5 things every Amazon seller should know
Whether you’ve been selling on Amazon for a while or you’re just starting out, there are several secrets to success you should have in your arsenal. Chief among them are tips on inventory management, listing optimization, sales tax collection, external marketing, and financing strategies. Understanding each one will help you set your Amazon business apart, own the Buy Box, and experience long-term sustainable growth.
So without further ado, here are five things every Amazon seller should know:
1. Inventory management is vital
If you don’t manage your inventory, you’re doing your business a disservice. On one hand, if you don’t have enough product in stock, you’ll lose sales and put your account at risk. On the other hand, if you have too much, all your cash will be tied up in product that’s not selling fast enough. You want to be somewhere in the middle, and part of your inventory management strategy is figuring out exactly where that is. The other parts include knowing when and how much to reorder at a given time so you always maintain an optimal stock level.
Amazon’s inventory reports or third-party inventory management software calculate this information based on your sales history, sales cycles, and sales velocity. You can even set alerts so you always know when it’s time to reorder.
2. The best way to stand out is to create original listings
When launching a new product, pay close attention to your listing and how well it represents the product. Since potential buyers can’t actually interact with it in person, they need to trust that the listing accurately brings your product to life online. To create an effective and engaging listing, make sure it has these key components:
- Catchy title
- Thorough product description, covering everything from item size to product features to care instructions, etc.
- High-resolution images showing the product on its own and in a real-world scenario
- Product demo video
Combining all these elements into your listing will give shoppers a sense for your product’s size and function. And if done well, these shoppers will become your customers.
3. When to collect sales tax
Knowing when to collect sales tax is as confusing as it is important. The last thing you want to do is deceive state tax authorities, but it’s difficult to understand how, as an online business, to be sales tax compliant. As an Amazon seller, your sales tax obligations depend on a number of factors, including the Amazon seller program you use, where you’re located, and how you process fulfillment. At the end of the day, these factors help determine your nexus, the connection your business has to a particular state.
Initially, nexus referred to the state where your business is based (i.e., where you run your day-to-day operations/your office). Now, nexus can expand to other states where you might use a warehouse, dropshipper, meet a threshold based on sales volume, or even attend a trade show. To understand where you have nexus and what the nexus rules actually are, check out Avalara’s Sales Tax Guide for Amazon FBA Sellers. In it you’ll learn the ins and outs of sales tax for Amazon sellers, including how to be compliant and how to set up sales tax collection.
4. Market your Amazon store outside of Amazon
Amazon’s Sponsored Products, Headline Search Ads, and Amazon Stores make it easy for you to promote your storefront and listings within the ecommerce giant’s domain. But have you marketed your business on other channels? Because there’s so much competition on Amazon itself, you don’t want to put all of your marketings eggs in one basket. That’s why you should consider the following tactics outside of Amazon:
- Your own network: Do you have an email list or your own ecommerce site? Prepare a newsletter to send to your existing audience so they don’t forget about your store
- Social media: Leverage your existing followers by sharing product updates and reviews on your social media accounts
- Influencer campaign: Is there someone you can partner with to help spread the word about your store and/or products?
- Search engine marketing: Target long tail keywords via Google AdWords to generate clicks at a more reasonable cost
Get more tips on how to drive outside traffic to your Amazon storefront.
5. Utilize your sales performance to get financing
Cash flow is such a necessary component to the growth of your Amazon business. You need it to buy (and turn) inventory, launch new products, hire employees, cover unexpected expenses, etc. But when you’re waiting two weeks for Amazon to deposit your income, you don’t always have what you need when you need it. So more often than not, you can’t replenish inventory in time and risk stocking out.
To prevent an Amazon stockout, many sellers turn to financing to bridge their cash flow gaps and buy more inventory. There are a number of more traditional financing options like business loans and credit cards that rely on your credit score, but did you know that you can also get financing based on the health of your business? For example, Payability — which gives marketplace sellers daily access to their Amazon income as they earn it and lump sums of growth capital — looks at your sales performance and account health in making a financing decision.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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