I decided to start a side hustle of selling on Amazon after hearing about a friend who was making a killing doing it. He told me that he was earning several thousand dollars per month in profit, and I was immediately intrigued. After doing some research, I found out that there were many people who were having success with Amazon FBA businesses.

And so, I decided to give it a try myself. Now, fast forward a few months later and my side hustle business has been booming! In fact, last month alone I made over $10,000 in profit from my sales on Amazon! If you’re looking for a way to make good money online, then starting an Amazon FBA business is definitely the way to go.  

Learn how to make money on Amazon FBA and be successful!

How to Make Money on Amazon FBA

Just think of all the time we spend on our phones every day. According to recent studies, the average person spends over four hours on their phone each day. That adds up to 28 hours per week or two full days! So it only makes sense that investing in the App business could be a profitable business venture.

But where do you start? How do you find the right app business and what should you look for before making a purchase? This guide will show you how to buy an app and also answer all those questions and more so that you can get started on your path to becoming a successful app owner today!

Why Invest in an App Business

If you can’t afford to purchase an app, you can always invest in it. But with thousands of new mobile apps coming out every day, it’s tough to find the rising stars!

When considering investing in an app, it is important to do thorough research to find potential rising stars. Checking metrics such as download data, app store optimization data and reviews can be helpful in this process. By taking the time to invest properly, you increase your chances of seeing a return on your investment.

How to Find Competitive Apps

Now it’s time to do a competitor analysis. Take a look at what apps in the same space are doing.

When you are looking to invest in a new mobile app, it’s critical to do a competitor analysis. This will tell you if the competition is fierce or if you can compete.

Estimated Downloads

To figure out which apps are most popular, use our market intelligence tool for estimated download numbers.

This will give you a good idea of how popular the apps are in your category, store, and country.

Search through the available apps by category, country, and store.

Now you can compare the estimated download numbers of other apps similar to yours to see how they stack up. This can help you see how your app compares to others on the market.

Visibility Score

Another way to estimate the competitiveness of an app is by using ASO Intelligence. Here, you’ll be able to track the Visibility Scores of your competitors.

The Visibility Score is a measure of how competitive your app is for a given set of search terms. This metric takes into consideration many factors, such as your ranking on the charts, as well as the number of apps competing for the same terms.

If the Visibility Score for an app is low, this indicates that there’s less competition. This makes sense, as there’d be more room for newcomers in a niche where there’re few competitors.

Spotting Clones

When looking into certain categories of apps, you should be on the lookout for numerous clones. If there are many similar apps in the market, it may not be the best place to buy an app.

It’s important to keep tabs on your competition, as it’s a great way to stay in the loop of what’s going on in the mobile app industry.

This will ensure you’re always on top of app market news.

User Reviews

If you want to be successful, it’s important to research your target apps and what users think of them. What are their thoughts on the app’s features? This will give you a good idea of what needs to be improved.

When researching competitors, it can be helpful to find out what features are missing from other apps. Also, understanding what people love about a particular competitor’s product can highlight areas of strength for your product. Finally, looking at overall user satisfaction can indicate if your app needs improvement.

Category Rankings

Find out how your target app ranks against competitors. This is easy to do with our App Ranking Charts.

You can track the ranking of your app in multiple app stores, allowing you to see how it’s doing.

An app’s sudden rise in the rankings in app stores could be the result of publisher manipulation. This could mean the app is being sold at a higher value than it should be.

Apps that have a history of performing well are reliable.

Tips on How to Buy an App

Before you negotiate with a publisher, you’ll want to go into it having a lot more information than “the app looks cool and has a pretty logo.”

We’ll show you how to look at the most important things so that you can get a better idea of what you should pay for an app.

Remember that we are app developers and app marketers, not lawyers. This is not meant to be legal advice.

Before you start acquiring apps, there are some basic things you should check off your list. Consult with a licensed lawyer or tax advisor if you have any questions about the acquisition process.

Who Should Buy App Businesses?

If you’re an app entrepreneur, then you’re constantly thinking about the next update or feature for your application. You want to make sure that your service is as top-notch as possible, and that it’s presented in an attractive, easy-to-use manner.

App development requires a few skills such as ASO, but the basic business model is not so different from other businesses.

Some app developers make money in the same way websites do by using ad networks. This is similar to putting AdSense on your website.

Just like with websites, there are tons of new tools out there for tracking mobile app usage. These tools include rankings, keywords, and user analytics.

But, you should also be aware of the fact that new revenue sources can sometimes come at the cost of algorithmic and manual penalties that can kill a business.

If you are someone looking for new opportunities to make money, creating apps could be a good investment.

If you’re already knowledgeable about app development and investments, then you’ll likely be able to easily run your own successful mobile app company. However, you may need to learn how to hire a developer to fix and update the app, but the overall process should be relatively simple.

If you’re new to the game, buying an app that’s already generating income could be a great way to get your foot in the door. Most apps don’t require much upkeep once they’re up and running, so you can focus your efforts on marketing and getting more users.

This lets you focus on marketing the app to get as many users and installs as possible.

If you’re looking to start a business quickly, buying a ready-made mobile app is a great way to go. Not only will it save you a lot of time and effort in developing your own, but you’ll also benefit from a proven business plan. This will put you way ahead of the competition, which is still developing its apps.

To run a successful app business, you need to be creative, have strong marketing skills, and understand the latest trends in technology.

What Does Running an App Business Look Like?

Running an app business is similar to other online businesses in that there are only a few differences.

An app business typically involves solving customer problems, ranking high organically in search engines, marketing the app in different channels such as Facebook, and optimizing the app for conversions.

The process of buying and selling apps is still in its early stages, even though it is a relatively new concept.

In 2013, Apple allowed app developers to start selling their apps to other people and businesses.

Running an app business is similar to running a Software as a Service (SaaS) business.

The app doesn’t require a lot of upkeep once it is up and running.

An app is a one-time task, whereas a content niche site requires adding new content and doing SEO.

Your main mission should be to market the app and bring in a good income. You can do this by buying an app that is already producing a good amount of money, or by making updates to the app that will make it more user-friendly.

If you’re not technically inclined, then you’ll need to hire a developer to make these updates for you.

If you’re looking to keep your app business running smoothly, it’s best to use the same developer that originally built the app. This way, they’ll have a much better understanding of how the app works and can make any necessary updates more easily.

Updates are an important part of app development, but the main focus should be on growing the user base.

Buying an App Business: Profit vs Risk

In 2014, people spent $946,788 every day on in-app purchases in Candy Crush. While revenues have decreased in 2016, the game still generates $418,116 in daily sales.

Many people think that because only 1 percent of apps generate revenue, app development is not worth it. However, this statistic is not too different from the percentage of websites that generate income. Therefore, the potential for earning money through apps is still there.

The question of whether a niche website or an app is riskier depends on how well they can attract and keep customers.

In recent years, mobile app gaming has seen a sharp increase in popularity, contributing to the growth of the gaming market as a whole.

Zynga’s recent IPO has made the company more valuable than Electronic Arts in revenue. This is due to the success of games like Farmville which has generated a lot of income for Zynga. While some may see this as a risky move, it could pay off big time for the company if they continue to produce popular games.

The market for apps is lucrative, and a lot of people are making money off of it.

If you are an experienced buyer of online stores, you may be wondering if buying an app is any different. The truth is that apps and websites are quite similar in terms of monetizing them.

While both websites and apps are there to satisfy their users, they each go about it in different ways. Apps rely more on developers and content creators, while websites are more reliant on the written copy.

An app’s business model is similar to a website’s in that both need to solve problems to be successful. Angry Birds and Candy Crush provide entertainment, while Uber and Lyft provide revolutionized transport services.

While apps and websites are both sources of traffic and revenue, they’re quite similar. They both rely on the same kinds of ads, and both offer the same types of monetization options.

Many people are surprised to find that the design and function of apps are very similar to websites. This is especially true when it comes to search engine optimization (SEO).

Conclusion

If you want to know how to buy an app, there are a few things you need to keep in mind. First, find an app that fits your needs and interests. There are millions of apps out there, so take your time and find one that’s right for you.

Second, understand the risks involved in buying an app business. Not all businesses are profitable, so do your research before making any decisions.

Finally, don’t be afraid to ask questions! The more you know about the process, the easier it will be to make a successful purchase.

Though affiliate marketing has been around in one form or another since the early 2000s, it is only relatively recently that online businesses have started to tap into the enormous potential affiliate partners can offer.

It is no surprise then that as of 2021, an estimated 80% of online brands use this strategy to increase traffic and drive sales. Not only are affiliate relationships simple to arrange and cost-effective, but they are also not confined to only a handful of industries and sectors. The beauty is that anyone can get involved, no matter their niche.

The forecasts also present a hugely promising future for affiliate marketing channels. The affiliate marketing industry is estimated to be worth around $12 billion, with that figure expected to continue its positive trajectory. 

In many ways, it sounds too good to be true. But those who have already taken the plunge can attest to its power and reliability. More than 80% of marketers expect their revenue streams to remain stable or increase considerably over the coming months and years.

Key Takeaways:

• Learn how to become a successful affiliate marketer.
• The pros and cons of affiliate marketing.
• Find out how you can join a program and start earning commissions today.

What is an Affiliate?

The first type of affiliate is a business relationship where one business has a minority stake or ownership over a second company. Businesses can also become affiliates if they are subsidiaries within the same parent company, referred to as corporate affiliates. 

The second type is an international affiliate, in which a corporation attempts to enter foreign markets by utilizing affiliate networks.

The third type of affiliate is the focus of this article – a retail affiliate, where the basic understanding of affiliate marketing originated. A retail affiliate is a relationship between two companies where one sells and promotes the products or services of another. If a sale is made, the affiliates receive a commission.

It is an effective way for a smaller business to produce an additional revenue stream by using the larger company’s reach and digital product selection, with both parties benefiting from the agreement.

What is Affiliate Marketing?

Affiliate marketing, as mentioned, is the process of promoting the products or services of another business so you (as an individual or business yourself) can earn commission as a monetary reward.

Essentially, a company is entrusting you to promote products or services through online marketing efforts, with the ultimate goal being to drive traffic to the company’s website or online store. Remuneration is usually based on pays-per-click; every time a customer clicks on your affiliate link and follows through to purchase, you as the affiliate earn money. 

In today’s online culture, most people have some form of social networking. This social media presence is a potentially untapped customer base for an online business that they can access through the affiliate. 

Companies are always looking for new ways to increase their reach, and affiliate marketing is highly effective. This type of marketing channel can provide a revenue source for the affiliate even if they have developed no physical product or online service. 

The Different Types of Affiliate Marketers 

One of the considerations you will need to make early on in becoming an affiliate marketer is which type of affiliate program you wish to pursue. Pat Flynn, a renowned affiliate marketer, gathered all he had learned about affiliate marketing and the approaches would-be marketers took when attempting to promote products to sell and came up with three categories of affiliate marketers.

1. The Unattached Affiliate Marketer

In this type of affiliate marketing, the affiliate has no apparent link to the online product or service they want to promote and sell. Unattached affiliate marketers do not know the niche or sector, and often there is no connection to the customer. 

With this type of affiliate marketing strategy, the affiliate is simply looking to take advantage of the company’s reputation to get prospective customers to click on their affiliate link. The company has already laid much of the groundwork for this strategy. 

This model type suits the affiliate who is not interested in carefully cultivating customer relationships and building trust. Instead, the goal is to obtain as many clicks as possible and high conversion rates.

The apparent advantage of this method is that it involves the least amount of work on the part of the affiliate while still having the potential to make good returns and affiliate commission. However, the lack of relationship and trust with the customer will mean that the focus is entirely on income, sometimes leading to unscrupulous practices.

2. The Related Affiliate Marketer

The affiliate has knowledge or expertise within a given field or sector for this type of affiliate marketing. Related affiliate marketers have taken the time to build an audience based on a shared passion for this niche. As a result, companies will feel inclined to offer affiliate products within that niche as there is a potentially rich source of traffic from the already-cultivated audience.

The audience will see the affiliate as a trusted source; they have likely spent years watching the affiliate’s YouTube videos or following their blog post. If the source is trusted, an audience member will be more inclined to buy the product or service and gain additional satisfaction knowing that the affiliate will receive a small commission.

With this model, the affiliate is not necessarily involved with the product or service itself, presenting a problem. For example, an affiliate can fall foul of a substandard product if they have had no direct experience with it. In addition, if large portions of their audience then subsequently purchase the product or use the service, they may be far more reluctant to trust any additional affiliate sites and products recommended by the affiliate.

3. The Involved Affiliate Marketer

Involved affiliate marketers have had direct experience with the product or service and can offer a first-hand appraisal. They usually have a long-standing relationship with the company and are looking to do what they can to expand the company’s reach and prospective customer base.

An affiliate using this model will have an established audience or following who will know them well. The audience may have seen the affiliate use the product or service. They will also likely tell that the affiliate is genuine in their product approval, often leading to higher conversion rates using the affiliate’s link. This type of affiliate strategy model generally takes the longest to achieve.

This model can help the affiliate build a high level of trust between themselves and their audience when successful. As long as they continue only to promote products and services they are involved in, they will likely see huge returns via affiliate sales. Other companies may see this and attempt to forge a partnership with the affiliate.

While the risk is not as high as with a related affiliate strategy, an affiliate cannot guarantee that every person who uses the product or service will have the same opinion and experience. 

How to Become an Affiliate Marketer?

If you are interested in becoming an affiliate marketer, we’re here to help with the best marketing tips and strategies to give you the best possible chance of success.

1. Find Your Niche

You will first need to decide which niche you will base your affiliate business within, a decision influenced by several factors. Suppose you are entering affiliate marketing from a position of strength (you already have a large target audience). 

In that case, you should start with the type of products and service your established audience are likely to purchase. For example, if you’ve built your business on health and nutrition, you might want to start with a similar affiliate marketing niche, resulting in higher conversion rates.

Source: Flippa

If you are looking to start affiliate marketing with no specific audience, you should consider what you would be interested in purchasing as a customer and start from there. You may wish to conduct market research to determine if there are affiliate programs within your chosen niche and try to gauge the level of competition to evaluate whether this is a viable option.

2. Evaluate Market Demand and Competition 

Now that you’ve decided on your niche, it’s time to investigate whether it will be worth the time and effort by determining the market demand and competition. 

Google Trends is an excellent tool to help determine whether there is potential in a product to promote or sell. These vital analytics provide a snapshot of what Google users have searched for over a certain period. 

Source: Google Trends

You can see if products within your chosen niche have an upward trajectory, or at the very least are stable, as this will indicate a consistent interest in the products or market sector. You will also need to evaluate the competition at this stage. 

Your chosen affiliate products and services may stand a good chance of selling, but if there is too much competition in your niche, the results may be disappointing.

3. Choose Your Channel

You have now settled on a niche and determined it is a viable option for demand and competition and a secure route to market products. You must now decide which type of affiliate marketing channels you will utilize to build your audience. 

