Make Money on Amazon: Become a Successful Seller on Amazon With the Following Strategies
No matter what or where you’re selling, becoming successful means your product needs to be seen and found by a mass of people. As one of the world’s largest online selling platforms, Amazon offers sellers exactly this: an existing customer base including millions of users, who can search for specific articles, product categories, or other offers. And the best thing is, to make money on Amazon, you neither have to take a financial risk, nor have substantial IT knowledge.
In the following article, we show you the major benefits of Amazon as well as the differences between Amazon and regular trading partners. Then we will talk about the most essential subject, successful product placement, before we present the most promising selling strategies that will help you make money on Amazon from home.
Table of Contents
Why many sellers prefer Amazon over regular trading partners
As a global public marketplace, Amazon lets you scale almost limitlessly while your running costs stay low
The biggest difference between Amazon and other trading partners is also the same as the marketplace’s core business model: Instead of buying and selling your products via intermediaries via your own marketing and distribution channels, Amazon allows you to offer your products immediately and independently on their huge online market platform.
Contrary to your usual trading partners, who (can) only take on a limited amount of your products, marketing them on Amazon lets you scale almost limitlessly, which presents one of the largest benefits. Additional orders such as the delivery and fulfillment service Amazon FBA (Fulfillment by Amazon) or Amazon VCS (VAT Calculation Service) let you expand even more seamlessly, even internationally.
To take advantage of these services, Amazon sellers pay a fee, depending on your subscription choice and product category. Whereas the monthly subscription for the Professional Seller account will cost you 39 EUR per month, a basic account will set fees according to your sales rate per unit, which means absolutely no financial risk for you.
Amazon is the go-to platform with immediate access to millions of customers willing to purchase
Having your own online shop is also a great option in many ways and its biggest advantage is that you are not dependent on other platforms. However, if your shop is still in its developing stages, selling there while simultaneously selling on Amazon can be extremely profitable. Instead of spending lots of money and time on getting customers to your shop’s website, as an Amazon seller, you can rely on an already existing customer base who comes to the marketplace already willing to purchase something. That way you directly profit from Amazon’s worldwide presence as well as their customers’ trust while building and developing your own online shop in the background without any financial burdens.
What is also great about selling on Amazon is that their intelligent mechanisms are suggesting your products to buyers who are highly interested in purchasing, provided you understand and follow the most important basic rules regarding product display, SEO, and customer service, about which we are going to tell you in this article. If you apply these rules, your initial costs will stay low, your conversion rates will skyrocket, and your sales are looking to increase massively.
And if you can qualify for Amazon’s Prime status, you will have immediate access to the marketplace’s customers group that is most likely to purchase and which counts over 17 million people in Germany alone.
If you understand the ranking algorithm, you don’t need to rely on your own negotiation skills
If you want to make money on Amazon, you can leave up product placement to an intelligent algorithm. Rather than your negotiation skills, the success of your products on Amazon depends on quality reviews, which can be optimized in many ways. The best and most successful Amazon sellers offer high quality products, which stand out from the masses thanks to their optimized listing, superb customer reviews, and a minimum return quota. Short delivery times as well as quick and flawless customer service can also improve your search rankings.
In the next paragraph, you will find out how exactly you can make all of this happen and the other things you have to know so that your products become bestsellers.
Make money with Amazon: Great product placement is a must to become a successful seller
How ranking, the Buy Box, and sales work together
Because its customers trust Amazon and because they come ready to buy, Amazon has become one of the world’s leading online marketplaces. To keep up its reputation, Amazon wants to retain its customers’ willingness to buy and simultaneously guarantee the best shopping experience possible. That’s why a sophisticated algorithm evaluates an Amazon seller’s quality and their products in various categories, so that they show up accordingly in a customer’s search rankings. In other words: Amazon lists products after calculating purchase possibility and thus keeps the respective buying process as short as possible.
A good ranking increases your chances to get into the Buy Box. That means your product will receive an Add to Cart button, which is usually found on the right side of the product page, next to the article. 82 % of all purchases on Amazon are carried out via the Buy Box. New products or those that have not qualified for a Buy Box (yet) will only show the various purchasing options again, which accounts for an extra step in the buying process and thus decreases the chances of a purchase.
