Whether you want to sell electronics, toys, or apparel, there’s no question that ecommerce on Amazon is a big deal. After all, Amazon is one of the oldest stores of its type in existence. What used to be just a large bookstore now sells every kind of product you can imagine – and some you’ve never thought of.
Furthermore, Amazon has the largest customer base in the US, if not the world. It is a truly global company that lets companies connect with consumers on a level that’s unprecedented. However, navigating ecommerce on Amazon as a seller can be relatively complicated. While setting up a Shopify store or something similar gives you almost complete control, Amazon has fixed systems and many rules.
Fortunately, if you know how to set up your Amazon store properly, you can quickly build a strong business. Alternatively, you can use this knowledge to expand your business as the main sales platform or an adjunct to other sales pipelines.
Here’s what you need to know.
Ecommerce and Amazon
Before we begin, it’s important to understand what Amazon is, and what role it occupies in the ecommerce space. Not only is the website an important source of customers, but it also helps with almost every aspect of product sales.
Growth of Ecommerce and Amazon’s dominance
In 2022, ecommerce sales accounted for 14.8% of total retail sales in the United States, with Amazon holding a 38% market share. These statistics demonstrate the rapid growth of online shopping and Amazon’s significant role in the industry.
The pandemic years led to a huge boom in online sales. With stores closed, people found other ways to buy what they needed every day. Often, consumers struggled to find basics like toilet paper, aspirin, and even some foods. Ecommerce through Amazon helped bridge the product availability gap, and much of the increased market share still remains.
Ultimately, most people agree that Amazon is one of the most important players in the ecommerce space. Since many other brands have a presence there, you probably should, too.
Amazon as an Ecommerce Platform
Amazon’s vast product catalog, efficient logistics network, and user-friendly interface have attracted over 300 million active customers worldwide, making it a highly popular and effective platform for both buyers and sellers.
Ultimately, Amazon’s quest to be the “most customer-friendly company on the planet” is beneficial to both buyers and sellers. That’s because an easy transaction is great for everyone as payments are made and goods received. Furthermore, people buy from companies they’re comfortable with, and the Amazon guarantee helps reach this goal. Likewise, sellers get their money in a timely manner.
Importance of Launching Your Ecommerce Store on Amazon
Launching an ecommerce store on Amazon, businesses can leverage the platform’s huge customer base, advanced fulfillment services (FBA), and advertising tools to maximize visibility and sales, leading to increased revenue and growth opportunities.
Amazon’s customer base is unbeatable in the West, and the company has a footprint worldwide. Everyone who searches for your item’s keywords is a potential customer, especially after you do the work of Amazon SEO to improve your ranking.
Similarly, FBA services let your company tap into free Prime shipping or other logistics promotions. People love to see the total cost of their purchase, except for taxes, on the product page. And if your products are bulky or heavy, not having to charge high shipping prices can provide an advantage over competitors who must pay for these services directly.
Finally, advertising is something that Amazon does well. As a “big tech” company, they helped develop many tools other companies use for marketing and content creation. And, because the site is so large, they can advertise almost anywhere – there’s almost no limit to the niches or customer bases that they can touch.
Research and Planning
Before you can start an effective ecommerce store on Amazon, you need to research the market and plan to meet current needs. Ideally, you’ll enter the market where it’s less crowded, which will provide more opportunity for growth.
Identify Your Niche and Target Market
Understanding your niche and target market enables you to tailor your product offerings, marketing strategies, and branding to meet your audience’s needs and preferences. This approach boosts the likelihood of success and customer satisfaction.
However, understanding your market requires some research. Depending on whether you will sell a product that you’re already making or looking to define your product line, you need to understand your potential buyers. For instance, if you sell items like power banks and adapters, chances are that your main audience travels a lot or commutes to work.
Likewise, you may have a niche inside that market. Are your products eco-friendly? Affordable for nearly everyone? A specialty item? Make sure that you have this value proposition well-defined. Then, tailor future products to make sure you stay relevant to your audience.