No matter which type of affiliate marketer you ultimately choose to become, you will need a website and content to populate that website. In addition, prospective customers will need a reason to click on your affiliate links or visit your landing page or website.

There are several examples of affiliate marketing channels, so decide which one best fits your strengths rather than the one you feel will generate the highest level of traffic.

Blogging and Review Sites

Blogging is often the cheapest and easiest way to start affiliate marketing. While its popularity has taken a hit in recent years due to the surge in short-form video and photographic content, it is still a viable option if you are skilled with words. 

You can demonstrate your expertise on a particular subject through a blog to show potential readers (and therefore buyers) that you are a trusted source and that any product or service you recommend will reflect this.

Review sites are also an excellent channel for content. According to Oberlo, 54% of customers still read at least four reviews before buying a product, so these are still a highly viable avenue for your content. 

They will again help to demonstrate expertise in an area. If you have an extensive back catalog of reviews for products you’ve tried, your audience is more likely to trust the higher ratings and any subsequent special deals.

YouTube

If you are confident in front of a camera, you may wish to set up a YouTube channel to try and build your audience. It is no secret that the most successful YouTube personalities have been able to bring in massive revenue through Google ads and partner programs. Still, in more recent times, many have turned to affiliate marketing methods for an additional source of income.

The most significant advantage of using YouTube as your channel is that it is free to start, and the potential audience is enormous. There are videos for everything imaginable on the platform. However, this is a double-edged sword as the sheer number of channels means considerable competition for even the smallest piece of attention.

Polished YouTube videos also take time to produce, and while the channel itself is free, the equipment and editing software you will need to create content is not.

Instagram

Influencer marketing is often subject to a high level of hostility, with many questioning the authenticity of those who make it big on the platform. However, there is no denying its power and capability to drive traffic to affiliate websites.

Short-form videos and aesthetically engaging images are particularly appealing to younger demographics, who are more likely to trust and listen to influencers they trust. There is also considerably less user input and time required on Instagram when compared to YouTube. As a result, affiliate marketing can be formidable in selling online products and services.

Facebook

Facebook is well on its way to dominating all facets of the online space, and affiliate marketing is no exception. It is perhaps more difficult to build large followings on Facebook than on YouTube and Instagram. 

Facebook Groups have a massive presence on the platform, and many will fall within your chosen niche. There is also the option to utilize Facebook ads to help drive traffic to your desired locations, though these can often be costly.

It is also worth pointing out that you need to treat affiliate marketing via Facebook groups carefully. Most members will not care about your promotions and actively resent them if you post too often. As with any affiliate marketing strategy, trust and authenticity are essential if you wish to yield results via this method.

4. Create Consistent, High-quality Content

Now that you have a chosen channel, it is time to populate it with content designed to build and cultivate an audience, otherwise known as content marketing. Aside from blog posts and reviews, here are several other types of content you may wish to try:

• Case studies: They are often more focused than blog posts and tend to study specific topics more deeply. Content creators use case studies to offer a deep dive into products or services they are affiliated with. Use this content strategy once you have established trust and authenticity within your audience.
• Tutorials: A type of content that is perhaps more suited to YouTube, how-to tutorials often generate big audience numbers, especially if the product or service is something that everyone will need. There is an added advantage if the tutorial is an active demonstration of an affiliate product.
• Product comparisons: Compare affiliate products or services to competitors within the same niche. It is ideal to legitimately demonstrate that your affiliated product is the best in specific categories, though the comparisons must be honest to maintain integrity and trust.
• Podcasts: The podcast industry has seen massive growth over the last couple of years. You could consider relating your reviews and comparisons as spoken topics, or you could look to conduct interviews with leading figures in your niche or creators of the products or services you are affiliated with.

Source: Flippa

5. Join an Affiliate Network or Program

You have an established channel. You create high-quality content regularly, and you now have an audience that enjoys your content. You should also have a good understanding of the type of audience you have been able to cultivate in terms of potential online products and services that may be of interest to them.

Join an affiliate network or affiliate program to start reaping the benefits of affiliate marketing. This will allow you to access the brands and businesses actively looking for affiliate partnerships. 

Amazon Associates are one of the leading affiliate networks currently operating, which is hardly surprising given its vast range of products and services. In addition, almost every niche is covered in some form, so this associate program will likely be accessible to most people.

If you have achieved an exceptionally high level of success in your social media following, you may also be eligible for their Amazon Influencer Program. Amazon affiliates are tasked with driving traffic to Amazon’s website in return for generous commission rates that can reach up to 12%. Other affiliate programs that pay include Commission Junction and Rakuten Marketing. 

Choosing the right program for your particular business is a huge decision and can often make or break an affiliate marketing business. Consider the following before making your choice:

• Commission: The ultimate goal of affiliate marketing is to make money, so you will want to know what you will receive for your efforts. Each program’s commission package is slightly different so do your research to find the best deal. You will also need to be aware of any refund policies if a customer refunds via your affiliate link.
• Relevancy: Each affiliate program will have a different portfolio of brands and products. It should go without saying that if you are a relevant or involved affiliate marketer, you should choose the products or services most relevant to the content you have been producing.
• Payment logistics: There are generally two forms of commission; flat rates and recurring rates. Flat rates are typically linked with products, with the commission being made per sale, whereas recurring rates are associated with successful subscription renewals for a service or website. 
• Creative assets and brand websites: Some brand websites are more appealing than others. Some brands put a lot of traction into helping their affiliates by providing banners and coupons to draw attention to your links, so you should also investigate this. At the other end of your affiliate link is a landing page or website — if the affiliate link lacks quality, it could put off potential buyers and lose you a commission.
• Cookie lifetime: A slightly more nuanced consideration is the number of days a cookie will remain on a user’s computer from the moment they first click on your affiliate link. Some cookies have a lifetime of a day. So the user must go through to purchase within the day for you to receive a commission. Some cookies remain valid for up to 30 days, giving a big window of opportunity to secure the sale.

6. Generate Traffic

You now have everything in place to become an affiliate marketer. All that remains is to maximize your potential earnings through the traffic that comes to your website or landing pages. 

If you have built an established audience, you will already have a firm footing from which to operate, generating traffic through every new blog post or video. Now you need to increase the level of traffic generated:

• Email lists: You should start to populate this early on. It lists people who have consented to you using their email addresses for marketing purposes. These lists can be used to send product and service updates, newsletters, and any new affiliate deals you may be part of that may interest them.
• Search Engine Optimization (SEO): Effective SEO is vital for any form of marketing. Keywords within your blog posts and metadata, or tags on your videos, need to be carefully geared toward and linked with your affiliate products to give search engine users the best possible chance of coming across your website.
• Paid traffic: If you have just started to bring in an affiliate income (or your YouTube videos are monetized and bringing in revenue), you may wish to reinvest some of this capital into paid traffic through ads. It is not a guaranteed method of increasing affiliate clicks, but it can be an effective way to increase traffic to your website or landing pages.

Is Affiliate Marketing Worth It?

Affiliate marketing is not a guaranteed avenue to monetary success, but there are some great reasons to try it and some not-so-great considerations.

Affiliate Marketing Pros

Perhaps the most notable advantage of affiliate marketing is that there is quite a low barrier to entry. You do not need to build a complex and multi-faceted business from the ground up, and you do not have to worry about product development and improved service updates and features. You need as many eyes as possible on those products and services.

Source: Ethical Direct Sellers Association

The risk is relatively low initially, and while you may need to invest in some video equipment here or there or web hosting, there are no painful overheads to bear. You don’t own the products or services, so you have no responsibility for them should things go wrong.

Lastly, the monetary rewards of affiliate marketing largely correlate to how much time and effort you put in. Affiliate marketing offers freedom and flexibility, whether you see this as a full-time income or just a little extra spending money.

Affiliate Marketing Cons

The low barrier to entry can also be a disadvantage. It has resulted in many markets and sectors being oversaturated in terms of available affiliate choices for an audience member. As a result, you will need to put in a very high level of work to ensure they click on your links and not someone else’s.

While you do have control over the products you choose to promote, you don’t control how your audience will perceive them. One lousy recommendation could set you back a long way in terms of your credibility and trust with your audience. You will also have very little say in the commission rates.

Source: The Balance Small Business

This lack of control can also result in shady practices such as ‘clickjacking.’ This is where an individual hijacks an affiliate link and redirects it toward their setup, thereby stealing your commission. Some affiliate programs are also quick to exploit those who don’t conduct their due diligence through loopholes in payments and other unethical practices.

Summing Up

The affiliate marketing industry is not going to go away any time soon. The relationship between companies and their affiliate marketers is often hugely beneficial to both parties. As such, the likelihood is that affiliate marketers will make their presence felt even more than they already do.

Content creators hold a lot of leverage. Bloggers, video creators, and (like them or loathe them) social media influencers are looking to jump on the affiliate marketing bandwagon to diversify their revenue streams. It’s time for you to do the same.

At Flippa, we have committed to bringing buyers and sellers of businesses together via our online marketplace for over ten years. As a result, we are now the market leader in helping entrepreneurs and business owners to buy and sell digital real estate. 

Flippa can offer expert guidance in making sure you can maximize your earning potential when selling your business. If you are looking to increase your business portfolio or have a business you are considering selling, contact us today.

Frequently Asked Questions

What is Affiliate Marketing and How Does it Work?

Affiliate marketing is when you share a product or service on a website, blog, podcast, or social media platform to earn a commission from the sale of that product or service. When someone purchases after clicking on the affiliate’s one-of-a-kind link, the affiliate receives a commission.

Is Affiliate Marketing Worth it?

Yes. Statista predicted for the affiliate marketing sector to grow from $5.4 billion in 2017 to $12 billion in 2022. As it is a low-cost or no-cost endeavor, businesses can profit from it easily.

How to Make Money with Affiliate Marketing?

There are a number of ways you can make money with affiliate marketing but the key is to provide content that matters. Include promotions for your own products within the content and make the most of the traffic you have already.

What is an Affiliate Program?

Affiliate programs are agreements in which an online merchant site pays a commission to an affiliate site for sending traffic to it. These affiliate websites put up links to the merchant’s website and get paid based on the set agreement – usually based on how many people click on the link to the merchant’s site.

Since nearly everyone shops at Amazon, Amazon Associates is one of the easiest ways to get started with affiliate marketing programs.

But just because getting started is easy, doesn’t mean you’ll get rich overnight.

Building a successful, predictable affiliate business off the back of Amazon can take years of trial and error to get right. And a single rate cut to destroy it if you’re not careful.

Luckily, we’re here to help you jump ahead with this guide to Amazon Associates and tips for building a profitable and resilient Amazon affiliate business.

What is Affiliate Marketing with Amazon?

Affiliate marketing with Amazon means referring visitors to your website to Amazon products through a special tracking link that helps you get credit for the referral.

If the person you referred makes a purchase on Amazon within 24 hours of clicking your link, you’ll receive an affiliate commission for your role in the sale.

The beauty of the Amazon affiliate program is that the person you refer doesn’t need to buy the exact item you recommended for you to earn a commission. Instead, you can earn a percentage of the entire order value that results from your referral.

How do you get people to click your links and buy your recommendations? Amazon affiliates promote affiliate links through a variety of content types, including social media posts, YouTube videos, product reviews, roundups and comparisons, gift guides, and more.

Benefits of Being an Amazon Affiliate

Amazon isn’t only the world’s largest affiliate marketing program, but it’s the easiest one to start off your journey as an affiliate marketer. Here are a few reasons why:

• Everyone shops at Amazon. By early 2020, over 80% of adults in the United States had become Amazon Prime members.
• Brand trust. Amazon is the United States’ second most trusted brand after the US Postal Service.
• Highly optimized checkout flow. For Amazon merchants running ads, their average conversion rate is a whopping 10% – compared to an average 1.3% among other ecommerce sites.
• Massive range of products in every niche. Amazon sells over 12 million products, so there’s sure to be something in there for your audience.
• Fast and reliable payouts. If you’ve generated revenue for Amazon, you can expect timely and predictable payouts.

Sounds like a good deal? Here’s how to become a successful Amazon affiliate in 7 steps.

How To Become a Successful Amazon Affiliate in 7 steps

Becoming a successful Amazon affiliate takes more than filling out a form. You have to develop a strategy to make your business successful, even if you’re starting small today.

Here’s how to become a successful Amazon affiliate:

1. Learn the programs policies and operating agreements
2. Research and create your marketing channel
3. Become an Amazon affiliate
4. Create and promote your affiliate links
5. Get your first payout
6. Optimize your content with the Earnings Report
7. Scale your Amazon affiliate operation

Let’s get started.

Step 1. Learn the program’s policies and operating agreements

The two official sources of Amazon’s policies include the Operating Agreement and Program Policies. Here are the key points you need be aware of as an Amazon affiliate:

• Include a compliant disclosure on the page where you’re promoting affiliate links, which doesn’t entice the reader to use your links (i.e. using language such as “support this site”)
• Link to Amazon only from public locations, such as an approved website or a public social media profile. Amazon links in emails and ebooks are prohibited.
• Make 3 compliant Amazon commissions in your first 3 months in order to stay an active part of the program.
• Don’t try to refer friends or family through your links. Not only is it against Amazon’s policy, but Amazon is clever and you won’t get commissions for these sales.

With that in mind, it’s time to pick your niche and create your first marketing channel.

Step 2. Research and create your marketing channel

You can promote Amazon affiliate links on a website, a social media profile, YouTube channel, or any number of other public marketing channels.

But the most popular way to promote Amazon affiliate links is through your own affiliate website.

Before you set up website hosting and buy a domain name, you’ll need to decide which niche you want to enter based on its earning potential and level of competition.

To pick an affiliate niche, you’ll want one of these three formulas:

1. High volume, high commissions. This is the most competitive type of affiliate marketing, in niches like web hosting, SaaS products, and finance.
2. Low volume, high commissions. This is a bit of a sweet spot, but usually relies on finding untapped niches that most people won’t realize is profitable and involves a bit of risk in case the niche doesn’t work out.
3. High volume, low commissions. This is where you’re selling consumer goods, and the commissions are low but you can compensate for that by selling a lot of product.

At Affilimate, we’ve found that Amazon affiliate websites tend to fall into that last category. To achieve monthly revenues of $10,000 per month, most Amazon affiliates need over 100,000 monthly visitors to their commerce content – which is a lot of traffic for beginners!

But you can start affiliate marketing with a goal of $1,000 per month and achieve that with far less.

Once you’ve chosen a niche, it’s time to create your marketing channel. Choose a domain name, set up some web hosting, pick a blogging platform like WordPress, and start writing content that targets affiliate keywords.

After you begin to receive your first traffic and clicks, it’s time to become an Amazon affiliate.

Step 3. Become an Amazon Affiliate

To stay in the Amazon associates program, you need to generate at least three orders through your affiliate links every 90 days.

