If you have built a loyal following for your business, Amazon might be an excellent option to explore. The platform has a vast database of customers, making it an ideal marketplace for startups. Merchants can generate revenue by selling to customers without having to spend so much on marketing and advertising.
Amazon has made its platform user-friendly; therefore, you can easily set up your store. However, you might have a few major decisions to make. One of the biggest decisions you make as a newbie is choosing between being an Amazon individual seller vs. a professional seller.
Similar to most cloud-based business models, being a professional seller entails paying higher fees and taxes because the platform gives you access to premium tools. In contrast, individual sellers pay lower fees but have limited access to the platform's tools and features.
In this guide, we aim to provide the necessary information to help you make this big decision as a newbie on the Amazon store.
Amazon Individual Seller Vs. Professional
If you do not need the inventory tools and volume reports, then opting for an individual seller plan might be the best option for you as a beginner. There is no monthly fee involved in this plan; you only pay for every item you sell. Also, you will have to pay for any other applicable fees.
On the other hand, you pay a non-refundable subscription fee every month if you wish to be a professional seller. You must note that payments must be made regardless of whether you make a sale or not, and other applicable fees are charged too.
As a professional seller, you have access to inventory tools and monthly volume reports. Also, the platform provides order processing tools to help you conduct business transactions seamlessly. Medium and large-scale businesses mostly use this plan.
Amazon Seller Professional Vs. Individual Categories
Amazon allows both individuals and professional sellers to market 20 categories of products. However, professional sellers enjoy an incentive; they can sell some additional categories, whereas individual sellers can't (we will discuss restrictions in the next section). Therefore, if you wish to market products in those categories, you can do so by opting for the professional seller account.
As an individual seller, you will face some limitations on marketing some selling categories. Professional sellers are only allowed to sell these additional product categories:
- Automotive Parts & Accessories
- Grocery, Food & Gourmet
- Fine Art
- Business to Business (B2B) products
- Fashion Jewelry
- Fine Jewelry
- Industrial & Scientific
- Collectibles Coins
- Sports Collectibles
- Video, DVD, & Blu-ray
- Professional Services
When you choose the individual seller plan, you will be forced to add your products individually. After that, you will have to wait until to product is matched with an existing inventory on Amazon; then, you can create a listing for that item.
For professional sellers, they enjoy the privilege of uploading numerous items at the same time with the help of a spreadsheet. This could help you save time and energy as a newbie because you literally load every item you wish to sell in minutes.
Also, the inventory feature on Amazon becomes an advantage when you start fulfilling your orders. Whether you choose to use Amazon FBA or manual order fulfillment, you need to know how many items you have in your inventory at a given time.
Although you get an inventory insight while on any of the plans, the professional plan stands out with its inventory-reporting features; keeping an account of your inventory becomes easy. Further, the professional plan's general reporting feature allows new sellers to find out the level of customers' interaction with their listed items.
Winning an Amazon Buy Box gives you the best chance of recording high sales for a product. In this scenario, when buyers search for a product on the platform, only a seller would have the "Add to Cart" button in the search result, this is popularly called the Buy Box.
The remaining competitors will be categorized under the "25 new" section. To become eligible for the Buy Box, you must register for the professional plan. Then, you must meet a certain list of requirements to boost your chances of getting selected. In addition, you must have a straightforward product description, and your shipping time has to be impressive.
In truth, it is only the advanced features that distinguish individual sellers from the professional sellers; besides that, sellers enjoy equal benefits. Of course, you have to establish your sales tax collection and order fulfillment processes in order to ensure that your incoming orders are handled efficiently. Whichever plan you decide to pick, the sales process on Amazon is lucrative and hassle-free.
Amazon Professional Seller Vs. Individual Shipping Rates
Shipping is among the most discussed topics on Amazon. Shipping costs are not constant and are largely dependent on seller plan, product, delivery address, type of order fulfillment, and so forth. However, the selling plan sets a standard for shipping costs.
As an individual seller, the platform sets the shipping fee. Your domestic customers can pay about $3.99 to $14.95 as shipping costs. In contrast, international buyers pay from $16.95 to $46.50. In a scenario where you go beyond the freight weight, you will be charged $0.50 to $0.99 for every pound above the limit.
You get to set your shipment fees as a professional seller. That being said, we recommend that you research to find out what your competitors are charging and set your rates accordingly. With this, you prevent driving your customers away with excessive shipping fees.
Before venturing into selling on Amazon, you should calculate your expected shipping costs to avoid any future mistakes.
Amazon Individual Seller Vs. Professional Seller Tax
The individual selling plan is suitable for merchants who record less than 40 sales in a month. Unlike the professional selling plan, it is free. But choosing this plan means you have to pay $0.99 selling tax for every item you sell.
The professional plan suits high selling merchants; these are people who sell more than 40 items in a month and target clients outside the United States. As mentioned earlier, this plan allows you to set your shipping costs, list bulk items, and so forth. You are taxed a monthly fee of $39.99.
Though it is possible to set out as an individual seller, you should opt for the professional selling plan if you wish to make a considerable profit on Amazon. It helps to ease the process for you as well as qualifies you for the Buy Box feature.
Professional Vs. Individual Seller Amazon Fees
You must have found out that the cost of selling on Amazon is dependent on your choice of plan. An individual seller pays $0.99 for every item he sells, coupled with additional charges spanning from $0.45 to $1.35. On the other hand, professional sellers pay variations of referral and closing fee percentages between 6% to 25%. They also pay a monthly subscription fee of $39.99.
The variable closing fees and referral fees are subtracted from the general cost of every sale; this includes the actual selling price, shipping costs, and other applicable charges.
What Is The Other Difference Between Amazon Seller Professional Vs. Individual?
A professional selling plan permits you to use Amazon Marketplace Web Service to receive reports, upload feeds, and perform other API functions while an individual account does not allow that.
As a professional seller, you can calculate U.S. sales and use taxes on your orders; an individual account doesn't permit that.
With the guide above, you have been able to find out the differences between being an Amazon individual seller vs. a professional seller. This will help you make an informed decision before venturing into selling on Amazon. Also, endeavor to carry out extensive research to find out what works for you.