Research Product Demand and Competition
Analyzing product demand and competition helps you gauge market saturation, identify potential gaps, and determine the viability of your product offerings, allowing you to make informed decisions and mitigate risks associated with entering a highly competitive market.
There’s no question that ecommerce on Amazon can be a crowded field. While some areas are tougher than others, most product types and niches feature a dizzying array of products for sale. However, anyone who’s shopped on Amazon for something specific can tell you that the perfect find is sometimes illusive. You can get an edge over the competition by providing that missing item.
Analyze Profitability and Costs
Assessing profitability and costs helps you determine your business’s financial feasibility, set appropriate pricing strategies, and identify areas for cost optimization, ultimately contributing to your venture’s long-term sustainability and success.
Doing this can be tricky: the cost of goods sold (COGS) varies significantly depending on your company’s capabilities and supply chains. At the same time, if your COGS is too high, your items can be unprofitable because you’ll be unable to sell the items at a reasonable cost. By researching your market, however, you can pivot to something that draws a high enough profit margin.
Even when you have an item that’s capable of making a profit, you still must factor in customer budgets with your pricing. Ideally, you’ll maximize profitability while making enough sales for your business to grow. And because most Amazon stores are small, there often isn’t room for products that don’t make a profit.
Setting Up Your Amazon Seller Account
Once you’ve decided what to sell (or how to market your products on Amazon), you’ll need to set up an account. Amazon is great because it collects payments from customers and sends your share directly to your payment method. But you still need to give them business and payment information. Doing this involves starting a Seller account.
Choosing Between Individual and Professional Seller Accounts
Selecting the right type of seller account on Amazon is crucial, as there are differences between individuals and businesses. Individual accounts are suited for small-scale sellers with fewer than 40 items per month. Professional accounts offer advanced tools and features for high-volume sellers, allowing businesses to choose the most cost-effective and appropriate option.
Let’s look at this another way. If you want to unload your kid’s unwanted Harry Potter books and get some money from them, you’re fine with an individual seller account. The features let you list the books, and then you only need to wait for someone to buy your copy and ship it. On the other hand, if you’re a used bookseller, you need a Professional account to promote different books and buy more advertising.
Provide Necessary Business Information
Accurately providing your business information, such as legal name, address, and contact details, ensures that your Amazon seller account is compliant with legal requirements, helps build trust with customers, and enables Amazon to provide you with relevant support and resources to grow your business.
Let’s be honest: the internet has a lot of false identities, scammers, and misrepresented goods. If a customer can’t be sure who you are, they have good reason to worry that they will lose their money. From another point of view, giving your true business or personal identity to Amazon will help you build a brand more easily.
Complete Tax and Payment Information
Timely and accurately completing tax and payment information allows for smooth financial transactions, ensures compliance with tax regulations, and helps avoid any potential delays or penalties, contributing to a seamless and efficient selling experience on Amazon.
Before you do this step, make sure that you know what the requirements for running a business are in your jurisdiction. While individuals cleaning out their library have relatively minimal exposure, there are still stories of zealous revenue authorities making life difficult. Especially in the age of AI and other tech tools, finding taxpayers who flout the rules is easier than ever. And if you get it wrong, the costs can be significant.
Sourcing and Procurement
Once you’ve set up your Amazon account, it’s time to build your supply chain. This step may be less necessary if you are already a brand and moving into the Amazon space. However, even then, you need to consider increased demand. Otherwise, you could quickly face product shortages, especially for popular items.
If you are looking to source new products to sell on Amazon, keep reading this section. Otherwise, please skip to the next Product Listing Optimization section.
Find Reliable Suppliers and Manufacturers
Ensure your supply chain is secure by conducting thorough research and vetting potential suppliers. To do this, check their industry reputation, client testimonials, and certifications. Such due diligence ensures you partner with trustworthy manufacturers who consistently deliver high-quality products.
Of course, the definition of high quality varies somewhat depending on your product’s price point. While everyone wants a great value for their money, you can’t work miracles. Materials and labor cost money that often varies based on the types and qualities of the same products.
