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Who is allowed to sell on Amazon?

  • Published: 05.09.2022
  • Updated: 20.01.2023

The huge number of product categories and Amazon’s exponential growth into more markets shows just how much opportunity the platform offers sellers in a number of industries. Artisanal food producers as well as electronics or clothing giants sell though this US marketplace.

Amazon itself has invited all businesses – from small entrepreneurs to the biggest brands – to become sellers on their marketplace. However, not in all cases, entering Amazon is a good business move. Factors such as the type of product, margins, logistics and even local regulations in each country play a significant role.

sales-amazon

In this article, we will therefore describe who is and who isn’t eligible to sell on Amazon, and what to look out for when deciding to start selling through this platform.

What are the requirements to register an Amazon seller account?

The standard requirements when setting up an account are:

  • account number
  • debit card
  • registrant’s identity card
  • company information
  • contact information

In most countries, there are no specific restrictions in terms of the business nature of the company. Both sole traders and limited liability companies can become vendors.

who-can-sell-on-amazon

Launching a sale is only the first of many steps

If you simply want to start selling on Amazon, it is a relatively simple process, and in fact most entrepreneurs are able to kick-start their sales without much difficulty. But simply launching sales does not automatically mean that this channel will generate profits. Be aware that selling on Amazon is driven by somewhat different rules than those of many rival marketplaces. The key difference is that a single product can only have one product card on Amazon, as opposed to customisable product cards.

So for example, if a customer is looking for a particular book, they invariably find only one listing in the search engine and can then pick from a number of sellers who offer that particular book, at which point only one of the listings will be highlighted by Amazon’s algorithm in a so-called buy box. Hitting such a buy box significantly increases the chance that customers will opt for that given offer from that particular seller. According to Forbes, up to 83% of all purchases on Amazon are made using a buy box.

They are usually granted to those vendors who offer:

  • The most competitive price
  • Free and fast delivery to the relevant countries
  • Impeccable customer service reviews and statistics (e.g. quick response time)
  • Low return and complaint rates
  • Product availability
  • Low rate of negative reviews

Due to the high level of competition and struggle to secure buy boxes, new vendors face a significant challenge, especially when they offer products many other vendors already have. In the event that we do not manage to secure a buy box, our offer can be found in the ‘More buying options’ box displayed just below the main panel, significantly reducing the chances of a sale.

buy-box-amazon

This makes it a much simpler for brands selling their own products which have not already been featured on the platform. Being the only vendor selling a particular item, you are guaranteed to receive a buy boxes each time.

How to fully utilise Amazon's sales potential?

For many brands and e-commerce businesses, Amazon is becoming one of the key, and often the most significant, sales channel. If you really want to take advantage of the platform’s full potential, you need to adapt to the marketplace’s many requirements in order to gain more buy boxes. We are mainly talking about criteria such as excellent customer service procedures and fast shipping to any country. The latter especially plays a special role and is closely linked to the FBA, or Fulfillment by Amazon, sales model. Sellers using this model are favoured by Amazon’s algorithm.

What is the Amazon FBA model and what does it offer sellers?

Fulfillment by Amazon is a sales model, in which vendors do not ship products directly to customers, but instead, determined by the markets they sell to, send their products to Amazon warehouses, located across Europe. Subsequently, Amazon then delivers these products directly to customers.

One of the most important requirements to be able to start cross-selling using this model, is the need to register as a VAT payer in each country where the company warehouses its goods. So, if our company is based in Poland, and we want to compete for buy boxes with sellers, in such major markets as Germany or the UK, and in order to do so, we need to store goods in these countries, which entails the obligation to settle VAT there.

More importantly, Amazon’s most favoured sellers are those that operate on a Pan-European FBA model, i.e. enabling products to be sold on the FBA model in all, major European markets, namely the UK, Germany, France, Italy and Spain.

For vendors who wish to use this model, this means they have to both register and settle VAT in any given country according to local regulations, which tend to vary considerably in every country. What is important is that, depending on the marketplace, for any delays and errors in VAT returns, sellers face penalties not only from the tax authorities, but also having their account on Amazon blocked until the matter is resolved.

This poses quite a challenge for e-commerce businesses, but the process can be greatly simplified and mistakes avoided with the professional support of companies offering a comprehensive VAT compliance service. As part of the service, we take full responsibility for the registration process and regular VAT settlements in each country.

Is it possible to compete on Amazon without using the FBA model?

Sellers who independently dispatch products to customers (Fulfilled by Merchant model) are less likely to acquire buy boxes than those who use Amazon FBA shipping. In 2015, Amazon created another category, called Seller-Fulfilled Prime, which is available to those sellers who meet a number of strict conditions, such as:

  • Shipping from a domestic warehouse
  • At least 99% of all packages delivered on time
  • The use of authorised carriers to dispatch and collect packages
  • And several other requirements

Fulfilling the conditions of Seller-Fulfilled Prime is not an easy task, but it provides, among other things, the following: ranking the offers very high and the possibility of placing the offers in the so-called “listings”. Lightning Deals, which are special short-term offers promoted by Amazon.

Are the products, which I offer, eligible to be sold on Amazon?

Before you ever start considering selling on Amazon, it is a good idea to review the list of products that are prohibited and those that must be approved by the marketplace administration. Most importantly, these rules vary considerably between countries due to the differences in local regulations. For more substantial coverage of this topic, please check out the following article:

What can and cannot be sold on Amazon?

In addition, it is also worth finding out about the precise costs and commissions involved when selling on Amazon. For some sellers and products operating on a not-so-high margins, it may be that these costs will be too high to be worthwhile and profitable to even start selling on this marketplace. We further elaborate on this topic in the following article:

How much is Amazon’s commission and what other costs do sellers incur?

Would entering Amazon be a smart step for your business?

based on the experience we have in working with e-commerce companies, in most cases Amazon can prove to be an excellent channel and one of the main source of generating sales.

However, to use the platform to your advantage, using the FBA model is often the best way to go, with the consequent need to register and settle VAT abroad and report on stock transfers.

As specialists in the field of VAT compliance and warehouse management, we support companies in this area, enabling the sustainable and secure development of international e-commerce.

Schedule a consultation with us and let’s discuss your business needs.

Kamil Kempisty Co-founder in Taxology and KP Consulting. From 8 years in the accounting business.