That’s why you actually shouldn’t apply for Amazon Associates with a brand new website or social media account. You’ll want to be confident you’re getting enough traffic and clicks for those first couple of conversions to be in the bag.

Already got an established site? Here’s how to become an Amazon affiliate:

Start on the Amazon Associates signup page and then:

1. Provide your account information. If you’re already logged in to Amazon, this will prefill with your address. Then click Next.
2. Share your list of websites and mobile apps. Amazon wants to know exactly which traffic sources you’ll be using to promote your affiliate links.
3. Fill out your profile. This includes payout details and tax information that Amazon needs to understand how to 
4. Get access to Associates central. This is where you’ll see your new commissions and how many clicks Amazon is receiving from your website.
5. Make your website compliant. Make sure you’ve included a disclosure on each page on your website where you plan to promote Amazon links.
6. Create and promote your first Amazon affiliate links. Finally, it’s time to create links, send traffic, and earn commissions.

Here’s more on that last step.

Step 4. Create and promote your Amazon affiliate links

Once you get accepted to the Amazon affiliate program, you’ll be able to activate your account and get access to Site Stripe.

Site Stripe is a widget that shows up at the top of Amazon. It lets you generate affiliate links for any page on the website by choosing the link type (Text, Image, or Text + Image) and then pressing Get Link:

If you’re going to be putting Amazon links on your affiliate website, my recommendation is to use the Full Link option. This is because you’ll be able to track Amazon affiliate links on a page-level by creating unique Tracking IDs.

Plus, it’s infinitely easier when you eventually sell your website on a marketplace like Flippa for the buyer to replace your Tracking IDs with their own.

Now that you’ve got your affiliate link, it’s time to promote it.

Some of the best ways to promote affiliate links include:

• Writing product reviews and roundups people can find through SEO
• Building out a resource page on your website with your favorite products
• Using other channels like Quora, Twitter or Instagram to promote affiliate links
• Share deals and coupons through an email newsletter (without including affiliate links directly in your emails – which is against Amazon’s terms of service!)

Finally, if your website gets meaningful traffic from multiple countries, you may want to consider localizing your links. In essence, you’ll increase your conversion rate by ensuring that readers from different countries are routed to the correct Amazon store.

Amazon does have a built-in option for this called One Link. But there are also third-party alternatives to One Link like Geniuslink which give you more control over the user experience and can help you diversify your affiliate income by offering alternative buying options.

Step 5. Get your first payout

Once you’ve generated the required three sales in 90 days, you’re probably wondering when you’re going to get paid.

Amazon’s minimum affiliate payout is $10, which you may or may not make from those first three sales. Once you reach that threshold, Amazon pays out on a two month delay. For instance, commissions generated during January are eligible for payout in March.

To find your pending payments, click your email address and then Payment History:

There you’ll be able to see any commissions you’re owed for the next payout period:

To make sure you’ll be paid promptly, be sure to have your tax information and payout details all filled out before the monthly transfer happens.

Step 6. Optimize your content with the Earnings Report

Now that you’ve got some commissions under your belt, it’s time to start optimizing your content. Under Amazon Associate’s Reports tab, you’ll find a few different ways to look at your earnings and adjust your content.

For example, if you want to know which Amazon product categories are most profitable for you so far, you can use the Earnings Report and group by Category:

In this example, you can see that Camera, Photo, & Video is the most profitable category. So this person may want to create more content about those categories.

You can also run reports by Tracking ID:

And if you took my advice about creating one Amazon Tracking ID per page, you’ll be able to see which articles are earning the most on your website.

In general, the key ways to optimizing an Amazon affiliate website are:

• Find profitable, high converting products
• Understand which types of content convert best
• Create more of those content types about those products
• Rinse and repeat

The simplicity of this model is why so many people recommend Amazon for anyone who is just getting started with affiliate marketing. But it also comes with unique challenges when it comes to scaling your operation.

Step 7. Scale your Amazon affiliate operation

As I shared earlier, growing a large Amazon website quickly turns into a numbers game. More content, means more traffic, means more clicks, means more commissions.

But what are some strategic ways to get more bank for your buck without going broke on content writers? Here are my top tips:

1. Spend time optimizing existing content. You can double or triple your Amazon commissions just by optimizing your existing affiliate content. Try different styles of buttons, comparison boxes, anchor text, and images. Popup plugins are another popular way to give readers one last chance to click before they leave the page.
2. Promote high-converting products in multiple formats. Found a great product that converts well? Include it in a number of different roundups and reviews. You can even re-use bits of content across articles or repurpose this content to podcasts or vlogs to save on costs.
3. Create multiple websites in the same category. Once you’ve found a profitable category, you can create multiple pieces of content across multiple sites and rank for all of them. 
4. Offer Amazon alternatives when possible. Amazon’s commission rates are not as high as they once were. Even if Amazon is your preferred merchant, you can offer multiple retailers (which is in line with Google’s product review updates as well).
5. Hire a VA to help you. Trying to do everything yourself is only going to take you so far in the Amazon game. Getting a virtual assistant on board doesn’t have to be expensive and you can start with just a few hours per week of help.

If you’re just getting started, ignore this advice for now. Your first goal as an Amazon affiliate is making your first commission. Then your 100th. And then your first $1K.

Don’t spread yourself too thin until you’ve started to generate predictable monthly commissions, no matter how small.

Is the Amazon Affiliate Program Worth It?

These days, over 80% of brands have an affiliate program. Is Amazon going to be the best one for you as you build out your affiliate content business?

The answer is: it’s complicated.

Amazon’s conversion rate is astronomical compared to most other online retailers. The sheer amount of data and resources they’ve dedicated to achieving this is practically a modern marvel. Amazon affiliates regularly see conversion rates of 5-10%, compared to typical ecommerce values which average less than half.

But conversion rate isn’t the entire story. Average order value, average commission, and the ability to build a relationship with your affiliate partners all play a huge role in building a resilient affiliate business.

Then there’s the fact that Amazon’s commissions are constantly shrinking. Many in the affiliate industry speculate that this program will disappear one day, leaving a lot of site owners in the dust. And you don’t want that to happen to you.

Whether It’s Now or Later, Always Diversify

My recommendation? Always choose an affiliate niche where you have options to diversify from Amazon later on. Find out more information on affiliate marketing programs that will grow your revenue here.

Learning affiliate marketing is hard enough when you’re also trying to learn SEO, conversion rate optimization, and how to run a website. Adding on top the complexity of selecting affiliate offers, using numerous affiliate portals, and optimizing for each one could be too much for beginners. But don’t put all your eggs in the Amazon basket long term.

Choose niches where you see your competitors promoting retailers besides Amazon, especially in their most popular content. This is a strong clue that alternative offers are also generating significant revenue for the site – and could for yours as well.

Diversified revenue streams not only keep your business safe from future rate cuts, but look great to website buyers as well.

So go forth and build your successful affiliate website! The commissions are yours to be made.

In this blog post, I’m going to share with you how does Amazon FBA work and what I’ve learned about the program so far to help you decide whether or not it is right for you.

How does Amazon FBA work?

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Fulfillment by Amazon or FBA has made it possible for online retailers to outsource their storage and shipping needs to the Amazon warehouse. This can be a great way to grow your business without having to invest in your own storage or staff.

All you need to do to get started is find a few products that are already doing well.

Let’s imagine you have a few products in mind, all doing well, and you’ve decided to try your hand at the Amazon marketplace.

You are seeing success with your business and it is continuing to grow.

You may be considering purchasing more stock to keep up with the demand, but you may be limited by the space you have to store it and the time it will take to dispatch more orders.

No, your dreams of expanding your business are not dashed. Amazon FBA can help you expand your business by taking on the task of storing and dispatching orders for you. This way, you can focus on other aspects of running your business.

Because Fulfilment by Amazon is so seamless, your customers may not even realize they’re purchasing from a third party. This makes it easy to expand your business without decreasing the quality of your service.

As a buyer, you won’t be able to tell whether you’re buying from an Amazon seller or directly from Amazon.com. You’ll have the same shipping, return, and customer support options. This makes it very easy for third-party merchants to use Fulfillment by Amazon.

So, for Amazon sellers, this can be a very beneficial solution and can take a lot of time-wasting activities away from your business. However, like any strategy, it will require work to get off the ground.

How Amazon FBA Works

If you are looking to expand your business, Amazon can help you do so in a cost-effective way.

With Amazon FBA, you simply use your regular account and then follow the simple instructions to add it to their warehouse.

The process for selling on Amazon is very straightforward.

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The first step to selling on Amazon is to ship your product to one of their many fulfillment centers. You’ll be instructed on which center to use.

Your product will be stored securely in their facility until it’s purchased by an Amazon customer. They’ll handle the transaction from payment processing to updating the inventory. Your item will then be packaged and shipped to your customer.

Returns and refunds will also be handled for you. Your sales profits will be deposited into your bank every 2 weeks.

So, with Fulfillment by Amazon, it’s like having your own warehouse, logistics workers, and trucks!

If you’re looking to sell your products through Amazon, be prepared to pay their fees for their Fulfillment by Amazon (FBA) program. Although their rates might be comparable to other fulfillment services, don’t forget to factor in the cost of shipping your products to an Amazon warehouse.

When you sell on Amazon, you won’t have to wait in line at the Post Office or struggle with packing and posting.

So, Amazon will take care of shipping and you’re responsible for the other aspects of your business.

Before you can sell anything, you’ll need to decide what you’re going to sell. Once you’ve decided, you’ll need to keep your inventory of that item updated. You’ll also need to make sure you list your product effectively so that customers can find your listing.

The Benefits of Amazon FBA

Now, I know you have a lot of questions, so let’s talk about some of the advantages of using Fulfillment by Amazon (FBA). When it comes to this fulfillment method, there are many benefits.

1. You can leverage Amazon’s good reputation to grow your business.

Many people around the globe trust Amazon to deliver the products they ordered. They know that they will receive their product on time.

They know that if they need to, they can return the product. This is a huge factor in their decision to purchase from you.

2. You can provide reliable customer service.

Because Amazon has such an efficient ordering process, they can often deliver your products to customers more quickly than you can.

3. You can improve your Amazon ranking and visibility.

FBA products are listed by total price, but the shipping cost is shown separately below the product price, making it appear as if the shipping is free. This makes your product more attractive to potential buyers.

The ‘Buy Now’ button on the product page is the prime spot for all products listed on Amazon.com. This is the ‘Add to Cart’ option that customers click on to place an order.

Even if you sell a product that is similar to another product that Amazon has listed, you still have a good chance of winning the Buy Box. This is because one of the factors that the sellers on Amazon use to determine who wins the buy box is their shipping.

Since you are using Fulfillment by Amazon, this makes you a likely candidate to win it.

4. You can offer free or discounted delivery.

By selling your products on Amazon, you allow customers to get free shipping with their Prime membership. This is an advantage over other retailers who do not offer this perk.

As a seller, you can take advantage of the busy shopping season by using Amazon FBA. Prime customers are more likely to purchase items with free shipping, so you can reach more sellers by using this service. This way, you can reduce your overhead costs significantly.

5. Your operating costs will be greatly reduced.

With Fulfillment by Amazon, you don’t have to worry about storing your products, hiring employees, or dealing with any administrative tasks. Instead, you can focus solely on making more sales and increasing your profit.

6. You can increase productivity.

FBA can help take your business to the next level by increasing productivity. With Amazon taking care of customer service, returns, storage, packing, and dispatch, you can focus on other aspects of your business. This can help you expand your reach and grow your company.

7. You can work from anywhere.

You can be on vacation and your business will still be running. As an Amazon FBA seller, you have the freedom to work from anywhere in the world. Amazon will handle all your orders 24/7 so you can take a break without worrying about your business.

8. You won’t have to deal with as many customer service issues.

Amazon FBA can take care of all your customer service needs, so you don’t have to. For example, if a buyer has an issue with their order, they can contact Amazon’s customer service department instead of having to contact you directly. This saves you time and stress while also providing buyers with the peace of mind that their concerns will be addressed promptly.

9. It’s so easy to use.

The number one benefit of using Fulfillment by Amazon has to do with how easy it is to use.

If you’d rather not spend your time packaging products, queuing at the Post Office, or talking to customers, then the Fulfillment by Amazon (FBA) program is perfect for you!

With FBA, you don’t have to do any of these things so you can spend more time finding new products and building your brand.

The benefits of Amazon FBA appear to be fantastic, even too good to be true! So, are there any disadvantages?

The Disadvantages of Amazon FBA

It’s easy to believe that Amazon has the perfect fulfillment service for all its merchants. This is not always the case. Despite the many benefits, it is important to also consider any potential disadvantages.

1. It costs money to start an Amazon business.

Like any business, Amazon charges fees for storage and fulfillment.

If you want to avoid paying high storage fees on Amazon, you’ll need to ensure that your inventory turns over quickly. This means making regular sales and not letting your stock sit idle for too long. As long as you keep your products moving, you shouldn’t have to worry about extra fees.

2. Listing your products on Amazon can be a tricky process.

One disadvantage of Amazon FBA is that you have to follow their guidelines strictly. If you make a mistake, your items could be rejected and you will have to pay a fee.

If your products are not labeled properly, they will be rejected by the warehouse, causing delays in your shipment. Make sure you follow the labeling instructions very carefully.

3. You cannot brand your packaging with your logo.

When your products are shipped by FBA, they ship in boxes with the famous Amazon logo on them. This makes it hard for customers to associate you with your brand.

If you’re concerned about building your brand, keep in mind that you’ll have to weigh the pros and cons of Amazon FBA. While it may be more difficult to build brand awareness using Amazon FBA, the service does offer other advantages that may outweigh this disadvantage.

4. Your return rate could increase.

One potential downside to using Amazon FBA is that you may end up with more returns from customers. This is because of Amazon’s easy return policy, which can be seen as a pro or a con depending on your perspective. If you are selling high-quality products, however, this shouldn’t be too big of an issue.

If you supply quality products, your customers will not feel the need to return them, minimizing the risk of negative publicity.

While returns are easy with Fulfillment by Amazon, some customers may regret their purchase and return it. This isn’t always the best method for selling on Amazon.

If a product is returned, there is a chance that it may be deemed unsellable by Amazon, which could result in a loss for the business. It’s important to be conscious of this possible problem before making a decision.

Additionally, success with Amazon FBA depends on other factors such as how much effort is put into it and how much knowledge the user has about utilizing the program.

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What are the Costs of Amazon FBA?

While the benefits of Fulfillment by Amazon (FBA) are many, it’s only worthwhile if you sell enough units. That’s because Amazon has its share of fees for its services.

To calculate your costs for outbound sales, follow these steps:

• Apply the dimensional weight (if applicable)
• Choose your order handling, pick and pack, and weight handling fees
• Add in any additional charges

Calculating Your Amazon FBA Fees

While you can ship your products through FBA, which sends them from Amazon’s warehouses, you can also send them from your own warehouse. However, the costs for doing this will be different than if you were to use FBA.

