the experience, business capital and product focus so you can start your Amazon store the right way. Start on the “app first” platforms and get your customer service and shipping skills right. Make those good record keeping, listing and product storage habits second nature.
Starting the right way can help you build positive customer feedback and prevent unneeded headaches with Amazon violation warnings and store suspensions – and launch you into big boy Amazon store profits.