Maintaining an online business requires wearing a variety of hats at all times, from inventory and marketing to shipments and customer service. To simplify daily tasks, however, business owners can leverage the systems that other platforms have already put in place. One of the best sites for small and midsize businesses to use is Amazon.
In 2019, there were millions of active users on Amazon, including 105 million Amazon Prime customers, many of whom shop on the site daily. According to a 2016 study, more than 50% of online shoppers go to Amazon first when looking for a product they want to buy.
Using Amazon to start your e-commerce business provides a platform for marketing, connecting with customers, selling, billing, and even shipping your products. This can help you start your venture with fewer resources, grow your business more quickly, and learn valuable lessons about selling online in the process.
Why Use Amazon to Grow Your Business
There are millions of third-party sellers on Amazon; combined, they sell more than 50% of the products sold through the site. In 2018, small and midsize businesses in the United States made an average of over $90,000 in Amazon sales. This is made possible by a variety of benefits that any business can take advantage of by using Amazon as an e-commerce platform.
- It has a built-in customer base: Millions of people around the world go to Amazon every day and buy thousands of products. That’s qualified traffic you can’t get with your own website, especially not in your start-up phase. That reach can help you make a profit from your early stages, rather than spending most of your time and resources trying to attract customers.
- It’s a brand name: Customers are more likely to trust businesses whose names they recognize. Because it has been around so long and been so successful, Amazon is a trusted site. As a new business, you would have to work hard to earn that sort of trust. But when you sell on Amazon's preexisting platform, you can leverage their credibility with customers from day one.
- The technical work is already done: One of the major tasks that online sellers face is setting up an e-commerce platform and shopping cart where your prospect can easily browse and order your products. When you work through Amazon, this has already been done, and the job of maintaining it and handling tech support is also covered by Amazon. This allows you to focus your time, energy, and other resources elsewhere.
Amazon has two levels that sellers can choose from. Individual sellers can list products in more than 20 categories and pay a fee of $0.99 per sale. Professional sellers can list in an additional 10 categories, pay a flat fee of $39.99 monthly, and have additional customization options for their listings and shipping. Both types of sellers pay additional fees when products sell.
Not every product is going to be a bestseller, and working with Amazon won't be the right model for every business. Before you invest time and resources in setting yourself up as a seller, research Amazon trends, best-selling categories, and popular products to find out if it's the right way to reach your customers.
How to Use Fulfillment by Amazon to Grow Your Business
If you’re selling on Amazon, you can sell your products through the website, then process orders and ship them to customers yourself. If you don't want to handle processing and shipping, which can tie up valuable time and resources, you can also let Amazon handle payments and processing orders, which is known as FBA.
FBA means Fulfillment by Amazon, indicating that Amazon.com takes care of processing and shipping an order, rather than the merchant.
Using FBA is a standardized and fairly simple process:
- You send a number of your products to Amazon.
- Every time an order comes in, Amazon will handle the necessary steps to get the shipment to your customers.
- Amazon takes a portion of each sale as a fee.
- The net income from each sale is deposited in your bank account on a regular basis.
- Amazon handles any returns or exchanges.
Using Fulfillment by Amazon provides a number of benefits that help your business grow:
- You save valuable time and money on processing and shipping orders.
- You can operate out of a smaller space because you don't need to store products.
- You keep a greater portion of your profits, which can then be reinvested in your business.
- Customers know what to expect for shipping and processing, which makes them more likely to buy.
Because Amazon has streamlined systems and sufficient manpower to handle order fulfillment and returns, they can do these tasks more efficiently and at a lower cost-per-order than many small businesses. The fees you pay for each FBA sale are generally lower than you would pay to store and ship a comparable number of products yourself.
Tips for Running a Successful Business With Amazon
Leveraging the thousands of people that visit Amazon every minute will organically generate traffic to your listings. But there are hundreds, sometimes thousands, of listings that show up for every Amazon search a customer does. To jumpstart your business and increase your profits, you will need to make sure your listings are easy to find and stand out from the competition when customers do see them.
Don't Skip Your Own Marketing
Continue to use your own online marketing to drive customers to your products. Grow your blog, landing pages, or website with search engine optimization so they appear near the top of online search results. You can also use social media to generate organic traffic or for paid advertising that sends interested buyers to your Amazon products.
Use your email marketing to send customers that are already interested in your products directly to your Amazon listings.
Create Accurate Listing Titles and Product Descriptions
The title of your listing should clearly state what you are selling, along with important details. Think about what customers might type into Amazon or Google to search for products like yours. For example, “iPhone case” is an ineffective title; “Protective iPhone case fits iPhone 5, shock resistant, multiple colors" will not only give customers plenty of information, but it will also show up for more search results.
Sell Your Product in the Listing
Use your listing and product description to stand out from the competition by writing it with the customer in mind. Use your knowledge of marketing, consumer psychology, and copywriting to show the benefits of your product and tell the prospect how it will improve their life. Consider adding extras, like an FAQ about your product, so all the features and benefits are clear.
Include Multiple Large and Clear Photos
Customers want to know what they're buying, so you need to show exactly what you're selling. Don't pull photos of similar products from an online image search, as customers are unlikely to trust these images. Instead, invest in professional photos of your products, just as you would if they were going on your website. If you take photos yourself, use a quality camera, good lighting, and a lightbox to create images that will stand out.
In addition to photos, consider adding videos that show your products being assembled or used, or to point out any special features.
Encourage Good Reviews
Amazon buyers love to read reviews, which allow them to comparison shop and decide which products to trust. Your products are more likely to sell if customers can see how other people have felt about them. You can encourage customers to write reviews by including a note in the package asking them to write a review or sending a reminder to your email marketing list asking buyers to write reviews. Never post or solicit fake reviews—this will not only lose the trust of your customers, but it is also against Amazon's terms of service and can get your products or even your business removed from the site.
Choose the Right Category and Sub-Categories
Having your products listed in the right categories is critical when people are searching or browsing for related products. If you’re selling organic soap, you don’t want to be with industrial cleaning supplies, for example. Double-check all categories and subcategories for every product you list to ensure you are being found by the right customers.
Growing Your E-Commerce Business
Once you've built up your company using Amazon, you can use your experience to develop your own e-commerce platform and business model. Or, like many sellers, you can continue to work with third-party sites to streamline and simplify your business model. Depending on your type of business, you may also be able to use sites like eBay or Etsy to sell your products and get in front of customers.
While there are many ways to start an online business, using the vast reach and influence of websites Amazon to help power your own business is a great way to kick off your e-commerce venture.