Fulfillment fees and storage costs are the only two main costs. Additional fees may apply such as:

• Labeling — Amazon applies barcode labels on a per-item fee.
• Prep service — Amazon preps your inventory for storage on a per-item fee.
• Repackaging — Amazon repackages your returned items to be resold.
• Long-term inventory storage — When products are stored in an Amazon warehouse longer than 365 days.
• Unplanned services — If your inventory arrives at the warehouse without proper preparation or labeling.
• Returns processing — Whenever a customer returns a product.
• Removal order — If you ask Amazon to return or dispose of your inventory in its fulfillment center.
• Oversize items — They come with special handling fees per shipment.

Using Fulfillment by Amazon (FBA) can be great for saving on shipping costs, but there are a few factors to keep in mind. For example, the type of products you ship, the size of your inventory, and the frequency of your shipments can all affect how much you’ll pay.

How to Estimate Amazon FBA Fees

The Amazon website offers tools and resources to help you preview your fees as best as possible. The following pages are the most helpful:

• Merchant Fee section
• FBA calculator
• Listing Fee estimator
• Variable Closing Fee estimator
• Referral Program Fee estimator

To start, you’ll want to check out the fulfillment fees for FBA orders and multi-channel orders for a basic overview of the basic costs involved with shipping through Amazon.

After that, you can review the monthly inventory storage fee to get an idea of what it costs to keep products stored in their warehouse.

Lastly, you can take a look at the complete list of charges to get a complete view of all the costs associated with using amazon.

The FBA revenue calculator is a useful tool for comparing a few items you sell already through Amazon.com.

It’s even possible to use a free Amazon calculator for checking prices in bulk.

It’s important to stay up to date on Amazon’s fees, as they change frequently. Be sure to evaluate the costs regularly to ensure you are getting the best deal.

Is Amazon FBA Suitable for All Businesses?

While millions of online sellers are successfully using Fulfillment by Amazon, it may not be right for everyone.

If you are an Amazon seller, then utilizing Amazon FBA can be a fantastic option for you. It can help you expand your business from a kitchen table operation to a full-time brand.

By using Amazon FBA, you can free up time that would otherwise be spent on fulfillment tasks, and instead focus on sourcing new products and making sales.

Selling on Amazon can be a lucrative and worthwhile endeavor.

It is important to do your homework before selling on Amazon. This includes understanding Amazon’s rules and regulations, as well as understanding your customers – your target market – before deciding if selling on Amazon is right for you.

How successful you are with selling on Amazon will depend entirely on the products you sell and your broader business goals.

Some Amazon sellers find Amazon FBA simple and helpful for outsourcing e-commerce tasks. It is important to weigh the pros and cons to decide if the cost is worth it.

Who is a Good Fit For Amazon FBA?

You’ve determined the costs associated with using Amazon’s FBA service.

Is Fulfillment By Amazon (FBA) a good fit for your e-commerce business?

If your profit margins are high enough and you have room in your budget for ads, consider doubling down on selling products through Amazon’s FBA program.

If the margins are slim when selling through advertising, it may still be worth using Amazon’s FBA service.

Every day, millions of customers visit Amazon intending to buy something. They have already entered their payment information, so they are ready to buy as soon as they find the right product.

The trust that’s built into an Amazon purchase is what makes it so easy for customers to commit. Click To Tweet

Many brands use Amazon as a marketing mechanism for visibility to expose their brand to potential customers. By doing this, they can upsell, cross-sell, and create lifetime value for their customers.

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If you can use Amazon’s FBA program to help you sell your products, do it.

It can be difficult to succeed on Amazon purely by using Amazon Merchant Fulfillment.

If you’re looking to spend less on Amazon advertising, Fulfillment by Amazon with Prime eligibility is the way to go.

With more and more sellers joining the ranks of Amazon’s vendor partners, competition is fierce.

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Conclusion

If you’re considering using Amazon FBA for your business, I hope this guide has given you a better understanding of how Amazon FBA works. While there are some fees involved, I believe that the benefits of Amazon FBA outweigh the costs.

With so much competition on this giant eCommerce platform, there are a lot of things you need to do to be successful on Amazon as there is money to be made.

According to Smarts, nearly half (44%) of Amazon sellers make from $1,000-$25,000/month, which could mean annual sales from $12,000-$300,000.

With as many as half the brands found on Amazon spending $60,000 on ads monthly, having the right game plan (with specific steps) is key.

This also means that failure to complete any of the crucial steps when attempting to grow an FBA business can lead to having minimal (or even no) sales and ultimately, a business that’s not profitable.

But don’t worry, we’re here to help.

If you’ve recently purchased an Amazon FBA store and looking to scale, this article will outline the most critical steps you need to take to reach your goals.

By the end of this article, you will have a solid understanding of what you need to do to succeed using the fulfillment by Amazon (FBA) program.

Let’s get right into it.

Steps To Growing An Amazon FBA Business

The following are the key steps that you need to take to grow your Amazon FBA business.

Capitalize On Your Strengths

While starting an Amazon FBA business might be straightforward, growing it is a different ballgame.

The first step is to capitalize on your strengths. What do you do better than anyone else? What can you offer that nobody else can?

There are two main ways to stand out from the competition when it comes to Amazon FBA: offering unique products or providing superior customer service.

If you can find a way to differentiate yourself from the competition in either of these areas (or ideally both), you will be well on your way to success.

A unique product will attract customers looking for something they can’t find anywhere else, while superior customer service will keep them coming back for more.

Focus On Successful Niches

Just because a niche is popular doesn’t mean it will be profitable for you. To find a successful niche, you need to do your research and find one with low competition and high demand.

There are many different ways to do this research, but an excellent place to start is by looking at the best sellers list on Amazon. This will give you a good idea of which niches are selling well right now.

Another thing to consider is the seasonality of the products in the niche. Some niches are more popular in specific times than others, so you will want to make sure that you know the market trends before you dive in.

Optimize Best Seller Rank (BSR)

The next step is to ensure that you do everything possible to optimize your Best Seller Rank (BSR). The lower this number, the better your sales should be. 

You can do many things to improve your BSR, but the most important thing is to ensure that your product is well-priced and in high demand. You can also enhance your BSR by using effective keywords and marketing your product correctly.

Image Credit: https://amazon.com/

Having a lower BSR will also help you rank higher in Amazon’s search engine, bringing even more buyers to your product listing.

Image Credit: https://amazon.com/

It’s important to note that the BSR will depend on the product category – if a product is found in multiple categories, then it will have different BSRs to consider.

Paid Advertising

Paid advertising can be a great way to increase your sales and grow your business. There are many different types of paid advertising, but the most effective one for Amazon is Sponsored Products. 

Sponsored Products allow you to place ads for your product directly on Amazon’s search results and is a great way to get your product in front of more buyers and increase your sales.

Image Credit: https://amazon.com/

Running paid ads from the get-go is an excellent way to get your Amazon business on the right track – as long as you are doing it correctly and are able to target potential customers. 

Develop Content Marketing

Content marketing is another great way to attract buyers to your product and increase sales. By creating high-quality content, you can educate your buyers about the benefits of your product and give them compelling reasons to purchase from your store.

There are many different types of content that you can create, but some of the most effective ones are blog posts, videos, and infographics. 

Using high-quality product photos is also a great method to increase conversions. It’s important that the photos used for your marketing are high resolution on neutral backgrounds. A background changer is a commonly used tool to polish product photos.

These formats allow you to share knowledge about your product with potential buyers, building up business longevity in the process.

Make sure that you publish high-quality content regularly to keep your buyers engaged and help you become an authority in your space. 

Creating valuable content also means that you can repurpose it into other formats, such as e-books and whitepapers. This ensures that you get that much more out of your content marketing efforts.

Grow Your Audience

To grow your Amazon business, you need to have a large audience of buyers. One of the best ways to do this is by increasing your social media following and marketing your products to them correctly.

If done correctly, this would also help build up your email list to reach even more buyers over time. By providing valuable email content to your audience, you can show these people what’s in it for them and why they should trust you with their money.

Growing your audience through the right email marketing tools also makes it easier to run promotions, contests and other proven ways to increase your sales.

Keep in mind that since Amazon will deliver your products through their fulfillment centers, having more sales won’t mean more stress for you – it just means that you need to ensure that everything is kept running smoothly

Move Into New International Markets

Growing your audience also means having the ability to move into new markets. As your Amazon business expands and you perform the right market validation, you might want to consider expanding into different areas.

There are many different markets that you can target, but the best ones have a high population and are ever-increasing. For example, catering to markets such as India and China can be something to consider as these are two of the best markets for many Amazon businesses.

That said, there are almost an infinite number of market possibilities you can explore.

Make sure that you do your research before expanding into a new market, and also ensure that the market is suitable for your product. Furthermore, you need to be certain that you have the resources to expand into new markets, such as staff and infrastructure as needed.

Offer Amazon Prime

Another way to grow your Amazon business is by offering Amazon Prime. 

Amazon Prime is a subscription service that allows buyers to (amongst other incentives) receive free shipping on all of their purchases. This is great news for buyers, and many are more likely to purchase your product if it is eligible for Amazon Prime shipping.

Image Credit: https://amazon.com/

Once Amazon has your products in its warehouse, the Amazon Prime logo should automatically be shown on your product listings. 

Simply ensure that this is the case and that potential buyers can see this logo when your listings show up.

One important factor in getting the Prime logo to show up is to ensure the right product weight is entered before dispatching your products to Amazon’s fullfilment centers.

Some sellers have complained that the Prime logo was not showing up on their listings and this solution seems to have fixed any pending issues.

Customer Satisfaction

Always make sure that you are providing excellent customer service to your buyers. This is the best way to ensure that they are happy with their purchase and will likely purchase from you again in the future.

If a buyer is unhappy with their purchase, make sure to resolve the issue as quickly as possible. This will help maintain your reputation and ensure potential repeated business.

Be sure to constantly gather feedback about both your products and customer service to help you improve your business. 

Manage Reviews

Furthermore, it is essential to manage your reviews on Amazon. By monitoring and responding to reviews, you can ensure that your buyers are happy with their purchase and that other interested parties are more likely to buy your products in the future.

If you see a negative review, make sure you respond to it as quickly as possible. While it might not always be possible to give your buyers exactly what they want, it will show them (and others) that you care about their satisfaction and are willing to strive to provide them with the best outcome.

Look At A Wholesale Business Model

Another way to grow your Amazon business is by looking at a wholesale business model. A wholesale business model involves selling your products in bulk to retailers instead of directly to consumers. 

Ensure that you research the retailers you want to sell to and ensure that they are a good fit for your product. 

Why FBA Is Better Than A Traditional Online Retail Store

Many potential issues and limitations are part and parcel of traditional online retail stores. Using Amazon FBA can help you avoid these problems and grow your business.

The main problems with traditional online retail stores are:

• Limited reach: Your store is only available to customers who visit your website. Amazon has a much broader reach, which allows you to sell to more buyers.
• No brand recognition: Your store may not be well-known, which can make it difficult to attract buyers. Amazon has a famous brand, which can help you attract more customers.
• High costs: It can be expensive to set up and maintain a traditional online retail store. Amazon FBA is much more affordable, making it a cost-effective option.
• Prone to security attacks: Your store is vulnerable to attacks and malware from hackers, which can result in data theft or website downtime. Amazon is a secure platform, which helps to protect your business from these risks.
• Difficult to scale: It can be difficult to increase sales and traffic to your online retail store. Amazon is a scalable platform, which means that you can easily expand your business as needed.

How To Grow An Amazon FBA Business – FAQ

How Do I Grow On Amazon FBA?

You can grow on Amazon FBA by expanding your product offerings, moving into new international markets to reach more buyers, and even using a wholesale model.

Can You Start Amazon FBA With No Money?

No, you will need to choose a plan when selling on Amazon.

Image Credit: https://amazon.com/

These are the available plans:

• The Individual plan: $0.99 for every product sold
• The Professional plan: $39.99 monthly for unlimited sales

Amazon’s cost calculator can help you figure out what’s involved when it comes to costs.

Image Credit: https://amazon.com/

Is Amazon FBA Worth It In 2022?

Yes, Amazon FBA is worth it in 2022. The platform offers many benefits, such as a wider reach, brand recognition, and security. Moreover, the platform is scalable, so you can quickly increase your sales and reach more buyers.

Conclusion

Using Amazon FBA can help you grow your business and give you access to a large buyers’ market. Make sure that you research the Amazon FBA platform well and ensure that it is a good fit for your product before attempting to grow. 

By following the above steps, you can ensure that your Amazon FBA business scales and prospers, allowing you to sell more products while building a brand that customers can trust.

But before your start perhaps you want to consider Buying an Amazon FBA Business? You can enter the Amazon FBA industry with someone having done the hard work of starting an FBA business for you! Read our Guide to Buying an Amazon FBA Business and decide what the right option is for you.

If you still want to start an Amazon FBA business from scratch, keep reading! 

What is Amazon FBA? 

FBA stands for Fulfillment by Amazon. Amazon FBA is a service offered by the Ecommerce giant as a means for third-party sellers to store their products in Amazon’s fulfillment centers, so the company picks, sorts, packs, ships, tracks, and handles returns and refunds. An Amazon FBA business is where you, as the business owner, choose what products you want to offer, find suppliers, purchase and stock them, and send them out to buyers.

In Amazon’s terms, “you ship it, and we ship it!” Launched way back in 2006, Amazon FBA has become a popular trend in the Ecommerce world today as it allows vendors to shift the burden of managing inventory, shipping every single order, and overseeing customer processes to Amazon so they can concentrate on scaling their business and reaching more customers. 

Fulfillment by Amazon (FBA) is one of the two core fulfillment options provided by Amazon, with the other being Fulfillment by Merchant. In FBM, Ecommerce businesses sell directly to customers. An FBM seller is responsible for just about every aspect of the business, and this includes: storage, creating listings, and then, after a sale is made, picking, packing, and shipping directly to the customer. 

If a customer wants to make a return or an exchange, the FBM seller will have to directly handle the return and refund. In other words, FBM sellers only use Amazon as a place to reach customers and generate demand since they do everything. Also, sellers must be in top form every day, including weekends and holidays. 

Amazon’s sales continue to grow year on year so if you want to get a piece of the very large pie, now is the time. Below you can see the annual net sales revenue of Amazon from 2004 to 2021.

How does Amazon FBA work? 

The Amazon FBA process is fairly straightforward, so you don’t need to put a lot of effort into it. Let’s break the process into steps.

Step 1: List and label your products 

Amazon requires that you list all your products on their website. There are three major ways to do this. You either add the products individually to Amazon’s catalog or add them as a group. Alternatively, you can integrate your inventory management software with Amazon’s API. You will also have to choose between labelling your products or using Amazon’s FBA Label Service. 

Step 2: Send your products to Amazon’s warehouses

Once you’ve added your products, it’s time to hand them over to Amazon to take care of the rest of the process. When you contact Amazon, they will provide the address of the warehouse you should send the products to. You can ship the inventory with Amazon or with a courier of your choice. 

