Selling on Amazon – a Beginner’s Guide

As business energy prices soar, the cost of running a physical store is becoming a burden on many small businesses. Selling online through ecommerce marketplaces like Amazon is helping retailers cut down on costs, while still maintaining a profit.

And as Amazon is the biggest online marketplace in the UK, with nearly 90% of the UK’s shoppers using the platform, it’s understandably attractive for retailers. The pandemic saw Amazon’s fortunes rise further still, with a massive 82% revenue jump compared to pre-pandemic levels.

But how do you get started with selling on Amazon? What are the costs involved? And how do you get paid to sell through Amazon’s retailer setup?

In this guide, we’ll walk you through everything you need to know about getting your business up and running on the Amazon marketplace, including potential profits, pitfalls, and whether selling on Amazon is right for you at all.

How to start an Amazon business

In summary, to start an Amazon business you will need to follow these steps:

1. Register as a seller
2. List your products
3. Set your pricing – and account for the costs of selling on Amazon
4. Organise shipping and storage (If you use Amazon’s fulfillment service, Amazon will pack and ship the item directly)
5. Receive payment

*SKU stands for ‘stock keeping unit’. It is a number that retailers assign to products to keep track of stock levels internally. 

Dean Shaw of Aroma Energy, one of Amazon’s top sellers of essential oils, on the benefits of selling on Amazon:

The ability to reach potential customers almost anywhere in the world is unparalleled. Although you can ship orders yourself, their FBA service enables you to remove yourself from the fulfilment process and spend your time and money elsewhere.

Who can sell on Amazon marketplace?

Amazon Marketplace allows retailers and distributors to tap into Amazon’s infrastructure and sell your products under their banner – in exchange for a fee.

Sellers are divided into two principal categories: individual and professional.

Individual sellers are defined as those selling 35 items per month or less, and are asked to pay only a completion and referral fee for each item sold. The fee per item sold currently stands at £0.75 (excluding VAT).

Professional sellers, those selling more than 35 items per month, are able to sell a greater range of products than individual sellers and are given bulk listing tools to make it easier to sell high volumes.

However, there’s a monthly subscription fee of £25 per month (£30 including VAT) in addition to the individual completion and referral fees.

Amazon recommends that if you’re looking to sell more than 35 items through Marketplace, you should become a ‘pro-merchant seller’ which enables you to sell in one, or all five Amazon EU marketplaces. Including the UK, Germany, France, Italy, and Spain.

Why should you sell on Amazon?

If you’re just starting a business and finding it hard to drive traffic to your own site, Amazon’s global reach and brand identity can ramp up your online business.

Around two million people sell on Amazon Marketplace; although this means there’s lots of competition, it also enables you to find out how your rivals are pricing and marketing their products, boosting your own business strategy.

Here are five key reasons why you should consider selling on Amazon Marketplace:

Exposure

According to BigCommerce, more than 197 million people visit Amazon.com a month. Having this exposure to so many individual users is unrivalled in the ecommerce space, and is sure to improve your brand equity and increase sales.

Simplicity

When you sell on Amazon, all you need to do is enter the product you want to sell, set a fixed price, record the condition and click ‘Yes’. In most cases, your listing will be live in 15 minutes.

Cost efficiency

You can list as many products as you like on Amazon with no listing fee, so you can choose a sales strategy to suit you – either putting all your products on display at once, or introducing new items slowly as awareness of your brand grows. There are no fixed costs for shipping and handling.

Trust

If a potential customer isn’t familiar with your company, they may be reluctant to make transactions via your site. However Amazon’s secure payment system is known to be trustworthy, so people may be more willing to buy your product via the Marketplace.

Market awareness

Any small business relies on targeted, intelligent pricing and marketing. By joining the Amazon Marketplace, you can easily view the prices your competitors are charging for their products, and see how the marketing messages you’re using are performing.

Andrew Newlands, founder of confectionary business Monty Bojangles, says that selling on Amazon allows businesses to back up success with real data.

“I love how Amazon gives us the ability to quantify everything, so that we have visibility over what works and doesn’t. Whether it’s informing our marketing strategy, or providing a testing ground for new products to bolster our sales portfolio.”

What products can I sell on Amazon?

• Automotive
• Baby
• Books
• Business
• Industry and science
• Electronics
• Home
• Home improvement
• Kitchen
• Lawn and garden
• Luggage
• Amazon device accessories (excluding Kindle batteries)
• Musical instruments
• Office products
• PC
• Shoes
• Software
• Sports
• Toys and games (there are exceptions for selling over the Christmas period)
• Video
• DVD and video games

What can I not sell on Amazon Marketplace?

If you’re considering selling on Amazon, there are a number of products that are prohibited including:

• Illegal products i.e. those that are illegally marketed – such as illegal drugs, guns, and ammunition
• Prescription medicine
• High-strength alcohol (70% ABV+)
• Tobacco
• Real fur clothing
• Used clothing and shoes (new clothing and shoes are permitted)
• Lottery tickets

For a complete list of prohibited products for selling on Amazon visit the website.

