Profitability Check - Is It Worth Selling on Amazon UK?

If you’re an e-commerce seller looking to start a business, would it be worth selling on Amazon UK? The answer to this question is YES! But only if you approach it correctly.

There are now thousands, if not millions, of sellers who use Amazon to make money and get their products shipped worldwide. Being a successful Amazon seller can be quite challenging.

Still, with a comprehensive analysis and correct learning experience, you can have a successful e-commerce career at Amazon.

This article will share why it is worth selling on Amazon UK. We will discuss everything from what to sell on Amazon UK to the potential earnings, costs, and strategies.

So, whether you’re a newcomer or a seasons Amazon seller, this guide will be helpful!

Understanding Potential Profitability

Amazon has been the largest online marketplace in the UK. Understandably, you need help to enter the market as a small business owner, especially with thousands of competitors on the platform.

You must do your research first and understand potential profitability. So, keep reading to know more about selling on Amazon.

How much do Amazon sellers make in the UK?

Generally, the amount of how much Amazon sellers in the UK make can vary widely. Some sellers make a few hundred pounds monthly, while others generate substantial six or seven-figure incomes.

Since anyone can sell on Amazon UK, the key to success often lies in product selection, pricing strategies, and marketing efforts. Technically, based on data and surveys, it shows that half of Amazon sellers make at least $1,000 per month.

Meanwhile, super-sellers or large companies on the platform make more than $100,000 monthly.

How much does it cost to sell on Amazon UK?

Is there a cost to sell on Amazon UK? Yes. Just like in any other platform, there are fees you would have to pay to Amazon to sell your products.

Amazon fees can also vary, especially for your subscription and the features you avail on Amazon (i.e. Amazon FBA UK).

There are two accounts you can have as a seller on Amazon:

1. Individual Account: The account will cost around $0.99 per item you sell on the platform. This acts as payment for Amazon.
2. Professional Seller: When you avail of this type of account subscription, the amount you would have to pay to Amazon is $39.99 per month, whether or not you have sales.

What are the best products to sell on Amazon?

Choosing the best products to sell on Amazon UK can be overwhelming with so many available products. So, how can you decide what to sell?

There are plenty of factors you can consider when choosing products to sell. But among all those, here are four tactics you can use to find top-selling product ideas:

1. Study top-sellers' product list: You can check the Amazon Best Sellers and see which items are the most popular. While you can’t sell precisely the same thing, you can use it as a guide to developing a list of ideas.
2. Look for trending products: You can search for the most significant sales rank updated every hour on Amazon. There are categories in the list where you can discover the top 100 trending products, sales rank, previous product ranking and the number of reviews and stars.
3. Check out Hot New Releases: If you want to know about new releases on Amazon, you can check them out on Amazon Hot New Releases. The guide can help you understand which might be the following trendy products and also help you develop products to sell.
4. Keep an eye on the Most Wished products: There are several lists of products that customers wish for the most. If you think selling most of these items is possible, you can also consider putting them on the market.

Pros and Cons of Selling on Amazon UK

Selling on Amazon UK offers a lot of opportunities and challenges. While the platform provides a remarkable avenue to reach millions of customers, it also comes with complexities.

There’s no denying it; indeed, Amazon is already saturated. It will not be a surprise if you doubt whether it is still worth selling on Amazon UK. But the good thing about this is that more and more buyers continue to buy on the platform, too.

That said, below, we’ll discuss the pros and cons of selling on Amazon UK.

Pros

With so many businesses opting to sell on the Amazon platform, it’s clear that there are a lot of benefits when you use this channel for your e-commerce business. 

Huge customer base and market reach

Amazon is where your customers are, and this makes one of the most compelling advantages of selling on Amazon UK. With its vast customer base and millions of active users, your products have the potential to reach a broad and diverse audience.

Amazon's extensive market reach allows you to tap into a customer base across the United Kingdom and beyond, increasing your products' visibility and potential sales.

It’s no surprise that customers tend to use Amazon. The reason is because they offer good customer service, excellent parcel tracking and fast delivery.

Ease of use with Fulfilment by Amazon (FBA)

Fulfilment by Amazon (FBA) streamlines your business's logistics and customer service pillars. It also helps you reach several more customers.

Since FBA Amazon takes care of storage, packing, shipping, and even returns, it will allow you to focus on sourcing, marketing, and growing your business.

So, is Amazon FBA UK worth it?

Yes! Amazon FBA UK can significantly reduce the operational burden and provide a more efficient selling experience.

Access to international markets through the European Fulfilment Network (EFN)

Another advantage of being a seller on Amazon is it helps you access global markets, which also means a broader reach of potential customers.

When you sell on Amazon UK, you gain access to the broader European market through the European fulfilment network. This streamlined access is immensely beneficial for you, primarily if you aim to expand your footprint beyond the borders of the United Kingdom.

Cons

Behind the advantages of selling on Amazon, you may encounter a few complexities and challenges on the platform.