Step 3: Amazon stores the products 

Upon receiving your inventory, Amazon will scan the labels, weigh and measure the products and store everything accordingly. When this is done, you will receive a confirmation email, and you can monitor your inventory through their tracking system. 

Step 4: Amazon processes all orders 

When a customer purchases your products, Amazon takes care of receiving orders and processing them. Amazon’s team will pick the products from inventory, pack and ship the order. The team will also track the order to the customer’s doorstep and provide customers with the tracking information. 

Step 5: Amazon handles returns and refunds 

If there are any return and refunds claims, Amazon handles them too! You will, of course, be notified of the same. 

Step 6: You get paid 

Amazon deposits your total earnings into your linked bank account every two weeks. 

Also, keep in mind that the FBA service isn’t free as Amazon charges a fee for the service it renders. Nonetheless, the overall fees are significantly lower when you try to manage everything on your own. Also, Amazon states that they will be responsible for any damage to your products while in their warehouses, which means you don’t have to worry about mishandling or losses due to damage.

How to Start an Amazon FBA

Without further ado, let’s dive into details of how you can start your Amazon FBA business. 

1. Choose a niche 

The first thing you want to do when starting an Amazon FBA business is to choose a niche. A niche simply refers to the focused segment of a broad marketplace. You can refer to it as a submarket if you will. 

Choosing a niche can be beneficial to your business in that it provides you with insight into your target audience and its unique demands, thus giving you a competitive advantage compared to sellers trying to reach a broad market. 

Finding the niche that’s right for you can be a daunting task, but with the right approach, you can identify the particular segment of the market that will help you maximize profit. Here are some tips to guide you on discovering the perfect niche for your Amazon FBA business. 

It should have a good product margin: The overall reason for starting an Amazon FBA business is to make a profit, so you want to do research to see the margins you stand to make on a niche before you commit to selling on Amazon. 

Avoid highly seasonal products: Try to avoid products that don’t suffer from seasonality, as this will ensure that you have a steady sales volume throughout the year. Consider hunting for products that are timeless and inconsistent with demand all the time. 

Do keyword research: If you’re struggling to get specific enough, let keywords help you. Keywords refer to specific words and phrases which shoppers use to search for products they wish to buy. You can find help in researching keywords by using tools like Google Adwords.

Look for product competitors without video: Videos are a crucial factor when it comes to product rankings. Product categories with a few videos are an incredible option to consider as you have the potential to rank higher than your competitors. 

Consider what an ideal product looks like: The dimensions of the product matter too. A large and heavy product is a bad idea unless you already have a good delivery network in place. Products that are small and light are generally easier and cheaper to ship. 

There should be good demand for it: Many new sellers often miss this crucial point. Your goal should be to find products that people actually want and not to list products that you think they will want. Research to find categories that generate regular orders. 

The tips above are some of the freeways to find the right niche for your business but if you’re not afraid to spend money to make money, consider using an Amazon niche finder tool.

2. Find products – how to find products, assess your competition 

If you followed the tips above, you should have no trouble identifying profitable niches for your business. Now you need to find the exact products 

Don’t compete with Amazon: This is an underrated piece of advice, but you will save yourself from a lot of trouble by avoiding products that Amazon sells. They will outprice you, and they almost always have the Buy Box. 

Avoid products sold by big brands: Amazon isn’t the only big brand you have to worry about. Popular brands can be tough to compete with as the only way to beat them is to have a product that’s pretty revolutionary. 

Review best sellers page: If you want to have a really good idea of the products that are in consistent demand, check Amazon’s best sellers page. This page lists the top 100 sellers in a category, allowing you to gauge the popularity of each product and determine if they will be worthwhile. 

Identify products that can become private labels: Look for profitable items that you can put your own spin on, and then let Amazon take care of the rest for you using the FBA service. The idea is to spot a top-performing product that you can brand and put back to the market. 

Assess your competition: Once you have found a product that’s highly in demand, you want to see how much competition there is. Simply search for the product you want to sell and see what comes up. From the search results, you should be able to see the movers and shakers in that category. Here’s how to analyze the competition:

Identify the keywords they rank for.

Audit your competitor’s product listing by paying attention to what they did in the areas like product title, features, description, Q & A, images, etc. 

Check the reviews to see what they like and their pain points for those items. 

Monitor their pricing to see whether they sell products at a consistent price or whether they change the prices. A price tracking software (like Sellics) can help you monitor your competitor’s product prices 24/7. 

Track their monthly sales to have a solid idea of how many products they sell and how much profit they’re making. Tools like Sellics Edition Software and Jungle Scout‘s Amazon Sales Estimator Tool.

Investigate their marketing strategy by checking their on-Amazon and off-Amazon efforts. Notice the type of content they use, how they communicate with prospective buyers, their social media pages as well as emails and blogs. 

Competitive products are great items to sell as the possibility of hitting a goldmine is high. However, you need to also do your due diligence before you start selling. It’s vital to analyze the competition as this may help you discover a competitive advantage to leverage on. 

3. Source manufacturers and suppliers 

Now that you have found your winning product, it’s time to source manufacturers and suppliers. The right supplier will help you conquer the marketplace by delivering quality products at reasonable prices that allow you to make a decent profit. A few top places to look for manufacturers and suppliers include:

Google 

Google has always been a lifesaver when it comes to searching for things, and you just may be able to find a manufacturer and supplier for your desired product. A simple internet search will bring up thousands of results to find the right suppliers. 

Trade shows 

Attending a trade show can help you meet face-to-face with suppliers. There are usually many manufacturers and suppliers in attendance, so there’s a good chance that you will leave the event with a variety of choices to consider. Plus, you don’t have to set an appointment and wait for days because the manufacturers and suppliers are on the ground also to meet with business owners like yourself. 

Online marketplaces 

There are plenty of online marketplaces where you can find manufacturers and suppliers for your products. Platforms like Alibaba and Aliexpress are great places to look too. You can also explore wholesale directories like WooCommerce, Spocket, Doba, Wholesale 2B, Salehoo, Worldwide Brands, and more. 

Sourcing agencies 

A sourcing agency is a company that specializes in finding manufacturers and suppliers for products you want to sell in your country. They’re an excellent way to find reliable suppliers in South Asia or China. These agencies don’t only find but also import the products at a low cost. 

Industry associations and publications 

Industry associations are groups of people that operate a similar kind of business, which in this instance is Amazon FBA. Mingling with members of these associations might lead to you getting product supplier referrals. Alternatively, search for magazines and blogs that target wholesalers and distributors in your industry, and subscribe to them. 

4. Brand your products, establishing your brand and design 

Branding your products is an excellent way to stand out from the competition. For starters, you will need to choose two brand names, namely store name, and product name. It’s a good idea to choose a generic store name so you will have no problem adding other products in different niches over time. Also, the product name should be a compelling name that you can potentially trademark. 

Your brand logo is an important element because it will be attached to your products, so if you can’t create one yourself, consider hiring a graphic designer. But don’t forget to choose your brand colors and your tagline. When creating your branding design, you want to make sure that it meets some basic criteria that include:

• Simplicity 
• Visually appealing 
• Contact information 
• Request for customers to review your product. 

Next, consider enrolling in Amazon Brand Registry, a program that offers verified sellers enhanced access to marketing features and complete control over their brand across Amazon. 

To register your brand, you will need a trademark number, images of your brand’s logo, and a list of countries where the products were manufactured and that you plan to distribute them in. The process is straightforward as all you need to do to create a Brand Registry account and enroll your brand. 

It takes 2-10 days for the process to be completed, and when your application is approved, you will receive Amazon Standard Identification Numbers (ASINs) for your products so no other seller can list the same items from your page. 

5. Creating your seller account 

Once you have figured out what you plan on selling, you will need to register to get an Amazon seller account. Before you proceed to create your Amazon seller account, you need to have the necessary paperwork, including:

• Your business information 
• Email address 
• Credit card 
• Phone number 
• Tax ID
• State Tax ID

Now, let’s get into the registration process. 

Go to https://services.amazon.com

Scroll down the page and click on ‘Sell on Amazon.’ Follow the directions. 

Select between ‘Sell as an Individual’ or ‘Sell as a Professional.’ Sign up as a professional if you’re going to sell more than 40 products per month; otherwise, the Individual plan is your best bet. A professional account has a monthly subscription fee of $39.99, but you won’t be charged from the first month. Plus, the plan will also help you save money since it doesn’t come with additional fees. 

Enter your email and select ‘Create a New Account.’ 

Choose your business location and business type. 

Enter your personal information 

Choose your marketplace (the country) in which you’d like to sell. 

Enter your billing information 

Provide answers about your products and validate your address. 

After setting up your Amazon account, add FBA to your account. 

You can now start selling on Amazon! 

6. Shipping your Amazon product 

Becoming an Amazon FBA seller comes with a lot of benefits, but most newbies struggle with sending their first shipment to the Amazon warehouse. Here’s a simple guide to help you. 

Step 1

In the Seller Central dashboard, select ‘Manage FBA Inventory’ from the ‘Inventory’ tab. On the right-hand side, choose the drop-down menu that reads ‘Edit’ and click ‘send/Replenish Inventory.’ If your product is already an FBA listing, all you need to do is click on ‘Send Inventory.’ 

Step 2

Next, you will be asked to ‘Create a New Shipping Plan.’ Click to proceed and select ‘Case-packed Products,’ which is the option that means you want to send more than one unit of the same product to Amazon. Click on ‘Continue Shipping Plan.’ 

Step 3

On the next screen, you will be asked to enter the quantity of the products and how many cases you’re shipping. For instance, if you’re planning to ship 20 products in 2 cases, you will need to enter the number 10 into the ‘Units per Case’ box and the number 2 into the ‘Number of Cases’ box. Click to continue.

Step 4

Next, you will need to choose whether or not your products will be prepared before shipping to Amazon. Amazon will let you know what type of prep your type of product requires, but most products are to be packed into an individual polybag with a safety warning. Click continue once your product is correctly prepared. 

Step 5

At this point, you will need to label your products. If you’d rather not do this, you can ask Amazon to do it for you, but fees will apply. 

Once you’re done with the labeling, it’s time to find out where Amazon wants you to send your inventory. Your account’s default settings are on ‘Distributed Inventory Placement,’ which means Amazon is at liberty to split your inventory, so you send different units to different warehouses. However, you can fix this by changing your FBA shipment settings in Seller Central to send all your units to one warehouse. Go to Settings > Fulfillment by Amazon > Inbound Settings and then edit. 

Step 6

In this last step, you will be given an option of courier services – UPS or FedEx, but this is after you have given Amazon the dimensions and weight of your package, which will determine the shipping charges. Click on the checkmark next to ‘I agree to the terms and conditions ‘ and then ‘Accept Charges.’ Lastly, choose the ship date and print your shipping labels. Once you have completed these steps, click ‘Complete Payment. 

7. Third party inspection services

Importing products you want to sell so you can ship them to Amazon’s warehouse can be scary because you can’t be too sure of the quality of the products. This is where third-party inspections services come in. Third-party inspection services refer to pre-shipment solutions offered by companies to help sellers ensure that their shipment meets the following requirements:

• That the quantity is as per order 
• That the quality matches specifications 
• That there are no defects in the products 
• That the weight and dimensions of the cartons are per Amazon’s FBA requirements 
• That the packaging is as per Amazon’s FBA requirement 
• That the labeling is as per Amazon’s FBA requirement 

There are many third-party inspection companies out there, and they can help ensure you don’t lose money to fraudulent suppliers. They also help decrease the risk of returns and ensure the quality of the product is top-notch so you can succeed in the marketplace. 

8. Launching your products

Before you post your products on Amazon, there are a few things you can do to make the launching a huge success. Here are three tips to help you launch your product and get great results: 

Generate a buzz ahead of launch 

You may have a great product, but no one will buy it unless they know about it. So you want to do things like write blog posts about the product so buyers can jump in right when it is released. Consider also creating videos for YouTube and social media about the products. Post frequently and make the content interesting. 

Optimize your listing 

Based on the research of your competitors, you should have a clear idea of how best to list your products for greater visibility. When you’re done, double-check to be sure the title, bullets, and descriptions are keyword-rich. Keep in mind that the goal is to sprinkle keywords in your product detail pages and not to stuff keywords. 

What you actually write about your products goes a long way to determine how successful your product will be. So make sure the product description is informative and engaging. Don’t forget to take excellent, hi-res photos from different angles. 

You can read more about optimizing your Amazon listing here.

Gather a bunch of product reviews

Most buyers tend to avoid purchasing a new product as they need reviews to help them decide whether or not to buy. In this instance, it’s a good idea to launch the product on your own website so you can garner reviews from respected sources. Post them on your site and share your site to your different social media pages, directing buyers to your Amazon page. From there, you can build reviews for your site. 

9. Build your audience 

There are many ways to build an audience of raving fans for your Amazon products. The first step is to identify who your target audience is, as this will help you hone your marketing message correctly. 

An excellent way to build your audience is to participate in Facebook groups by writing and posting valuable content whenever questions are posed. The idea is to make them know you, like you, and trust you (the KTL factor). You can also create your own group and invite your friends to it while encouraging them to invite others. The idea is to provide valuable content and involve them in the development of new products. 

Additionally, you can also explore promotions such as discounts in price, a free gift, free shipping, etc. You can also use the concept of lightning deals and make them available for only a limited time. 

10. Amazon Delivery Service Partner

Launched in 2018, Amazon Delivery Service Partner is a program that allows entrepreneurial-minded individuals to start their own delivery business for low startup costs. In other words, the program offers you the opportunity to hitch your entrepreneurial fortunes to one of the fastest-moving companies in the world.

If you become an Amazon delivery service partner, you will operate the business entirely on your own, including setting up, hiring staff, and managing the business. You don’t have to worry if you feel you don’t know much about the business, as Amazon is there to help its DSPs ensure smooth operations via hands-on training to on-demand support. 

Set up your Amazon Delivery Service Partners Business Program and Employ Staff

Amazon’s Delivery service Partners (DSP) program is the Ecommerce giant’s attempt to reduce its reliance on United Parcel Service Inc. And the U.S. Postal service. You can set up your Amazon Delivery Service Partners business and join a growing community of DSPs. 

You will be required to start up the business, but you don’t have to worry as Amazon offers a variety of deals to acquire the assets you need to start the business. These include discounts on recruiting tools, payroll, tax, accounting software, legal support, and insurance support. 

