How to start a successful Amazon business?

Amazon as a marketplace is taking 60% of the e-commerce, and is the best place to start your own business. But the main question is how, and how to prepare yourself for this journey.

E-commerce is exploding. It has been exploding for a long time now.

There are a few economic trends that happened in the last few years that turned it into a rapidly growing business. It is something that is changing the world in unforeseen way that anyone could really imagine.

We are getting to the point where e – commerce is the new “Internet”, rampaging through every industry and is changing everything. It has transformed the entire world, from how to buy things and how things are sold.

There are a lot of opportunities in e-commerce. It is perhaps the biggest opportunity since the dawn of the Internet itself. This is nothing that you can make up. It is a fact. Amazon is the best example for that, because today the company is 22 times bigger than it was in 2008. And the growth is not over. It is expected to double in size in 2018. Probably the best example of showing that the e-commerce is growing faster and faster every day.

If you are a young entrepreneur, and you are giving excuses like ”Oh, I am too late for the game” or “It’s too competitive for me”, YOU are wrong!

There are more opportunities in e-commerce than there were yesterday, and tomorrow there will be more than it was today. So, it has never been a better time to start your own business. You just have to make the decision, and go out there do it!

Make it simple! Amazon as a marketplace is taking 60% of the e-commerce, and is the best place to start your own business. But the main question is how, and how to prepare yourself for this journey.

Here is a simple beginners concept, which will help you to became a successful seller on Amazon.

1. Find your ‘killer’ product

First of all, you need a product. Do a lot of research about the product you want to sell. When choosing a product, best way would be to order few samples and test them. Might offer to your friends, neighbors, relatives and ask them what they think about it. Many sellers recommend testing a product before selling it to real customers, and find out their reaction and feedback. After you have chosen your first product, no need to go big and order thousands of units. Almost every new seller makes this mistake, but when you start you want to take things slow. The quickest way to grow is to grow slow. For example: start with ordering – samples, then the next order would be 50-100 units etc. Grow slow with your orders because of few reasons:

  1. Quality control and
  2. Capital.

You might not want to lock up all of your money in inventory, because inventory losses value over time, whereas you also need some of your capital to sell the inventory. For example, advertising on Amazon.

What is a good product?

As a new seller and young entrepreneur, you should choose products that are small, light and simple. Dealing with heavy, fragile and expensive products to ship, might cause a headache.

Secondly, find your ‘startup sweet spot’. This means choose a product that sells for 50-100 GBP in order to keep your profit margin safe. Anyway you have to pay 5-10 GBP for shipping, and selling a product below 15 GBP won’t be beneficial. Also, 100 GBP products don’t require much buying power to get started. It is cheaper to buy 5 samples from 100 GBP instead of 500 GBP per product. The goal is to make good margins. For starters, minimum 50 % profit. Let’s say your minimum sale price should be double your cost. So, if you buy it for 10 GBP, selling price should be 20 GBP. As you keep up the good work, next step should be the ‘ startup sweet spot’ or 67% profit margin:

Startup sweet spot= 3X your cost (200% markup, 67 % margin).

But, what is a bad product?

Completely the opposite. Everything that is heavy, bulky and hard to ship, won’t be a good choice. In the beginning you would also need to avoid technically complex and products that require very high quality. Same goes to products that are in markets with lots of brand loyalty such as : baby diapers, floss, toothbrushes etc. Then, trademarked, goods with other companies logo or patented features and highly regulated like most consumables (food, drugs, beverages etc.)

In order to make your product research, there are few tools on-line that can help. Jungle scout is one of them, for which a paid subscription is needed. In the long run, this will be more helpful, but since you don’t want to pay in the beginning for subscription, will do the job, and it is for free. Basically, they are product research tools for Amazon sellers, that aggregate all the search results of a product search term, and that give you the average of:

  • Monthly sales, and revenue estimates of amazon search results
  • Numbers of review and total review score
  • Best seller rankings in any category
  • Product category
  • Average price rate
  • Average sales rank

2. Source your supplier

Start with finding the right supplier on Alibaba and Aliexpress. Looking for other places might get you in difficulties, scams and cost you a lot of time. This two sources have scam proof the market.

Next thing to do while searching for a supplier, is to make initial contact with 5-10 suppliers. They will send you pictures, pricing details etc.

Use similar email sample to send to all of them, with questions about the price of total samples you want to order, and the shipping costs for them. Going through that, will guide you to the best supplier for you. Remember that there is no best supplier for a particular product, but one that is best for you! This supplier is your business partner, and should help you to grow your business. Therefore, chose wisely!

3. Negotiate with suppliers

When writing emails to the suppliers, always use a separate email for supplier communications.

You will start getting a lot of promotional emails from them, so you don’t want to get annoyed by them on your personal email address. When presenting yourself in the emails, never be the boss, always someone else. Introduce yourself as your secretary, business development director or purchasing director.

The main reason is, you don’t want your supplier to think that you are a small company. If they think that it is a big company they are working with, will go out of their way and give you better prices.

Another thing is, if you don’t know something, most probably they will stop replying to your questions, since you as a boss should know everything.

But, talking as the secretary or someone else, more chances to understand that the employer doesn’t know everything and to go that extra mile and help you with any questions.

4. Get started!

Your first order should be 5 to 10 samples.

Once you know that the product is good and the customers like it, make the second order. It should be less than 100 units.
Third order should be more than 100 units, and still modify it with every order.

The best option is to make one modification per order. In this way, getting to know the customers better, will help you to deliver the best product on the market.

As you start selling more and more, you might prepare yourself being more competitive on the marketplace. This means, get a head- start on building a great reputation and maintain good metrics.

Then comes the point when you have to be smarter and faster than your competition, and provide your customers with the best price on the marketplace. For this, as competition heats up, you might start using an automated repricing platform that will help you finding the best strategy for your items, and boost your sales and profits.

The best place to sell your first product is Amazon or eBay.

Amazon as the biggest e- commerce platform is the best place for newborn sellers and starting your e-commerce journey. Great number of audience there, and possibility for you not to bother with packing and shipping your products. This is possible with using FBA shipping type on Amazon.

Just relax in front of your computer, and Amazon will ship your products to every country you want to offer and sell the product.

P.S. Selling on Amazon is very competitive. By knowing this in advance, get yourself prepared to constantly update and review the prices on your items. eSagu is a start-up RePricing software company based in the heart of Cologne, that can guide you through the Amazon world. In the same time, it can help you to remain competitive 24/7, and increase your chances of winning the Buy Box.

Still not sure what the Buy Box is? Stay tuned, and I will write about her ‘Majesty’ the Buy Box in our next blog post!