August 02, 2022

How to Resell on Amazon: A Complete Guide to Becoming an Amazon Reseller

How to Resell on Amazon: A Complete Guide to Becoming an Amazon Reseller

Thousands of sellers join Amazon every single day. In 2020 alone, the marketplace saw an influx of 1,000,000 new sellers joining the already large 6-million seller community.

As the e-commerce hype only accelerated during the pandemic, more and more people are looking for ways to capitalize on this seemingly never-ending craze.

But the numbers we shared above can sound discouraging. With millions of competitors, can you really enter an already overcrowded platform?

Well, consider the following few stats:

  • Amazon’s net sales revenue in 2021 amounted to $470 billion, up from the previous year’s $386 billion. And the upward trend is seen each year from 2004.
  • The number of people visiting amazon.com has also been growing over the years, reaching an all-time high in December 2021 (but let’s wait until 2022 is over to assess the year-over-year traffic trend).
Traffic Analytics tool stats for amazon.com

So, as Amazon’s user and sales bases are growing, it opens space for more shoppers to come in and reap the full benefits of the platform. And while having an original brand that sells unique products is one of the most loved up-and-coming strategies for Amazon sellers, you can still enter the marketplace at a relatively low cost and with minimal effort—through reselling.

Becoming an Amazon reseller is a tried and tested strategy for starting your e-commerce business. And while it’s been around for years, there are still a lot of questions and uncertainties regarding the process.

This guide will help unwrap the ins and out of reselling on Amazon, revealing how to become a successful Amazon reseller.

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What Is an Amazon Reseller?

Amazon resellers are people (or companies) that buy products at the lowest price possible and resell them later on the marketplace, earning from the price difference between their sourcing and sale price.

Typically, unlike brands and private label sellers, resellers purchase ready-made products in large quantities directly from the manufacturer or a wholesaler.

Resellers browse platforms like Alibaba, eBay, and AliExpress to find the lowest-priced products to make a profit once they sell the item to the end customer.

It might not be a sustainable way to build a brand—resellers’ business model is rarely product-focused—but it can be a great source of revenue.

Because, unlike distributors, resellers simply enjoy the profits without having to get into building a close relationship with the manufacturer, or getting involved with marketing, branding, labeling, and other activities.

The short answer is “yes”, it’s absolutely fine to buy and sell items on Amazon, whether you are buying them from a retailer or a wholesaler. As long as it’s not a used or a counterfeit product.

Also, you cannot break any trademark or copyright laws. In all other cases, you are pretty much free to resell whatever you want.

There are some specific brand restrictions like selling Nike or Adidas, as well as some brands that don’t permit their products to be sold on Amazon.

You’ll also have to factor in local laws and Amazon’s restricted items list, as well as the FBA prohibited products list if you plan to participate in Amazon FBA.

So, do your homework before running off to source your products.

You should also note that if you buy a product from a store—even if you never used it—and sell it later on Amazon, it won’t be considered new. You’ll have to place it under the “Used” or “Very Good Condition” category.

If you want to sell your product as new, you have to source it directly from a manufacturer or a wholesaler.

The Difference Between a Reseller and a Seller

Back in the day, Amazon was made up of almost exclusively resellers—typically, people who owned their own e-commerce or brick-and-mortar stores and used the marketplace as an additional sales platform.

But as the number of resellers grew, they were forced to decrease the prices, and hence their margins, to stay competitive. But prices couldn’t go down forever, so there wasn’t much else to do to stand out from the competition. That’s when there was a shift to turn into a seller—a person who creates their own unique product and sells it on Amazon.

And today, being a seller is typically considered to be a more sustainable model as you don’t have to race to the bottom competing with other similar resellers. But…if you’re just getting started on Amazon and don’t want to (or simply cannot afford to) invest in building a unique brand, reselling can be the way to go. If you do it smartly, of course.

Is Reselling on Amazon Worth It?

Maybe reselling has lost its momentum on Amazon as large brands, private label brands, and unique product sellers are now all a part of the Amazon-verse, so you are no longer competing with similar resellers, where all you need is to offer the lowest price.

