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...
- What is Amazon Marketplace and how to sell on Amazon Marketplace
- Selling on Amazon: Business planning and preparation
- Rules and regulations for selling on Amazon
- Tips and useful contacts for selling on Amazon
What is Amazon marketplace and who is selling on Amazon suited to?
Essentially, Amazon Marketplace allows retailers and distributors to tap into Amazon’s infrastructure, in exchange for a fee. Amazon Marketplace enables you to sell your products under the Amazon banner.
Amazon Marketplace divides its sellers 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).
With around 300 million active users on Amazon and over 50 million Amazon prime members, the market is ripe for budding e-commerce entrepreneurs looking to sell on Amazon marketplace.
Selling on Amazon also benefits e-commerce start-ups looking to grow internationally
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.
It may be worth considering seeing if you can get a Start Up Loan (external partner site, link opens in a new tab) to help you with financing, and mentoring to start this business idea. You'll also need to think about registering your business, either as a sole trader or as a company - if a company, then Smarta Formations (external partner site, link opens in a new tab) are an organisation that can help you set up.
Amazon UK reports that the number of UK-based marketplace sellers exporting to European customers increased by more than 40% in 2016.
Ramping up revenue isn’t the only reason businesses should consider tapping into Amazon’s various marketplaces. Selling in a new market can be a great way to test product fit without too much investment.
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. Plus, banks tend to give businesses bad exchange rates and charge for them to move money into their domestic account – that means it’s possible to lose money if you sell in multiple currencies. And when you use your domestic bank account, Amazon will charge a currency conversion fee for you to withdraw foreign currency.
Thankfully there are alternatives. Services like TransferWise help Amazon sellers save. TransferWise is a free multi-currency currency account that comes with international account details for the US, Eurozone, UK, and Australia that you can get in a single click.
For businesses selling in Europe, you can sell in euros, use your European bank details to get paid into your TransferWise account, and then convert earnings back into pounds – using the mid-market exchange rate. And with less fees.
Not only could you turn profit and learn a new market – you can control over 40 currencies in your account with a single login.
Selling on Amazon: A low-cost business opportunity that’s quick to set up
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. Amazon currently has 130 million global customers – that’s over twice as many people as live in the UK. The Amazon market grew over 43% in the fourth quarter of last year, and according to stats from Nielsen, Amazon.co.uk was visited by almost 17 million British people in March 2011 – around 42% of those who are actively online. So it’s fair to say that, if you put up a listing on Amazon, a lot of people will view it.
Simplicity. As a small business, you want to get your products listed, and sold, as soon as possible to get money coming in and brand awareness up. The simplicity of Amazon is ideal in this regard; 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. This compares favourably with other auction and ecommerce sites, which can be much more complicated and time-consuming. The simplicity and affordability of Marketplace provide genuine benefit for entrepreneurs who don’t know much about web development, and don’t have much money to spend on their own website.
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.
It’s worth bearing in mind that sellers in the professional category have to pay a monthly subscription of £28.75 or £25 if you’re a VAT registered seller; however, if you are selling enough products to fall into the professional category, chances are you’ll be making enough money to justify this fee. Also, Amazon Marektplace are currently offering a one month free trial on subcriptions so you now test it out without the charge.
Trust. Amazon is liked and respected by the majority of its customers; indeed a US survey last December gave Amazon a score of 86 out of 100 in terms of customer satisfaction, as high as any other American ecommerce site. If your product is listed on Amazon, you will benefit from the trust and loyalty which are fundamental to its brand.
If a potential customer isn’t familiar with your company, they may be reluctant to make transactions via your site. However Amazon, with its secure payment system, is known to be trustworthy, so people may be more willing to buy your product via the Marketplace.
Market awareness. 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. Any small business relies on targeted, intelligent pricing and marketing, and Amazon Marketplace can give you a real leg up in this crucial area.
While selling on Amazon boasts low-start-up costs, it’s also a great home-based business idea and enables you to work from the comfort of your home – provided you have access to the internet and can organise shipping etc.
Selling on Amazon: Business success stories
Successful UK start-ups using Amazon to increase their product sales and boost exposure include baking products and subscription service BakedIn, smart devices creator Smarter, organic baby food business Piccolo, Nespresso-compatible coffee pod start-up CafePod, and many more.
Currently, there are over 70,000 UK small businesses using Amazon Marketplace.
Products you can sell on Amazon marketplace
For selling on Amazon, you can sell items in the following categories:
- Industry and science
- Home improvement
- Lawn and garden
- Amazon device accessories (excluding Kindle batteries)
- Musical instruments
- Office products
- Toys and games (there are exceptions for selling over the Christmas period)
- 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+)
- 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.
Ready to get started? Find out everything you need to know about how to start a business here.