Amazon is one of the biggest e-commerce companies in the world and its success is mainly down to its huge product offering, accommodating selling plans and global reach.
Both B2C and B2B businesses sellers use Amazon to reach millions of customers. With flexible selling plans, product categories, and fulfilment options designed to accommodate your business needs, it’s no surprise that Amazon is considered to be one of the most cost-effective ways to grow your business.
But how much does Amazon charge to sell in the UK? We’ve created a helpful guide outlining everything you need to know.
Selling on Amazon UK
Selling on Amazon in the UK is incredibly easy. The platform prides itself on allowing its sellers to “reach tens of millions of shoppers, whether you’re selling one item or millions.”
One of the main advantages of selling on Amazon is that it is one of the most advanced fulfilment networks in the world – Amazon can manage the whole delivery process for you, from packing to shipping, and of course customer service in-between.
How Much Does Amazon Charge You to Sell?
Amazon offers a range of different selling plans so that you can choose a selling strategy that meets the needs of your business.
For example, you can choose from an Individual Plan, where you’ll pay 75p every time you sell an item, or the Professional Plan, which will cost you £25 per month. With both of these plans, Amazon collects a referral fee on each sale, which is a percentage of the total transaction and varies by product category.
With this in mind, before you start selling, it’s definitely worthwhile comparing both plans.
Amazon Basic Seller Account
The Individual Amazon basic selling plan is a pay-as-you-go plan that provides access to a basic set of listing and order management tools. This account allows sellers to create listings on an individual basis, by matching their products to existing pages or creating new pages in the Amazon catalogue.
If you choose this selling option, Amazon will set the delivery rates for orders, as well as delivery service levels. With a pay-as-you-go rate of £0.75 (VAT excl.) per order, you would need to make less than 34 sales per month to make this option feasible for you.
Amazon Pro Seller Account
If you sell more than 40 units per month, you should opt for a professional Amazon seller plan, especially if any of the below applies to you:
- You want to advertise your products
- You want to qualify for top placement on product detail pages
- You want to use advanced selling tools, like APIs and reports
- You want to sell products in restricted categories
As part of this plan, you will be able to enjoy the following features and benefits:
- Apply to sell in additional categories
- Save time creating listings in bulk
- Manage inventory with feeds, spreadsheets, and reports
- Qualify for top placement on product detail pages
- Increase selling efficiency with API integration
- Set your own shipping fees for non-media products
- Attract shoppers with on-site advertising tools
- Run promotions including free shipping
- Add multiple users to your account
What Are the Fees for Selling on Amazon?
There are a number of selling fees that you should be aware of when selling on Amazon, including the following:
Amazon charges a referral fee for every item that is sold on the website. The referral fee will depend on the category that the product you are selling falls under and the vast majority of referral fees are between 8% and 15%.
You should also be aware that you will need to pay a fixed closing fee, based on the item price that is paid by the buyer. This fee also includes any shipping or gift-wrap charges.
Per-item fees should also be taken into account as Amazon will take a cut from every item sold. This ranges from 6% to 45%, depending on the items that you are selling.
Fulfilment by Amazon
How much you will pay in fulfilment fees depends on whether you ship your products yourself, or use Fulfilment by Amazon, which has been set up to handle all of your logistics and offer Prime shipping for your products.
If you decide to fulfil orders yourself, Amazon charges shipping rates based on the product category and shipping service selected by the customer. The shipping costs are then passed onto you in the form of a shipping credit.
Amazon charges customers different shipping rates for different products. You should familiarise yourself with these.
Returns with Amazon FBA
When a customer returns an item, Amazon will assess the condition and, if they are satisfied that it warrants a return, they will process the return for you. At Amazon’s discretion, they can also offer a refund without requiring that the customer return the item. You can find the refund amount listed as a product charge in the Refund section of the Payments report.
VAT Issues Relating to Amazon Fees
If you’re selling in the UK, the majority of Amazon’s fees will be billed from Luxembourg. The implication of this is that the reverse charge mechanism applies to these charges. The implications of this are that you must account for these charges as both an input and an output on your VAT return, with no actual overall impact on your VAT liability. There are therefore two things to be aware of in respect of this issue:
- You will not have any VAT to reclaim on these Amazon fees. This means that the amount of VAT you should expect to pay per quarter would be higher than for example selling on eBay where their charges are subject to UK VAT.
- Impact on the VAT registration threshold – The UK VAt registration threshold is £85,000 per annum. However, in addition to your revenue, the outputs under the reverse charge mechanism explained above also count towards the VAT registration threshold. So if for example you have made £80,000 in gross sales but have incurred £10,000 in Amazon fees, you will have exceeded the VAT registration threshold and need to register for UK VAT.
The exception to the above is Amazon’s fees for advertising. These are billed from within the UK which means that they are subject to UK VAT. You will therefore be able to reclaim VAT on these charges are reduce your quarterly VAT bill.
In order to be able to correctly analyse the many different charges you may incur from Amazon between the correct VAT rates, we would recommend using software like A2X which integrates with your Amazon seller central account and analyses out your payouts before pushing them through as invoices to our recommended cloud accounting software, Xero.
Do You Need an Amazon Accountant?
Whether you’re an Amazon seller or an Amazon FBA seller, you will benefit from choosing an accountant that specialises in eCommerce. This is because eCommerce accounting requires a specialist set of skills that cannot only help you to manage your tax obligations but also help you to manage your operating costs, keep on top of costs of goods sold, and allow you to easily track other business expenses.
If you need help with your Amazon accounting, get in touch with our team.