The Ultimate Guide to Selling on Amazon in 2020

Updated on February 3, 2020
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If you’ve been curious about using the Amazon marketplace to grow your small business, read our comprehensive, step-by-step guide on how to become an Amazon Seller. We’ll also discuss how much it costs to sell on Amazon, as well as how to sell your services as a B2C business, so you can be sure you’re getting the most out of the Amazon marketplace in the way that works best for you.

A 5-Step Guide to Selling on Amazon

Although there have been entire books written about how to sell on Amazon, selling your products using this ecommerce platform can be a pretty fast, easy process. 

Regardless of their size, every new Amazon Seller gets started with the same five steps. Here are the details of what you need to do to start selling on Amazon.

Step 1: Sign Up for an Amazon Seller Account

In order to set up your Amazon Seller account and get started selling on Amazon, you’ll need to choose a seller plan, provide some information about your business, and understand Amazon’s Seller policies.

Choose a Seller Plan

When you sign up to sell on Amazon, you’ll choose one of three different selling plans, depending on the scale of your business:

  • Amazon Individual Seller: If you own a very small business and plan to sell fewer than 40 items per month, you can sign up as an Amazon Individual Seller. This will cost you just $0.99 per sale, plus a few other transaction fees.
  • Amazon Professional Seller: If you plan to sell more than 40 individual items per month, you’ll need to sign up for a Professional account. Amazon will charge a subscription fee of $39.99 per month, plus some transaction fees on each sale.
  • Amazon Vendor: If you manufacture products yourself, you can sell these goods as a wholesaler to Amazon. They will handle product listings, fulfillment, and shipping, and when they run out of stock, they will order more from you.

Be aware that certain products require approval to sell—and, if approved, only sellers with Professional accounts are eligible to sell those products. Some products that require approval include specific software, laser pointers, and hoverboards. Before you choose which type of account to sign up for, check out Amazon’s comprehensive list of products requiring special approval to see whether you’ll need to get the go-ahead before becoming a seller.

Additionally, Amazon also prohibits certain items, like prescription drugs, from being sold on their platform—so be sure to consult those restrictions as well. Finally, it’s worth mentioning that if you choose to sign up as a Professional Seller (and meet certain requirements) you can apply to list your products in an additional 10 categories that are not available to Individual Sellers.

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Amazon recommends that you use the Professional Seller plan. Image source:

Create Your Amazon Seller Account

After you’ve chosen which plan you’ll sell under, you’re ready to set up your Amazon Seller Account. To complete your account setup, Amazon will request:

  • Your Business Name: This is the name that will be visible to customers in the Amazon Marketplace.
  • Your Legal Name and Address: This information is stored in your account for Amazon’s reference. If you’re a registered business entity, or have a fictitious business name or DBA, use the exact name and address under which you’re registered.
  • Contact Information: Amazon will use your contact information to send you order notifications, guarantee claim notifications, and service and technical updates. Customers will use your customer contact information to reach out with questions about your orders. Contacts for Amazon and customers can be the same or separate.
  • Where Products “Ship From”: Although your “ship from” location doesn’t change the shipping time or cost for buyers, some customers will use this information to make a buying decision between similar listings.
  • Bank Account Information: Amazon delivers payments for products sold every 14 days directly to your business bank account.
  • Shipping Options: Select which worldwide regions you’re willing to ship to, and indicate whether you’ll offer expedited shipping.
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Set Up Your Seller Profile

Once your account is active, the next step to selling on Amazon is to complete your public seller profile. Think of the Amazon Seller profile as your Amazon-based social network profile for your business: This is where Amazon customers will get to know your company, view your shipping and return policies, review customer feedback, and more.

Here are the main sections you’ll want to complete in your Seller Profile right away:

  • “About Seller” Section: This is where you’ll introduce buyers to your small business. Let them know who you are, tell the story of how you started your business, share your company philosophy, and add any other information that may help the buyer establish an emotional connection to you as a seller.
  • Your Seller Logo: Customers will see your logo on your At a Glance page, on your storefront, and on the Offer Listing Page. Your logo must be 120 x 30 pixels in size, and the image can’t contain a URL or any reference to your own website.
  • Return and Refund Policies: Provide instructions for how customers should return items, including the address where the merchandise should be returned to, and inform customers about the estimated time to process a refund. Keep in mind, though, that Amazon policy requires sellers to allow returns for a minimum of 30 days.

Once you provide all this information, you’ll be able to access your Seller Central Dashboard, you can start listing products, and start selling on Amazon.