But there is still money to be made in the marketplace that’s only growing from year to year. So there will always be space for everyone—unique product owners and simple resellers.

Resale is a great way to get things started on the marketplace and learn the ins and outs of Amazon selling, try out the best practices, and go on a journey of trial and error.

Later, you can move on to launching a private label brand or even build your own unique product, once you’ve gathered enough knowledge and data on Amazon, your customers, and the overall market landscape.

And if you want to stay in the reseller’s shoes, you can always learn about ways to put your own unique spin on reselling on Amazon. Our latest product bundles post reveals a few ways to do that.

How to Resell Items on Amazon

Now that you have all the background information about buying and selling on Amazon, it’s time to unwrap how to actually set yourself up for reselling on the marketplace. It’s a step-by-step process, and we’ll walk you through all the key stages.

Step 1. Register an Amazon seller account

The very first thing to do is to register your Amazon seller account.

Amazon offers two kinds of seller accounts—an individual and a professional one.

A professional account costs $39.99 a month, while the individual one only asks for a $0.99 fee per sale. Just do the calculations, and you’ll see that if you plan on selling more than 40 items a month, a professional account actually comes in cheaper.

Moreover, an individual account limits you to 50 sales a month, which, for a reseller, is a small quantity.

So, we suggest that you go with a professional account from the very start—to leverage all the additional perks it gives you, like order reports, Buy Box eligibility, various inventory tools, and so on.

Step 2. Find the right product

Now, the right product choice will often determine the success of your resale efforts. So you should be ready to invest some time in product research.

Your decision should factor in the three key features—product quality, level of competition, and margins.

1. Select quality products

While you might think that price determines it all for a resale, you’d be wrong; quality is still essential if you want to build a sustainable reselling business on Amazon.

So, whatever product you opt for has to have quality. It doesn’t just lead to ephemeral things like customer satisfaction, it will affect your reviews, seller ratings, return volumes, and eventually affect your account’s health. And this, in turn, means rankings and being able to win the Buy Box.

Remember that Amazon’s A9 algo factors in not just sales and keywords, but also reviews—so keeping your product quality high is an absolute must!

2. Find high-margin products

Well, it’s pretty obvious that having a product with high margins is better than selling an item with low margins. But for a reseller, this is especially important, because chances are high that you will have to enter a price war where you have to be able to compete for the lowest price possible.

Having a high-quality product with the highest margin will ensure the scalability of your Amazon business—if you have a super-low profit per sale, you can hardly afford to get out of the loop and grow your business, expanding your product base or marketing efforts.

You can use revenue calculators to get a quick estimate.

3. Pinpoint low-competition products

The level of competition is another key factor to consider. There are two approaches to this:

  • You can sell products that come with high competition—because there is a proven success record.
  • You can sell items that come with zero to low competition.

Of course, you might immediately think that the second option works best. You don’t have to compete with many sellers for pricing, Buy Box, and other points.

But on the downside, starting with low-competition products may simply mean that they don’t have the demand or the margins, yet if you go for high-competition products, you will have to have a solid seller rank.

The decision is ultimately yours, but if you are brand new to the marketplace, start with the second approach, and pick higher-competition products as you build up your seller authority.

If you manage to find a product that meets all these criteria, don’t shout Eureka just yet. Consider a few more things before making your final product choice:

  • Take a look at competitors—check their pricing history, especially to spot a negative downward trend.
  • Check the cost per unit—contact manufacturers and wholesalers to find the lowest sourcing price to be able to calculate potential profits per item.
  • Order a few product samples to see the product quality for yourself.
  • Try to avoid choosing oversized, bulky, or fragile items as they might lead to delivery issues you don’t want to face.
  • Understand if there is any seasonality in product demand—you can do this by checking keyword stats for a particular product (if searches for that product always skyrocket in summer but come to a near-zero level in winter, that’s a seasonal product). This post reveals how to run keyword research for Amazon.

