Thinking of selling on Amazon? You’ll be joining hundreds of thousands of sellers who use the platform to make money and get their products out there.
In fact, over half of all products sold on Amazon are by third-party sellers.
Whether you have a clothing brand or a handmade craft business, being a successful Amazon seller involves good customer service, careful stock management, and a strong brand.
Read on to find out:
- is it worth selling on Amazon?
- Amazon seller fees
- how to start selling on Amazon
- how to make money selling on Amazon in 6 steps
Is it worth selling on Amazon?
Amazon Marketplace is one of the largest online sales platforms in the UK. According to Amazon’s SME Impact Report, more than 85,000 UK small businesses sold on its website in 2021 (up 25 per cent on 2020).
These sellers sold more than 950 million products across a year, equivalent to an average of 1,750 a minute.
Amazon figures show that over 15,000 UK small businesses made revenue of over £100,000 in 2021, with 700 reaching sales of £1 million or more.
There’s clearly money to be made on Amazon, but it can be tricky to stand out in such a busy marketplace.
A few benefits include:
- optimised search results (helping your products appear higher up the listings)
- reach more customers – even internationally
- easy to use platform
- no marketing costs
If you get your product right, nail the description, and have eye-catching imagery, then you could be on your way to earning passive income.
Amazon seller fees – what you need to know
Amazon has two different price plans: individual and professional. Amazon selling fees also vary depending on your product category and whether you choose to ship your products yourself or use Amazon’s fulfilment service.
Use the Amazon fees calculator to give you an idea of how much your monthly costs could be.
Amazon fees | |
|---|---|
Individual plan | 75p for each unit sold |
Professional plan | £25 a month (plus VAT) to sell unlimited units |
Referral fee | 8% to 15% (for both individual and professional plans) |
Fulfilment fees | See Amazon fulfilment fees for more information on shipping costs and fulfilment |
Read our detailed guide to Fulfilled by Amazon (FBA) for more information on whether this is the right option for your business.
Should you choose the Amazon professional plan?
When comparing Amazon professional selling fees, the easiest way to choose which plan is right for you is to consider how much you sell each month and how much you want to grow your business.
If you sell fewer than 35 items a month – or are still in the early stages of planning your stock – the Amazon individual plan will probably work better for your business. Whilst this keeps costs lower, the main drawback is that you won’t get access to the advanced selling and advertising tools on the premium plan.
The Amazon professional plan is a better option if you plan to sell more than 35 items each month. Whilst you’re paying a higher fee up front, the cost will work out less the more you sell.
You’ll also have more opportunities to grow your business. The Amazon professional plan has more ways to advertise your products and be more visible on product detail pages. You’ll be able to use advanced selling tools, such as reports.
How to start selling on Amazon
To start selling on Amazon marketplace, you need to:
- Register as an Amazon selling partner (you’ll need an Amazon account first)
- Comply with VAT regulations
- Create your product listing
- Ship your products
- Get paid – Amazon Payments will send proceeds from sales to your bank account within five days
- Manage customer reviews – make sure you respond to reviews and let people know you’re a trustworthy brand that really cares about customers
Read more: What the DMCC Bill means for online reviews
How to make money selling on Amazon: a 6-step guide
Selling on Amazon is quick and easy, but there are several steps you should follow if you want to make it a long-term success.
Here’s an overview of how to get started:
Step 1: Choose a product that sells
To make money selling on Amazon (or anywhere) then you’ll need to choose the right product.
Some of the best selling products on Amazon include:
- beauty products
- fitness equipment
- books and board games
- electronics like cameras and speakers
- handmade products like candles and prints
- pet supplies
- home and kitchen supplies
- clothing and shoes
There are certain rules for selling alcohol on Amazon, and some other products like jewellery and food need special approval, so be sure to check the seller rules for different product categories.
Step 2: Create a listing that stands out
It’s important to optimise your product listing page so it appears high up the search results and in front of as many potential customers as possible.
First you need a product title that people are searching for. Then choose a category, write a detailed description, and add photos that help your product stand out on the listings page. Meanwhile, encouraging and engaging with customer reviews will help you build a brand.
For more tips, read Amazon’s guide to optimising a product listing.
Step 3: Form a pricing strategy
When pricing your products you need to factor in the cost of selling on Amazon, so you have a good profit margin. You should also consider packaging and shipping costs.
Fast selling products on Amazon will usually be priced between £10 and £50 for impulse buys. If it’s priced too low then you won’t make a profit, but if it’s too expensive people won’t find your product as it will appear too far down the listings page.
Make sure you keep track of what’s selling well in your Seller Central dashboard and adjust your prices if you need to. You can also use a price tracking tool to help you adjust your price positioning on the market.
Step 4: Analyse your competition
Look at what sells well on Amazon. This can change depending on the time of year, market conditions, and business trends. For example, sales of things like gym equipment tend to trend upwards in January, while garden furniture is more popular in the spring and summer months.
Check the ‘Frequently bought brands’ and ‘What do other customers buy’ sections for inspiration for related products. This can also be useful if you’re looking to develop a new product for your business.
You can also view Amazon Best Sellers, which is updated every hour. You can view this by category and see what products are trending to help give you inspiration.
Other lists you might find useful for product ideas:
- Hot New Releases
- Movers and Shakers (biggest gainers in sales rank compared to 24 hours previously)
- Most Wished For
- Most Gifted
Or have you found a gap in the market? This can be a great opportunity to stand out in the product listings if it’s solving a problem for consumers, but there aren’t any other sellers out there doing it quite like you.
Step 5: Get the right insurance
If a product you sell accidentally injures someone or damages something, then you could be held responsible. That’s why product liability insurance is a good idea to protect you and your products from a potential legal claim.
With online retailer insurance you can make sure you have the cover you need for your business, whether you design products yourself or are selling items from a third-party manufacturer.
Recent changes to Amazon’s terms mean that UK sellers who make sales of more than £4,000 a month must have at least £500,000 of public liability cover.
These sellers must also have Amazon named as an Additional Insured Party or Indemnity to Principal on their insurance policy.
Find out more about having the right insurance to sell on Amazon.
Step 6: Pay your taxes
As with any business, it’s important to register as self-employed with HMRC and pay your taxes. You’ll need to file a tax return in January even if selling on Amazon is just your side hustle.
VAT regulations for Amazon
As with any business, you only need to register for VAT in the UK if:
- you store goods in the UK,
- you sell them to consumers based in the UK, and
- your sales exceed the VAT threshold of £90,000
However if you sell to EU countries, you may need to register for VAT separately and get an EORI number.
Read more about your tax obligations when you have a side hustle, tax dates you need to be aware of, as well as a general guide to starting a business.
What’s your experience selling on Amazon? Let us know in the comments below.
More useful small business guides
- Do I need a PayPal business account for my small business?
- How to sell on Etsy – a simple guide
- What the CE mark extension means for small businesses
- Is business insurance a legal requirement?
Looking for self-employed insurance?
With Simply Business you can build a single self employed insurance policy combining the covers that are relevant to you. Whether it’s public liability insurance, professional indemnity or whatever else you need, we’ll run you a quick quote online, and let you decide if we’re a good fit.
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