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Step 2: List Your Products

There is a learning curve to determining how to sell on Amazon successfully, but once you get the hang of it, selling on Amazon can be simple and intuitive. Once you set up your Seller account, you get the ball rolling by listing your products for sale in the Amazon marketplace.

If you’re an individual seller, you’ll list your products on the Amazon Marketplace one at a time. If you’re a professional seller, on the other hand, you can list your products in large batches. Certain types of products, like clothing, support variations of size or color under a single listing.

The products you’re selling on Amazon will fall into one of two categories: Products already listed in the Amazon Marketplace, and new products of which you will be the first or only seller.

Listing Products Already on Amazon

If the product you’re listing is already on Amazon, you can use the stock images and descriptions available on the site. You just have to indicate how many of the products you have to sell, describe the condition of the products, and select your available shipping options.

When other sellers offering the same product run out of stock, Amazon will show your listing at the top. Remember also to try to differentiate yourself from other sellers who have listed the same product. You can offer free shipping, faster shipping, or lower prices to stand out from other sellers.

You can find “List a New Product” in your seller dashboard. Search through the product catalog to see if Amazon already stocks the product. You’ll be asked to provide price, quantity, and shipping information. You can add one product at a time. But if you’re listing more than 50 products that are already in the Amazon catalog, you’ll use the Excel-formatted Listings Loader to fill in and upload the UPC/EAN codes for your listed products.

Listing a product on Amazon. Image source:

Listing Products Not Yet on Amazon

Do you design or manufacture a brand-new product that isn’t yet sold on Amazon? The great news is that you’ll definitely face less competition. The not-so-great news? Listing new products requires an Amazon Professional Seller account and involves a few extra steps.

In order to list a new product on Amazon, you’ll need to provide:

  • The UPC/EAN Number: A unique 12- or 13-digit bar code used to track products. Multiple listings from various sellers of the same product will have a single UPC/EAN number, and only one product detail listing will be created to match that unique number.
  • The SKU: An SKU number is a unique number that you create to track each of your listings.
  • The Product Title: This should describe the product as concisely as possible.
  • Product Description and Bullet Points: Use the bullet points as quick descriptive text to catch the buyer’s interest. You can provide a more thorough overview of your product in the product description.
  • Product Images: High-quality images are essential to selling on Amazon successfully. Amazon requires that images are at least 500 x 500 pixels on a pure white background without text or watermarks, and the product should take up at least 80% of the image area. For best results, use well-lit images of at least 1,000 x 1,000 pixels in size.
  • Search Terms: For each new product that you list, Amazon gives you five fields of 50 characters each in which to list search terms.

Your product description and images will be key to attracting customers. Make sure the description is search-engine-optimized and that you include high-quality product images. Once you’ve gathered your product information, you have two options for uploading new product listings:

  1. If you’re selling 50 or fewer products, you can use the Seller Central Add a Product tool.
  2. To add multiple products not yet listed in the Amazon catalog, you’ll:
    • Go to Seller Central
    • Download the Inventory File Excel template that corresponds to your primary product category
    • Fill in and upload details for all of your products from one central spreadsheet.

You can also link some ecommerce apps, such as Shopify and BigCommerce, with your Amazon Seller account to automatically pick up product listings.

Listings may be available to customers immediately after your upload is complete—but Amazon may take up to 24 hours to process your upload. If you don’t immediately see your new listing on the offer listing page, be patient and check back the next day for updates. If it still seems to be missing, contact Amazon through the Seller Portal, or use the FAQ to troubleshoot any upload errors.

Step 3: Manage Your Inventory

As soon as you upload your listings and set them live on the Amazon marketplace, you can use the Seller Central website to manage all aspects of your selling account. You can check for new orders, update your inventory, monitor your performance metrics, and much more.

Properly managing your inventory is one of the biggest keys to successfully selling on Amazon. As a buyer, you know how it feels when you click on a product you really want or need, only to find that it’s out of stock—and that’s a huge missed opportunity for the seller.

To prevent that situation from happening, there are a couple of different tools you can use. The simplest for small sellers is the Seller Central dashboard. From there, you can manually adjust inventory levels for all of your products. If you’re a Professional seller, you can also adjust inventory levels with a bulk Excel upload. If you use an inventory management app that integrates with Amazon, such as Vendio or SellerEngine, you can use that to update your Amazon inventory.

Sometimes, sellers choose to sponsor their merchandise with ads if a particular product is not moving fast enough, or simply to increase demand. Sponsored ads are keyword-targeted ads that will move your listings above other search results—marked as sponsored—when a customer types in a specific search term. The cost is per click, and you can set your own budget and track performance.

