How to start an Amazon Marketplace business

Wondering how to sell on Amazon Marketplace? Check out our step-by-step guide to learn how to start an Amazon business...

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With around £12.84bn in sales and 579.5 million visits to Amazon UK alone in 2020, the world's leading ecommerce market is ripe for budding entrepreneurs looking to sell online.

But, quickly ramping up your revenue isn’t the only reason businesses should consider tapping into Amazon's various marketplaces. Selling in the world's number one commerce platform can also be a great way to test appetite for your products, without too much investment in creating your own online store and sales process.

So how do you get started? What are the costs, and how do you list products?

In this guide, we'll walk you through everything you need to know about setting up on Amazon marketplace, including potential profits – and potential pitfalls.

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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: casual and professional. Casual 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.

Professional sellers, those selling at least 35 items per month, are able to sell a greater range of products than casual sellers and are given bulk listing tools to make it easier to sell high volumes, but there's a monthly subscription fee 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 all five EU marketplaces, for £25 a month (£28.50 including VAT).

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 Amazon's SME Impact Report, over 14,000 sellers surpassed £100,000 in sales, and more than 1,000 reached £1m in sales for the first time in 2020.

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 the marketing messages you are using.

Anna Jenkins is founder of small business florist, Silky Bouquet. Jenkins told us: “The convenience of Amazon’s service and the reputation of the brand was a big draw for us at Silky Bouquets. The speed of service that Amazon offers – for both small businesses and customers – is incredibly important.”

Can I sell internationally with Amazon?

Amazon has unified its European marketplaces which means you can create and manage offers for Amazon.de (Germany), Amazon.fr (France), Amazon.es (Spain), Amazon.it (Italy) and, of course, Amazon.co.uk.

However, the admin that comes with selling abroad – i.e. foreign currency payments and taxes – may be expensive and not that fun. And opening a local bank account may not be an option for some.

Thankfully, you can use a free multi-currency currency account like Wise to get international account details for the US, Eurozone, UK, and Australia that you can transfer to your main account in a single click.

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

Products you can't 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 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 full list of prohibited products for selling on Amazon click here.

Anna Jenkins, founder of Silky Bouquet, told us: “The biggest challenge for us was getting on the platform in the first place. Our product wasn't part of Amazon's existing catalogue, [so] we had to go through what was quite a lengthy process to have our products accepted to the platform.”

Silky Bouquet products (and Wally, the shop dog)

Silky Bouquet product (and Wally, the shop dog)

What software do I need to launch my Amazon Marketplace business?

Smart use of the right software can help you set up your Amazon business to succeed. When launching any business, we'd recommend making the most of software that can make organising your tasks, keeping track of your customer base, and taking payment so much easier.

Using these software tools – which are now readily available to even the smallest businesses – can save business owners quite literally hours of time each week, and can even help you offer better customer service.

Consider our top recommended software tools for task and team management, managing customer information, and taking payment below:

What do I need to sell on Amazon?

If you've reached this page of our guide on how to start an Amazon business then 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 casual Amazon classification. However, if you anticipate selling in bulk, or want 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 valid billing address
  • A phone number where you can be reached during the registration process
  • Bank account information
  • E-mail address
  • VAT number (if your business is VAT-registered)

Additional rules apply for sellers from outside the UK, further information is available on the Amazon website.

Another good idea when you're planning your first Amazon marketplace business is to test out the platform first before you list larger inventories.

This will save you time and money incase your first attempt doesn't prove popular with consumers.

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 a casual 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 an additional comment.

If you've registered for professional status, you can use Amazon's web-based interface or 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 using the site's web-based interface, 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

Then you can create them using either the web-based interface or the 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. 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.

What are the rules and regulations for selling on Amazon?

Permissible products

Most products are allowed, but you need to consider a number of key restrictions before you begin the Amazon registration process.

As detailed in our guide to products you can and cannot sell on Amazon here, Amazon forbids anyone from selling any of the following on its site:

  • Mobile phones (including service)
  • Magazines and newspaper subscriptions
  • Tobacco and alcohol
  • Gift cards and gift certificates
  • Prescription medication
  • Guns and ammunition
  • Photo processing

Both casual and professional sellers can sell in all remaining categories. However, all items you sell must be in Amazon's existing online catalogue – you cannot add new product ranges.

Furthermore, products in a limited range of categories, such as watches, jewellery, groceries and health and beauty, require authorisation.

Pricing your products on Amazon

When working out the price to sell your product on Amazon, you should factor in the condition of your product, the price of similar prices on Amazon, and the potential impact of Amazon's referral and variable fees – not forgetting your delivery costs.