Top Tips for Getting Started with the Amazon Delivery Service Partner Program 

If you’re looking to start an Amazon DSP business, here are some key tips:

Be sure you meet the requirements for the business

• Amazon gives five criteria for the DSP program
• Minimum investment of $10,000
• Commitment to fully managing the hiring and development of their teams 
• Capable of managing a minimum of 40 vans and 100 employees 
• Ensure that shipments are delivered seven days per week throughout the entire year

Fill the online application

You should have no trouble filling the form as the questions are in yes-no format. Amazon essentially wants to know if:

• You have experience hiring and developing teams; You are ready to commit to being a hands-on DSP owner 
• You have a strong credit history
• You have owned a business before
• Prepare for the screening process

Amazon wants to know if you qualify to be a DSP. What they’re basically looking for are an up-to-date resume and a clean driving record. They will also run a background check on you, which will include a criminal record check and credit check. 

Go for the interview. 

The interview is held at one of the company’s fulfillment locations nearest you. Visit this link to know where these locations are. Once you scale through the interview, you can expect an offer and rate card for your business, and you can complete the DSP program. 

11. Your Product Listing 

Your product listing refers to the product page for each of the items you sell. As you’re probably aware, a typical product page comprises the information you enter when you list your products, including title, images, description, and price. It’s vital to pay attention to your product listing as it not only allows your products to be found but also encourages shoppers to purchase your products. 

Here are three things you can do to improve your product listing:

Secure a badge on your product listing 

Amazon’s Choice Badges are the company’s way of filtering the best of the best items that shoppers are looking for so they can have peace of mind during the purchase process. To brighten your chances, target keywords you can win because each keyword has a badge attached to it. For example, both ‘hair cutters’ and ‘hair clippers’ have their own Amazon Choice badge attached to them. 

Product reviews

 If you want Amazon to vouch for your products, you need to generate positive customer reviews. Amazon wants to see that previous buyers are happy with your product and services. Most of your reviews need to be in the four and 5-star categories. If you have negative reviews, go the extra mile with the goal of changing them into positive ones. 

Maintain a high seller rating 

Your seller rating is a reflection of your customer experience over a period. It is determined by a range of factors, including the return rate, how fast products get to customers, and how quickly you respond to inquiries. 

12. Product description 

A product description is an essential part of listing as it shows the value of a product to a potential customer. If done correctly, it can positively influence the decision of a customer because it clearly highlights how the product can solve their problem. 

Optimize your product description 

Want to write a compelling and SEO-friendly product description? Here are some tips:

Strategically sprinkle keywords in the content to increase the chances of shoppers finding the product 

Clearly highlight the key features of the product so potential buyers can instantly have an idea of the problem the product solves. 

Make the content simple and clear. Use simple words to state what sets the product apart from competing items

Use strong verbs to describe how the product will 

Write your product descriptions

Copying product descriptions is a must for every seller that wants to be successful. Always write unique and distinct product descriptions. 

13. Private label 

A private label is a product that a retailer gets produced by a third party but that it sells under its own brand. Excellent examples include Walmart’s ‘Great Value,’ and Costco’s ‘Kirkland.’ Many Amazon FBA sellers are adopting private labels as their business model because of its lower operating costs, better brand loyalty, higher profit margins, and better brand loyalty. 

Identify products that can become private label products 

How to find products with the potential to become private label items can be grouped into three steps:

1. Search for items that are highly in demand by looking out for products with a low sales rank and highly ranked keywords. 
2. Next, check out your competition. Narrow your focus items with less than 1,000 reviews to confirm that the market isn’t already saturated. 
3. Evaluate products that make it to this stage by selecting products that are small and light so you won’t pay heavily for shipping. 

Uncover product opportunities and establish your private label 

To succeed in the Amazon FBA business using the private label model, you will need to increase your product offerings. To do this, research product ideas, do competitive analysis, study the reviews, and identify ways you can make the product better. Don’t forget to also source for manufacturers and suppliers for the products, 

14. Customer Service

Customers get Amazon’s trusted customer service and returns

A major advantage of the Amazon FBA program is that Amazon takes care of customer service and returns for sellers’ orders. Your product listing will be displayed with the Prime logo so customers can have peace of mind from the knowledge that Amazon handles packing, delivery, customer service, and returns. 

15. Profit margin

Wondering how you can be sure a product is going to be profitable before you start sourcing it? Use Amazon’s handy FBA profit calculator to figure out the exact profit on the item. 

To get started, get the ASIN of any item you’d like to calculate the margin for and enter it into the search product box. Fill in the item price, the cost to ship it to Amazon, and the total cost of the product per unit. 

When you hit ‘Calculate,’ the tool will give you a breakdown of your Amazon fulfillment costs. Adjust the number of sellers and estimated sales to calculate the revenue and profit. 

16. Costs of Starting an Amazon FBA Business

When it comes to starting any business, many people often wonder how much it would cost to start and grow. Here is an overview of the costs of starting an Amazon FBA business. 

Costs of starting an Amazon FBA business

Ongoing costs: Amazon FBA sellers pay a monthly fee of $39.99 for a professional plan to operate their business. 

Shipping costs: Amazon charges fees per unit, with the cost including picking and packing your orders, shipping and handling, customer service, and product returns. The fees are calculated on the weights and dimensions of your product.

Below are the costs for FBA Fulfillment for non-apparel items.

 Startup costs: The startup cost is up to you as it depends on how much you have budgeted. 

Storage costs: Amazon charges monthly storage fees of $0.69 per cubic foot used for January to September and $2.40 for October to December per cubit of storage used. Long-term storage fees (that have exceeded 365 days) attract $6.90 per cubic foot used or $0.15 per unit, whichever is greater. 

Marketing costs: Small businesses spend around $9000 to $15,000 for Amazon marketing services, while medium-sized companies spend about $15,000 to $35,000.

Average costs: Depending on your budget, the average cost of starting an Amazon FBA business is around $1,000 to $3,000.

Biggest costs:  Perhaps, the biggest cost of selling on Amazon FBA is the sales cost. Also known as the referral costs, this is the fee Amazon charges whenever a sale is made for referring buyers to you. Sales fees range from 6%-%20.

17. Tax 

If you’re planning to start selling on Amazon, it’s important to consider issues relating to tax. These are the major questions that new sellers ask. 

Do I need a business plan license to sell on Amazon? 

The simple answer to this question is ‘No.’ You don’t need to secure a license to sell on Amazon since most of the products and services on the website are not federally regulated. These products are primarily consumer products, and they don’t require government approval. 

Do I need to pay taxes if I sell on Amazon? 

The short answer is ‘Yes.’ Amazon FBA (and non-FBA) income is taxable. All sellers on Amazon are required to report Amazon sales on their taxes just like other income streams. 

Do I need an LLC? 

The simple answer is ‘Maybe.’ You don’t really need an LLC to start selling on Amazon unless you wish to do so for a few reasons, which typically border on financial and legal protection. However, you can create a seller account as a sole proprietor as long as you’re a US citizen. 

18. Business plan

Much like every other type of business, it helps to have a business plan if you’re looking to start Amazon FBA. You want to stand out from your competitors, and a business plan can help you define the path to get there. Here are some questions you may want to ask about having a business plan for Amazon FBA. 

Do I need an Amazon FBA business plan? 

A business plan is not one of the requirements for starting an Amazon FBA business, but it’s a good idea to have one, so it serves as the internal road map to implement when starting and growing your business. 

Marketing strategy 

There are thousands of Amazon FBA sellers and products in the marketplace. If you want to achieve success, you need to figure out how you can get ahead of the competition. Here are some things to put into consideration when developing your marketing strategy. 

SWOT analysis: Conduct strengths, weaknesses, opportunities, and threats analysis so you can know how best to market your products. 

Customer segments: Identify the specific groups of people that your products target and the factors that matter most to them. 

Customer relationship: Develop strategies to build lasting relationships with your target audience. 

Elevator pitches and taglines: Create short ways of introducing your products and persuading your audience to buy. 

Marketing ideas: Brainstorm things you can do to create awareness about your product and promote it. 

Marketing budget: Decide the amount of money you can afford to allocate to marketing

How can I find an existing Amazon FBA business for sale 

Amazon FBA sellers put up their businesses for sale for the same reasons brick and mortar brands sell their business. There are many places you can find existing businesses to buy, but the best place to start is Flippa!

Amazon FBA FAQs

How much time do you spend per day/week on running your Amazon business?

It’s up to you to decide how much time you want to spend operating your business. You can choose to run it full-time or part-time. Most sellers spend less than 30 hours per week working on their Amazon businesses. 

How to Start an Amazon Business as a Seller?

You can start selling by visiting the Amazon seller sign-up page to create an account. You will be asked to choose your business model and provide basic details about yourself and the products you want to sell. 

How Much Does Starting Amazon FBA Cost as a Reseller?

In general, it takes about $500-$2000 to start an Amazon FBA reseller business if the products are relatively inexpensive. 

How to Get a Business Loan to Launch Your Amazon Business?

You can get a business loan by applying for one via the Amazon Lending Program. Alternatively, you can opt for the Small Business Administration (SBA) microloan or secure a loan from Fintech lenders like Kabbage and AccrueMe. You can also check out Flippa’s Finance Services here.

Do I Need an Amazon FBA Business Plan?

Unless you’re looking to secure a loan, you don’t need a plan to start your Amazon FBA business. Nonetheless, it’s a good idea to have a business plan as it can help you have a solid idea of how to start and run your business. 

How to Find Products to Sell on Amazon FBA? 

Finding products to sell on Amazon can be a daunting process, but it helps to know what to do. Top tips include keyword research, product reviews and ratings, weight and dimension of the product (preferably small and light), and consistent demand all year round, among others. 

Is Starting an Amazon Business Still Worth It?

Starting an Amazon business is still worth it for the benefits and efficiencies Amazon can provide to Ecommerce business owners, including effortless shipping and logistics, discounted shipping rates, return management, more storage space, etc. And if you need more convincing, read our post about how much money you can make with Amazon FBA.

What is an Amazon FBA Business? 

An Amazon FBA business is a type of Ecommerce business where sellers empower Amazon to take care of storage, packaging, and shipping of their inventory for a fee. Sellers are able to focus on the core of their business (sales) while Amazon takes care of the boring aspects of the business. 

How Much Money do You Need to Start an Amazon FBA Business? 

It’s all up to you. You don’t need much to get started as you can start with as low as $500 if you plan to sell inexpensive products or start with a larger sum if you wish. 

Can I Start Amazon FBA With no Money? 

The short is ‘Yes.’ You can start Amazon for free by selecting an individual seller account when registering. After signing up, look for an item you’d like to sell and list it on Amazon to sell for free. Deliver the product when it sells by shipping it to the buyer. But to build your Amazon FBA Business you’ll need some money.

Is Amazon FBA Still Profitable in 2021? 

Yes, Amazon FBA is still profitable in 2021 as more than 50% of sellers rake in an average of $1000 to $25000 per month. With more than 150 million shoppers ready to buy at any time, Amazon FBA is a lucrative business. 

Do I need a Business License to Sell on Amazon? 

No, you don’t need a business license to sell on Amazon since the products on the website are not federally regulated. 

What is the Minimum Quantity for Amazon FBA? 

With Amazon FBA, there is no minimum for sending inventory. You’re free to fulfill any order quantity that buyers want without risking a penalty. 

Conclusion

As you can see, there’s a lot involved with starting an Amazon FBA Business. But it’s worth it – Amazon continues to be the leading online retailer, growing every year. You can see just how well Amazon and FBA Business owners did in 2021 here.

If you want all the benefits of owning an FBA Store without have to start an Amazon FBA Business, maybe Buying an Amazon FBA Business is the right option for you? Read our Guide to Buying an Amazon FBA Business and decide what the right option is for your FBA empire!

In this guide, we’ll discuss the best way to go about doing so. Purchasing any business comes with its own questions that this guide will aim to answer. By the time you’ve finished reading, you should feel more confident in your decision to purchase an Amazon KDP enterprise.

What is Amazon KDP?

Amazon KDP is an abbreviation for Amazon Kindle-to-Direct Publishing – a service that allows you to quickly and easily publish your own literature easily on the Kindle store. KDP is an absolute game-changer allowing authors to sell their work to millions of readers without needing a publishing house.

With the rise of mobile devices, we’ve seen ebooks explode in popularity as consumers digitize their reading experience. Amazon KDP dominates the industry, controlling no less than 80% of the ebook market. This industry continues to grow, making it all the easier to understand why buying a KDP business can be a fantastic opportunity.

How Does Amazon KDP Work?

If someone wants to publish their ebook with Amazon, all they need to do is upload their book files to KDP. Authors also can have their books printed on demand whenever a purchase is made. These printing costs are then subtracted from the total royalties allotted to the author.

After an ebook is published, everyone can purchase it on the Kindle platform. The KDP business you are buying will likely already have several titles available that are actively being sold and receiving royalties.

Fees and Royalties

It’s free to publish on the Kindle store. However, there are other voluntary fees involved, such as marketing, artwork, editing, and even ghost authorship services. In terms of compensation, there are two options available to publishers – 35% and 70% royalty rates (for physical paperback books, you’ll receive 60%).

The 70% royalty rate applies to all books sold in the Available Sales Territories (view the complete list here). For all other locations, you’ll receive 35% in royalties. Finally, there’s a low rate for digital delivery based on the size of your ebook.

What To Consider When Buying an Amazon KDP Business

When purchasing any business, you want to ensure you’re buying into a genuinely profitable venture. While buying a business can be the start of an amazing journey, you have to be careful not to buy into a sinking ship – or just to not be scammed outright. When analyzing a KDP business, there are a few key metrics to consider, which we’ll discuss below.

Industry/Niche

Now, when thinking about publishing to a specific audience, our most significant concern will be how big that audience is – and whether they spend money on ebooks. Let’s look at an example from a KDP business for sale on the Flippa marketplace:

Generally speaking, every KDP business is going to target a specific niche. This will allow them to establish their authority in that domain and create a positive reputation. With that in mind, you must pick an industry you’re knowledgeable about. Even if you outsource most of your writing, it’ll be up to you to ensure the quality and integrity of the books you’re publishing.

This seller’s business is in the parenting niche. Our intuition tells us that parenting is an excellent niche since we see parenting books promoted everywhere. The research backs it up, too: millennial moms spend $231.6 dollars on parenting books annually. So, in this case, we know that we’d be buying into a profitable industry – if we chose to seal the deal.

Customer Demographics

When researching any niche, we’ll be especially concerned with the exact audience interested in the subject. For example, if you’re selling children’s books, your biggest audience will be children and the parents buying them. In the case of our model, the target audience is readers male and female.

While the seller isn’t particular about the demographics of their readership, an audience can be incredibly specific depending on the niche. For example, history books will sell to history fans, and cooking books will sell to practitioners of the culinary arts.

You get the picture! Demographic information will be directly relevant to your marketing and growth efforts. Therefore, before purchasing a KDP business, you must ensure it caters to a demographic with solid revenue potential.

Business Model

While every KDP business will revolve around selling books, the actual approach will vary. Do they write the books themselves, or do they outsource them? Do they rely on paid traffic, or do they have a more organic model? It’s these kinds of questions that you’ll need to answer to know what you’re getting into.