It can seem overwhelming to do full-scale product research when you are just getting started with Amazon, but it’s absolutely essential. However, you can use special tools like Product Research for Amazon, which pretty much automates the entire process, helping you to find the next winning Amazon product without putting in too much effort.

Step 3. Optimize your product listing

If you went with the low-competition approach and chose a product that’s not even listed on Amazon yet, you’ll have to create a brand-new product listing. And optimize it!

Product listing is the digital storefront that showcases your product—so if it’s messy, unclear, or unappealing, you will turn your customers off.

Now, product listing optimization is an art and science of its own—this post unwraps everything you need to do to create a top-performing Amazon listing—but here are a few key things to consider:

  • Add high-quality images and videos of your product.
  • Run some keyword research to add relevant keywords that will potentially bring you higher ranks in Amazon search results.
  • Create an appealing (and keyword-optimized) product description and keep your bullets informational.
  • If you want a shot at having a best-seller listing, add an A+ description.
  • Encourage product reviews (this post has some cool tips for this) and entice customers to rate you as a seller.
Source: https://www.sellzone.com/blog/the-anatomy-of-a-bestselling-amazon-listing/

Step 4. Utilize FBA

You might not want to pay the FBA fees, but successful Amazon reselling is closely tied to your seller ranking, and that means you will have to opt for Amazon’s fulfillment (FBA) service.

Amazon FBA takes care of storage, picking up, packing, and shipping, providing full customer service, and even dealing with returns. And Amazon sure encourages sellers (and resellers) to use this service—it can help to boost your seller rank and, hence, up your chances of winning the Buy Box.

So, unless you are reselling a unique item, to stay competitive when racing against those of other resellers, you’ll have to use FBA.

This means that you should factor in FBA costs in your profit analysis.

Step 5. Win the Amazon Buy Box

We’ve mentioned the Buy Box a few times already, so you might be wondering what it actually is.

That white box you see on a listing that lets you purchase an item is the Buy Box. Not all sellers qualify for it or can win it; it all depends on the experience you can provide to a customer (speed of delivery, shipping options, customer care, etc.).

While Amazon doesn’t reveal all the factors that help you get into the Buy Box, typically you meet the following criteria:

  • Have competitive pricing
  • Offer fulfillment by FBA
  • Have a high-quality product
  • Have positive customer reviews

Build a Smoothly Running Amazon Reselling Business and Keep Growing

Once you know how to set up a resale business on Amazon, you should be all set for success—given you chose the right product, built an impeccable product listing, and did everything you could to win a Buy Box.

And starting things on Amazon as a reseller might seem surprisingly easy, so you might be wondering—if everyone follows these principles, can they still fail?

Why do resellers fail?

Of course, there is no one surefire way to build a winning business model that will ensure success. But there are a few common fail factors you should be aware of—and most of them have to do with poor pricing strategies and underestimation of costs:

  • Rising competition: Amazon doesn’t set a limit to the number of resellers per item. So you might one day find yourself being among hundreds of sellers of the very same product. And this is the kind of environment that’s hard to compete in.
  • Winning the Buy Box is becoming increasingly important, so resellers always start with cutting the pricing instead of playing the long game—improving their seller rank, growing the number of reviews, etc.
  • If you’re reselling a branded item, even if the original brand wasn’t present on the marketplace when you started reselling, it could enter it any time. And this means you are losing most of your advantages, as original brands can almost always set a better price and gain more customer trust.
  • Resellers don't always get into the cost structure of the product they are selling—it might be a good strategy when you start seeing lowering margins as you can try to work with the manufacturer in cutting costs.

Make sure to keep these fail factors in mind when you are building your Amazon resale business, and maximize the efficiency of all the steps we’ve listed here to get a competitive edge over all the other resellers who didn’t know how to go smartly about reselling on Amazon.

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Read further:

Boost your Amazon seller rating and get a shot at winning the Buy Box with tips from this post. Factor in all possible Amazon fees by unwrapping all the potential costs listed in this article. And if you’re still not sure whether it’s best to sell on eBay and Amazon, this comparison round-up will walk you through all the pros and cons.