Start Selling
Being the largest e-commerce platform in existence, Amazon provides a plethora of opportunities for sellers to connect with millions of customers. For a small business or even seasoned entrepreneur, however, it can be beneficial to get familiar with the different models of selling on Amazon so you know how to best gameplan when launching products. This blog delves deeper into the mainstream Selling Models of selling on Amazon explaining each, its pros and cons, and best practices.
1. Selling as an Individual Seller
What is it?
It is the account for selling a minimal product on Amazon without spending money initially. This is perfect for smaller sellers, as this account lets you list fewer products.
Benefits:
- No Monthly Fee: Unlike Professional accounts, Individual sellers do not incur a monthly subscription fee. Instead, they pay a per-item fee for each sale.
- Ease of Setup: Setting up an Individual Seller account is straightforward and requires minimal initial investment.
Challenges:
- Essentials Features: Individual accounts have fewer features than Professional sellers, such as access to advanced selling tools and reporting.
- More Costs: Third-party Sellers pay a per-item fee based on the product category and potential fulfillment costs in comparison to Amazon Referral Fees (you gotta pick your poison).
Best Practices:
- Optimized Listings: Be sure to have high-quality product listings with descriptions, more images — even if you just start with a basic account that enables it.
- Track Sales: Monitor your sales and performance metrics to know what is working well for you as well as where can you improve.
2. Professional Seller- Selling
What is it?
A Professional Seller account is better for more high-volume sellers. This account level gives you more features and tools than individuals but comes with a monthly subscription fee.
Benefits:
- Advanced Tools: Professional sellers get access to tools like bulk listing, detailed reports, and promotion creation.
- No Per-Item Fee: Professionals pay a monthly subscription fee, instead of a per-item closing costs. This makes sense for most professional sellers with high sales volume since per-item costs are more likely to add up.
Challenges:
- Monthly Fee: The monthly subscription fee may not represent a good value for sellers with extremely low sales volumes.
- Difficulty: A good amount of maturity is required to run a Professional account and it can be overwhelming for newcomers due to the complexity.
Best Practices:
- Use Tools: Take advantage of the state-of-the-art tools and reports to get your listings dialed in, and know where you stand.
- Invest in Marketing: Investing in marketing to Increase Visibility through Sponsored Products.
3. Private Label Selling
What is it?
In other words, private labeling is the practice of finding generic products from a manufacturer and branding them with your own label to sell as unique items on Amazon.
Benefits:
- Brand Control: Being able to create and maintain your brand can mean better customer loyalty, as well as recognition.
- Increased Margins: Brands earn a higher percentage of profit because of branding and differentiation through private labeling.
Challenges:
Initial Investment: Private labeling items can be expensive to develop as the cost of product design, branding, and many times higher manufacturing costs are necessary before you see any return on your investment.
- Quality Control: This can be difficult to master, especially when you work with some overseas suppliers.
Best Practices:
- Do Your Market Research: Find a niche with demand and low competition to make your chances of success much higher.
- Establish Good Relationships: Equally well, work hard on your supplier and manufacturer relationships so as to always get high-quality materials.
4. Wholesale Selling
What is it?
Wholesale selling is when you buy a large volume of products from the manufacturer or distributors at discounted prices and sell these individually on Amazon.
Benefits:
- Known Brands: Selling established products can make it easier for customers to be more familiar with what you are selling.
- Less Risk: As you are selling existing products, there is no risk of product development and branding.
Challenges:
- Less Margins: Your wholesale margins may be smaller than they would have been private labeling because of the cost to purchase products at true wholesale prices.
- Inventory Management: This includes managing inventory and variations in demand.
Best Practices:
- Work with Suppliers: Establish business relationships with suppliers to help maintain and negotiate cheaper prices/ terms.
- Demand Oriented: Choose a product with high demand and low competition which results in maximum profit.
5. Dropshipping
What is it?
Dropshipping: This is a fulfillment method where you sell products without having to hold any inventory yourself. Instead, you buy the product from a third party who then ships it directly to the customer when someone places an order for that item.
Benefits:
- Minimal Startup Cost: Zero need for inventory, zero risk financially.
- Sustainable Product Selection: You can provide all the products suitable to your industry range without a physical area for a big inventory.
Challenges:
- Margins: Dropshipping margins are also lower than other forms of e-business.
- One of supplier reliance ( Human ): To get your business going all you have is a 3rd party who could mess up with inventory, shipping, or quality control.
Best Practices:
- Opt for Reliable Suppliers: Try to select suppliers that you have dealt with before and are known for delivering the item on time without making mistakes.
- Customer Service: Maintain good customer service and address any issues in regards to shipping or products using excellent quality matching skills.
6. Handmade Selling
What is it?
Amazon Handmade is not a marketplace that empowers artisans to sell products they make with their hands? For those who make their own products (not a reseller of others), this platform is more authentic.
Benefits:
- Specialized market: Amazon Handmade offers a unique platform for handmade products that are specially intended to cater to top niches only.
- Storytelling for Brands: Allows sellers to tell the story of their craft and meet customers who share their love.
Challenges:
- Tiny Scalability: Handmade businesses can work to scale production, but it's often tough and time-consuming (especially if you're working alone or with a small team).
- It can become competitive: those popular product categories fill up fast due to market saturation.
Best Practices:
- Showcase Your Work: Focus on the details of your handmade product and tell a piece of story to engage with potential customers.
- Optimized Listings: Make use of high-resolution images and elaborate descriptions to portray the level of artistry you have put into your products.
7. Retail Arbitrage
What is it?
Retail arbitrage is the purchase of discounted or clearance items from retail stores and then selling them off on Amazon.
Benefits:
- Little Investment Necessary: Retail arbitrage involves little upfront investment, so it is viable for new sellers.
- Fast Profit: You can quickly resell the items you purchase at a bargain for a quick profit.
Challenges:
- Uneven inventory: The discount availability may be inconsistent, so maintaining a consistent balance in your inventory can be difficult.
- Pricing: Maintain the right pricing to continue being competitive.
Best Practices:
- Keep a tab on Sales Trends: Monitor sales trends and promotions at retail stores for profitable arbitrage opportunities.
- Amazon Seller App: The Amazon Seller app can help you scan barcodes, and analyze products for profitability in real-time.
Conclusion
Selling on Amazon offers various avenues, each with its own set of benefits and challenges. Whether you choose to sell as an Individual or Professional Seller, explore private labeling, wholesale, dropshipping, or any other method, understanding your options and aligning them with your business goals is key to success.
Individual and Professional Seller Accounts cater to different scales of operation, while private labeling and wholesale allow for unique branding and leveraging established products. Dropshipping offers a low-risk entry into e-commerce, while Handmade and Retail Arbitrage provide niche and opportunistic selling avenues.
By choosing the right selling method and applying best practices, you can optimize your presence on Amazon and achieve your business goals. Dive into the model that suits your resources, market knowledge, and long-term vision to start or enhance your selling journey on Amazon.
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