Step 4: Fulfill and Ship Your Products

Listing products for sale in the Amazon marketplace and managing your inventory are the hardest parts of selling on Amazon. This being said, once a customer places an order, the next step is to get that product into their hands.

Amazon offers two options for product fulfillment and shipment:

  1. Fulfillment by Merchant (FBM): You, as the Amazon Seller, are responsible for maintaining inventory, packaging, labeling, and shipping products to individual customers.
  2. Fulfillment by Amazon (FBA): Amazon stores your products in their fulfillment centers, and they’ll handle packaging and shipping products to customers.

Fulfillment by Merchant (FBM)

Self-shipping is typically a good option for small sellers and those with smaller margins. You can opt to charge for shipping or offer free shipping. The biggest advantage of FBM is that you can keep everything in-house and not lose more of your profits to Amazon fees.

The disadvantages are that it’s harder to qualify as an Amazon Prime shipper when you do FBM, so you could lose out on customers with Prime accounts. The other downside is that it’s more difficult to win the buy box (more on that below) when you choose FBM.

Fulfillment by Amazon (FBA)

If the nitty-gritty of processing and shipping orders yourself feels overwhelming, go for the Fulfillment by Amazon (FBA) shipping method. Through FBA, you can use Amazon’s world-class fulfillment centers, customer support, and other operational tools to scale your business faster than you ever could on your own.

If you work with FBA, you’ll store your inventory in Amazon’s fulfillment centers around the world. When a customer places an order, Amazon handles packaging and shipping the product to the customer.

Here are some other advantages to using FBA:

  • Automatic Prime Eligibility: When you manage your products through Amazon FBA, your entire inventory automatically becomes Prime-eligible—a benefit that regularly leads to customers choosing your listing first. With FBM, you must have high volume and outstanding sales metrics to qualify as a Prime seller.
  • Free Super Saver Eligibility: All products that FBA manages are eligible for Free Super Saver Shipping on orders over $25. These listings benefit from better placement on the Amazon site than seller-fulfilled listings.
  • A Single Inventory Pool: You can use Amazon FBA to fulfill orders not just from the Amazon Marketplace, but from your own ecommerce platform or other third-party sites, as well. As a result, you’ll have a seamless sales and shipping experience, regardless of where you’re selling online.
  • Win More Buy Box Listings – When you choose FBA, you significantly increase your chances of winning the buy box for a particular product.
  • Higher Product Rankings – Amazon gives preference to FBA sellers when ranking products.

Beyond these advantages, the best part of using FBA is that it’s incredibly easy. Instead of handling the logistics of monitoring and fulfilling orders, tracking shipments, and handling customer service issues yourself, all you have to do is send your inventory to Amazon and let them handle the rest.

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How FBA Works

If you decide that using Fulfillment by Amazon to manage your Amazon Seller account is the best choice for your business, follow these steps to get started.

  1. Upload Your Product List: To get started with FBA, upload your product list onto Seller Central following the same steps you would use for a seller-shipped product. Then, arrange to ship your full or partial inventory directly to Amazon, benefiting from Amazon’s reduced shipping rates.
  2. Store and Manage Your Inventory Through Amazon: Amazon stores and manages your inventory within one or several of their 75+ fulfillment centers around the world. You still own the products, of course. You’ll also pay a storage fee for your items until they’re sold.
  3. Pay-as-You-Go: FBA has no minimum unit count, so you only pay for the number and weight of units you actually store and ship to customers. The only monthly fee is the monthly inventory storage fee for the convenience of using Amazon’s fulfillment centers to store your products.
  4. Picked, Packed, and Shipped by Amazon: As soon as you receive an order, Amazon will package and ship your product directly to the customer.
  5. Seamless Management of Payments: Once Amazon ships the order, Amazon collects payment from the customer, deducts their fulfillment fee as a percentage of the total sale based on the weight and number of items, and deposits payments directly into your bank account every 14 days.
  6. Customer Service by Amazon: If you use FBA, Amazon serves as the direct customer service contact.

FBA Pricing

When using FBA, you’ll be responsible for two different types of FBA fees:

  • Amazon Fulfillment Fees: Amazon charges fees, based on the weight and size of your products, to pick, pack, and ship your products, and handle customer service inquiries. This fee can be as low as $2.41 per product for smaller items but can increase significantly (even over $100) for larger or oversize items.
  • Monthly Storage Inventory Fees: If you use Amazon’s warehouses to store your inventory, you’ll be charged a monthly fee based on the amount of storage space you’re using. This fee can be as low as $0.69 per cubic foot, and reach as much as $2.40 per cubic foot.

