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Individual vs. Professional Amazon Seller Account (How to Choose)

A common question I get asked from new sellers is about what type of Amazon seller account they should set up. Specifically, they ask if they should set up an individual seller account or a professional seller account.

Each type of selling account has its respective benefits, and it really depends on your specific needs. To figure out what type of Amazon seller account you need, let’s start by looking at how Amazon describes each account type:

The Amazon Individual Seller Account

Here’s how Amazon describes the individual seller account option:

“The Individual selling plan is for sellers who don’t need access to inventory tools and reports for volume selling. Under the Individual selling plan, you don’t pay a monthly subscription fee. You pay a per-item fee in addition to applicable fees.”

The Amazon Professional Seller Account

Here’s how Amazon describes the professional seller account option:

“In the Professional selling plan, you pay a nonrefundable monthly subscription fee regardless of whether you list or sell anything. You don’t pay a per-item fee when an item sells. All other fees are charged as applicable. The Professional selling plan gives you access to inventory tools to upload batch files and manage your orders through feeds and reports. These tools are beneficial to most medium - to large-size businesses.”

Key Differences between the Amazon Individual Seller Account and the Amazon Professional Seller Account

Below is a chart that shows the key differences between the 2 account types:

The above chart is directly from Amazon and does a nice job of comparing the two account types. That said, there’s a lot here, and it’s important to drill down to the details that are most important:

The Amazon professional seller fee rings in at $39.99 per month. However, that $39.99 monthly fee removes the individual seller fee of $0.99 per item. So, if you are selling more than 40 items it almost always makes sense to get the professional seller account. Only Amazon professional sellers are eligible to have their items featured in the “buy box.” The buy box is the featured seller on a listing within Amazon. For example, on this listing “Windy Castle Gift Shop” is the seller in the buy box:

This means that if the seller clicks the “add to cart” or “buy now” buttons (red arrow), they will be purchasing from Windy Castle Gift Shop, as they are the seller in the buy box. If you are selling this item and are not in the buy box, you will show up as one of the sellers featured below the buy box, or in the list where it says used & new (37) by the blue arrow. As you can see if you aren’t in the buy box it’s a bit more difficult for customers to buy from you.

Only professional seller accounts have the ability to have sales tax collected on items they sell. Sales tax for FBA sellers is a bit of a tricky issue, but if you want to collect sales tax you need the professional seller account. Amazon requires an additional level of approval to sell in certain categories on the platform. Below are examples of categories that require you to have a professional seller account to seek approval:

Automotive & Powersports Jewelry Watches Sports Collectibles Video, DVD, & Blu-ray Collectible Coins Entertainment Collectibles Fine Art

The final major difference that I will point out is the ability to use product data feeds, and granting access to other users. These features are only available on the professional selling plan. If you want to use 3rd party apps and tools, then you will need a professional seller account. In my case, the tools that I use to help run my business require me to be signed up through a professional seller account.

Which Amazon seller account type is best for you?

The individual Amazon seller account is best for someone who:

Wants to get their feet wet selling on Amazon and keep costs as low as possible at the beginning Is selling less than 40 items per month Doesn’t have the need for the additional features of the professional seller account

The professional seller account is best for:

Any sellers selling over 40 items per month Any seller wanting to collect sales tax on their items Any sellers who want to use 3rd party apps and tools Sellers who want to be displayed in the buy box Sellers who want to sell in certain restricted categories

Can I start off as an individual seller account and then switch to a professional seller account later?

Yes, you can switch at any time you would like.

This is the route I took when I first started selling on Amazon. When I was doing it part-time as a hobby I used an individual seller account. Then, once I was selling over 40 items per month, I upgraded to the professional seller account.

Here’s how to upgrade your Amazon seller account:

Login to your Amazon Seller Account Scroll to the bottom of the page and click Account Info under Settings In the Your Services section click Manage Click Upgrade next to the account type

Note: If you want to switch from a professional seller account to an individual seller account, steps 1 to 3 are the same, and in step 4 click downgrade.

Conclusion:

This post walks through the main decision factors that I would look at when determining which account type is right for you. If you are in doubt as to which option is right for you, and you are selling less than 40 items per month, I’d start off with the individual seller account. Then, once you are selling 40 items per month or need additional features, upgrade to the professional seller account.

Want to learn more about getting started selling on Amazon? Here’s a general overview of my recommendations for getting started selling on Amazon.

You can also take my free email course where I share some of the tips I’ve learned from operating my own multi-million dollar business to help you get your first sale on Amazon.