Negotiate Pricing and Order Samples
You can secure better deals, reduce costs, and improve profit margins by effectively negotiating pricing and terms. This is also a win for the customer, especially if you can pass on some of the savings through lower prices. However, you’ll want to make sure that your products are still making enough profit to be worthwhile. Customers want a fair deal, even though the degree to which they’ll compromise varies.
Similarly, ordering samples allows you to evaluate product quality, packaging, and shipping times to ensure they meet your expectations before committing to a larger order. When you get them, ask yourself if you’d pay a certain amount for that product. Thinking about the customer’s point of view helps determine if you have the right quality and the best manufacturer. Otherwise, keep looking because your customers deserve quality products.
Establish a Supply Chain and Inventory Management system
Implementing an efficient supply chain and inventory management system enables you to optimize stock levels, minimize storage costs, and ensure the timely delivery of products to customers. In other words, knowing how much inventory you have and when to order more helps keep everyone happy. When someone has to buy the products they want from someone else, customers are less likely to buy something from your company in the future.
Besides, overstocking and having too little product can be a headache. Overstock inventory often must be marked down, which erodes your profit margins and makes your brand seem less exclusive. If you sell premium products, that’s the last thing you want.
Product Listing Optimization
Once you have your Amazon store set up, it’s time to write your product descriptions. This step is important because the descriptions serve multiple purposes. First, the product description provides valuable information to the customer so that they can decide if your product meets their needs. Second, product descriptions help drive traffic to your product pages through Amazon search, advertising, and catching the customer’s attention.
There are several steps that you must take to maximize the effectiveness of your listing texts.
Create Compelling Product Titles
Crafting informative and engaging product titles that include relevant keywords helps potential customers quickly understand the product’s main features, boosts click-through rates, and improves visibility in search results.
First, you should include the most relevant features of your product. For instance, does that computer for sale feature a 14-inch screen for portability or a 17-inch desktop replacement display? How much memory does it have? Besides the make and model, these are some of the most important features of any laptop and are usually included in the search terms. For this example, therefore, you’ll both make your item more visible and assist customers with product selection.
Second, consider making your title interesting. Depending on your item, humor and other word-artistry may not be appropriate. However, even then you often can make the title more compelling, or at least invite people to learn more by providing enough information to show customers that they should be interested in reading further.
Write Detailed Product Descriptions
Providing comprehensive and accurate product descriptions that highlight unique features, benefits, and use cases can help customers make informed purchasing decisions, leading to increased sales and reduced return rates.
To write a comprehensive and detailed description, you don’t always have to write a book. Certainly, some products have a lot of technical specifications and need extra space. However, there are situations where less is more, such as with clothing and accessories. Here, customers are mostly interested in colors, sizes, materials, and textures. These are easy to discuss in a concise way, with the addition of good photos and a size chart if relevant.
Either way, what you should always avoid is a vague description. Unless your brand is famous, an Amazon product description is the best way to sell products on the platform. Ask yourself – would you buy something based on your written description, or would you want more information?
Utilize High-Quality Product Images
Showcasing your products with professional, high-resolution images that display the product from multiple angles and in various use cases can build customer trust. Good photos can also enhance perceived value and reduce purchase hesitation, leading to higher conversion rates.
One of the biggest drawbacks of ecommerce in general is that customers don’t get to touch or examine items before purchasing. Combine this challenge with the possibility that customers might need to return things, and it’s easy to see why many customers are hesitant to buy things online. Fortunately, great photos let people examine products virtually.
Successful Amazon sellers try to display every possible aspect of an item through pictures. For instance, if you buy a backpack or other luggage, the seller should show you what pockets it has, the structure of any laptop compartment, and other features you might want. Likewise, a listing for accessories often includes close-up shots to demonstrate size and texture.
Leverage Amazon SEO Best Practices
Arguably, Amazon SEO is the most important aspect of description writing besides accuracy. Optimizing your product listings using Amazon SEO best practices, such as incorporating relevant keywords, maintaining a competitive price, and encouraging positive customer reviews, can improve your product’s ranking in search results, increasing visibility and driving more sales.
