How to Start an Amazon Business: An Analytical Guide

Ecommerce enabled over $4.28 trillion in global sales in 2021. Amazon comprised 40% of the US ecommerce market, making it a highly lucrative platform to sell through. This guide uses data-driven insights to help you successfully start your own Amazon business.

Understanding the Amazon Market Opportunity

Amazon‘s dominance only continues to grow year-over-year:

Chart data source: Invespcro

As the chart above demonstrates, Amazon is outpacing overall ecommerce growth rate by nearly 3x.

The key statistics that make Amazon an appealing platform for entrepreneurs:

• Over 200 million Amazon customers worldwide with very high trust in the Amazon brand
• Amazon moves from 63% to 76% of all product searches across categories
• 72% of all ecommerce growth in 2022 has thus far come from Amazon

For budding entrepreneurs, these facts showcase the ripe opportunity that lies in selling products on Amazon‘s marketplace.

Top Challenges Faced by Amazon Sellers

However, successfully running an Amazon business does come with its fair share of challenges.

Feedvisor‘s 2022 survey of over 1000 Amazon sellers revealed the following key difficulties:

This data shows that operational factors like managing multi-channel inventory and shipping pose the biggest pain points. We will address how to tackle these challenges head-on later in this guide.

First, let‘s walk through the process of starting your Amazon seller journey step-by-step.

How to Get Started on Amazon

Follow this 7-step playbook to launch your Amazon seller account:

Step 1: Choose an Account Type

Amazon offers two main seller account options:

Individual (free to enroll):

• $0.99 fee per item sold
• No monthly fees
• Best for <40 total units per month

Professional ($39.99/month):

• No per item fees
• Access to Amazon‘s advertising tools
• Best for >40 units per month

Step 2: Submit Registration Documents

Amazon will ask for the following to approve your account:

• Government-issued ID
• Tax information
• Business documents if selling as a company

Approval can take 2-5 weeks

Step 3: Select Products to Sell

Conduct product research to find profitable products aligned with your expertise and business model.

Use Amazon‘s own product browsing data:

Consider private labeling your own products by sourcing manufacturers or wholesalers. Alternatively, resell merchandise sourced online at wholesale rates.

Step 4: Set Competitive Pricing

Use repricing software to benchmark competitors‘ pricing:

Price items competitively while keeping profit margin targets in mind.

Step 5: Create High-Converting Listings

Each product listing should sellcustomers on why they can‘t live without your product!

Listing Copy Best Practices:

• Feature-focused titles and bullet points
• Detailed product descriptions
• High-quality images presenting product usage and context
• Informational video demonstrations

Step 6: Run Sponsored Product Ads

Consider enrolling in Amazon Advertising to run targeted product ads:

Leverage Amazon‘s data on search queries and conversion funnels to calculate ROI and optimize ads.

Step 7: Manage Customer Reviews

Product ratings and reviews significantly influence purchase decisions on Amazon. Some best practices around managing customer feedback:

• Reply professionally and constructively to negative reviews
• Follow up with customers post-purchase to encourage positive reviews
• Offer refunds or replacements if reasonable to appease unhappy buyers

Now that we‘ve covered account registration and product launch basics, let‘s tackle some of the complexities around managing day-to-day Amazon operations.

Optimizing Daily Operations

Running your Amazon business involves staying on top of orders, inventory and advertising:

Inventory and Channel Management

63% of Amazon sellers struggle with keeping inventory synchronized across multiple channels like Shopify,Walmart and eBay in addition to Amazon.

Using multichannel inventory management software enables tracking stock levels across channels in one dashboard:

This gives you visibility into your true inventory position to help minimize stockouts.

Shipping and Fulfillment

55% of sellers find managing shipping costly and complex.

Outsource fulfillment/shipping to Amazon through Fulfillment By Amazon (FBA) to reduce headaches. FBA makes your items Prime eligible for free 2-day shipping.

Alternatively, use a shipping management solution like ShipStation to automate packing, printing labels and tracking across shopping carts.

Handling Amazon Fees

Keep these standard selling fees in mind when pricing items:

Use repricing software to keep prices competitive factoring in fees.

Optimizing Listings

Run targeted Amazon PPC ads promoting your listings to improve visibility:

The above example breaks down keyword performance. Bid up on terms yielding high ACoS and conversion rates.

Scaling Your Amazon Business

Once you gain initial traction, developing sustainable growth requires vigilance across:

• Expanding product selection
• Increasing brand awareness on Amazon
• Tapping into incremental sales channels

Let‘s analyze each lever:

Expanding Your Catalog

Diversify your product range to become a category leader and minimize risk of flames outs.

Options for expanding catalog:

• White label products in complementary niche categories
• Build brand affinity through branded merchandise
• Version products for different customer segments

Map out expansion opportunities methodically by researching category demand on Amazon‘s own data.

Building Brand Equity

Enroll in Amazon Brand Registry to gain control over product listings and brand presentation.

Invest in high-quality lifestyle imagery and brand story content reflecting your positioning. This builds authority and trust.

Unlocking B2B Sales

18% of Amazon‘s ~$200B revenue comes from business customers. Unlocking B2B significantly expands revenue potential.

Features that attract B2B buyers:

• Volume pricing discounts
• Bulk purchase capabilities
• Ability to set up master ordering accounts

Dedicate effort to crafting commercial offers speaking to key business purchasing needs around price, convenience and order visibility.

Ensuring Ongoing Success

Selling on Amazon is not a "set and forget" endeavor. Brands must continually optimize across:

• Product research and expansion
• Advertising and promotion
• Operational efficiency
• Customer experience

Employ dedicated Amazon channel managers using performance data to drive growth. Audit regularly for continuous improvement across above areas.

With diligence, selling on Amazon can become a highly profitable sales channel over the long-term. Use this guide as your actionable playbook for Amazon success!