Both aspects, product ranking and Buy Box, are therefore essential concepts for you, which you have to understand to successfully earn money with Amazon. At the same time, these two concepts present a clever and knowledge-hungry online seller with the chance to pull ahead of their competition and thus multiply their sales.
These factors determine your Amazon ranking
How and where Amazon places your products determines how often your products are bought and comes down to two factors: relevance factors, which decide whether or not your product description fits for what the customer was searching and which are described primarily in the sub category product information as well as performance indicators. The latter include many key performance indicators that refer to your products as well as you as a seller and which predict the following success with customers.
1. Product information
When optimizing your products and their reviews you should start with the basics. That means a telling and correct product title as well as filing your product under the correct category. Your article should solely be found by people who are interested in buying it. This also calls for informative and high quality product images and article descriptions. You should also summarize the article description in the Feature Text field and pack it with as many relevant keywords as possible after you have done your research on them. This increases the amount of information of your product page and ensures that prospective buyers can find your products.
Defining additional search terms (5 fields with 50 characters each) as well as adding the product brand in the according field of the article description can make it easier to discover your articles. Linking variants is another important one: If you want to make money by selling products on Amazon and your products come in different colors, sizes, or memory space, for example, you can catalog them into a single main product (the so-called Parent ASIN). The customer will see your product with its various variants that they can select on the same product page, which makes it easier for them and simultaneously increases the chance that they will buy.
Again, we want to mention the main difference between Amazon and a brick and mortar store: If a customer is interested in buying your product, they are not able to physically see, touch, and evaluate it, but have to rely on the information about your product which you added to the description. This means if you want to make money on Amazon and sell your products, you absolutely have to present your product in a way that will make people want to buy it.
2. Product pricing and processing
Of course your pricing plays a role in not only how much money you can make selling on Amazon, but also in fulfilling your customers’ expectations when it comes to a certain price point. Selling rather expensive products implies a higher standard of quality, which can backfire on your reviews when your customers’ expectations are not met.
Especially when offering products that are in high demand, you should always have them in stock. The best Amazon sellers are able to estimate future sales even during seasons and when other effects hit, so that supply shortages as well as excess capacities can mostly be avoided for long periods of time. If your product is out of stock, your product reviews and thus your ranking will take a hit from that. You should especially take this into account once you have qualified for Amazon Prime status. This status gives you a chance to increase your visibility, ranking, and thus sales of your products. If you are not able to meet the strict requirements when it comes to sales processes and customer satisfaction, not only your product placement will suffer, but you will also lose your Prime status.
Another important metric when selling with Amazon is the so-called Perfect Order Percentage (POP). This strictly quantitative indicator describes the percentage of perfectly processed orders within the last 90 days. “Perfect” in this case includes avoiding the following:
- Incorrect cancellations
- Delayed deliveries
- Negative feedback
- Guarantee claims
- Messages from customers who need an answer from the seller
While Amazon usually recommends a POP score of 95 %, product categories differ also when it comes to their typical scores. For example, whereas the fashion industry naturally measures a higher return quote, their POP score would decrease.
Similar to POP, Amazon uses a metric to evaluate each seller’s customer service, the so-called Order Defect Rate (ODR). Compared to the POP score, the ODR only pertains to events with “negative feedback,” credit card settlements as well as guarantee and warranty claims. This calculation happens analogously.
The third and last objective metric which influences ranking and chances for the Buy Box is the pre-fulfillment cancel rate. This calculation is also done mathematically and analogously to the POP and ODR and indicates how many orders are canceled by the seller before delivering their product, meaning how often they are unable to deliver an ordered product and have to issue a refund instead. This happens especially a lot if sellers offer their products simultaneously on other marketplaces and / or their own online shop and when their inventory is not updated in time.
If you want to avoid this, our magnalister plugin can help: as it connects your online shop to many popular online marketplaces including Amazon, our tool can effectively support you when it comes to listing articles and managing orders, so that you can focus on expanding your Ecommerce business.
