How to sell on Amazon as an individual or business
For online business owners, Selling on Amazon has long been a key channel for increasing revenue and reaching a huge potential customer base.
Thousands of SMEs and individuals sell on Amazon. If you’re thinking of joining them, you might be wondering: how much does it cost to sell on Amazon? What are the VAT implications? And what are the key steps to building a thriving e-commerce business on the platform?
We answer all of these questions in our complete guide.
How much it costs to sell on Amazon
To work out whether it’s worth selling on this platform, what the margins are and how to set prices, you first need to know how much it costs to sell on Amazon. There are two different plans available:
- Individual Plan: this costs 75p (excluding VAT) per item sold. There’s no monthly subscription fee. Shipping rates are set by Amazon for all products. With this plan, you can sell products in categories such as jewellery, shoes, bags, electronics and watches.
- Professional Plan: this costs £25 a month (excluding VAT) plus commission based on the item sold (which varies between categories). There are no limits on the number of items that can be sold. This plan allows sellers to manage inventory, set shipping rates, advertise products, run promotions, use Amazon Business features, sell restricted products and receive a series of sales reports.
As well as plan costs, there are also selling fees:
- Referral fees: these are the fees charged by Amazon on every product sold. They vary based on the product category and range from 7% to just over 15%.
- Closing fees: Amazon Marketplace also charges a fee for every article sold in media categories. These fees are: £1.00 for Books and £0.50 for Music, DVD, Video, Video Games (Games, Accessories and Consoles) and Software categories.
Lastly, there are shipping fees. Sellers on Amazon can select one of two options:
– Fulfilment by Amazon (FBA): Amazon handles the storage and shipping of products. Sellers using this option can give customers the option of Prime shipping. With FBA, sellers must first send their stock to Amazon, who will then ship it to customers whenever an item is sold. This option comes with inventory storage and fulfilment fees. You can find out how much it costs to ship with Amazon here.
– Shipping orders yourself: sellers can also choose to ship the products they sell on Amazon themselves. In this case, Amazon charges the customer a fee based on the product category and the shipping service chosen. This amount is then passed on to the seller in the form of a shipping credit.
How to start selling on Amazon in five steps
Now that you have an outline of the costs involved, it’s time to look at the key steps for selling on Amazon:
- Choose what to sell: the first step is to work out what products to sell on Amazon. Just because your business stocks a range of product categories, it doesn’t mean that you should sell them all on Amazon. A smart strategy is to sell products that get lots of searches on the platform, or those with a reasonable number of searches but little competition. Selling things that are lightweight and easy to ship will also lower shipping costs. From clothing to stationery and office supplies to pet products and home accessories, aim for high sales volumes to maximise profits.
- Create a seller account: the second step is to sign up for a seller account on Seller Central (just click “Sign up”).
- Choose a selling plan: next, you need to choose either a Professional Plan, which is best for businesses, or an Individual Plan, which is best for private individuals for whom selling on Amazon is just a side hustle.
- List your products: now it’s time to list the products you want to sell on Amazon. Fornunately, it’s a fairly intuitive process. From the Homepage of your Seller Central account select Inventory, followed by Add a Product, and then search for the product name in the search bar at the top of the page. As you type the product name, a list of items to choose from will appear. If there is no listing for that product, you can create a completely new one by clicking “Create a new product listing”.
- Optimise and advertise your products: each product page should be optimised by adding an accurate description and a title that reflects users’ search intent. What’s more, from your Seller Central account, you can also create an advertising campaign to promote your products on Amazon. Not all products can be advertised on the platform, just those that are eligible for the so-called Buy Box: here’s everything you need to know.
How to sell on Amazon Business
If you want to start selling in the B2B sector (i.e. to professionals and other businesses) you can choose to do this through Amazon Business. This solution offers various benefits: from access to a huge pool of users across Europe to listing product prices without VAT and the ability to offer business pricing and quantity discounts.
Amazon Business also provides exclusive features aimed at the needs of B2B sellers, such as the creation of exclusive offers for businesses and the ability to accept requests for quotations. The costs are the same as those for the Professional Plan, and to enjoy the benefits of Amazon Business you can simply activate it in your Seller Central account.
That wraps up our guide to the basics of selling on Amazon. The possibilities are practically endless and certainly can’t all be covered in one article. Getting started is easy – the real challenge comes once you’ve sold your first items.