Are you thinking about selling on Amazon? Or perhaps you already do and you want to know if you're getting the best bang for your buck.
Stay tuned, because in this post we'll be comparing regular Amazon with Amazon Handmade and Fulfillment By Amazon.
Hi, my name is Mei and I help makers, artists and designers make a living selling their handmade products online.
Amazon is one of, if not the most popular online marketplaces out there. It attracts a huge amount of shoppers, with over 150 million unique visitors each month in the U.S. alone!
They have a really good reputation and brand name and they’ve had an online selling platform since 1998. They really know what they’re doing.
When it comes to actually selling on Amazon though, understanding the different account types and the pros and cons of each can be a little confusing. So let's break it down.
The majority of sellers use regular Amazon. Here you can find almost anything, from bags of peanuts to designer clothes to laptops.
Whatever you're selling here, the first choice you'll have to make is whether you should apply for an “Individual” or a “Professional” account.
Individual sellers are required to pay a listing fee of 99 cents for each item they want to sell, whereas Professional sellers don’t pay for listing fees but instead pay a monthly fee of $39.99.
If you expect to sell 40 items or less per month, you should go for the Individual account. If you expect to sell more than 40 items per month, go for the Professional account.
Professional accounts also include product advertising, potential top placement on product detail pages, and advanced selling tools like APIs and business reports.
You should also know that some product categories specifically require a Professional account or approval to sell.
Products on Amazon are sorted by category. Depending on which ones your items fall under, you can expect to pay a referral fee of between 8% and 15% of your product's total sale price (including any shipping or gift-wrapping fees).
There are a few categories that charge a referral fee of more than 15%.
If you choose to fulfill orders yourself (in other words, handle the packaging and shipping of your products) Amazon will charge the buyer a shipping fee based on the product's category and the shipping service they select. This amount then gets passed to you in the form of a shipping credit to cover your costs.
Individual sellers are forced to stick to Amazon's set rates, even if the shipping actually ends up costing more than Amazon states to the customer! Your products should be priced accordingly to account for this cost.
Professional sellers, on the other hand, are able to set their own shipping rates, except for books, music, video and DVD items.
Another fee you might see is a refund administration fee. If you have already received payment from a customer but need to refund them, Amazon will refund you the initial referral fee but minus 20% of it, or $5.00 depending on which number is lower.
There are also optional extra costs to think about.
If you want to advertise your listings via your Professional account, you can pay for Amazon Advertising. They use an auction-based system where you can set the maximum amount you're willing to pay each time a shopper clicks on one of your ads.
So what's different about Amazon Handmade? Amazon Handmade is a separate selling program specifically for makers of handcrafted products.
There’s an application process you have to go through, but apparently you get an answer within minutes. Those who are approved are required to register with a Professional selling plan.
However, unlike regular Amazon, makers don’t have to pay any monthly fee. Listings are free! But each sale on Handmade is still subject to a flat 15% referral fee.
Amazon Handmade is great in that it offers a standalone platform for makers to sell their products. Its verification process instills a certain level of trust between shops and customers, where they know the product is handmade, or made in America.
You can have a customized URL for your shop, so customers can easily find your store. You can use Amazon advertising features, the same as regular Amazon, and you only pay when your ad is clicked.
The idea of selling through Amazon Handmade might sound great because it’s a place just for handmade products, right? That should attract customers who care about handmade products!
However, more veteran sellers contend, and I agree, that the only thing that really matters to Amazon shoppers is the price, reviews and that it’s a good product.
If a customer wants a bespoke item, they won’t usually think to shop for it on Amazon. It's like the notion of going to Walmart instead of Louis Vuitton to buy a luxury handbag.
Amazon has a stigma attached to it that gives the Handmade stores a reputation that can be hard to shake and therefore potentially limit profits.
Since you’re technically on the Professional account with Amazon Handmade, you can set your own shipping rates.
Having said that, there is an option on both platforms that lets Amazon take care of the fulfillment side of your business entirely. This program is called, Fulfillment By Amazon, or FBA for short.
Fulfillment By Amazon (FBA)
While it has more fees to think about, there are definitely certain perks to FBA which makes it very attractive to sell on.
A huge benefit is it frees up a lot of your time so you can focus on parts of your business you actually enjoy doing.
Another benefit is the potential boost to sales that comes from FBA because your products are eligible for Amazon Prime shipping. The Prime label appears on your product listings and is very attractive to buyers.
There are almost 85 million Prime subscribers and they often search for the Prime label while shopping. I myself never buy products on Amazon unless it has Prime on it.
Search filters and Amazon's algorithms also prioritize Prime items so your products can appear more and higher in search results. Not to mention, many people shopping online feel safer putting their trust in a major corporation, rather than an individual.
However while you will probably see an increase in sales through FBA, consider also that by entrusting Amazon with customer service for your shop, you lose some of your own brand, same as any marketplace site like Etsy or Ebay.
In my experience, purely in terms of sales, FBA is the most profitable.
Self-fulfillment on regular Amazon has been the next best option for me, followed lastly by Amazon Handmade.
Remember that you’re not restricted to any one selling avenue. You can have more control over certain products you have on one platform but be willing to experiment with another through a different marketplace.
If you're used to selling on Etsy, making the switch to Amazon can be intimidating because their fees are not as straightforward and you might feel lost with all the different options.
I will have other posts coming out soon on the different Amazon pricing, how to start selling on FBA and how to get more sales on Amazon.
For now, I’d like to hear what you think about selling on Amazon. Do you think you’ll start there? Let me know in the comments.