Did you know Amazon is the largest online retailer in the world and that 86% of its sellers are making a profit? Amazon makes it easy to launch your product to a pool of eager consumers for a minimal fee. Better still, you’ve got a 67% chance at making a profit within your first year of opening. The Amazon platform gives you access to over 100 million Prime member, and it’s still growing. Your first step? Learn how to start an Amazon store.
With a major increase in the popularity of online shopping and low start-up fees, starting an Amazon seller account is almost seamless. The ecommerce platform combines flexibility with a marked increase in visibility. You’ll also join a market where 89% of consumers buy from Amazon first, which means customer relationship and trust are already established.
Amazon is also one of the most viable platforms in the world, underpinning 45% of online spending in 2019 with a revenue of $47 billion per year.
Starting your own store can be a daunting task, especially with such big players already in the game. But starting an Amazon seller store is easier than you think. You’re seven steps away from opening your digital doors and serving your own customers.
Here are the steps to start your Amazon store.
1. Create a Plan
Every business needs a plan to follow — a roadmap to your goal. Business plans keep you accountable as your ideas grow. Here are some important points to consider when designing your business plan:
- What is the idea behind your business, and what consumer problems are you solving?
- Have you set out SMART goals?
S – specific
M – measurable
A – achievable
R – relevant
T – time based
- What potential problems could you encounter?
- What does your ideal customer or audience look like?
- Are you entitled to any tax breaks or government grants?
- What is your product and product category?
- What does your selling strategy entail?
- How will you raise brand awareness for your store or product pages?
- Are you measuring your Amazon metrics to see where you rank as a best seller?
- How many product listings do you intend to add, and at what frequency?
If you’d like a detailed explanation of how to create a business plan, then you’ll find a plethora of information in our small business plan guide.
2. Choose a Business Structure
What’s the best business structure when you start an Amazon store and seller account? Will you be a sole proprietor or a limited liability company (LLC)? The structure you choose depends on the plans you have for your business, the size, and your particular industry.
As a sole proprietor, you have the freedom to make decisions for your business, and to operate flexibly. The paperwork is minor, though you may need to consider licenses and permits. Taxes are straightforward, and you can choose to claim some expenses against the business. However, you’re not legally separate from your company, and everything you earn is personal income.
The “limited liability” of an LLC protects the business owner, keeping personal assets and finances protected should the business not be able to pay back debts. An LLC can have multiple owners that make decisions together, making the process of qualifying for a personal loan easier.
You can file for an LLC online, but you may pay publication fees, filing fees, and name reservation fees. Keep in mind that the fee to file an LLC can vary from $50 to $500 or more, depending on your state.
3. Determine your Costs
Before you start selling on your Amazon store, you’ll need to know your costs and whether they’ll be covered by your revenue. Creating a spreadsheet of costs can be a great way to keep track. Include equipment and materials, Amazon membership and selling fees, bank fees for transactions and payments, business taxes, website design and hosting, and even storage lease or monthly rental costs.
If you’ll have a brick-and-mortar storefront, check out the 100 most popular places in the U.S. to run a business. Check for tax breaks and local grants to help cover your business costs. The government rapidly increased funding during 2020, so there’s more help available for small businesses than ever.
To get ahead of your taxes, take a look at our webinar series. Taxes for an LLC can include employment tax, property tax, state sales and excise tax, as well as franchise taxes.
How Will You Fund Startup Costs?
There are multiple options available to fund a startup, with pros and cons to each:
- The U.S. government offers business funding assistance, especially during the COVID-19 crisis. For a list of general loan options, head to the SBA’s website.
- Business credit cards: To use a company credit card, you’ll need a bank account open and approved for credit. Banks will want to see your LLC operating agreement before they’ll open a business bank account.
- Loans: Most loan officers will want to see an LLC operating agreement before offering assistance. When taking out a loan, consider the interest rate and the repayment plan.