There’s an oft-cited saying in marketing that pages get buried if it’s on page two of a Google SERP. While this isn’t as true of Amazon, we must remember that the higher your listing is on the results page, the more organic traffic you’ll likely get.
Further Reading: The Ultimate Guide to SEO for Ecommerce Websites
Launch and Promote Your Products
Now that you have product listings ready for your Amazon debut, it’s time to plan your product launch. As part of these efforts, you’ll want to promote your products. Especially since you won’t have Amazon reviews yet, you’ll have to work harder to get started. Fortunately, there are many tools available that can boost your chances of success.
Utilize Amazon’s Advertising Tools (e.g., Sponsored Products)
Using Amazon’s advertising tools like Sponsored Products, you can increase your product’s visibility, reach a wider audience, and drive more targeted traffic to your listings. In time, you’ll see better sales as people discover, then review, your products.
You can find these features in your Amazon Marketplace account. Not only can you sponsor products but you can also sign up to have your items featured in off-site Amazon advertising campaigns. Ideally, you should promote products that best represent your brand, such as a signature item. In addition, buying targeted campaigns for people who have viewed your products is usually money well spent.
Implement Promotional Strategies (e.g., discounts, coupons)
Offering time-sensitive discounts or coupons can create a sense of urgency and incentivize potential customers to make a purchase, leading to increased sales volume, higher conversion rates, and improved customer acquisition.
On Amazon, there are some different options. For instance, you can offer a coupon on the product page. People can click on the coupon to redeem it. Or, you can discount the item for all users. Doing this is a good way to win the buy box, and also attract price-conscious consumers who might’ve otherwise gone to the competition.
In addition, you should consider offering a discount on Prime Day. People who benefit the most from Prime Day are loyal Amazon shoppers and an important source of both reviews and repeat business. While the discount can be a significant expense, many brands find it very worthwhile.
Leverage Social Media and External Marketing Channels
Harnessing the power of social media and other external marketing channels, such as email marketing or influencer partnerships, can help you build brand awareness, engage with your target audience, and drive targeted traffic to your Amazon listings. All of these outcomes help boost sales and promote repeat customers.
With that said, social media marketing is a huge topic. I and others have spilled a lot of ink about maximizing your sales and ROI. Overall, however, the goal should always be to pick the right social networks for your marketing efforts. To do that, think about your target audience and where they hang out the most on social media. Then, build a community around your niche, brand, or both.
Similarly, external marketing is important. You can try pay-per-click (PPC) for product listings or pay the fees for Amazon to include your products in its display ads. Even product review sites and blogs are appropriate places to spread the word about your items. Here, you’d pick the ones in your niche.
Further Reading: 10 Ways to Leverage Social Media in Ecommerce
Manage Your Store and Customer Relations
Setting up your Amazon store and marketing it is just the beginning. You must manage your store, including any shipping that you do in-house, perform customer service tasks, and ensure that you have the right amount of inventory for consumer demand.
Monitor and Manage Inventory Levels
Keeping a close eye on inventory levels and implementing an effective inventory management system can help you maintain optimal stock levels, prevent stockouts or overstocking, and ensure timely order fulfillment. Having the right products at the right time leads to increased customer satisfaction and repeat business.
Knowing how much of a product you need can be tricky, especially when you’re starting out. And if your business grows quickly, vigilance in ensuring you have enough product will be even more difficult. You can lose a lot of your profit margin for both overstock and out-of-stock situations. Overstocks tie up your money and prevent you from making a profit on the inventory you could have bought instead. Similarly, backorders and stockouts cause you to miss out on revenue opportunities.
Luckily, there are a few things you can do to improve your chances of turning a profit. There are inventory management systems that work with different ecommerce models, including Amazon. In addition, you can help predict future needs by tracking the past performance of your products across seasons.
