Start Business on Amazon

AMAZON IS THE LARGEST E-COMMERCE PLATFORM IN THE WORLD

Amazon was founded by Jeff Bezos on July 5, 1994 as an online bookstore, but later the range of products was expanded and included videos, MP3, audiobooks, software, video games, electronic products, clothing, furniture, food, toys, and jewelry. Today, Amazon has more than 800,000 employees and a turnover of over USD 247 billion.

Company in Estonia OÜ offers assistance in registering a company in Estonia, which is ideal for trading on the global Amazon platform. We will be happy to offer you a full assistance in registering a company, obtaining a VAT number, and accounting services, as well as consulting in opening a current account to receive payments from Amazon.

In order to have a full understanding of the entire process, please read the sequence of steps to start trading on one of the European markets of Amazon.

How to start a business on Amazon

1. Registration of a company in Estonia (depends on the method of company establishment)

Company in Estonia OÜ offers 4 ways to register a company in Estonia:

  1. with an e-Resident card
  2. a one-day visit to Tallinn
  3. by power of attorney
  4. by purchasing a ready-made company

Regardless of the method you choose for a company establishment in Estonia, we will be happy to offer you a full range of services, including a legal address in Tallinncontact person services, and payment of state fees.

Estonia has more favourable conditions for trading on Amazon Europe than other European countries due to its seamless bureaucracy, beneficial and unambiguous taxation, a possibility to manage a company fully remotely and a possibility for non-residents to own a business.

2. Opening a company account in one of the PSP (Payment Service Provider) cooperating with Amazon

After establishing a company in Estonia, the specialists of Company in Estonia OÜ provide a list of payment solutions suitable for joining Amazon.

With a PSP account (IBAN), sellers can directly receive money from their Amazon account, store funds in multiple currencies, and receive a credit card that can be used to pay for Amazon services.

The PSPs are suitable for use in the following platforms:

  • Amazon.co.uk (UK)
  • Amazon.de (Germany)
  • Amazon.fr (France)
  • Amazon.it (Italy)
  • Amazon.nl (Netherlands)
  • Amazon.es (Spain)
  • Amazon.com.tr (Turkey)
  • Amazon.se (Sweden)

3. Registration of VAT number in Estonia, the UK, or Germany (2-4 weeks)

One of the main requirements of Amazon is registration as a VAT payer both in the country of trade and in the country of registration (Estonia). Company in Estonia OÜ offers assistance and help in VAT registration in Estonia, the United Kingdom or Germany.

Company in Estonia OÜ also offers fixed accounting costs for sellers selling through Amazon in the UK and Germany.

It is difficult for sellers wishing to trade on Amazon to register as a VAT payer in Europe without having a company in the EU. In addition, one of the main requirements for registering a VAT number is confirmation of the company’s address in the EU (utility bill).

4. Registration of Amazon Seller Account

Once you have established a company and opened a bank account, you can proceed to creating an FBA seller account. It usually takes a little time to sign up for an Amazon account, as the procedure takes just a few steps. It is required to link a credit card to withdraw funds received from sale of goods on Amazon.

5. Setting up accounting services for an Estonian company

It is especially important for companies trading on Amazon to maintain regular accounting records in order to avoid fines, financial problems, and blocking of funds on their Amazon account. Company in Estonia OÜ offers professional accounting services for companies trading on Amazon at a fixed monthly cost.

The full package cost to become an Amazon trader 2,790 EUR

Reasons to start a business on Amazon

Amazon is the most popular marketplace in the world, presented on almost every continent. As of 2020, Amazon has over 300 million active users from over 180 countries and over 2.5 million active sellers. According to Feedvisor, 89% of shoppers surveyed prefer Amazon to other marketplaces.

Thanks to sophisticated logistics, quality service and fast delivery, the platform attracts more than 2 million new users from all over the world every year. Amazon is undoubtedly the e-commerce hub of our time, selling over 4,000 items per minute. In the third quarter of 2020, the total trading turnover of the site was USD 96.1 billion.

