How To Make Money On Amazon

Learn how the giant online retailer can help you sell your stuff

Anyone can sell on Amazon.  jhorrocks/E+/Getty IMages

If you've shopped online, you've likely bought something from Amazon at one point or another.

While some items are sold and fulfilled directly from Amazon itself, many others come from third-party sellers which include both large-scale companies and individual entrepreneurs. There's no reason you can't be one of those entrepreneurs.

To start selling your own goods or services on Amazon, you first need to create an account and choose a selling plan.

Selling Plans

Amazon offers two tiers of selling plans, each tailored towards overall volume of sales as well as the the types of items you'll be offering in your virtual store. The Professional Sellers plan is the most common, intended for sales projections of over 40 items per month, while the Individual Sellers program allows smaller retailers or sole proprietors to take advantage of Amazon's wide reach without moving as many products.

The Professional Sellers plan includes a monthly charge of $39.99 which lets you sell as many items as you like with no per-item fee. Individual Sellers, meanwhile, do not pay for their subscription but are charged $0.99 for each item sold.

Other benefits of the Professional plan include the ability to offer gift wrapping and special promotions as well as lower shipping costs on certain item groups. Professional Sellers also have access to reporting and bulk listing tools, as well as the ability to sell their products in both the United States and Canada from the same account.

The Cost of Doing Business

In addition to the figures mentioned above, Amazon sellers incur other costs every time an item is sold. First and foremost are shipping fees, which can vary greatly based on seller type, product category and fulfillment method.

For Professional Sellers, Amazon's custom shipping rates are applied to books, music, videos or DVDs on self-fulfilled orders where the seller is responsible for packaging and shipping each item sold. With Individual Sellers, however, Amazon shipping rates are levied across the board no matter the product line. 

Each time an order is shipped you will receive a standardized credit. Charges are based on these rates along with the shipping method chosen by the buyer, and your seller account is credited with the total amount that the buyer paid for shipping. If your actual shipping costs end up being more than the credit that you received, you are still obligated to ship the item. Many sellers will typically offset this difference by modifying the overall cost of the product itself.

Sellers of all levels also pay referral fees to Amazon for each sale, the amount calculated based on item category and price, as well as variable closing fees for all media items.

Amazon Fulfillment Methods

Amazon sellers can choose between two unique and very different fulfillment methods, each dictating how and where their products are packaged and shipped from. 

With the aforementioned self-fulfillment method you pack and ship all sold items yourself, affixing a printable label and enclosing a receipt which are both accessible through your seller dashboard and contain all pertinent information. Depending on which shipping service you've chosen to use, this process is very similar to sending any other package. Some shippers, including USPS and UPS, even offer the option to pick up your packages if you don't feel like venturing out to the post office or local facility.

Fulfillment by Amazon (FBA)
This works by storing your products in Amazon facilities until they're sold, at which point they are packed and shipped to the customer. Amazon even handles customer service and returns for said products after the fact as part of the FBA program.

Aside from the obvious conveniences of having someone else pack and ship your items, opting for FBA means that your listings are eligible for free shipping and Amazon Prime. Offering these incentives often means a significant boost in sales, especially when dealing with products that have notable competition from other sellers. Providing these additional services also raises the probability of your item appearing in the coveted Buy Box, which is displayed on each respective main product page and is where the majority of Amazon sales originate.

Of course, nothing this good can be free. Amazon charges fees for each order that's fulfilled as well as for warehouse space to store your products, using a scaling rate based on how much room is needed.

Many larger sellers also choose to take advantage of Amazon's Multi-Channel Fulfillment program, which utilizes the company's storage, packing and shipping services for products that are sold on their own individual website or through another sales channel other than Amazon.

Product Categories

Because of its vast inventory, the Amazon marketplace is broken down into dozens of distinct categories ranging from beauty products to video games. Many of these categories are open to all sellers, while others require specific approval.

To apply for permission to sell in a restricted category, you first need to be subscribed to the Professional Sellers plan. Next, you'll have to submit a request form which is then reviewed by Amazon on a per-seller basis. Stringent guidelines are followed in some categories such as Sports Collectibles and Jewelry, ensuring that the company's standards are met in each instance.

Some criteria that is taken into consideration is whether or not you have a website that features your products, your estimated online revenue along with the condition of the items that you're selling (i.e., new or refurbished). It typically takes about three business days to learn whether or not you've been approved for a particular category.

In addition to standard product categories Amazon also provides the ability to sell professional services, including product assembly and housekeeping, through its website and app. There are no initial costs or subscription fees required to do so, resulting in minimal risk where you only pay when you make a sale. For most services, Amazon will take 20% of revenues up to $1,000 and 15% of anything over that amount.

Not unlike the restricted categories mentioned above, Amazon carefully reviews all professional service providers and completes thorough background checks prior to approval. With minimal upfront costs or required time commitments, advertising your services to Amazon's broad user base is often a win-win situation for all involved.

Listing Your Items

At a high level, there are two ways to list items on Amazon. The first and easiest is to list products that are already on, in which case you only have to provide condition, number of items in stock and what shipping options you'd like to offer customers.

The second is to list a product that's not currently in Amazon's database, requiring a significant amount of detail including a thorough description along with UPC/EAN and SKU numbers.

Individual Sellers have to list items one at a time, while those on the Professional plan can upload many at once via Amazon's bulk listing tools.

Standing Out From the Competition

No matter what products or services you're selling, paying careful attention to detail and providing a good customer experience can go a long way when it comes to affecting your bottom line. By following these basic guidelines, you can assure that your Amazon Seller rating remains at a level where potential customers will trust you and that your products have a better chance of winning a spot in the aforementioned Buy Box.

  • Accurate descriptions: Make sure that you are delivering exactly what you described in the expected condition. Too often third-party sellers will ship something that does not meet the attributes found in their listing.
  • Timely shipping: If you're going the self-fulfillment route, be sure to ship items in the timeframe that was promised.
  • Careful packaging: Take care in your packaging, no matter what the item is.
  • Customer service: Respond to buyer inquiries quickly and politely. When something goes wrong, honesty and friendliness can help make an irate customer feel better.

Learning More

While we've covered the basics in this article, Amazon's seller tools offer a wide array of features that can result in increased sales volume and a streamlined workflow when utilized correctly. To make sense of these tools as well as the advanced reporting dashboards that accompany them, Amazon provides an organized curriculum of instructional videos known collectively as Seller University.

There's also your own personalized Selling Coach, a virtual adviser that helps you improve listings, as well as a very active seller community.