Amazon FBM (Fulfilled by Merchant)

A quick transition from a new seller to an Amazon expert. Data backed information and intelligent tools for smarter Amazon strategies and increased profits.

Understanding Amazon FBM

Why should a seller consider FBM? Is FBM Amazon a viable option for your Amazon business? Understand it better to choose the best fulfillment option for your business online.

Amazon has proven to be one of the most complex and competitive marketplaces in the world. Sellers navigating the marketplace have to find ways to not only compete against millions of other retailers but also to manage their fulfillment processes. Amazon offers two different methods for sellers to fulfill their orders: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). In this article, we will take a look at Amazon FBM and how it can help you with business.

What is Amazon FBM?

Fulfilled By Merchant, popularly known as FBM, is when sellers list their products on Amazon and choose to ship products to each buyer by themselves. In other words, sellers are responsible for fulfilling their orders and do not rely on Amazon for the same. While it is a rather advantageous method for products with lower margins, FBM Amazon is rather overlooked owing to easy shipping, handling, and other benefits that come with Amazon FBA.

How does Amazon FBM work?

After setting up the seller account on Amazon and creating the listings, sellers have two ways to deliver their products: they can either use Amazon’s fulfillment network to ship your orders on their behalf, that is, Amazon FBA or, they can do it by themselves and go with the FBM Amazon way.

The merchants are responsible for shipping the orders to the customer's delivery address, from their warehouse location/slash the place where they have stored the products. The MFN (Merchant Fulfilled Network) seller is also responsible for handling returns and providing customer service.

Amazon merchants who are going this way need to keep FBM shipping in mind. They need to find shipping/delivery partners who are reliable and most importantly, cost-effective. If FBM shipping charges are higher than the fees incurred with FBA, then it doesn’t make sense for merchants to fulfill the orders by themselves as it will only impact their margins negatively.

When to choose FBM for product fulfillment

FBM is better for exclusive products, small volume products or products with lower profit margins.

FBM is better for:

Exclusive products - products that have a lower frequency of sales A smaller amount of products - cuts down the shipping charges considerably for a relatively low volume of product units. Products with lower profit margins - helps save on the warehousing and storage fees on FBA Situations where FBM works out to be cheaper than FBA. FBA fees depend primarily on the weight and dimensions of the product. If sellers can ship their orders for a more reasonable price in comparison to using FBA through their delivery partners/network, then it is feasible to opt for FBM.

Selling on Amazon vs Ebay

Online Shopping is seeing year after year growth. In fact, Retail e-commerce sales worldwide are forecast to nearly double between 2016 and 2020. If you’ve thought about selling online, now is the time to ride the e-commerce wave to boost revenue. But which online marketplace should you invest your time, resources, and products? Should you diversify or go all in on one? While there are several online marketplace options to sell, we’ll specifically be comparing selling on Amazon vs eBay in this post.

AMAZON SELLERS VS. EBAY SELLERS

In this year’s letter to shareholders, Amazon announced that, “Over 300,000 U. S.-based SMBs started selling on Amazon in 2017.” That’s a lot of new sellers on the platform, and that doesn’t even capture the individuals sellers and larger brands who are all rushing to list their product in Amazon’s ecommerce catalog.

Amazon Sellers

Amazon’s brand awareness as the go-to online store with lightning fast deliveries and excellent customer service draws shoppers like a giant consumer magnet. And that makes it very appealing for sellers. So appealing that many sellers on the platform do not sell their product anywhere else. But with more and more sellers jumping on the platform, competition has increased. And that means customer expectations have increased too.

It’s not enough to ship a product from your garage and have it arrive a week after purchase. Customers want their orders at their doorstep tomorrow. And they want that product to be quality. If it’s not, one bad review can knock down your rating and potentially your conversion rate and your ranking.

Overall, what this more competitive landscape means for the type of sellers on Amazon’s platform is that they are becoming more and more higher-caliber. They are becoming more and more competitive. Those who succeed and win a good ranking position know how the platform works, and they know how to succeed.

EBay Sellers

EBay sellers on the other hand span a wider range. Unlike Amazon, there are not large brand names on the platform. But there is a wide spread of seller types from large, competitive sellers with some brand recognition to the online-yard-sale individuals who are selling single items they are trying to get rid of.

While Amazon sellers battle the high expectations of customers on the Amazon platform, eBay sellers battle quite the opposite: the idea that all items on eBay are used or second-hand. This is probably one of the reasons that eBay sellers list their products on multiple marketplaces. eBay attracts a different kind of customer too, which lends it to certain products more than others.

