The day has come! You boss got on your nerves, your wife gave you a kick in the butt, your friends seem to be doing better than you. Does not really matter, because all the stars aligned, and you decided to start an Amazon business.
And guess what, almost 3,000 new business owners worldwide register for an Amazon Sellers account every single day. I don’t know about you, but I am defining it as nothing short of a fierce competition.
If you decide to be the 3,001st Amazon seller registered on the most popular marketplace in the world, then you need to understand some Amazon basics (no pun intended) before you can become successful on this platform.
In this brief article, we are going to be talking about what you need to decide on before you register your Amazon business. Thinking about these items will set you on the right path and increase your chances for success.
We will also recommend some tools that you can use to help you make the right decisions along the way.
Product Considerations for your Amazon business
We are not going to be diving into much detail here, but product research is important. You might want to answer these questions before you decide on a product first:
- Is there an existing demand for this product?
- Is there too much demand from big guys?
- How unique is the product?
- Who are the prospective buyers?
- Why would they buy from you?
- Are there any distinctive features that your product is offering?
- What is the price point that will allow you to make the margins after all fees?
Understanding the product and the prospective market is what’s going to make or break your Amazon business. You should clearly understand your product and your distinct advantages before opening your store.
Tools and resources to be used:
- Jungle Scout Chrome Extension will show you estimated quantities and sales on Amazon pages
- Google Trends will help you see if the demand is increasing or decreasing for that particular industry
- Keywords Everywhere Chrome Extension will allow assessing the search volume for specific Google searches
- Check trade shows in your city on 10times.com. A lot of Amazon sellers find new products by talking directly to vendors.
Marketing Considerations for Starting Your Amazon Business
There is a lot of noise out there in the e-commerce world. That is why it is important to understand your audience and how you will be talking to them. Especially, if you are on a shoestring budget.
- Where does your audience congregate online and offline?
- Where are they located an what language do they speak?
- Who are the influencers in that industry?
- What content can you create to educate your audience about the benefits of your product?
- How can you show that you are different from the competition?
Tools to be used:
- Search on Facebook groups and see how many people belong to each group to estimate the demand. Lurk on some groups to see the problems the users are facing on a daily basis.
- Search on Reddit to see what people are talking about when it comes to your products or industry
- HootSuite and Buffer will allow scheduling your posts in advance on social media
- Canva will allow you to do some DIY graphic design for your social media and website
- Grammarly will help you with righting better content
Business Structure Considerations for Your Amazon Business
There are three primary business structures you can choose for your Amazon business in Canada: Sole Proprietorship, Partnership, and Corporation. Choosing the right business structure is important and will save you hours of headache down the road.
It is also important from tax and legal liability perspectives and can result in thousands of dollars of tax savings if you plan ahead of time.
We discuss the pros and cons of each business structure for e-commerce sellers in this article. Selecting the right structure will depend on many factors like the number of partners, liability protection, and cost of administration.
Tax and Accounting Considerations for Your Amazon Business
Last but not least, we recommend you clearly understand your tax obligation when you start your e-commerce business (we are an accounting firm after all). Many sellers effectively operate multi-national corporations, and as a result, are subject to sales and income taxes in multiple jurisdictions.
Understanding your tax obligations is also critical because of the cash flow considerations. Amounts like sales taxes must be kept in trust and properly remitted to the government by the filing due date.
In terms of keeping accounting records, once you open multiple bank accounts and you need to be very organized with your transactions. According to the CRA, you must be keeping records and supporting documentation for at least 6 years.
Resources to be used:
- Research accounting software like Quickbooks Online and Xero and see how you can use them to track your business expenses.
- Understand relevant tax deductions that are available to your e-commerce business. We have a long list of CRA-approved tax deductions in this article.
- Understand your income and sales tax obligations as an e-commerce seller in Canada and in the U.S. We wrote a detailed article about these and other tax topics.
- Make a decision what e-commerce accounting services you are comfortable outsourcing and what accounting tasks you would like to be running yourself. Understand the pricing for each accounting process.
In summary, Amazon is the new game in town, and it creates millionaires and losers every single day. But it is not a get-rich-quick scheme. You must understand your product and customers on a granular level before you can become successful on this platform.
In addition, be aware of your tax and accounting obligations and make sure they are taken care of to avoid any interruption in your e-commerce venture. Do your homework and speak with the professionals of your choice (not necessarily us).
We want you to be successful with your Amazon business. Understand what is required, but don’t let these trees stop you from seeing the forest. After all, you are capable of much more than you think you are!