Provide Excellent Customer Service
Delivering exceptional customer service, including prompt and accurate communication, addressing customer concerns, and offering hassle-free returns, can lead to higher customer satisfaction. One of the great things about selling on Amazon is that you can have them take care of most of the shipping. They’ll also take your returns.
Of course, customer service is about more than simply shipping on time. Rather, you must answer customer concerns and questions as they arise. Being available to customers helps generate positive reviews and increases customer retention, which is crucial for long-term success on Amazon.
Respond to Customer Reviews and Feedback
Actively engaging with customers by responding to their reviews and feedback demonstrates your commitment to their satisfaction and helps you identify areas for improvement. On Amazon, reviews can be built in and help generate star ratings for your products. Those stars are a major factor that help determine what a customer purchases. Additionally, customers that are happy with their experience are more likely to recommend your products to people they know. In this way, you can increase your customer base and make more money without spending so much on advertising.
Addressing negative reviews and resolving issues can also improve your brand’s reputation and foster trust among potential customers. Many of the recent public relations nightmares were a result of poor responses to customer issues. For instance, during the Bud Light disaster, management largely ignored the backlash until it was too late. Similarly, many airlines have a horrible reputation for being unresponsive towards customers.
Often, forging a reputation for great customer service is as simple as reaching out to customers and listening to their concerns. Even if you can’t always give customers what they want, being responsive often goes a long way.
Analyze and Optimize Performance
Even the best strategies require constant monitoring and fine tuning. It’s almost impossible to form an Amazon strategy that works well forever. And if you’re new to ecommerce generally, then you have less data than major brands. Most companies fine-tune their strategies over years, so you’ll have to start with what you think works, then move on to what exceeds expectations.
There are several things you can do to track and improve performance.
Monitor Sales Data and Key Performance Indicators (KPIs)
Regularly tracking sales data and KPIs, such as conversion rates, average order value, and customer acquisition costs, enables you to identify trends, measure the effectiveness of your marketing efforts, and make data-driven decisions to improve your Amazon business’s performance.
To accomplish this goal, you’ll need the right tools. Choose a good, Amazon-friendly ecommerce analytics suite that lets you keep track of all your products and their sales numbers. Or, if you’re adding Amazon as a sales source, start using the Amazon tools in your existing tech stack.
Over time, you’ll want to get higher conversion rates and increase the average value of your sales. This improves your shop’s overall profitability and helps insulate against significant market swings.
Optimize Pricing, Product Listings, and Advertising Strategies
Continually refining your pricing strategy, enhancing product listings, and adjusting advertising campaigns based on data analysis and market trends can help you stay competitive. What is profitable when you first open your shop might not be later on. After all, there can be certain market changes that happen, both over time and in the short term.
Likewise, customer habits change. The recent trouble with inflation and job losses in the tech sector are examples of triggers that can force people to buy less expensive items. In this case, you might introduce lower-cost products or demonstrate why your items are worth the extra money.
And finally, along with consumer changes, there are variations with your competitors. No matter your niche, count on the competition analyzing your product performance and advertising strategy so that they can meet the challenges your brand presents. You need to be doing the same thing with them.
By analyzing and optimizing continually, you can try to stay ahead of the trends. In time, you can get a bigger bang for your advertising buck and better profits due to your vigilance.
Further Reading: 23 Amazon Marketing Strategies for 2024 (with 3 Case Studies)
Continuously Improve Your Store and Product Offerings
Actively seeking ways to expand and update your product selection, identify new market opportunities, and improve the overall shopping experience can help you stay ahead of the competition. It will also help you meet evolving customer needs and foster loyalty among your customer base.
This Amazon tip for ecommerce has multiple facets. Updating your products, whether through introducing new products, improving old ones, or discontinuing underperforming items, helps keep your shop relevant to consumers. Likewise, if you make those products easier to buy, you boost the possibility of beating out a competitor for any sale.
Of course, this strategy requires market research. Feedback from consumers can help you discover what people want. Likewise, paying attention to what you and your competitors sell the most demonstrates current shopping trends. Once you find something that people want and where the market isn’t saturated, you can take advantage of the opportunity.