AMAZON CUSTOMERS VS. EBAY CUSTOMERS

In the selling on Amazon vs eBay discussion, both have unique customer bases that set them apart and make them more or less favorable to certain products. Before you decide where to list your product, you’ll want to make sure that there is good demand for it with the customers on the platform.

Amazon Customers

Amazon is the most popular online store in the United States, according to Statista. It has by far the largest market share for ecommerce. So who are these Amazon customers? Compared to customers on other ecommerce platforms, they are generally more educated and more well-off than the average American. Here are the four most distinguishing traits of Amazon customers:

Younger. According to Digital Commerce 360 , over 50% of Amazon shoppers are under the age of 45. Prime customers tend to be even younger than the average Amazon shopper, with 18 – 34 being the most Prime-heavy age group. Higher Income. Amazon customers are predominantly male and tend to have higher incomes. Amazon captures 90% of the 50 – 100K income shoppers, and 89% of the 100K+ shoppers. And even for shoppers with an income under 50K, Amazon still captures 73% of the market. Bigger Spenders. Prime members are especially keen on Amazon’s free 2-day shipping and tend to buy more than non-Prime members. And with Prime membership in 64% of US households, that means Amazon customers are spending more on the platform than ever before. Trust the Amazon brand. Amazon customers trust the Amazon brand for quality products, timely delivery, and excellent customer service if anything does go wrong with an order. Amazon customers are also sometimes unaware that they are even purchasing from a seller at all. Thinking rather that they are purchasing “an Amazon product.”

Overall Amazon has captured most US shoppers, especially those under 45 years old, making over 50K. And since their customers do tend to be wealthier, they come with higher customer expectations. This is especially true of Prime members, Amazon’s biggest shoppers. The Amazon brand is one that customers deeply trust and masks the marketplace experience for customers by providing them with fast shipping and incredible customer service.

EBay Customers

EBay, though not as popular as Amazon, continues to be a big player in ecommerce. According to Statista, “In the first quarter of 2018, eBay reached 171 million active users.” And though smaller than Amazon’s customer base, 171 million is still undeniably significant. Here are the four most distinguishing traits of eBay customers:

Older. eBay customers tend to be older than Amazon customers, with 61% over the age of 45. Like Amazon, they tend to be mostly male. Medium income. While an exact income range for eBay customers is hard to pin down, it seems to generally be lower than the average income for Amazon customers. Deal hunters. eBay customers also tend to come in with the expectation that they will pay less for the item they are looking for. While Amazon used to be a lot more competitive on price, customers, especially Prime customers, seem to be willing to pay more for the convenience of 2 day shipping and a wide-reaching catalog. Less trust in eBay brand. eBay customers do not trust in the eBay brand name in the way that Amazon customers trust the Amazon brand name. Rather, they trust the brand of the Seller they are purchasing from. The expectations for customers satisfaction are put on the seller rather than on eBay as the platform.

Overall, eBay is still a significant size market that is more popular with older shoppers, especially those over 45. Since their customers tend to be of average means, they are more motivated to find the best price and pay less for the item they are looking for. eBay customers are much more aware of eBay as a marketplace than Amazon sellers and trust the brands of the sellers they purchase from rather than eBay’s brand.

AMAZON PRODUCTS VS. EBAY PRODUCTS

The types of products that customers buy on Amazon and on eBay are different. Each platform has its own strengths and draws shoppers for those specialties. It’s important to know these comparisons when weighing up selling on Amazon vs eBay.

Amazon Products

Amazon’s catalog has 562 million products in its catalog with Clothing, Shoes & Jewelry being the biggest category by far. Amazon’s top selling categories are:

Consumer electronics Home and kitchen Publishing Sports and outdoors

EBay Products

EBay’s catalog has well over 1 billion live listings. According to the site, some of its best selling products include:

Electronics Fashion Video games Collectibles

While both sites sell electronics and fashion items, Amazon sells far more books than eBay. Amazon also sells more Sports and Outdoor equipment whereas eBay sells more collectible items. Shoppers looking for unique, vintage, or antique items will look to a platform like eBay. And shoppers looking for books, outdoor equipment, and items that they need to arrive quickly will look to Amazon.

AMAZON FEES VS. EBAY FEES

As we look at fees in the selling on Amazon vs eBay comparison, the associated fees are a crucial factor. We’ve written a fuller blog focused on Amazon seller fees, but we’ll give an overview of both here.