Content Creation

For KDP accounts created to make a profit, it’s most likely that the business will outsource all or most of the writing labor. Outsourcing is done because it allows the business owner to multiply their output orders of magnitude greater than what it would be if done solo. So it will be a necessary expense, though more than made up for with a properly-run KDP account.

In all likelihood, the freelancers the previous owner was working with will pass on to you. This is the case with our example candidate, who outsourced most of the writing process:

Just know that no freelancer will last forever, and you’ll need to understand how to vet and acquire component writers.

Audiobooks

Many KDP businesses will choose to have their titles recreated in audiobook format, which will allow them to tap into a market experiencing incredible growth.

As the chart indicates, audiobooks have exploded in popularity in recent years – a trend set to continue for the foreseeable future. Buying a KDP business would allow you to cash in on this growing trend and enjoy the significant growth thereof.

Audience Acquisition

As with all other products, there has to be a method of generating leads and creating customers. Will your KDP business rely on paid traffic, organic traffic, or a combination thereof? If your business uses ads, it’s another business expense you have to account for.

The firm you’re purchasing may also have a blog, which will generate expenses in hosting, software, security services, and more. Of course, any of these expenses will return dividends if executed properly.

For any methods of audience acquisition that a seller’s business doesn’t utilize, those will be potential avenues to expand the business after your purchase. As hinted above, starting a blog can be a fantastic way to generate organic traffic that fuels purchases.

Distribution Channels

When we discuss distribution channels, we’re talking about the platforms that the business will sell its ebooks on. So even though “KDP” is in the name, many firms will sell on multiple platforms.

Such is the case in our above example, which sold on Amazon, Audible, IngramSpark, and more. Intuitively, we understand that having broader distribution channels means casting a wider net and making more sales.

KDP Select

That said, some publishers may choose to enroll in KDP Select, which requires them to commit to publishing exclusively on the Kindle bookstore. These firms trade the wider net of broad distribution for the benefits offered by Amazon Select.

These benefits include higher royalties, exclusive promotional tools, automatic enrollment in Kindle Unlimited, and more. It should be noted that enrollees in KDP Select may still distribute physical books however they choose.

Financials

When purchasing any business, you must have a thorough grasp of their financial situation. To verify we’ll turn a profit, we’ll have to ensure the integrity of the publisher’s accounting.

Revenue

For our example business, we can see that they’re receiving a consistent revenue ranging from a low of $929 to a high of $2,904. Given that the company is only 22 months old, there’s a good chance we can continue to grow it and make back its $24,000 price tag.

While metrics such as median revenue and net profit are important, you’ll need to go in-depth into their finances to know exactly what you’re getting into. Believe it or not, people actually lie on the Internet.

To avoid making a grave business-buying mistake, you’ll have to make sure everything the seller advertises is true. Fortunately, Flippa offers a due diligence service you can leverage to verify any business’ integrity.

Securing Copyrights

It’s critical that you completely secure the copyrights of any content your prospective business may be selling. Although copyright transfer is typically a necessary clause in any KDP acquisition, it’s still up to you to ensure that all property – intellectual and otherwise – is transferred entirely to you during the acquisition process.

Time Commitment

Any business you acquire will require a certain amount of time to maintain and grow. Your KDP acquisition is no exception, and you’ll have to factor it in if you want to make a profit after the purchase.

That said, a KDP business tends to be relatively passive and will generally require a minimal amount of time. Here’s what our example publisher noted about the time needed for their business:

Once the seller grew their business into a profitable venture, it was generally smooth sailing from there. Once they hand it off for you, there will be only a minimal amount of time required to keep the business running. Of course, if you wish, you may want to invest more time to grow the account’s revenue – that’s the beauty of a passive KDP business.

Why Not Just Start From Scratch?

Having learned all the ins and outs of an Amazon KDP business, you’re probably wondering why you shouldn’t just start one from scratch. It’s an excellent question, given that the price tag for a KDP business can run well into the six figures.

The main benefit of buying one outright is that you’re acquiring a business that’s already successful. When you start one yourself, you may very well achieve profitability. However, there’s always a real risk that the company will fail, and all the time and money involved will be wasted.

When you buy a KDP business, you know exactly how much the purchase will cost you, allowing you to plan out exactly how long it may take to achieve profitability. However, if you start your own company, you can only have a rough idea of the costs involved with no guarantee of ever seeing that money again.

When you purchase a KDP account that you know for sure is turning a profit, you buy security – it’s that simple.

Conclusion

While purchasing a KDP business can be a fantastic venture, it’s essential that you fully understand what you’re getting into. From the business model to the financial situation, you must understand every facet of the company to succeed.

The good news is that Flippa is incredibly eager to help you out. From everything to acquisition to valuation, they have an incredible set of tools to help you achieve your dreams. I’ve been incredibly impressed with both the quantity and quality of the resources they offer.

If you choose to purchase a KDP business, good luck! You’ll be buying into a fantastic industry experiencing a consistent growth for you to cash in on.

It’s a common dilemma many startup founders face. You’ve spent a lot of time and money building a product and marketing it to the right audiences. For a long time, your main focus was on acquiring funding, developing products, hiring a team, and scaling. But now you find yourself asking, how do I sell my SaaS business? 

In this guide, we’ll cover some of the important questions to ask when selling a SaaS company, including how to determine value, what avenues to use to sell, and how you can position your company to get the best price possible. 

Why Sell Your SaaS Company?

Arguably, the question to ask before how to sell a SaaS business is why sell at all? Why now?  Ultimately, the motivation to sell is up to you and your plans for the company. It may be a personal life change that motivates you, such as retiring. Or, you may be looking to take advantage of the upward trend in the SaaS market without drowning in the competition. 

Either way, there are certain criteria to use when considering the timing of a sale.

You Don’t Have the Means to Grow

This is a big one a lot of newer businesses face. Early growth trends may have been sharp, but this usually slacks off over time. If your business has been slacking in its growth and you don’t think you have the means to change it, then it might be time to sell. 

A common scenario for businesses involves building a useful product and gaining some customers, only to find that there is nowhere to go within current means. Scaling requires money for new hires, marketing, technological advancement, and more – and not all small businesses have the revenue to push past this threshold. 

There are a number of reasons this could be the case. Sometimes it’s an issue with the SaaS business model you chose. Some SaaS products lend themselves to low-cost, high-volume sales, and many businesses try a freemium model to entice users to adopt. Others rely more on fewer, big-ticket enterprise sales. A transactional sales model is arguably the most scalable, though many SaaS solutions lend themselves better to a low-cost subscription-based model. 

The takeaway here is, your business model impacts scalability, and not all SaaS businesses will be equipped to grow. This may be hard to recognize or accept at first, but larger companies may have a better capacity to scale your business than you do. 

You’re in it for the Product-Building

Some SaaS startup founders are more interested in the tech side than the business side. Fundraising, marketing, etc. can be draining, and it requires very different skill sets than developing a cutting-edge SaaS application. 

If this might be you, experts suggest asking yourself if you would want to keep growing if you had the funds. If the answer is yes, you might consider selling a small percentage of shares just for some quick liquidity. You also might consider seeking a loan or other funding source if you think it might just be a temporary cash-flow issue. 

But this isn’t the case for everyone. If you are more interested in tech than marketing, you can hire people to do the rest for you. But without the funds or the desire, future growth will be limited. There’s nothing wrong with moving on if you prefer to stay a developer and leave the long-term plans to another owner. 

Your Product is Not a Whole Business

Another common challenge SaaS startups face is having a good idea that doesn’t necessarily lend itself to a full-scale business model. This is partially caused by the way most SaaS products are developed, namely, by identifying a problem in a particular industry and trying to fix it. Often, the problem and its solution are fairly niche, and this can yield a product that may be better as a feature of someone else’s service platform than an independent offering. 

If this is the case with your business offering, that’s fine. Your product can still be valuable to customers and the industry. It just might be more valuable as a part of another business’s service suite than trying to make it on your own. 

How To Measure Value

Before selling any business, it will need to be valued. We’ve previously prepared a guide on valuing online businesses, so that is a good place to start if you’re completely new to the topic. Here, we’ll briefly cover some basics and then get into the SaaS-specific factors to consider. 

Estimating Fair Market Value

Without getting in over our heads in finance speak, a few basics first. Small businesses are commonly valued using a concept called seller’s discretionary earnings (SDE) to help prospective buyers estimate the expected ROI on their purchase. In short, SDE = Revenue – Cost of Goods Sold – Non-discretionary Operating Expenses + Owners Compensations (salary, shares). 

This number is what a business can expect to earn in a year (pre-tax), so it’s then multiplied by an industry multiplier to try to predict long-term value. SaaS businesses historically fall within a 3x – 10x range. For our purposes, more important than the calculations themselves are the factors that influence it. 

The Significant Variables

There are a few variables that are easy to understand as having an influence on your business value. The first of these is age. It’s an oft-cited statistic that about 90% of startups fail, and about half fail within the first two years. 

So, congratulations – if you’re currently looking to sell your business, you probably beat the odds. That being said, an older business will show prospective buyers that your product and business model are sustainable. Businesses less than two years old can still be sold, but know that the age may count against you.

On the topic of sustainability, buyers will also want to know how much input the business will require. Many owners want a completely hands-off asset, so if you alone are the development, marketing, and sales departments of your startup, fewer prospects will want it. We’ll take a deeper dive into this point later on. 

Finally, be ready to show prospective buyers the growth trends of your business. It probably goes without saying that a business trending upward is more valuable. But many businesses showing strong growth potential aren’t necessarily being sold. It’s not a problem necessarily if growth is not where you would like it to be – that might be why you’re selling in the first place. But you will hopefully be able to show at least consistency rather than a decline in order to prove the value of your business. 

Quantifying Success

Overall, it’s important to know specifically what buyers will be looking for when they assess your SaaS business. Different industries have different ways of measuring value. For example, something that is unique to online businesses is the amount of attention paid to web metrics in assessing business value. Similarly, for SaaS businesses, churn, MRR, and ARR will be significant factors.

While some churn is unavoidable, high churn is often viewed as a potential flaw in a SaaS business model. That’s because acquiring new customers is expensive. What’s more, losing a lot of customers after a short time might highlight problems with your service. 

The churn rate is calculated as the number of customers who leave in a certain period divided by the total number of customers (x100). It is expected that churn rates will be higher for newer startups. But for SaaS businesses, many of which rely on monthly and annual subscriptions, churn is a bit more complicated. 

SaaS businesses must differentiate between annual run rate, also known as annual recurring revenue (ARR), and monthly run rate (MRR). MRR is the recurring revenue normalized into a monthly amount, and it can help put subscription-based revenue in perspective when you look at different billing periods. It’s important to track your revenue from yearly subscriptions as compared to monthly subscriptions. 

To give more context to your churn rates and revenue, you should also consider two of the biggest metrics for SaaS: customer lifetime value (LTV) and customer acquisition cost (CAC). If the cost of acquiring new customers is too high, or the predicted long-term value you get from each customer is too low, your business will be less sustainable. 

Where To Sell Your SaaS Company

Once you understand the basic criteria, you can start to calculate an internal valuation of what you think your business is worth. Then, get a second opinion, either through a free online tool or professional valuation service. After that, the next step is knowing the different platforms at your disposal.

Sell Directly

Probably the most obvious way to sell a SaaS business is to just sell it. If you have what you think is a well-positioned company and you know there might be prospective buyers in the industry, there is no reason you can’t approach them. Some larger companies even make offers on smaller companies they find to be of value. 

Steve Jobs, for example, once tried to acquire DropBox. Harkening back to our product vs. feature discussion, Jobs thought file syncing capabilities were not a business in and of itself. He saw it as a feature – a feature which he apparently wanted. DropBox turned down this offer and is still alive and well, but Apple and other giants also have added file syncing capabilities in their own platforms. 

This isn’t to say you should wait around for Apple to come to seek you out. But it does go to show that large companies will recognize value when they see it. And you can help them to see it by cold-calling potential buyers and pitching to them the way you would any other customer. The downside is, this can take a long time and doesn’t always yield lucrative results. Plus, you will likely need to pay accountants, lawyers, etc. to assist, so you might not be saving yourself much money in the end. 

List On A Marketplace

If you don’t want to sell directly, you can always list your business on a marketplace (life Flippa) – the online business version of the classified ads in newspapers. The cost to list is relatively low, and you are putting your business in front of people who are already seeking out businesses to purchase.

Still, this process can be time-consuming because you have to research every prospective buyer and negotiate. Just as with direct sales, you will have to handle all of the grunt work, contracts, etc. yourself. It’s certainly a viable option, but not always the best for first-time sellers.

Go To Auction

If your business is small and not priced very high, this option might be best for you. Like a traditional auction, there will be a set amount of time for prospective buyers to bid, so it’s a good way to shorten the time to sell if you’re in a hurry.

Again, the logistics are on you with this method. Unlike with marketplaces, the fee structure is usually a fixed listing fee and a percentage success fee when it sells. On top of that, auctioned businesses don’t usually sell for very much, so this will likely earn you less than other options. You may get a lot of looks and offers, but it doesn’t necessarily equate to a better price. 

Use A Broker

Using a broker to sell your company is a good way to save time and effort, particularly if this is your first go at business ownership and selling. You will have someone to manage the sales process for you. Good brokers can also help you optimize your business before you sell so you can get the most out of the transaction. 

There are trade-offs, of course. For a brokerage service, you will be charged a percentage fee of sale value, so you will pay more for the service the more money you make. On one hand, this can be good because you know your broker is invested in getting you the best possible offer. But if you suspect your small business isn’t worth much in the first place, you might be better off with a marketplace or auction. 

Tips To Position Your Business as an Easy Sell

Now that you know how SaaS business value is determined, it’s time to think about how you can increase yours. If you are looking to sell soon, you may be somewhat limited in what you can do in terms of reducing churn, releasing new product upgrades, etc. But there are still some steps you can take to make your business appealing to buyers. 

Audit Your Operations

As mentioned above, buyers will likely not want to acquire a business that will require a huge amount of input from them. This means it is in your best interest as a seller to automate and streamline as much of your internal business processes as possible.

A good example of this is customer service. Early-stage startups may have an all-hands-on-deck culture. But as your business matures, you should hopefully be outsourcing things like customer service  – either to call centers or by utilizing chatbots. Functions like accounting should also be a mostly automated process, or at least not something you are doing yourself as the owner. If you are automating a large portion of your marketing, all that much better. Automation and outsourcing will noticeably increase the perceived value of your business because it will make owning it a mostly passive activity. 

Document Everything

SaaS business buyers will not necessarily be tech people themselves. Even you as the business owner may not have been actively involved in every stage of the product development process. But when it comes time to sell, the new teams will need to precisely understand how the product works. 

For this reason, clean, well-documented code is absolutely crucial to increase the value of your SaaS business. Document every change made, when it’s been last tested, etc. This rule doesn’t just apply to the technical aspects either. You should also have clear documentation of accounts, internal expenses, business processes, marketing plans, etc. The easier it is to understand your organization, the easier it will be to convince an outside party to get involved. 