Business on Amazon opens up e-commerce opportunities for companies around the globe. Company in Estonia OÜ offers the registration of a legal unit that is most suitable for trading on one of the European Amazon platforms. The advantage of an Estonian company is the absence of income tax and the possibility of its completely remote establishment and maintenance.

Almost any company that manufactures its own goods or is the official representative of the trademark can act as an Amazon Seller. The advantage of expanding to Amazon Europe is that you only need to deliver your product to the Amazon warehouse, after which the platform itself will be responsible for delivering it to the customer. On such conditions, every two weeks you will be receiving payments from sales.

In addition to guaranteed reliability, Amazon offers entrepreneurs transparency in the system of costs, which allows them to calculate payments and profits without risks. Selling finished products through Amazon will only require the initial investment for the purchase or production of the product, and there will be no costs for opening a physical store. The advantage of such a scheme is a completely remote collaboration with Amazon.

Frequently asked Questions

In which countries does Amazon operate in Europe?

The official localised website of the Amazon platform is presented in the markets of the following countries:

If I have a Seller Account in one country, can I sell on other Amazon marketplaces?

Yes, you can sell on multiple marketplaces using one account. With your Amazon Europe Marketplace Account, you are automatically eligible to sell on all Amazon European marketplaces: Amazon.co.uk, Amazon.de, Amazon.fr, Amazon.it, Amazon.es. Amazon.se, Amazon.com.tr and Amazon.nl. Such an abundance of European marketplaces gives the clear advantage of trading on Amazon in Europe and provides significant potential for the growth of your business.

Where are Amazon warehouses?

Your products can be stored in any of the Amazon Europe warehouses in seven countries: UK, Germany, France, Italy, Spain, Poland, and Czech Republic. The abundance of warehouses allows products to be placed as close to consumers as possible, which reduces the time and cost of delivering goods to the end customer.

What are the differences between selling on Amazon in Europe and the US?

There are more similarities than differences between Amazon shopping in Europe and the US. However, there are still several important peculiarities. For example, every country in Europe has certain tax requirements. Depending on the country of the marketplace, you need to ensure that your business complies with local laws and regulations of commerce in Europe. Amazon also requires product listing and customer support to be provided in the local language of the country of trade.

Under what conditions do you need to register as a VAT payer in the country of trade?

There are two circumstances in which you need to register as a VAT payer in the country of trade:
  1. Country of storage: when storing goods in an Amazon warehouse in a specific country in Europe.
  2. Threshold of sales: upon reaching a certain level of sales in the country of trade, there is an obligation to obtain a tax number in that country.
For its part, Company in Estonia OÜ recommends applying for a tax number before the start of trade – this will help you comply with legal formalities and significantly save your time.

Fulfillment by Amazon program

Launched in 2006, Fulfillment by Amazon (FBA) program gives you access to the infrastructure of the trading platform for a small fee, which includes storage, shipping and return of the products you sell. Such e-commerce model is convenient in that the entire process is automated and after the goods are sent to the warehouse of the marketplace, the customer is serviced by Amazon employees.

FBA: order processing

  • Sending finished products to the Amazon warehouse
  • Product acceptance, distribution, and storage in the Amazon warehouse
  • Order made by the buyer on Amazon Europe website
  • Marking and packaging of the ordered goods in the Amazon warehouse
  • Delivery of the order to the buyer’s doorstep by the FBA service

There are two strategies for trading on Amazon:

  • Drop shipping – reselling goods at a higher price by an intermediary, bypassing traditional distribution channels.
  • Private Label – sale of goods produced under a private label.

Delivery of goods to the Amazon warehouse

Delivery of finished products to the Amazon warehouse takes place in several ways:

  • Through an agent (freight forwarder) who will settle issues with customs and deliver products to the specified place
  • By cooperating with a private delivery company such as DHL
  • By sea (30 to 50 days)
  • By air transportation (from two weeks to a month)

Choosing a Selling Plan

Before starting business, sellers on Amazon need to decide on a selling plan. There are two selling plans for registering a seller account: Individual and Professional. Professional sellers pay a higher price for access to more advanced features, thus ensuring that their Amazon trading business flows smoothly.