The plugin’s core features include a central product upload from your own online shop, fully automated price synchronization as well as inventory synchronization between the various marketplaces. Additional features such as order status synchronization and a multi-channel distribution of your product will save you even more time and money.
3. Customer reviews
Customer reviews give potential buyers the chance to evaluate any benefits or potential weaknesses of the product they intend to buy. This implies that reviews are not only important to rank on Amazon, but also are key to how much money you will make on Amazon. If someone searches for a product or product group on Amazon, the article overview already includes the respective star ratings as well as the number of reviews; therefore, a product rated with more stars indicates a promising value for the money. However, star ratings only objectively certify quality if a product has received many reviews, which equals increasing trust from customers.
The content of your reviews is crucial for many customers because they will decide depending on the quality and validity of these reviews when searching for products. You as an Amazon seller should also pay attention to questions asked on your product page and answer them precisely and informatively. This will let potential buyers know about the excellency of your customer service.
4. Sales and sales history
Calculating your sales performance indicators is not really complicated. Three factors come into play here: The general sales history of a product, the ratio of sales and the period of time, in which the article has been offered as well as the so-called Bestseller ranking.
Whereas the former simply indicates a general willingness to buy, the sales-time ratio can be a trend indicator for especially popular products at a given moment. The Bestseller ranking compares products from the same product category in terms of their sales performance which is quantified through an algorithm. The higher the product ranks on Amazon’s hourly updated list, the better its influence on the general product placement. The best Amazon sellers of the respective sub-category will receive the so-called Bestseller badge, which will already show in the article preview and increase sales significantly.
Analytics are one more performance indicator of the various products of Amazon. Analytics consist of three rates: The known Click-Through-Rate (CTR), which describes the percentage of people who click on an article after searching for it; the Click-To-Sale-Rate, which analogously refers to actual completed purchases; and the so-called Bounce-Rate, which means the percentage of users who neither interacted with the product page nor opened another page. This one is not to be confused with the exit rate. The exit rate counts the relative part of users who land on a website and exit via this same website of a domain. If you want to successfully make money on Amazon as a seller, you have to understand the importance of keeping (potential) customers on your product page as long as possible. To have them remain on the website for a while, you must provide targeted and informative product descriptions, reviews that are of high quality and valid content, as well as attractive images.
How to sustainably make money on Amazon as an Amazon seller
Excellent product placement is at the base of every Amazon seller’s success. But showing up high in the rankings is by far not all that it takes to hit your sales goals in the long run. In the following paragraphs, we will reveal four strategies that will help you achieve your sales goals.
Exclusive products and flexibility allow you to be a step ahead of your competition
If you want to earn well with Amazon you have to offer articles that stand out from the Amazon product jungle because this will get you ahead of the game against your competitors. This strategy usually works best when you can provide a unique selling point. Designing your own products or allowing customers to individualize existing product lines or variants are great options. You don’t have to reinvent the wheel for this: Many times, it is already enough to enhance already proven products and / or have a better listing.
To become an Amazon seller also means to learn about a dynamic market climate, in which product trends, pricing, and one’s competitors can quickly change. Therefore, it is important not to fall back once you have become successful, but to constantly keep an eye on the market to be able to quickly react to changes. Depending on the category of your product, you can benefit from working together with the manufacturer to develop your product and constantly be one step ahead of the game.
Stay within reason and avoid being in direct competition with Amazon whenever possible
Amazon has started to sell their own products, such as language assistant Alexa and other products in various categories. Of course, Amazon hereby focuses on the most successful products in every area and provides them with optimized placement accordingly.
To be able to increase the visibility of your products, you should mainly sell in areas where Amazon does not sell any products of their own or where your competition is manageable.
New mechanisms, old values: Always keep in touch with your industry and manufacturers
Globalisation and automation have made many trading processes digital and mainly anonymous. But let’s not get it twisted: keeping in touch with your industry and manufacturers can mean a huge advantage over your competition, (especially) in today’s time. Personal business relationships possibly allow you financial advantages when purchasing your products, which results in a higher profit margin for you. And this money you could use for Amazon’s web service PPC (Pay per click) to give your products better visibility in the search rankings at the beginning – without a high organic ranking.