There are additional, smaller FBA fees noted in the next step. Don’t forget that you’ll also have to pay separate fees that all Amazon Sellers are charged, whether or not they use FBA. We’ll cover those in more detail next. For instance, there’s the referral fee that’s charged per product, usually no higher than 15% of the list price. There’s also the monthly subscription fee for Professional sellers.

Step 5: Receive Your Earnings

Amazon is a great way to expand your business’s reach, but there’s obviously a cost to selling on Amazon. Amazon will deduct all applicable fees from your sales proceeds every two weeks. They’ll deposit the remaining balance into your bank account and send you an email notification every time you’ve received a new payment.

Here is a list of Amazon Seller fees that will be deducted from your sales:

  • Monthly Seller Fee – These are the fees that you pay to Amazon for the privilege of access to their marketplace. Professional sellers pay $39.99 per month, and individual sellers pay $0.99 per sale.
  • Referral Fees – These vary by product category and size, but you generally won’t have to pay more than 15% of your product’s sale price as a referral fee.
  • Returns Processing Fees – Amazon charges sellers a returns processing fee in certain product categories.
  • Stock Removal Fees – This is a fee that Amazon charges FBA sellers who want Amazon to send back or dispose of their unsold stock.
  • Inventory Placement Fees – This is another fee levied on FBA sellers who want more control over which Amazon fulfillment centers their inventory ships from.
  • FBA Export Fees – Sometimes, Amazon charges export fees for shipping products internationally.
  • Pick and Pack Fees: Amazon charges fees for FBA sellers, as we mentioned above, based on the weight and size of your products, to pick, pack, and ship your products, and handle customer service inquiries. This fee can be as low as $2.41 per product for smaller items but can increase significantly for larger or oversize items.
  • Monthly Storage Inventory Fees: Once again, if you use Amazon’s warehouses to store your inventory, you’ll be charged a monthly fee based on the amount of storage space you’re using.
selling on amazon

These are some of the referral fees Amazon charges based on category. Image source:

Although this list of fees might seem overwhelming, a large number of independent sellers manage to make a nice profit selling on Amazon. The key to success is managing your inventory correctly, high-quality products listings and images, and fair pricing for your products.

How Much Does It Cost to Sell on Amazon?

As you can see there are a variety of different fees that may be involved when selling on Amazon. With this in mind, you might be wondering: How much does it really cost to sell on Amazon? Unfortunately, because of the variable nature of these fees, it can be unpredictable to determine the actual cost. This being said, however, if you’re trying to decide whether investing your time and effort into selling on Amazon is worth it based on the cost, you’ll want to keep a few things in mind:

  • Seller Fees: First, you’re always going to have to pay a Seller fee in some way. If you’re a Professional Seller, you’ll pay the monthly subscription fee ($39.99) and if you’re an individual seller, you’ll pay the $0.99 per item fee.
  • Referral Fees: You’ll also always have to pay a referral fee, as we mentioned above. Certain product categories have higher referral fees, so you’ll want to consider the type of product you’re selling and what the respective referral fee will look like.
  • Shipping Costs: Whether you use FBA or ship your products yourself, you’ll want to consider how much any shipping services will cost. You may want to do some research on the cost of packing materials and shipping providers to compare the prospective cost to the cost of using FBA.
  • Inventory Costs: Finally, you’ll want to think about how much it will cost you to find and purchase the products you’re going to sell, or, if you have your own manufactured product, how much it costs to make that item. You want to be sure that you can sell your products for more than you paid for them, especially considering the fees that Amazon will charge that will be taken out of the money you make.

Ultimately, these four costs will be ones that you can’t avoid when selling on Amazon. Plus, when you first start out as a Seller, you’ll likely find that you need to invest a little more in getting set up and figuring out your process.

How to Sell Services on Amazon

By now, most retailers are well aware of Amazon’s impact on the product marketplace—and they know how product-selling on Amazon can benefit their businesses.

But if you’re a service business professional who provides any type of B2C service, you, too, can use Amazon to grow your business.

Recently, Amazon launched Amazon Home Services to allow Amazon customers to source any type of professional services—like bike mechanics, carpet cleaners, pet groomers, and plumbers—through the portal.

Below are the types of professionals currently listing their services on Amazon, but this list is growing regularly.

selling on amazon

If you’re a B2C service professional, here’s what you need to know to start selling on Amazon.

