Do you have to pay to sell on Amazon? This question has probably crossed your mind a number of times.
This may especially hold true if you’ve been contemplating quitting your 9 to 5 and wish to start making money online.
With technology advancing more than ever before, global distribution channels have been enhanced. This gives people the ability to order products of their choice from anywhere in the world.
According to a recent article, retail sale ratios will rise up to 200% in 2020 as compared to 2014. This makes e-commerce an opportunity to seize for anyone thinking about becoming an online seller.
Why Sell on Amazon
Coming back to the question “Do you have to pay to sell on Amazon,” the answer is yes. However, before making any decisions, you must do a little research about Amazon. You should know what Amazon offers in exchange for the money it’s charging its sellers.
Every e-commerce platform has its own pro and cons. With that said, the reason why Amazon is so popular is the fact that it has a very impressive working mechanism. It started out as a bookseller but has now expanded into many other third-party sales.
When choosing a platform to sell on, you look for factors such as the price of becoming a seller, number of potential users, and brand reputation to help you decide how lucrative your decision will be. The following reasons are why you should jump on the bandwagon and become an Amazon seller.
Large Customer Base
If you choose to sell on Amazon, you will get access to its large customer base. Statistics reports the number of potential customers on Amazon to be 237 million which is massive. This is far more than many other e-commerce platforms like eBay.
According to a recent study by Forbes, Amazon has surpassed Walmart as the world’s largest retailer. This proves that Amazon clearly dominates the retail business and if you want to succeed as a seller then it’s a good idea to sell on Amazon!
People Are Spending More Money on Amazon Than Ever Before
Amazon does not only have an impressive large customer base but its revenues have also been hitting skyrocket levels. People are spending more and more money on Amazon every year.
Amazon has reported revenues of $81.76 billion in June 2019. This is far more compared to last year’s revenue in June which was around $66.85 billion. This is a positive sign for any seller on Amazon. Higher revenues mean people are spending more money so they would be more willing to buy your products!
Amazon has a reputation for being a fair and honest brand. It has many loyal customers. A brand’s reputation surely speaks for its credibility so if you want to work with a platform people are proud to shop from; Amazon should be your choice!
No Extra Listing Fee Per Item
Amazon does not charge you money until you actually make a sale. So Amazon will not charge you to list anything on it. Consequently, you can have your listings up for longer and sell more items. However, Amazon will charge you a commission on every sale you make. The charges vary according to the seller program you sign up for.
Unlike other E-commerce websites, Amazon does not ask you to constantly relist items again and again. This means less work for you as a seller.
Furthermore, Amazon offers different programs through which you can lessen the workload on you. If you don’t want to deal with the distribution and customer care of your shop yourself, then you can outsource it to Amazon. These services are offered by Amazon on their fulfillment By Amazon (FBA) program.
Amazon is one of the most trusted brands in the world. This is why buyers on Amazon sign up for Amazon Prime Service and pay $99 for it per year. This subscription allows them to get discounts and free shipping on certain products all year.
Becoming A Seller on Amazon
If you want to sell on Amazon, you just have to register online. It’s an effortless process and Amazon has a step by step guide to make the registration process easier for beginners. You need to have the following information readily available to successfully register as a seller:
- Your business name, address, and contact information
- An internationally-chargeable credit card with a valid billing address
- A phone number where you can be reached during this registration process
- Your tax identity information
If you have been wondering “do you have to pay to sell on Amazon” the answer is yes, you do. A platform that is giving you access to such a large audience surely deserves to be compensated for it.
Choosing your selling plan effectively is an important factor in becoming a successful seller on Amazon. Amazon has 2 different plans for sellers. These depend on your nature of work and the number of sales you want to make each month.
Individual Selling Plan
This program is for sellers who plan to sell less than 40 items per month. There is no monthly subscription for such sellers. However, they do have to pay selling fees of $0.99 per item. Furthermore, the referral and variable closing fee is also applied to this plan. This option is best for people who are trying to establish a new business.
The main disadvantage of this plan is category restrictions. There are many categories which are not open and can only be sold through a professional selling plan.
Another disadvantage of this selling plan is you have to do manual listings. You cannot simply import an excel file with the details of your listings. This proves to be a time-consuming task.
Another disadvantage of being an individual seller is your ineligibility for the “Buy Box”. The Buy Box is the seller Amazon recommends its buyers to shop a certain product from. It accounts for very high sales. The shop in the Buy Box changes every 15 minutes systematically but your shop will not appear on it if you are an individual seller.
Professional Selling Plan
This plan has a monthly subscription fee of $39.99 and is for people who plan to sell in higher quantities. There is also a per-item selling fee which is different for every product category. This plan allows you to sell more than 40 items per month. This plan has added referral and variable closing fees.
The main advantage of this program is you are eligible to appear in the Buy Box. This can increase your sales drastically as loyal customers of Amazon follow its recommendations.
Another advantage of the professional selling plan is that Amazon provides you with tools to make multiple listings. You no longer have to separately make each individual listing.
Moreover, with the professional selling plan, Amazon will also let you use strong third party tools for reporting and inventory management. This helps you analyze and manage your business better and also helps you generate business reports.
Lastly, the professional selling plan comes with the advantage of multi-market listings. This means you can duplicate your listings for another market. For example, if you currently sell in the U.S.A, you can sell the same listings for free in Canada or Mexico as well.
Fulfillment by Amazon
This is another selling plan offered by Amazon which has extended services of shipping and customer care included. This means less work for you! The fulfillment by Amazon plan has competitive fees. It allows you to outsource shipping and customer service to them. It results in free shipping for your customers to motivate them to buy from you.
This program makes selling on Amazon much less stressful. Amazon manages to pick up your products, packing them and shipping them. Amazon is also in charge of customer service and product returns. It really reduces the workload on you.
This allows you to focus more on product quality rather than distribution. The pricing details are as follows:
Amazon Shipping Fees
The shipping costs depend on the size and weight of the product you are selling. The company through which you are selling also affects the price. Amazon also offers two-day shipping service but you must meet the criteria to apply for that.
You have to be selling on Amazon for 90 days when you apply for their shipping. You also need to have at least 10 orders in the last 30 days. Furthermore, you must have a cancellation rate lower than 1.5%.
Amazon Referral Fees
This fee depends on the item category and also on the per-item minimum fees. The higher of the two is implemented in each case. For example, the referral fee for goggles is $1 but the goggles you are selling are for $50. So the minimum per-item referral fee is 4%, then you will have to pay $2 instead of just $1.
Amazon Variable Closing Fees
This fee is for items that fall in the media category. This fee is highly disliked and argued upon by individual sellers but it is part of the deal so you have to oblige. The different products which have to pay the fees are:
- Books $1.35
- DVDs $1.35
- Music $1.35
- Software & Computer/Video Games $1.35
- Video $1.35
- Video Game Consoles $1.35
At the end of the day, the selling plan you choose depends highly on the kind of seller you are. If you are a new seller looking into the business prospect of selling on Amazon, then the individual selling program will be far more affordable for you.
However, if you are already an established seller from a well-known business that has an existing demand for its product, then the professional selling plan is more suitable for you. The professional selling plan has enhanced features and tools which allow you to analyze your business faster. Like all good things in the world, the added benefits of this plan come with a price.