Don’t Try To Inflate Value

We’ve talked a lot about the factors that impact value, but that doesn’t mean you should make a last-ditch effort to fake them. For example, resist the urge to have a big sale on reduced price annual memberships just to rapidly increase your numbers. Buyers will see through this, and it will not equate to long-term growth. It’s better to maintain a consistent trajectory in the months before you try to sell. 

Conclusion

Choosing when and how to sell a SaaS business is a big decision. You should avoid taking any drastic actions and instead reflect on why you want to sell and whether the present time is the best time to do it. Once you are sure selling is the right move, keep these tips in mind to make sure your success as a founder translates into a highly-valued, lucrative business offering. 

The future of e-commerce looks exceptionally robust, with Nasdaq predicting that by 2040 95% of all purchases will happen online. As a result, retail business owners have spent the past few years adapting to the changing landscape, with some having found the transition harder than others, with 5,994 closing their doors in 2019. 

Traditional retailers such as Toys R Us struggled to move their business online and became a well-known casualty of the impact of e-commerce. In their place came online retailers who realized the power of shopping online and retail e-commerce and ultimately rejected the prospect of the physical store. Jeff Bezos and Amazon are one prominent example of e-commerce business models finding great success.

Image credit: Wharton School of the University of Pennsylvania 

It is not surprising that many budding entrepreneurs are now following suit. Rather than purchasing a store and setting up a physical product business, many immediately start selling online digital products directly to consumers via an e-commerce store. Alternatively, they may purchase an e-commerce business to take it to the next level.

What is Eommerce?

E-commerce, also known as electronic commerce or internet commerce, is buying and selling physical and digital products online rather than in traditional brick-and-mortar retail shops. Only in the past decade or so have e-commerce models and e-commerce sites started to dominate the retail sector. 

However, the history of e-commerce can be traced back to 1994 with the first secure online purchase, when Phil Brandenburger purchased a CD from the e-commerce platform NetMarket.

As the internet continued to evolve and develop at the turn of the millennium, so did the e-commerce space. 

Online marketplaces such as eBay brought the concept of online auctions to the world wide web. Popular e-commerce websites such as Etsy allow anyone to sell their products to potential customers across the globe. 

More recently, the accelerated development of mobile technology has secured the dominance of e-commerce websites, with mobile commerce allowing customers to shop from anywhere, at any time, on their mobile devices. Indeed, mobile payments are expected to grow by 24.5% by 2026, a substantial percentage of all retail e-commerce sales.

What’s the difference between e-commerce and e-business?

E-commerce and e-business are used interchangeably, despite not being considered the same concept. E-commerce is considered a subset of e-business. E-business is an all-encompassing term for all online business activities not exclusively linked to buying and selling goods, including sales calls and the electronic signing of contracts.

What are the different types of e-commerce businesses?

On a surface level, buying and selling goods over the internet seems quite a simple definition, but many types of goods and services can be sold, along with various buyers. That said, here is a list of the most common types of e-commerce businesses operating within the e-commerce market.

1. Business-to-business (B2B)

A B2B e-commerce model involves transactions between two businesses and does not involve individual consumers. Usually, a company will look to purchase or subscribe to services offered by another firm to facilitate its processes. Often, this takes the form of software-as-a-solution (SaaS). 

Airwallex is an excellent example of a SaaS e-commerce solution that recently emerged during the pandemic. Many businesses needed to conduct virtual payments to an increasingly global workforce. Airwallex provided the solution for countless companies to manage international business accounts, company cards, virtual payments, and expense management.

Image credit: Airwallex

2. Business-to-consumer (B2C)

The most widespread model, B2C e-commerce, is when a business sells goods and services to a consumer via e-commerce websites or online markets. B2C models can involve both physical products and subscription services. Most businesses once exclusively found in physical locations now offer their goods online to compete with those without a physical presence.

3. Consumer-to-business (C2B)

The consumer-to-business (C2B) is another e-commerce model. As the name suggests, the relationship is flipped and involves a business looking to purchase products from a consumer. Freelancers usually fall into this category, as do independent photographers who provide stock photos and footage for firms to use on their promotional material.  

4. Direct-to-consumer (D2C)

A D2C model is an e-commerce business that creates and designs its products in-store before shipping them out to customers. Many e-commerce businesses sell them via an intermediary (such as Amazon) or require external services to create or build the products. 

With a D2C model, there are no middlemen. A business with a D2C e-commerce strategy does not need to rely on external manufacturers or marketplaces to get its products to a consumer. Everything is done in-house.

Warby Parker is an excellent example of an e-commerce D2C model when in 2010, it began to design and create glasses in-house, selling its product online via its e-commerce website. This e-commerce business model often leads to reduced overhead costs and more personal relationships with customers over an extended period.

5. Consumer-to-consumer (C2C) 

Similar to how you would have once found individuals selling their wares down at the local market, C2C e-commerce models involve a consumer selling their products to another individual via an online marketplace such as Flippa or eBay.

Individuals who design and create products and sell them directly via their website or a facilitator such as Etsy also use this model. Additionally, entrepreneurs looking to set up lifestyle businesses to strike a better work-life balance also adopt a C2C model.

How to start an e-commerce business?

Starting an online business can be tricky, especially if you’ve never done it. Many considerations are involved in each stage of building your business, from conception to the moment you begin selling products and making your first online sales. Here are the main stages of starting an online e-commerce business.

Step 1: Know what you wish to sell

Suppose you’re at the stage where you believe you want to set up an e-commerce business rather than an affiliate marketing venture, for example. 

You may have dreams of selling your customizable scented candles to the masses. In that case, chances are you will be looking to utilize a D2C or a C2C business model as you are looking to design and create products and sell them directly to consumers. This is the natural starting point when creating your business ideas. 

Your original art pieces are sure to find willing buyers. However, this alone may not be enough to build a successful e-commerce business. Candles are a competitive market. You may love your art pieces, but how can you be sure there is a demand for them?

Step 2: Conduct market and product research

Before selling products, you will need to conduct valuable product and market research to ascertain whether your business idea is viable. Is there a good niche for your product? Is there a market demand?

The product research will help you determine which market sectors you should target, whether your product will likely succeed within those markets, and the level of competition you should expect to face. 

You can use analytics tools such as Google Trends to help determine e-commerce trends and whether your product or targeted niche is on an upwards trajectory. A comparison site such as SimilarWeb (a chrome extension plugin) enables you to spy on your competition and find things like quickly:

• An estimated average of monthly website traffic a site gets.
• The bounce rate.
• The average visit duration.
• A percentage breakdown of the top 5 countries that visit a specific website.
• A traffic source breakdown in percentages (search, direct, email, social, referrals, display ads).

Image credit: PetEdge

You can also use keyword research tools like Ahrefs or Semrush to determine the monthly search traffic demand and keyword competitiveness. In the example below, you’ll notice that dog grooming tables receive around 6,600 searches per month, and Semrush gives this particular keyword a keyword difficulty score of 57. This grade shows how competitive an individual keyword is. 

It’s important to point out that this keyword should not be the only deciding factor. Other related keywords, such as “dog grooming equipment” or “dog grooming tools,” will leave plenty of room for business expansion by offering pet clothing, dog accessories, dog food, etc.

Step 3: Set up your e-commerce business

You have now determined the market demand for your product. You are confident that the competition is not too fierce and that the trajectory of your chosen market sector is positive. At this point, you should start to lay the critical foundations for your business. 

Step 4: Write a business plan and create a company name

A business plan is an invaluable tool for any prospective business. It enables you to set out expectations, timelines, budgets, and priorities for the business. Potential investors and partners will expect to see a detailed plan before proceeding with any investment. 

Image credit: Business Model Analyst

You will need to make sure that the name you choose for your business is also available as a domain name online. While businesses have changed names further down the line, it can be an awkward and time-consuming process, so try and nail it from the beginning. 

You could consider using a business name generator or suffixes, prefixes, adverbs, or a portmanteau.

Step 5: Product logistics

Another primary consideration is how you will get the products you sell to your buyers. Depending on what type of product or service you have chosen to offer, there are several avenues and types of e-commerce that you may wish to pursue:

• Service-based: You may choose not to sell a physical product but rather a service, which will likely follow a D2C or C2B model. Freelancers often offer a consultation with prospective customers to determine what a customer requires before agreeing to take on any work.
• Digital products: Create and sell digital products such as ebooks or virtual courses rather than physical products. An essential advantage of this form of e-commerce is that there are no shipping costs to account for, as your customers will be able to receive the product instantly.
• Physical goods: If you want to sell and market your creations via your e-commerce website, you will need to consider shipping costs and fees. This pursuit may be more of a labor of love and will be difficult to scale without additional e-commerce resources.  
• Dropshipping: This method of selling can almost be considered a hybrid of physical and digital logistics. You, as the retailer, sell and market products, and the supplier handles the shipping. The massive benefit of this type of e-commerce is that there is no need to worry about inventory management. The supplier handles that aspect.

Step 6: Optimize your website

Often the difference between a sale and a near miss; a functional, easy-to-use e-commerce website is vital for the success of an e-commerce business. Optimize your product pages to convince customers to add to their shopping cart or choose to use your service. Customers now often expect a satisfactory shopping experience rather than just a quick purchase.

If you are selling physical goods, clear and prominent images should take center stage, showing them in the best possible light. If you are offering a service, you should include a compelling portfolio of previous work and customer testimonials to help persuade the customer to proceed.

Image credit: Flippa

Your product page has only one purpose; convert a possible sale into a sale. Product descriptions should maximize search engine optimization (SEO) potential by using keywords and internal links to other website areas (blog posts, reviews) that benefit visitors. Make sure a clear call to action (CTA) is on all sales pages.

Image credit: Calvin Klein

In this example, Calvin Klein has a very noticeable “add to bag” button that stands out on the right. You’ll also notice that Calvin Klein offers flexible payments using Kiama or Afterpay and free shipping for orders over $49.

Step 7: Market and promote your business

Your products are in place. Your website is fully optimized, and your product pages are sure to catch a customer’s attention. Now you need to make sure the right people are seeing your business. If you are unsure where to start with this process, our Partner Market might be just what you need to get you moving in the right direction.

Image credit: Flippa Partner Market

Social media is now an invaluable tool across all walks of life. When leveraged successfully, it can significantly drive traffic and sales for e-commerce businesses of all sizes. The trouble is that everyone is looking to use these platforms due to their prevalence and power. So, how can you ensure your business stands out in such a crowded field?

Step 8: Social marketing strategy

To make the most out of social media marketing, you will need to arm yourself with several marketing strategies to give yourself the best possible chance of driving traffic and increasing revenue.

Start by setting a series of goals you want to achieve through social marketing. Creating demand for your products is a given, but are you also looking to build a loyal customer base? Do you wish to increase your brand awareness and any messaging or values? Are you hoping to network and collaborate with similar sites to create mutually exclusive partnerships?

Image credit: Hubspot

You should also be aware of who you’re hoping to target. Every product will appeal to specific demographics more than others. Knowing who your ideal customer is and where you might find them is essential. Facebook groups, Twitter, and Instagram hashtags are good places to start. 

Image credit: Wordtracker

Your ideal customer (or buyer persona) may change over time, but having someone to target from the outset can give your business an initial direction.

Step 9: Metrics and KPIs

Analytics has become essential when determining how successful a business is in terms of cold hard facts and figures. Key performance indicators (KPIs) will give a snapshot of progress and success, and metrics can often highlight trends to inform future marketing decisions.

Some key metrics you should pay close attention to are:

• Website traffic: An account of how many people visit your website. When used in conjunction with marketing campaigns, you can determine whether these have had a meaningful impact on increasing traffic to your website.
• Bounce rate: The percentage of people who leave your website after visiting just one page. A high bounce rate often means that your links and promotional material may be effective, but something on your website is amiss or not appealing.
• Visitor conversion rate: The percentage of visitors who follow through to purchase. Low conversion and high bounce rate are often correlated and point to problems the customer experiences when on your website.
• Mobile users: A big reason e-commerce is so powerful is that customers no longer have to sit at their desks to shop online. Work hard to ensure that your website is fully optimized for mobile users, as they will likely make up a large percentage of your website visitors.
• Email engagement: An email list is no good if the subscriber does not engage with the content within emails or ignores them altogether. Email engagement helps determine how effective your newsletters and product updates are and whether they need modifying for higher engagement.

Step 10: Content marketing

Suppose your social marketing strategy aims to build a loyal customer base. In that case, you will need content on your website or social media channels that will entice them to give you a chance and stick around long term for future products or additional service features.

There are several types of content available for you to try. Blog posts are often an effective way to demonstrate your expertise in the area of your niche. Video content can be a fun way for your customers to get to know the person behind the product and can help foster more meaningful relationships with your customer base.

Image credit: Flippa

Instagram can be a highly impactful way of delivering content. Aesthetically pleasing photos of your products or portfolio examples (if you provide creative services) will give potential customers the impression that you treat your branding seriously. These are often quicker to produce than videos or blog posts but can be as effective in driving traffics through backlinks via referral traffic.

Whatever type of content you choose to offer, consistency is critical. If you post a compelling piece of content that draws attention to your product but then wait a month before posting again, all momentum will have vanished. Devise a schedule that you can stick with and utilize marketing automation such as Buffer or Hootsuite to keep on top of things.

Always keep in mind that the purpose of each piece of content is to result in a sale. Make sure your call to action (CTA) is clear and concise and that what you share provides consistent value to the customer.

Summing up

There is no question that e-commerce is now a permanent part of daily life for anyone with access to the internet. Products you would have once had to visit a brick-and-mortar store can now be purchased with just the click of a button. Thanks to software-as-a-service options and subscription models, it has never been easier for e-commerce businesses to start.

Flippa is the market leader for business owners in buying and selling all forms of online business, including e-commerce sites and companies. Use Flippa’s online free website valuation calculator, browse e-commerce websites for sale, apps, and domains, list your online business for sale or learn more about how we value e-commerce websites.

Frequently asked questions

What is an AB test?

An AB test, also known as a multivariate test, tests two different variations (e.g., an ad, landing page copy, button color, etc.) to determine which variation has a higher conversion rate.

What is a website builder?

A website builder is software that allows you to create a website without code easily. Some examples are Shopify, Wix, WordPress, Squarespace, and Weebly.

What is a target market?

A target market is a group of people your business’s product or service targets. Often this will be further segmented into specific demographics, such as gender, age, income, location, and interests.

What is Amazon FBA?

Amazon FBA stands for “fulfillment by Amazon” and is a service offered by Amazon that allows sellers to outsource their customer’s shipping allowing Amazon to handle the end-to-end process.

How can influencer marketing help my e-commerce business?

Influencer marketing can skyrocket sales for e-commerce businesses using the right influencers. Not every influencer will drive a positive ROI, so it is critical to research and ensure they have a following that aligns with your brand.