Can I sell internationally with Amazon?

Yes, you can. And in order to capitalise on a much larger consumer market and increase sales, you should.

Internal data collected by ecommerce giant Shopify reveals that international spending with their EMEA merchants grew by 117.5% in 2021 – a clear indicator that the selling overseas trend continues to grow across the UK, even post-Brexit.

Be aware, however, that as a result of Brexit, selling across Europe is not the simple task it used to be. After the UK left the EU single market back in 2020, Amazon changed its policies and ceased UK to EU fulfilment through FBA.

This means that sellers can’t use Amazon’s fulfilment network to move products across the UK-EU border.

Instead, you will need to split your business, with one fraction operating in the UK, and the other in the EU.

Amazon sellers should also ensure they meet the requirements of the regulatory zone they are selling into. This could mean paying additional VAT and customs charges, adhering to EU-regulated product compliance and labelling, and ensuring they have a cross-commerce fulfilment process in place – but more on this later.

Our advice is to not let the post-Brexit rules and regulations stop you from selling internationally, as there is so much to gain from casting a wider consumer net.

And, as Dean Shaw, founder of Amazon’s top essential oils seller Aroma Energy notes, Amazon makes it a simple, hassle-free process:

Product depending, selling across Amazon’s various international platforms can be as easy as clicking a button. Shipping can be bought through the Amazon platform, or you can simply drop your products down at the post office.

What do I need in order to sell on Amazon?

The first step to getting started as a seller is to decide on your Amazon classification.

If you anticipate selling only small numbers of items (less than 35) or don’t have much money to spend, you’ll probably want to go with the individual Amazon classification.

However, if you anticipate selling in bulk, or want a greater range in the products you can sell, you’ll need to go for the professional (pro-merchant seller) classification.

To register as a seller on Amazon, you will need to provide the following information:

• A UK or internationally-chargeable credit card with a valid billing address
• Bank account information
• Valid passport or ID
• Business mail address or Amazon customer account
• Company registration details, including VAT number
• Additional rules apply for sellers from outside the UK, further information is available on the Amazon website

How do I register products on Amazon?

Once you’ve decided on your classification, you’ll need to register your products – thankfully this part of the process is extremely simple.

If you’re an individual seller, on each Amazon.co.uk product page you’ll find a blue box called ‘More Buying Choices‘ on the right-hand side of the page.

Click on the ‘Sell Yours Here‘ button; you will then have to enter details regarding the condition of the product, its age, and additional comments.

If you’ve registered for professional status, you can use Amazon’s Seller Central portal and its bulk listing tools to list your products. The specifics of the procedure depend on whether or not your products are already in the Amazon.co.uk catalogue.

If your products already exist in the Amazon.co.uk catalogue

Then you can list them individually on Amazon’s Seller Central portal, simply by entering the name of the product, the price and your available stock.

Alternatively, you can use Amazon’s bulk listing tools, which require the EAN, ISBN, or UPC code (barcodes) for each product. If you need a barcode, you can source one online by clicking here.

If your products do not exist in the Amazon.co.uk catalogue

You can create new listings using Amazon’s bulk listing tools.

For each new product, you will be required to provide product information, including:

• EAN, UPC, or ISBN code
• The product title
• Product description
• An image of the product
• Price
• Available stock

Note that you might be required to input additional information to list your products in some categories.

Adding images to your Amazon Marketplace listing

Any images you use to accompany your product must be in a tif or jpeg format and sRGB or CMYK colour mode, with pixel dimension of at least 1280 pixels on the longest side.

File names must consist of the product identifier (Amazon ASIN, 13-digit ISBN, EAN, JAN, or UPC) followed by a full stop and the appropriate file extension – for example: B000123456.jpg or 0237425673485.tif.

Keep in mind that spaces, dashes or additional characters in the filename will prevent an Amazon seller’s image from going online.

For more information on how to upload an image of your product, go to the Amazon Marketplace page.

Pricing your products on Amazon

When working out the sale cost of your products on Amazon, you should factor in the following:

• Condition of your products – are they brand new, or used?
• The price of similar products on Amazon – what is the average market cost of the product you are selling? Is your price competitive?
• The potential impact of Amazon’s referral and variable fees – you need to make a profit, so factor the additional costs into your pricing model

To help gauge a reasonable price, and gain some insight into the competition, you might choose to use Amazon’s on-site Pricing Tools.

These include the ‘Low Price’ feature, which allows you to compare your listing against products of similar type and condition.

You can also click on the listing ID for your items to view your listing information on a single detail page. On this page, you’ll see a box marked ‘This Item Also Available To Buy’, where you can see the lowest-priced Marketplace items offered by other sellers in each condition available. This will help you set a competitive rate for your own products.

Amazon also offers automated pricing, which enables sellers to adjust prices quickly in reaction to competitor price changes. It also increases your chances of being selected as Amazon’s ‘featured offer’ on Amazon product detail pages, which will guarantee an increase in sales.

