When it comes to making money online, Amazon is often a top pick for many entrepreneurs.  Why? Because chances are that both you and I have both purchased something from Amazon, and we may or may not spend an additional 30 minutes before bedtime browsing the marketplace for new deals.

In other words, Amazon's marketplace is so big that your audience is is nearly limitless, creating huge opportunities for those wanting to create some extra income, or even build a full time million dollar business!

Here ill discuss how to build a profitable Amazon business, whether you are just beginning your online entrepreneur journey, or whether you're a seasoned entrepreneur who's tried your hand at multiple businesses online.

Two Ways To Build An Amazon Business

When all is said and done, there are essentially two different ways one can grow an online business using the Amazon marketplace.  You can pick one or the other, or even implement both if you wish.  They are:

  1. Selling physical products on Amazon
  2. Make money with the Amazon Affiliate Program

Both options can be done with or without prior experience, and both are fairly simple to begin.  Both options can be started with some startup capital, or they can both be started if you have no money to start with.

How To Sell Physical Products on Amazon

Within this strategy to building an Amazon business, you have two paths to choose from when starting, with the option as well to utilize both pathways should you chose.

Most would think that in order to sell physical products, you need to purchase inventory first and then resell it.  This is an option and is the first of the two available options.

It has slightly higher profit margins should you have enough startup money to do this, but also comes with the risk of never selling your product leaving you left with a bunch of expired inventory.

Option two is selling physical products online through drop shipping.  The difference is simply not having to purchase inventory up front.  What you have to do, is list a product for sale on Amazon, and as orders come in, you send that order onto your wholesale warehouse who then sends the product directly to the customer.

If you sell the product on Amazon for $50 and you can purchase it at wholesale for $30, you just made $20 for one sale.  This option is much better for those who don't have startup capital, or for those who don't want to risk buying a lot of inventory and not ever being able to sell it.  Keep in mind, your profit margins will be slightly lower, however.

Regardless of whether you choose to purchase inventory in bulk to resell on Amazon, or whether you choose to sell via drop shipping, there are a few things to do to get things up and running.

Setting up your Amazon Seller Account

Amazon Seller Central is the central hub for sellers to begin posting products for sale on Amazon.  Setting up your Amazon Seller account if you haven't done so already is the first step to starting your Amazon business.

There are two seller account options: the individual or the professional account.  If you intend on selling at least 40 products each month, then you will want to set up the professional account which costs $39.99 per month.

If you don't plan on selling at least 40 products each month, then the individual account is your best option.  The individual account is free, but Amazon will charge you $0.99 per product sold.

Choosing your product market

One of the biggest mistakes people make when selling on Amazon is deciding to sell anything and everything.  This makes you a generalist in all industries, but an expert in none, resulting in mistakes made and money lost.  As the saying goes “A Jack of all trades is a Jack of none”.

Heck, even Amazon started out as a niche specific company selling books online! Now they have mastered the art of nearly every industry and slowly breaking ground into more.

By starting out in one target industry and becoming the expert there, you stand out more and enjoy a lot more success.  As you grow your business, you can then later on expand into other industries as you are able to.

Picking a product market will be most profitable if its in an industry that you personally enjoy or have a strong expertise in already.

Once you have your industry chosen, then you want to do a little bit of market research to determine whether there is potential to make money, or if the market is too saturated.

The idea is to find something that has the highest profit potential, and being in an industry that you enjoy (in a perfect world).  If not, find the closest thing to that.

Finding a wholesaler to work with

Finding a good wholesale company can literally make or break your online business.  Ideally, finding one that has a good reputation, long track record in the industry and a smooth and timely process is what you are looking for.

Using tools like Salehoo will save you the headache of hiring a bad wholesale company.  Salehoo is a wholesale directory company that will give you info on different wholesalers, show you the product industries they work with, and will even tell you whether they have drop shipping services or not.

Once you've found your wholesale company, next up is to start selling your product on Amazon!

How To Make Money With The Amazon Affiliate Program

The Amazon Affiliate program allows online businesses, publishers, advertisers and really anyone in general – to market any product sold on Amazon and make a commission when a referred customer makes a purchase.  This is called Affiliate Marketing.

By building a website, writing content and referring your website visitors to Amazon products found within your content, you can make a lot of money from the commissions Amazon pays you per sale.

The best part is that you don't have to purchase any inventory, the business can be passively managed, and the potential to make money is nearly unlimited.  There are Amazon affiliate marketers making hundreds of thousands of dollars per year.

There is a three step process to building an Amazon Affiliate Marketing business:

  1. Pick a niche market
  2. Build a website
  3. Attract an audience to your website

As your audience grows, naturally they will click on related and relevant links to Amazon products, resulting in commissions made.

If you want to get really creative, you can target specific keywords and audiences and drive paid traffic to your website.  The trick to doing this is planning your paid traffic to result in higher commissions than the cost of the paid traffic.

Where To Get Started With Your Amazon Business

You can start with the Amazon Affiliate program, or selling physical products on amazon, or both!  If I were to restart everything again knowing what I know now, I would begin with the Amazon Affiliate program and slowly start selling physical products through drop shipping on Amazon.

As my business grows, I would begin determining which products are profitable and start purchasing inventory in bulk as my business grew.

Here's a great starting point to learn the best tips and tricks to affiliate marketing, and you can find everything you need to know about ecommerce and selling physical products online right here.