How to sell on Amazon
Last reviewed . General information, not legal or tax advice.
To sell on Amazon, register a seller account at sell.amazon.com, choose the Individual plan ($0.99 per item sold) or the Professional plan ($39.99 a month), verify your identity, then list your products and decide whether you ship orders yourself or use Fulfillment by Amazon. Every sale also pays a referral fee, usually a percentage set by product category.
Which Amazon selling plan should I choose?
Amazon's pricing page offers two plans. The arithmetic is simple: the Individual plan costs $0.99 for each item sold, so once you expect to sell more than about 40 items a month, the flat $39.99 Professional fee costs less. Amazon lets you switch or cancel the plan at any time after registration.
| Plan detail | Individual | Professional |
|---|---|---|
| Plan fee | $0.99 per item sold | $39.99 per month |
| Cheaper on fees when you sell | Up to 40 items a month | 41 or more items a month |
| Listing one product at a time, fixed prices, FBA or shipping yourself | Included | Included |
| Bulk listing and inventory tools, Amazon Ads, brand tools, Automate Pricing, selling to businesses and worldwide, apps and APIs | Not included | Included |
Both plans pay referral fees on every sale, and both can ship orders themselves or use Fulfillment by Amazon.
What are Amazon's referral fees?
The referral fee is Amazon's commission. For each item sold you pay a percentage of the total price, which includes the item price, shipping and any gift wrap, or a minimum amount, whichever is greater; for most categories the minimum is $0.30. Some categories that small product brands often use:
| Category | Referral fee |
|---|---|
| Home and Kitchen | 15% |
| Beauty, Health and Personal Care | 8% if the total price is $10.00 or less; 15% above $10.00 |
| Clothing and Accessories | 5% up to $15.00; 10% from $15.01 to $20.00; 17% above $20.00 |
| Jewelry | 20% of the portion up to $250.00; 5% of any portion above |
| Grocery and Gourmet | 8% if the total price is $15.00 or less; 15% above $15.00 |
| Toys and Games | 15% |
| Everything Else | 15% |
Notice the price steps. A shirt with a $22 total price pays 17% of the whole $22, or $3.74, while at $20 it pays 10%, or $2.00. Because the total price includes shipping, a small change in price or shipping can move your margin more than it seems. Amazon also notes that a product's fee category may differ from the category shoppers see.
Should I use Fulfillment by Amazon (FBA)?
With FBA you send inventory to Amazon's fulfillment centers, and Amazon picks, packs and ships each order, handles customer service and returns, and offers your items with Prime shipping. It adds two kinds of cost on top of the plan and referral fees:
- Fulfillment fees per unit, based on the product's price, weight and dimensions.
- Monthly storage fees, based on the space your inventory occupies, calculated from your daily average volume in cubic feet. Slow sellers cost money while they sit, and Amazon warns about long-term storage costs.
The alternative is Fulfilled by Merchant: you store and ship orders yourself. It suits heavy, fragile, made-to-order or slow-selling products. Before choosing, run one product through Amazon's revenue calculator, which compares the two methods for the same item.
What do I need to register as an Amazon seller?
Amazon's registration guide walks through five stages. Have these ready:
Business information
Where the business is registered and what type it is. You do not need an LLC: an unincorporated seller selects "None, I am an individual." A registered business enters its exact legal name, its registration number (not the EIN) and its registered address.
Seller information
Your details from a government-issued ID, such as a passport: full legal name, citizenship, country and date of birth and residential address. You also state whether you are a beneficial owner, meaning someone owning more than 25% of the business, a legal representative, or both.
Billing information
A bank account in your own name or the business's name to receive payouts, and a credit card for charges.
Store and product information
A unique store name, which need not match the business name, and your product IDs. Most products need a GTIN such as a UPC, which can come from GS1; Amazon grants exemptions only in rare cases.
Identity verification
Upload your ID and a proof of address from the last 180 days, then take a photo or join a video call. Amazon says verification usually takes three business days or less.
If you own your brand, Amazon recommends enrolling in its free Brand Registry before you list; it requires a pending or registered trademark. See business names, DBAs and trademarks for the USPTO side.
What rules apply to reviews and taxes on Amazon?
Reviews make or break a new listing, which is exactly why the FTC's rule on consumer reviews matters. It bans writing, creating or selling fake reviews, and bans giving money or other incentives for reviews that express a particular sentiment, positive or negative. Asking all buyers for honest feedback is fine; paying for five stars is not.
On tax, states treat Amazon as a marketplace provider. Texas, for instance, lists Amazon among the providers that must collect and remit sales tax on marketplace sales, yet a Texas-based seller still needs its own permit and must file returns. For income tax, the IRS requires a Form 1099-K above $20,000 in more than 200 transactions, and you must report all selling income either way.
Frequently asked questions
How much does it cost to sell on Amazon?
You pay a plan fee, either $0.99 per item sold on the Individual plan or $39.99 a month on the Professional plan, plus a referral fee on every sale, which is a category percentage of the total price with a minimum of $0.30 in most categories. Fulfillment by Amazon adds fulfillment and monthly storage fees.
Do I need an LLC to sell on Amazon?
No. Amazon says you do not need an LLC or a registered business to sell in its store; you select "None, I am an individual" during registration and give your own details. You will still need a government ID, a bank account in your name, a credit card and proof of address.
Is the Amazon Professional plan worth it?
On fees alone, the Professional plan's $39.99 a month beats the Individual plan's $0.99 per item once you sell about 41 items a month. Amazon also lists tools only on Professional, such as bulk listing, advertising and brand tools, which matter more as your catalog grows. You can switch plans at any time after registering.
Can I give free products for Amazon reviews?
Not in exchange for a positive review. The FTC's consumer review rule bans giving compensation or other incentives in exchange for, or conditioned on, reviews that express a particular sentiment. Fake reviews are banned outright. Ask every buyer for honest feedback, and follow Amazon's own policies on reviews as well.
Sources
- Pricing: selling plans and referral fees, Amazon (Sell on Amazon). https://sell.amazon.com/pricing
- Fulfillment by Amazon, Amazon (Sell on Amazon). https://sell.amazon.com/fulfillment-by-amazon
- Seller registration guide, Amazon (Sell on Amazon). https://sell.amazon.com/sell/registration-guide
- 16 CFR Part 465, Use of Consumer Reviews and Testimonials, Federal Trade Commission (eCFR). https://www.ecfr.gov/current/title-16/chapter-I/subchapter-D/part-465
- Marketplace Providers and Marketplace Sellers, Texas Comptroller of Public Accounts. https://comptroller.texas.gov/taxes/sales/marketplace-providers-sellers.php
- Understanding your Form 1099-K, Internal Revenue Service. https://www.irs.gov/businesses/understanding-your-form-1099-k
This guide is general information, not legal or tax advice. Rules differ by state and city and change over time, so confirm the details with the official sources above or a licensed professional.