Choose an Amazon seller plan

As already discussed, you have two options when it comes to selling on Amazon. You can either become an individual seller, or a professional seller. We’ve created the table below to highlight the key differences between the two seller plans.

Shipping and storage for selling on Amazon

The management of products and orders is done via the Seller Central account, and each seller has full access to this facility. All orders are visible on the interface, so you can track the progress of your transactions on one centralised dashboard.

When your item sells, Amazon will send an email to notify you that payment has been taken from the buyer. You must dispatch the item to the buyer within two days of receiving this email.

You can either manage the product delivery process yourself, or let Amazon take ownership. If you are going to retain responsibility for the delivery, Amazon will notify you by email when an order has been placed. Once this is done, all you’re required to do is pack and deliver the item.

If you choose to let Amazon take ownership of the product delivery process, you are agreeing to use its fulfilment service, known as Fulfilment by Amazon (FBA).

Dropshipping on Amazon

As well as providing fulfilment services, Amazon also allows sellers to dropship products on its online marketplace to customers.

Dropshipping is the act of outsourcing your entire order fulfilment to a third party, otherwise known as a ‘dropshipper.’ It typically involves the process of purchasing goods from your chosen third party – whether they are a wholesaler or manufacturer – and then having them shipped directly from your dropshipping supplier to the customer who made the purchase.

To find out more about what dropshipping actually is, visit our guide.

How is dropshipping different from FBA?

Although the two may appear similar, there are key differences between FBA and dropshipping that you need to be aware of.

When using Amazon for order fulfilment, you still need to supply fulfilment centres with the products you are selling, before they can be sold. Amazon is not a wholesaler or manufacturer – you can’t purchase products from them to sell.

With FBA, you have control over the quality of your products. This is because you are sourcing them, inspecting them, and packaging them before they arrive at a fulfilment centre to be shipped.

With dropshipping, you have no control over the product quality, or a say in how it is packaged and shipped – and if you do, it’s very hard to monitor.

How does dropshipping work?

In terms of how to set up dropshipping, typically it works as follows:

• The seller (you) signs an agreement with the dropshipper – to find out more about the best dropshipping suppliers, visit our in-depth guide.
• The customer orders online on your Amazon product page
• The seller (you) receives the order
• The customer receives an order confirmation
• The order is forwarded to the dropshipping supplier
• The dropshipper packages and ships the order
• The customer receives their product

Pros and cons of dropshipping

How do I get paid selling on Amazon?

Amazon transfers payments to your bank account via an electronic funds transfer. For each payment, this typically takes up to five working days for the money to reach your account, from when Amazon initiates payment.

It is imperative that you provide a valid bank account as your deposit method in your seller account settings. Keep in mind that you can’t receive payments into online systems such as PayPal – if you try to do this, you won’t get paid.

You can keep track of all your payments by accessing the Payments dashboard located within your Amazon Seller Central account. The statement view in the dashboard shows you when and how much you will be paid.

The information is updated automatically, so when you make a purchase, this will reflect in the Statement view.

Amazon fees and cost structures

Selling on Amazon is a pretty cheap way to get your ecommerce venture started. However as the saying goes, nothing good in this life comes for free, and the same can be said for selling on Amazon.

There are some fees that you will need to pay, regardless of your circumstances. We’ve listed the most common of them below, but be aware that they aren’t the only fees that can be applied to your account. For full information, visit the Amazon fees page.

• FBA fees: as mentioned earlier, Amazon will charge you for using its fulfilment services. Fulfilment fees vary depending on the type of item (media or non-media), its dimensions and weight, and the shipping method used. Storage fees can range from between £0.43 – £1.05 per cubic foot per month depending on the time of the year
• Referral fees: Amazon always charges a fee for selling on its platform. It essentially takes a commission for allowing you to use its marketplace. The rate differs depending on the product category, but on average ranges between 8% – 14%, and is always £0.25 minimum for the majority of categories
• Subscription fee: if you sign up for the professional selling plan, you must pay £25 per month for the service
• Closing fees: if you are selling media items (/Music/Video Games) you must pay a closing fee of £0.50 per item sold. For books, the closing fee rises to £1 per item

Conclusion – is selling on Amazon worth it?

If you’re a small business or startup that wants to reach a huge, incredibly varied audience, then selling on Amazon is certainly worth it.

You can, as Dan Davies says, “lean on the reputation of Amazon to help you sell at volume”. Whilst also solving the common problem many small online retailers face of legitimacy and consumer trust, by selling on such an established brand as Amazon.

It does, however, have its drawbacks, which you need to consider before making an executive decision. It isn’t easy to succeed on Amazon, and as Dean Shaw notes, “it can take time to build good products and promising sales rank and review”.

Either way, you will be up against over 280,000 other Amazon sellers in the UK alone, so you’ll need to be sure that your product can compete with the others, and that you can stand out from the crowd.