Individual (Natural Person Account)

The Individual selling plan maximally limits the seller’s ability to work with the site, allowing to sell no more than 40 units per month. This sales rate is complicated by the fact that not a single offer from an Individual seller will ever make it to the top of search results or to the coveted BuyBox window. As part of the Individual selling plan, the service will charge USD 0.99 for each unit sold, adding a commission from 8% to 20% depending on the product category.

Individual plans are limited to specific sales categories. Selling goods in the following categories is only possible for Professional sellers:

  • Cosmetics
  • Collectibles (coins, books)
  • Spare parts, tools, equipment,
    and accessories for cars
  • Clothes, shoes, bags, and sunglasses
  • Wristwatch
  • Jewelry
  • Fine art objects
  • Gourmet and grocery products
  • Luggage and travel accessories
  • Video, DVD and Blu-Ray
  • Wine

All sellers are subject to other restrictions. See the full list on the Amazon website.

Unlike a Professional, an Individual seller are not allowed to create their own webpage. Among other things, they will have access to the market of only one region. It will be impossible also to sell products in any category, adjust shipping rates, participate in promotions, launch advertising campaigns, and use the convenience of the sales center analytics. For these reasons, the Individual plan is not a popular option and cannot be used to generate real profits from international trade.

Selling Plan features Professional Individual
Best for sellers who plan to sell monthly More than 40 units Less than 40 units
Adding new products to the Amazon catalog Available Available
Trade with FBA Available Available
Placement of goods in the top Available Unavailable
Adjustment of rates on delivery of goods Available Unavailable
Uploading items as a feed Available Unavailable
Stock reporting function Available Unavailable
Trade in different regions from one account Available Unavailable
Participation in promotions Available Unavailable
Launch of advertising campaigns Available Unavailable
Gift wrapping of goods Available Unavailable

Professional (Company Account)

The first month of subscription is free. The monthly subscription fee is USD 39.99 without additional commissions on sales. Calculations show that selling 40 units of goods per month will be many times more profitable to a professional seller than a seller with an individual selling plan. As noted earlier, Amazon offers to create your own online store page and does not limit product listing. The Professional selling plan offers the ability to upload an item using a feed, allowing all products to appear on an Amazon listing in a few minutes. In comparison, the Individual selling plan forces a seller to add each item individually and wait for those items to match the product availability in Amazon warehouses, while the Professional plan already includes an inventory reporting feature.

And although Amazon’s rules state that the seller has the right to change the current Selling plan at any time, this will require another time-consuming process of identity confirmation.

Due to the restrictions on listing and sales of the Individual plan, Company in Estonia OÜ considers it advisable to start trading on Amazon immediately as a Professional seller, therefore, we offer our services to customers wishing to choose the Professional selling plan.

A common mistake when trading on Amazon is doing business as a natural person without registering a company. When starting to trade on Amazon, it is especially important to think about a full-fledged business and register a company that will allow you to trade on Amazon Europe without restrictions and additional tax costs. It is also worth mentioning that Amazon does not have a Sole Proprietor concept.

Doing business on an individual basis is more expensive, since a Sole Proprietor pays turnover tax, and a company only pays tax on the distributed profits. If all the profits at the initial stage of trade are invested in the purchase of new goods, no taxes arise.

Recommendations by Company in Estonia OÜ

  • If you do not have a registered legal entity yet, set up an Estonian company to optimise your business on Amazon.
  • Pay close attention to the official information, requirements, and rules of trading on Amazon in your country of choice.
  • Study carefully the list of product requirements on Amazon.
  • Conduct market analysis (competitors, prices, products on Amazon).
  • Calculate all costs competently (logistics, Amazon fees, cost of goods, delivery times).
  • Consider a Professional selling plan.
  • Consider how the Amazon sales revenue will be accrued.

Company in Estonia OÜ will help with business optimisation for launching the trade on Amazon Europe Marketplace. We will provide you support of experienced and qualified professionals at all stages and help with the entry of your business to Amazon in Europe.

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