July 16, 2020 Last updated July 16th, 2020 1,027 Reads share

How to Start an Online Marketplace Like Amazon

Image Credit: DepositPhotos

Amazon is arguably the most powerful online marketplace in the world, and anybody can create a seller account to begin selling products on its platform. Accordingly, it’s a fantastic opportunity to start your own business or side gig—without having to create a platform of your own from scratch.

Of course, if you’re going to be successful with this endeavor, you’ll need to treat this like starting any other type of business. You’ll need to have a business plan in place, a strategy for how to grow, and all the resources necessary to remain operational and profitable.

So how do you get started?

Figure Out Your Sourcing Method

First, you’ll need to figure out how you’re going to source your products; in other words, when people buy your products on Amazon, where are they going to come from?

There are several different options here, but these are some of the most common:

  • Production. First, you could produce the items yourself. If you’re trying to grow your Amazon business into a large-scale operation, this typically requires a massive investment in manufacturing equipment and processes of your own. For many novices, this isn’t a realistic option.
  • Wholesale. Instead, you could go the wholesale route. Through this method, you’ll buy products in bulk at a low rate, then resell them at a profit. However, you’ll be responsible for storing and managing inventory; Amazon has options to help sellers with this, or you can attempt this management on your own.
  • Dropshipping. You can also pursue a dropshipping model. The idea here is to sell items at a marked up price, forwarding all orders to a third party, who then fulfills them (usually with a white-label service).

Find a Niche

Next, you’ll need to find some kind of niche for your business. There are millions of people and businesses trying to sell products on Amazon, including Amazon itself, so how are you going to compete?

If you want any hope of standing out, you’ll need to be unique in some way. That could mean offering a product that no one else can offer, appealing to a demographic that your competitors are neglecting, providing the lowest price on a highly competitive product, or simply offering a more compelling brand. Spend some time researching your competition and your target demographics to figure out a potential angle here.

Understand the Rules

One of the most common pitfalls of new Amazon sellers is failing to follow the rules. If you break one of Amazon’s selling policies or part of their Seller Code of Conduct, your account could be suspended or permanently banned. In many cases, Amazon will send you a friendly warning or recommendation before taking formal action, but you can’t purely rely on this.

Instead, take the time to familiarize yourself with all of Amazon’s rules for sellers. Many of these are common sense; for example, you’re not allowed to sell illegal products or lie to your customers about what you’re selling. However, some of them are more nuanced and may be harder to follow. Check out the Seller forums if you’re confused about anything.

Start Your Business and Create an Account

From there, you should be ready to start your business formally. Depending on how you’re operating, that could mean starting an LLC, a corporation, or another formal business entity in your state. It could also mean getting a federal tax ID number and registering your business. Once your business is created, starting an Amazon seller account is relatively easy—but you’ll have a few important decisions to make. For example, if you sell items as an individual, you’ll pay a per-item rate of $1 plus referral fees. But if you pay for a full seller account, you’ll forgo the per-item rate and instead pay $39.99 per month.

Prepare a Marketing and Advertising Strategy

Even if you have a great product at a great price, you probably won’t be successful on Amazon unless you have a marketing and advertising strategy in place. For your convenience, Amazon offers its own built-in marketing and advertising options to sellers. With sponsored products, you can pay to have your products listed at the top of a customer’s search results, or somewhere else on the screen. With sponsored brands, you can make sure your brand’s store page is showcased. With display ads, ads for your products will be showcased in web search results and across the broader web.

For most newcomers, Amazon’s marketing and advertising options are ideal; you can easily capitalize on them to jumpstart momentum for your brand’s long-term growth. They’re accessible, inexpensive, and relatively easy to use.

However, if you want to grow your brand even further, you may want to leverage additional marketing strategies of your own. Maintaining a presence separate from Amazon, with the help of an external website and social media, can increase your visibility and potential audience—as long as you aren’t leading people away from Amazon intentionally (which is a violation of their rules).

Start Optimizing Your Product Pages

Most people on Amazon find new products as a result of searching, so one of the best ways to increase your likelihood of getting found is to optimize your product pages (and your store page) for search. Amazon-centric search engine optimization (SEO) strategies are designed to make it easier for your products to rank for relevant search queries; they often include listing the right keywords and phrases in each of your product pages, providing full descriptions, and interlinking.

Accumulate Good Reviews

In an effort to show people the best possible buying options, Amazon gives more visibility to products and stores that have good reviews, so good reviews should be one of your top priorities. Never pay for reviews or fake them, but do spend time trying to cultivate them with great customer service and amazing products.

You won’t be able to become a success on Amazon overnight, but with the right strategies, and enough investment, you should be able to become a formidable competitor in your chosen niche. Before you start opening accounts and selling items, formally document your business plan, and consider all your options carefully; the more you research and evaluate your own ideas, the more successful you’re likely to be.

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Larry Alton

Larry Alton

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