On the other hand, personal relationships with suppliers will also hold them accountable to deliver on time or, if needed, more or faster than usual. Because a supply shortage would mean your downfall at Amazon, avoiding this helps you meet the high quality requirements of the marketplace in the long run.
Think cross-borders and serve international markets as well
If you really want to make money on Amazon, you have to think about selling on a global scale. Even though you will have to get some paperwork done for each country, for example get a VAT number, you will quickly be rewarded with a much larger reach of your products. For this, Amazon offers its VAT Calculation Service, which takes work off your shoulders and simplifies dealing with international taxes.
If domestic markets are saturated with your products, expanding to other countries should be a no-brainer. Our magnalister listing tool supports you with your expansion plans: you can not only connect the German Amazon marketplace to your own online shop, but also various international versions of the shopping portal, such as Amazon France, Italy, Austria, or Spain. Even the gigantic US marketplace and its Canadian counterpart can be seamlessly connected.
Beware of price dumping: How you can avoid competing for the lowest price
Many sellers see the vast amount of products on Amazon and think offering the lowest price will serve them. They constantly lower their prices to undercut similar products and increase their own sales. This can either happen manually or using so-called repricing tools which can speed up the negative effects of the downward price spiral even more.
Looking at a short amount of time, more sales at a lower price can be profitable; however, once you offer the lowest price, there is usually no turning back. Sellers undercutting each other results in a very low profit margin for everybody.
So that you don’t have to enter the battle about the lowest price, you should define clear profit margins for various products beforehand, based on which you can determine price intervals. In case your target margin falls short, you should take your product off the market and observe further pricing developments. Another possibility is an offer screening, which means you sound out the market carefully and insert your products at the exact time when they are sold out by top sellers (mostly Amazon itself).
Practical tip: If you want to make money on Amazon sustainably, magnalister can help you react flexibly to the strong dynamics of the marketplace and stand out from your competition. Our plugin allows you to adjust your product prices directly from your online shop. You can also take off articles from Amazon, but without taking them off your online shop.
Conclusion: Can you really make money selling on Amazon?
Short and sweet: If your product is suitable to be sold online and you are following the rules with discipline, the answer is usually YES.
However, you definitely need certain know-how when it comes to Ecommerce and an understanding of Amazon’s ranking mechanisms to stand your ground among the countless other sellers, so you can earn well with Amazon. Plus, high competition causes downward price spirals and the complex review algorithm is a challenging requirement for a good product placement.
Nevertheless, Amazon offers its sellers a lot of significant advantages which exceed those of a regular trading partner. One of these benefits includes directly reaching millions of customers without any further efforts. On top of that, you can use Amazon’s already existing excellent delivery and logistics infrastructure while only paying a minimum amount of initial and sales costs. Amazon’s additional services make expanding your own business even more easy and way less complicated.
And if your articles are of high quality just like your customer service, Amazon will increase their visibility. As a clever Amazon seller, you can thus not only avoid pricing wars, but rather increase your credibility as a merchant, which in turn leads to high chances of success and sales in the long run.
If you plan on launching your own online shop or have already done so, you should definitely check out our listing tool magnalister. Our plugin offers everything you need to effectively manage between your online shop and Amazon and thus, simplifies your entry into the Amazon marketplace enormously and lets you start selling even faster.
Multi-channel distribution lets you profit from the following features:
- Product upload: Save time uploading your articles efficiently to all marketplaces
- Price synchronization: submit prices fully automated or individually (per marketplace)
- Inventory synchronization: Keep your inventory uptodate between shop and marketplaces
- Automatic order import: import and manage marketplace orders
- Match attributes: match product variants and attributes with those of the marketplaces*
- Order status synchronization: submit order status (such as sent or canceled) to marketplaces
- Plugin customization: customize the plugin via hook points according to your needs**
- Invoice upload: Transmit invoices created from the webshop or from magnalister to METRO
* Not supported by all marketplaces
** Requires programming knowledge
The magnalister plugin is available for all online shops. You can get your free 30 day trial now including all features.