Scale Your Business
In some ways, starting your ecommerce business on Amazon is easy, and scaling it is hard. Certainly, starting a store requires a lot of work and plenty of inquiries. However, scaling your business can require adding market tools, expanding your company’s reach, and partnering with individuals. But if you don’t scale your business, then you’ll lose out on a lot of money. Stagnation could even kill your business entirely. Here’s how you can expand your shop’s business.
Further Reading: 10 Ways How to Make Money with Ecommerce Today
Expand Product Lines and Enter New Markets
Diversifying your product offerings and exploring new market segments can help you reach a broader customer base and reduce dependence on a single product or niche. It can also increase revenue streams, contributing to your Amazon business’s long-term stability and growth.
Expanding a product line often takes a lot of work, but it doesn’t have to. For instance, you might expand the number of variations that people can buy if a product sells well. Offering new colors or different designs can help increase your repeat customers. Likewise, you might start offering something related to your original product line so that people can experience something different.
New markets are a great way to scale your business. Several ways exist, such as offering a more upscale product similar to the original and opening the door for a new segment of the market. Or, you might discover that people from other countries are interested in your products. Changing your settings to allow for shipments to those destinations is relatively easy. Just be ready for the higher order volume.
Remember, the more diverse your product line and the broader your brand’s market, the more stable it’ll become in the long run. Here’s an example. When this blog was written, there was a large-scale labor strike in the American automotive industry. Not only does this kind of labor strike affect the company subject to the strike, but it also has a ripple effect on related businesses, as they won’t sell products to the car companies. On the other hand, the suppliers would be less worried if they were diversified.
Utilize Fulfillment by Amazon (FBA) and Other Tools for Growth
Leveraging services like FBA can streamline your order fulfillment process, improve delivery times, and enhance customer satisfaction. Any time someone shops on Amazon, they have the option to filter products by whether or not they’re available with Prime shipping. Because Prime shipping for third-party sellers is part of the FBA program, you’re putting your brand at a disadvantage if you don’t use it.
Similarly, using Amazon’s suite of tools and resources can help you optimize your business operations, increase efficiency, and support your growth strategy. While you may also use third-party tools, it’s important to remember that Amazon makes money when your Amazon store does. Of course, this is true for all sellers, so be sure to do your own research. Just know that Amazon’s tools are trustworthy.
Further Reading: 15 Important Ecommerce Tools You Need to Know in 2024
Consider Partnering with Influencers or Affiliate Marketers
Finally, let’s talk about one of my favorite topics: influencer marketing. Collaborating with influencers or affiliate marketers can help you tap into their established audiences, build brand awareness, and drive targeted traffic to your Amazon listings. There are a couple reasons why this works, but one of the most important is that people often prefer authentic voices over the company shill. Especially for influencer marketers, people pay attention to them because it’s similar to asking a friend for advice.
These partnerships can lead to increased sales and help you reach new potential customers who may not have discovered your products otherwise. Plus, influencer and affiliate campaigns typically are cost-effective. Influencers often work in exchange for free product or charge a modest fee. You can also pay them based on the sales they generate, which is most effective using a special link or code. Likewise, affiliate marketers get paid on commission, typically using links. You can send them free stuff, too.
Naturally, the compensation methods for these campaigns typically incentivize people to do a good job at promoting your products. If you pay in product, the influencer will want to make it worth your while so they have future opportunities. With commissions, if you don’t make money then they won’t either. Your brand wins either way.
Amazon realizes this and have their own internal Amazon influencer program pictured above that you can take advantage of as a convenient way to get started with ecommerce influencer marketing on Amazon.
Building an Amazon store is hard work. With any type of online store, you need to do a lot of work to ensure your business is a success. For instance, you must understand your market and have a steady supply chain that will help you properly meet demand. Similarly, you’ll want a good marketing plan that stays ahead of the competition. Ultimately, if you follow the directions in this article, you’ll have a much better chance of success.
Hero Photo by Marques Thomas on Unsplash