To help gauge a reasonable price, and gain some insight on 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 in 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.

How much does it cost to sell on Amazon?

As a casual seller, you are required to pay a completion fee of £0.75 per product sold and a referral fee (this varies dependent on the item) in each case – most referral fees are between 8% and 15%.

Professional sellers on Amazon pay a monthly subscription fee of £28.75 per month (£25.00 for sellers that qualify for VAT-exclusive fees), plus a referral fee and closing fee on certain products, such as books, music and DVDs.

Referral fees and closing fee vary by category and whether you qualify for VAT-exclusive fees. Check out the Amazon website fee schedule for more information.

There are additional fees for the addition of bespoke Amazon services to your core Marketplace package. These services include Fulfilment by Amazon, a packaging and shipping facility; see below for more information.

Silky Bouquet founder, Jenkins told us: “The Amazon Prime service and its national reach is unmatched. Just having our products available on the site is a strong indicator of the quality of our product, boosting our brand's reputation”.

Shipping and payment for selling on Amazon

Amazon has also developed strict rules governing distribution. You must ship your product within two days of receiving notification that it has been sold, and you must send confirmation of dispatch for funds to be credited to your account.

Once you have sent confirmation that the item has been sent, Amazon deposits your earnings into your seller account. Funds are then transferred to your bank account on a 14-day cycle.

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.

When your item sells, Amazon will send an e-mail 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 e-mail.

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.

Fulfilment by Amazon

If you don't want to manage the package and shipping process, then you can utilise the Fulfilment by Amazon (FBA) feature – whereby you sell it, and Amazon ships it. With FBA, a customer stores their products in Amazon's fulfilment centres, and the site directly picks, packs and distributes them, as well as offering customer service.

There are no additional set-up charges or subscription fees when you add Fulfilment by Amazon to your seller account, but you'll need to pay fulfillment and storage fees. Fulfilment fees vary depending on the type of item (media or non-media), its dimensions and weight, and the shipping method used.

There are two types of fee per month for inventory storage. From January to September, customers can expect to pay £0.30 per cubic foot, per month; between October and December the fee rises to £0.40 per cubic foot per month, taking into account the extra stock over the Christmas period.

The FBA service can be cost-effective, but ultimately it depends on the amount of items you are selling and shipping each month.

To see whether the service would be beneficial, you should add up the costs of overhead you could be spending on warehouse space, packing supplies, postage and labour, dealing with customer service inquiries and returns handling, and from there work out whether the Amazon charges work out cheaper.

Amazon Prime delivery is a game changer for Jenkins.

“As a florist, we have to ensure that whatever and wherever our customers order from us they can expect timely delivery. We do our best to ensure that our service is as fast and simple as possible and Amazon enables us to do this to perfection.”

Silky Bouquet

Silky Bouquet shop front

How do I get paid selling on Amazon?

Money paid by buyers of your products will be automatically deposited into your bank account every 14 days, starting 14 days after you register your seller account.

You will receive a notification by e-mail that your payment has been sent.

However, sellers should remember that Amazon's payment processing can be a little complicated – and you should expect a short delay. This can cause issues for ecommerce businesses given they are often short on capital.

Jenkins' found a solution to Amazon's payment processing issue: 

“While we were waiting for our payments to come through, we looked at revenue-based loans through companies like iwoca, allowing ecommerce companies to repay their loans in line with the ebb and flow of their businesses. This means a lean sales month or a month with high returns won’t leave us caught short.”

Tips and useful contacts for selling on Amazon

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

The benefits to selling on Amazon are:

  • Your products are easier to find and are displayed to millions of online shoppers
  • You can sell across Europe in five marketplaces
  • You're listing your products with a trusted and established brand
  • Your products are protected by Amazon's security and fraud protection
  • There are no listing fees (unless you exceed 2 million SKU's in any given month)
  • You can let Fulfilment by Amazon look after storage, picking, packing and shipping (or you can deliver your products to your customers)

Useful resources and contacts for selling on Amazon:

  • Amazon Marketplace: How it works
  • Startups.co.uk's blog on the role for small businesses in Amazon's growing empire
  • Selling on Amazon FAQ and Amazon Marketplace Contact Us

Jenkins says the number one piece of advice for ecommerce businesses should be to take your time.

“Do your research, and make sure you’re fully prepared for life online. All the good work you’ve done can be quickly undone if you are not ready to meet dispatch times and fulfil orders.”

Lucy Wayment
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