6 Steps to Selling Services on Amazon

Think of Amazon Home Services (which we’ll call AHS) as an Uber for B2C services: Through AHS, Amazon customers can easily source a variety of services by connecting to those service providers in their neighborhoods. Check out the Amazon Home Services Storefront to see how customers navigate services, and to determine what other service providers are currently participating in your neighborhood.

Curious about becoming an Amazon Service Provider? Follow these six steps to apply to the program, set up your account, and start connecting with prospective clients in your area.

1. Apply for Amazon Home Services

Before you can to register your professional services on AHS, you’ll need to complete an application. To be eligible for this program, you’ll need to suit Amazon’s basic requirements, which include holding General Liability insurance and providing the appropriate licensing for your trade.

Then, Amazon will complete a business background check to make sure your company’s information is copacetic. Any employees participating in in-home services will need to pass individual background checks, too.

If your application is accepted, you’ll receive an email from Amazon with an activation code and instructions for setting up your Amazon Home Service profile.

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2. Set Up Your Amazon Home Services Profile

Once you’ve been accepted as an Amazon Service Provider, you’ll be able to create your storefront, which is the profile page where customers can learn more about your company. You can write an introduction to your business, specify your service area by zip code, collect customer reviews, and more.

3. Create Your Packages

Amazon has created set pre-packages for various service categories based on the most common service requests they see from customers (most of which are product assembly and installation).

Once you’ve signed up as a seller, you can choose which of these services to offer, set your prices, and specify the exact zip codes in which you’ll operate. Customers can order these packages on at any time. You’ll receive an email notification when your new order is queued up. 

4. Use Seller Central

Through the Amazon Seller Central portal, you can schedule services online, set up automated communications with customers, manage your packages, prices, and payments, and much more. 

5. Create Custom Services

Occasionally, a customer in your neighborhood may be interested in a service that’s in your wheelhouse but doesn’t exactly fit within one of your pre-packaged options. In that case, Amazon offers custom service requests.

When a client makes a custom service request, you’ll receive their request via email and have 24 hours to respond with a bid. If the customer accepts the bid, you’ll proceed with the order as usual, and Amazon will handle all scheduling, billing, and payment processing.

6. Receive Payment

Amazon Payments automatically handles the payment for services sold through Amazon Home Services, so you don’t have to deal with invoicing or collecting from your customers. Once you’ve completed a job, Amazon simply deposits your earnings directly into your bank account. You should also be aware that Amazon collects a percentage of your service price, which they’ll deduct from your bank account every time they pay you.

Amazon Home Services Fees

One of the greatest benefits of selling services on Amazon is that you don’t pay upfront for leads or business advertising. Fees are calculated as a percentage of sales, so Amazon only gets paid when you do.

For any service that Amazon sells on your behalf, the company will collect the following fees:

  • Transaction Fee: 5% of each transaction—includes the costs of invoicing, payment processing, and fraud protection.
  • Platform Fee: between 10% and 20% of each transaction—covers marketing and advertising costs, seller tools, and customer service.

The total cost of Amazon Home Services fees depends on the price of your service, and the type of service you’re providing:

  • Pre-Packaged Services: Amazon collects 20% for the portion of the service price up to $1,000 (5% Transaction fee and 15% Service Platform fee), and 15% for the portion of the service price greater than $1,000 (5% Transaction fee and 10% Service Platform fee).
  • Custom Services: Fees for Custom Services amount to 15% for the portion of the service price up to $1,000 (5% Transaction fee and 10% Service Platform fee), and 10% for the portion of the service price greater than $1,000 (5% Transaction fee and 5% Service Platform fee).
  • Recurring Services: If a customer books your company for a recurring service (such as weekly fitness training sessions or monthly carpet cleaning services), Amazon collects 10% of service price for completed orders over $1,000 (5% Transaction fee and 5% Service Platform fee).

As you can see, Amazon collects all transaction and platform fees as a percentage of the service price, rather than a flat rate. Additionally, that percentage excludes any taxes collected through Amazon tax collection services.

The Bottom Line

Whether you’re selling products or services, Amazon’s brand recognition and logistical advantages are incredible tools for expanding your business far beyond what you’d likely have the capacity to achieve on your own. However, setting up your small business on Amazon (and finding the products to sell) will take some time and attention. 

And, although the costs associated with selling on Amazon do take a notch out of your profit margins (as is the case with most marketplaces) you can make up for these costs by developing a strategy— deciding how to optimize listings, promote your store, and work best within the Seller guidelines—in order to find success selling on Amazon. Check out our article for tips for selling on Amazon to learn more.

Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email:
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