Amazon Fees

Amazon fees vary depending on how the item is sold. There are two main ways to sell a product: as an individual or as a professional. An individual is anyone selling less than 40 items a month. Think college students selling their used textbooks. Professional sellers are those looking to supplement or replace their income, including retail arbitrage sellers, online arbitrage sellers, wholesale sellers, and private label sellers.

Per-item fees Referral fees Closing fees

Referral fees depend on product category but are typically 15% with a minimum fee of $1.00. See the full list of referral fees by category here. Closing fees are $1.80 per item sold and apply only to media items such as books, DVDs, music, software & computer/video games, videos, and video game consoles.

Professional account subscription Referral fees Closing fees Shipping fees (if applicable)

A professional seller account is $39.99/month and replaces the per-item fee charged to individual sellers. Referral fees depend on product category but are typically 15% with a minimum fee of $1.00. See the full list of referral fees by category here. Closing fees are $1.80 per item sold and apply only to media items such as books, DVDs, music, software & computer/video games, videos, and video game consoles. Some professional sellers use Amazon’s fulfillment program (Amazon FBA) to store, pack, and ship their products to customers. FBA has its own fees, which you can see here.

EBay fees are seemingly less complicated than Amazon fees. But eBay is set up for individual sellers with individual items more than it is set up for sellers with multiple skus (stock keeping unit) and multiple items for each sku. There are two main fees that eBay charges sellers:

Insertion or listing fees Final value fee

The insertion fee works a little differently depending on how you are selling your products. If you are selling individual products auction-style, eBay gives you 50 free listings per month with a $0.35 insertion fee after your 50th item.

If you are listing a product with a fixed price and hundreds or thousands of items in stock, eBay will charge you an insertion/listing fee up front and every 30 days until all items sell out or you or eBay closes the listing.

The amount you pay for this insertion fee is calculated based on what eBay calls the total start price of the listing. The total start price is the sale price of the product multiplied by the number of items available for sale. So if you’re selling a $15 t-shirt and have 1,000 on the listing, the insertion fee will be based on a start price of $15,000.00.

The other main fee that eBay charges is a final value fee. The final value fee is a percent of the final amount the buyer pays, including shipping and handling but not tax. Final value fees are typically about 10% with a cap of $750.00. So if a customer purchases all 1,000 of your $15 t-shirts, your final value fee would be capped at $750.00 rather than being the full $1,500.00.

EBay also charges a few additional fees:

Listing upgrades Select category fees

Sellers have the option to pay small fees for listing upgrades like bold font, subtitles, international site visibility, dual category inclusion, Gallery Plus, and Listing Designer. These fees depend on the price of the item and the duration of the upgrade. See all options here.

EBay also charges additional fees for items sold in certain categories, including motor vehicles, real estate, and select business and industrial items.

Who Should Sell on eBay

Because eBay is a smaller marketplace, it is a great way to get your feet wet with e-commerce. You can start selling on eBay with a lot less money, and drop shipping is a viable option. Customer expectations on eBay are lower, and eBay as a platform is more lenient when it comes to requirements for listing your product and customer satisfaction.

Who Should Sell on Amazon

Because Amazon is a bigger marketplace, it is more competitive. That means the cost to compete is higher but also that the reward for success is higher too. There are thousands of product markets that see healthy sales every month where competition is still low. And if you are lucky enough to find one of these markets, the rewards for performing well on Amazon are greater than they will ever be on eBay.

If you have a smaller budget and are thinking of drop shipping, Amazon is probably not the place for you. With high customer expectation, Amazon has strict requirements for their sellers. If you find yourself with too many unhappy customers and late orders, you could be off the platform.

But if you have a bit more of a budget to work with and are looking to sell a large volume of products to a large audience (especially if you are looking to utilize Amazon’s FBA program), selling on Amazon is the way to go.

Selling online is a huge opportunity for business entrepreneurs. As you research selling on Amazon vs eBay, you’ll want to know the buyer demographics, marketplace strengths, fee comparisons, and the seller options available to you.

Amazon buyers have generally higher income and are younger while the average eBay buyer is older and looking for a bargain. eBay is more lenient with a lower barrier of entry while Amazon is more competitive but with a higher potential for sales eBay has fewer fees than Amazon and will generally be more profitable but requires you to be more hands on with the whole process. Amazon buyers expect higher quality and faster shipping while eBay buyers sometimes assume the products are second hand or less quality.

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