Increased competition in popular product categories

If you are a small or medium business looking to build a large and solid customer base quickly, it might be challenging to achieve this on Amazon — why? It’s because of Amazon's popularity.

While you do not need a company to sell on Amazon UK and only open a seller account individually, competition can be fierce with other big retailers on the platform. Amazon UK offers vast opportunities so that popular product categories can be highly competitive.

Additionally, when more sellers enter the marketplace, standing out and gaining a foothold in these saturated niches becomes increasingly challenging. So, if you are a newcomer, you must invest in effective strategies to differentiate their products and attract customers.

Potential impacts from policy changes and suspensions

Amazon has terms and conditions you must agree with when you become a Seller. Among these are selling policies, code of conduct and much more.

While this may benefit you for a while, you might find it difficult to adjust, especially when they have sudden changes to policy, and when violated, it may lead to suspension.

Additionally, Amazon has a stringent requirement for creating listings, which may detract from your marketing flexibility. So, sellers must remain vigilant and adapt to these changes swiftly, as policy violations or suspensions can disrupt operations and profitability.

Fees and Costs for UK Sellers

As an Amazon seller, you’ll encounter various fees on the platform. Among them are referral, subscription, refund, and storage fees.

The cost of selling on Amazon UK that you will need to pay might be overwhelming, and it’s understandable to wonder if it is worth Selling on Amazon UK.

To help you, we’ll further discuss all the fees involved when selling on Amazon below.

Understanding the types of fees for Amazon UK sellers

Amazon’s fee structure covers various styles to cover the costs of listing and selling products on the platform. If you find it complicated, you can integrate Amazon into Quickbooks for easy bookkeeping management.

In the meantime, here's an overview of the types of fees that Amazon UK sellers need to consider.

Amazon Seller plan fees

Before you will be allowed to sell on Amazon, you will need to pick a selling plan account. As mentioned earlier, there are two options for you:

• Individual Plan - $0.99 per item sold
• Professional Plan - $39.99 per month

Picking the correct type of plan is crucial to reduce costs. We suggest you take the individual program if you’re just starting and want to test the waters. The professional plan is the best choice after building your business and being committed to growing and making money on the platform.

Referral fees

Amazon charges a referral fee for each item sold on their platform. This cost is calculated as a percentage of the item’s sale price. So, it will vary depending on your product category.

Typically, the referral fee is around 15% of the total sale price, and you will be charged with it once the item has already been shipped to the buyer. You can check out Amazon’s exact referral fees here.

Amazon FBA fees

When selling on Amazon, there are two ways to fulfil your orders: Fulfilled by Merchant (FBM) or Fulfilment by Amazon (FBA).

The fees will remain the same depending on which fulfilment method you use. FBA fulfilment fees are paid on top of the referral fees, which will cover the cost of shipping, returns, and customer service. The price will also depend on your product type, size and weight.

Understanding the Impact of Pricing on Profitability

Pricing strategies and the competitive landscape on Amazon play a significant role in determining the profitability of sellers.

As a seller, you must carefully consider how to price your products and navigate the pricing competition to optimise financial performance and lessen fees and costs to pay on Amazon.

Below are some key factors to understand.

Dynamic Pricing

You can easily automate product pricing if you adjust product prices based on market demand, competitor pricing, and inventory levels.

Doing this will help you stay competitive with other prices. However, you should note that this can lead to low profitability over time.

Cost Structure

Sellers must clearly understand their costs, including product sourcing, Amazon fees, fulfilment costs, advertising expenses, and overhead. This information is essential for setting prices that are both competitive and profitable.

More than that, accurate cost analysis ensures sellers set prices that cover their expenses and generate a profit.

Value Proposition

Aside from the price of your products, you should also emphasise the unique value you provide, such as high-quality products, excellent customer service, or bundled offerings.

Doing these will not cost you anything; a strong value proposition can even justify higher prices and protect profit margins. Even in a competitive market like Amazon, it can lead to better profitability.

Consideration of other Amazon costs

Another factor you must consider when evaluating the profitability of selling on Amazon UK is the cost of product sourcing, shipping and returns.

These additional costs can significantly impact a seller's bottom line.

Product sourcing costs

Negotiating favourable terms with your suppliers or manufacturers to reduce costs is essential. If you’re sourcing products from overseas, you should factor in import duties and taxes.

Meanwhile, ensuring the quality of the products you source can help prevent returns and negative reviews. So, make sure to invest in quality control measures.

Shipping costs

When evaluating the profitability of your products on Amazon, consider the cost of shipping.

Meanwhile, getting products to Amazon’s fulfilment centres will also incur shipping costs.

Depending on which method you will use, the Fulfilment by Amazon (FBA) has specific fees based on factors like shipment size, weight and shipping method. So, efficient packaging and inventory management is a must to reduce cost.