- Friends and family: Going into business with friends and family can be wonderful, but it’s also risky. Be sure to have things written out, agreed to, and signed by all parties involved.
4. Create your Amazon Store
Creating a name for your Amazon store can be an exciting challenge. Settling on one that shares who you are and what you offer can be tricky. It needs to be unique, but bear in mind certain words that are restricted. Your business name must end with “Limited Liability Company” or some form of the acronym LLC, Ltd, or L.L.C. Refrain from following up with “Incorporated” if your business isn’t a corporation.
Once you have a few ideas, search for them in Google to see if they’re already taken. Choosing a name that’s already earmarked by another company can lead to legal troubles. The last step is to secure a web domain name and create your social media pages.
5. Register your Business
Opening a business means you’ll have a few legal requirements that you need to fulfill. When you start your new Amazon store, make sure to:
- Register the type of business structure you chose (i.e LLC, etc.)
- Get your employer identification number (EIN) for your business. You can do this on the IRS website in a simple process.
- Be sure to look into license or zoning permit requirements for your area and type of business.
- Purchase a business license from your local municipality.
- Investigate a general liability insurance policy suited to your industry.
- Open a business bank account to separate your business assets from your own (important for an LLC). Be ready to show your LLC operating agreement.
6. Get the Right Equipment
Purchasing equipment doesn’t need to be an all-at-once expense. Start with a comprehensive list of items that you need to make the business run. Prioritize what needs to be purchased first and what can come later. Before you go out and buy new items, also see what you can utilize from items you may already have.
Every business needs a specific list of equipment but there are a few common items for businesses that are taking their store online with Amazon:
- Paper supply
You may have many of those items already, but the camera and lightbox are key for taking original product shots. Other startup fees may pop up, like a website, domain registration, hosting, content and Amazon fees.
7. Market your Amazon Business
Creating a social media space for your business is a wonderful way to network and connect with others, as well as building your ideal audience avatar. Facebook, Twitter, and Instagram pages can help you craft your business’ brand voice that tells your story. Sign up with Google My Business to set parameters for your business like maps, reviews, and blogs.
After you’ve established your presence online, look into advertising your Amazon store on these platforms. It’s never been easier — or cheaper — to get started with online ads, even with the smallest of budgets, and these platforms can immediately help you target your ideal online shoppers and bring them right into your digital storefront.
Beyond that, follow social media pages and groups that will allow advertising, and spend time commenting on other users’ posts. Make use of local business directories, businesses and advertising opportunities to spread the word about your products, and what you have to offer.
As you grow your business and nurture your reputation, your business name will be spread through word of mouth. When you feel confident, take time to craft blogs with keywords that are relevant to your field of work. LinkedIn can also be a great way to connect with potential customers and clients, to partner with local businesses, and offer exchanges and competitions to relevant social media pages.
There are many existing businesses on Amazon that can give you a feel for what your store may look like. But at the core of each is a business model that makes a brand work for Amazon.
Amazon has a few different options for business models:
- Private label: When a retailer renames or rebrands a product that’s already sold under their own label
- Wholesale: Bulk purchasing low-cost items to resell individually on Amazon
- Retail arbitrage: Purchasing new products from physical stores at low costs to resell on Amazon
- Online arbitrage: Purchasing goods from an online source at low costs to resell on Amazon
- Dropshipping: No stock changes hands. The store transfers orders from customers to the manufacturer
- Handmade: Self-created products sold on Amazon under your own brand name
Starting an Amazon store doesn’t have to be a tricky transaction. Amazon’s low-risk, high-reward offerings and minimal startup cost make it an attractive option for many. The behaviors of consumers change just as quickly as buying trends, but Amazon does much of the heavy lifting for you as you build your customer base. They also make it easy to get started through their Seller Central platform, where you’ll set up an Amazon FBA to start listing your products.
1 All prices and services presented above were reviewed and verified as of 11/2/19.
2 The Starter plan is $49/year the first year and increases to $119/year after that
3 This chart does not include state fees because those will vary in each state.
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