KPMG Spark Blog
Interesting in getting into ecommerce? This primer provides tips and advice for selling online, primarily focused on sales via Amazon.com.
In 2018, Amazon's share of the US ecommerce market hit 49% according to BigCommerce.com. That's 5% of all retail spent across the entire country. To put things in perspective, according to BigCommerce.com this market share is more than the next three biggest online sellers combined, with eBay coming in at 6.6%, Apple at 3.9% and Walmart at 3.7%. Because of its online market share and, although these tips also apply to other online sellers and retailers, our blog will primarily provide tips for selling on Amazon.
There are more than 2.5 million active sellers on Amazon. Looking to make a quick few bucks, join the 200,000 Amazon sellers making more than $100,000 in sales, or even the 25,000 making more than $1 million in sales? Well, you’ve come to a good place to learn how to get started.
A few additional facts from BigCommerce.com to get you hyped about selling on Amazon:
You pumped yet? Let’s go. There are two stages to consider for online selling: before you register and after you register.
It might seem unnecessary to include this step, but it’s probably the whole reason you came to read this blog in the first place: you have something to sell! However, while there are more than 20 product categories open to all sellers, there are at least 10 categories that are only available to professional sellers. To sell from these additional 10 product categories, you need a Professional Selling plan and specific permissions from Amazon. Why is this the case? It’s so Amazon can ensure quality product selling in those categories. Right now there are 11 product categories that need approval (and a Professional Selling plan), which include:
(This list was updated March 2, 2020)
Within the open 20 categories, products can be listed without special permission or a Professional Selling plan but each category has additional guidelines that sellers need to follow. For example, if you would like to sell Home and Garden products there are no requirements to sell new, used or collectible items. For certified refurbished products, however, there are a few requirements that must be met. Each product category is different, so take your time to learn about your product category here.
Choosing a selling plan strictly depends on how many products you want to sell. According to Amazon, the magic number is 40. If you plan on selling fewer than 40 items, then the individual selling plan is the way to go. This plan charges you $0.99 per item plus referral fees and variable closing fees. If you plan on selling more than 40 items, then the Professional plan is probably better suited for you. This plan has a monthly subscription fee of $39.99 plus referral fees and variable closing fees.
Reading about all these “fees” may sound overwhelming. Don’t worry—referral fees are there since Amazon plays a role in facilitating the sale between the buyer and the seller. The referral fee is again based on which product category you are selling. Let’s go back to our Home and Garden example. The referral fee for Home and Garden products is 15% or with a $0.30 minimum. So if you sell a Bonzai tree for $50, Amazon’s referral fee would be $7.50 ($50 x 0.15 = $7.50). If you sold a succulent for $1.50, the referral fee would be $0.30. (Even though 15% of $1.50 is $0.23, $0.30 is the minimum referral fee).
The variable closing fees refer to media categories only. This includes books, DVDs, music, software and computer/video games, videos, video game consoles, and video game accessories. All products sold within these categories must pay a closing fee of $1.80 per product.
The only other fee included is a shipping fee. The shipping fee depends on whether or not you plan for Amazon to fulfill your orders for you. If you do so, you will be charged fees for order fulfillment, storage and optional services. See this page for further details on fulfillment fees.
Have you figured out your selling plan yet? If not, see Amazon’s own website for further info. If you have figured out your plan, let’s move on to stage two of online selling: after you register!
In order to start listing, you must create an account on “Seller Central,” which is the interface where you will manage your selling account.
How exciting is this? You’re ready to list your items to sell. To list, you must know whether your products are already on Amazon.com or not. If they are, then you simply indicate how many products you have to sell, describe the condition of the product(s) and provide shipping options. If your products are not yet on Amazon.com, you need to identify a Universal Product Code (UPC) or a European Article Number (EAN), and a Stock Keeping Unit (SKU) number. You also need to list product attributes like a title and a description.
The best part of selling--actually selling the product! The payment for your product, minus Amazon and shipping fees, will be directly deposited into your designated bank account. Boom, that’s it.
Once your product sells, you will be notified. If you decided to use Amazon’s fulfillment service, then Amazon has you covered and you are done here. If not, you need to handle the shipping yourself.
All in all, it’s pretty simple. The biggest thing is understanding Amazon’s process and doing what’s necessary to get your products on their platform.
If you are ready to sell using an online retailer like Amazon, but don’t know how to start bookkeeping or need help with bookkeeping for your business, that’s what we’re here for. Learn more about how KPMG Spark can help here.
This blog article is not intended to address or provide advice concerning the specific circumstances of any particular individual or entity and does not constitute an endorsement of any entity or its products or services.
Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.
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