Tips and Tricks for Amazon UK Sellers

Navigating the world of Amazon UK as a seller can be rewarding and challenging. To help you succeed and make the most of your e-commerce venture, here are some valuable tips and tricks:

1. Choose the Right Products: Conduct market research to identify profitable product niches with demand and manageable competition.
2. Optimise Product Listings: Craft compelling product titles, detailed descriptions, and high-quality images to entice buyers. You can also use relevant keywords and Amazon SEO techniques to improve search visibility.
3. Competitive Pricing Strategies: Monitor competitor prices and adjust your pricing accordingly. Dynamic seller tools to automate price adjustments based on market conditions are also a good trick.
4. Fulfilment Methods: Evaluate the benefits of Fulfilment by Amazon (FBA) and Fulfilment by Merchant (FBM). Once you know their pros and cons, you decide the best fulfilment method for your products.
5. Leverage Amazon Advertising: Investing in Amazon PPC (Pay-Per-Click) campaigns is a good idea to increase product visibility and attract more customers. After a few weeks, you can analyse campaign performance and adjust your ad spend to maximise ROI.
6. Build a Brand Presence: Create a strong brand identity, including a memorable logo and an engaging brand story. Doing this will help customers remember your business and brand and will give a higher chance of them returning to repurchase your products.
7. Customer Service Excellence: Providing exceptional customer service to build trust and encourage positive reviews does not cost you anything. Responding promptly to customer inquiries and addressing issues professionally is an excellent business etiquette.
8. Inventory Management: Maintaining an adequate inventory level is one essential trick to prevent stockouts and fulfil customer orders timely. Inventory management software can track sales, restock needs, and reorder quantities.

Navigating Policies, Regulations, and More

Aside from studying the costs and profitability of selling on Amazon UK, you should also know about their policies, regulations and more.

Understanding Amazon's policies and regulations is essential for maintaining a successful and compliant e-commerce business on Amazon UK.

Understanding Amazon’s Policies and Regulations

Amazon does not tolerate sellers who do not follow their rules, policies, and guidelines. Instead, complying with Amazon's rules, policies, and procedures will make your life easier.

Overall, Amazon’s regulations are customer-centric. The platform wants to create a positive customer experience, and you are a part of fulfilling that duty.

Below are some of the most important rules you will need to comply with as a seller for Amazon:

Seller agreement

This is the first agreement you must sign when setting up your seller account on Amazon. It’s a straightforward contract that mentions terms regarding your funds, limits and warnings for termination.

General policies

After you become an Amazon seller, you will be bound by more rules that apply to specific selling programs. Each rule will differ depending on which feature or program you will join. Some of these policies that you will come across are:

• Selling Policies and Seller Code of Conduct
• Customer Product Review Policies
• Account Health Rating Program Policy

Intellectual property policies

The Intellectual Property Policy is one of the most important regulations that can get you suspended as a seller when you break them. We advise you to read more about these IP Policies, but in summary, you should only sell Authentic Items (must be in line with the Amazon Anti-Counterfeiting Policy).

Complying with tax obligations, VAT, and international selling regulations

Compliance with tax obligations, Value Added Tax (VAT) registration, and international selling regulations is critical for Amazon UK sellers. Abiding in these will avoid legal issues and penalties, helping you maintain a good reputation.

1. Register for VAT: While it can be tedious, sellers must register for VAT, especially when they do business with Amazon UK.
2. Collect and Report VAT: Once registered, you must collect VAT from customers on your sales. So, make sure your product prices reflect the appropriate VAT rate. After that, you must regularly submit VAT returns and payments to HMRC through HMRC's online services, usually every quarter.
3. Maintain Accurate Records: Keep detailed records of your sales and VAT transactions. This includes invoices, receipts, and documents related to your VAT calculations. Our Amazon to Xero (or Quickbooks) Integration can help you with bookkeeping and accounting if this seems complicated.

Frequently Asked Questions (FAQs)

Let’s explore the top FAQs on whether it’s worth selling on Amazon UK.

Do I need a company to sell on Amazon UK?

You can have a company or not when you sell on Amazon UK. Amazon UK has two selling plans, one for individuals and another for a professional account. Depending on the plan you avail of, you can start selling on Amazon right away.

You only need to be a registered company before selling on Amazon when you reach the platform’s sales income limit to ensure you are paying your taxes accordingly. Otherwise, sole ownership is acceptable when selling on Amazon.

Selling on Amazon vs. eBay - Which is better?

As a selling platform, Amazon is way more profitable than eBay. Sellers find it easier to sell their products on Amazon, especially if they have quality products and many stocks. In Amazon, it is easier to optimise product listings and run effective paid campaign ads. Accordingly, more people also shop on Amazon than on eBay.

Conclusion

This article has mentioned all the essential factors Amazon UK sellers need to know — pros and cons, policies, tips and tricks. So, with all the above details in mind, is it worth selling on Amazon UK?

In a nutshell, the decision to sell on Amazon UK is multifaceted as it entails the promise of substantial profits and the challenges of entering a competitive marketplace.

LinkMyBooks is here to help! We help you save time and money by automating the bookkeeping for accurate ecommerce accounting.

Here’s our 14-day free trial to help you explore and get started.