Building Your Business Challenges and Tips for New Amazon Sellers By Hannah Hottenstein Hannah Hottenstein Instagram Twitter Website Hannah Hottenstein is a writer and small business expert contributing to The Balance on topics such as entrepreneurship and small business finance. Hannah is also the founder and proprietor of HänaSun, a fine art and antiques business. In addition to The Balance, Hannah has written for Lean Labs, NewsBreak, and several Medium publications. learn about our editorial policies Updated on November 29, 2021 Reviewed by David Kindness Reviewed by David Kindness David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. David has helped thousands of clients improve their accounting and financial systems, create budgets, and minimize their taxes. learn about our financial review board In This Article View All In This Article Amazon Seller Structure Individual vs. Professional Seller Plans Challenges of Amazon Individual Selling Tips for New Amazon Sellers The Bottom Line Photo: JGI / Tom Grill / Getty Images As of 2020, Amazon was responsible for approximately 40% of all e-commerce sales in the U.S., according to data from eMarketer. However, despite the power, visibility, and accessibility Amazon offers, it can still be challenging to succeed as an individual seller on the platform. In order to do so, it’s important to learn about the differences between individual and professional seller account plans, common problems sellers run into and how to overcome them, as well as tips for new sellers to succeed. Amazon Seller Structure Amazon offers a multilevel e-commerce structure, one that essentially operates as a business-to-business-to-consumer company. Amazon simultaneously focuses on business-to-consumer sales and business-to-business relationships, while facilitating customer-to-customer transactions within its marketplace. Note U.S. small and medium-sized businesses sell more than 4,000 items per minute in Amazon's online stores. Now, even large e-commerce sellers can build entire websites based on Amazon's platform, called stores, and use the Amazon marketplace to sell their products (sometimes while continuing to sell them on their own websites). Meanwhile, the Amazon Associates affiliate marketing program allows individuals and businesses to post Amazon links and earn a commission (up to 10%) on the resulting click-through sales. Amazon acts as the go-between for payment processing and sometimes inventory storage and shipment for sales made to smaller, individual sellers. Individual sellers can now list new and used items at set prices, drive online sales, let Fulfillment by Amazon (FBA) complete those orders, and enjoy the e-commerce capabilities powered by the company. Individual Seller vs. Professional Seller Plans Here is a comparison list highlighting the similarities and differences between individual and professional sellers. Individual Seller Plans Pay-as-you-go plan designed for low or infrequent sellingNo monthly subscription fee99 cent per-item fee when an item sellsAbility to create new product pages in the Amazon catalogA basic set of listing and order management toolsAutomated clearing house (ACH) or electronic transfer paymentsPayments every seven days (up to five days for processing time)Amazon-set shipping rates for all products Professional Seller Plans Intended for bulk and high-volume sellingFlat $39.99 monthly subscription feeNo fee when an item sellsAbility to create new product pages in the Amazon catalogAdvanced inventory management tools (feeds, spreadsheets, and reports)Automated clearing house (ACH) or electronic transfer paymentsPayments every 14 days Seller-set shipping rates for non-media productsAmazon Marketplace Web Service API functions like receiving reportsPromotions, gift services, and other special listing featuresEligibility for listing placement in the Featured Offer Ability to calculate U.S. sales and use taxes on your ordersAccess user permissions and grant access rights to other users The professional seller plan is designed for individual sellers who expect a higher volume of sales and wish to successfully manage orders with the help of some additional features and tools that the professional plan includes. For example, if you make over 40 sales per month, it makes more sense financially to pay the flat $39.99 per month fee than it would to continue paying 99 cents per item sold. Note Amazon requires all sellers who exceed 50 transactions in a calendar year to provide a federal taxpayer identification number (TIN), regardless of sales volume. For smaller sellers, your TIN can be your social security number (SSN). For larger sellers, you’ll need an individual TIN issued by the IRS. See your seller account information page on Amazon for more information. The good news is that if you experience seasonal sales lows, you can upgrade or downgrade your seller plan at any time from your seller account. Amazon makes it easy to get the access you need when you need it and to opt out when it no longer applies to your business. Problems With Being an Amazon Individual Seller As with any small business, succeeding as an Amazon Seller means keeping track of more than a few risks while operating your business. The nature of the Amazon marketplace means that even longtime e-commerce sellers can sometimes face challenges on the road to profitability. Here are a couple of examples. Incentivized Reviews Originally, Amazon community guidelines prohibited financial compensation for reviews, with an exception—reviewers could post a review in exchange for a free or discounted product as long as they disclosed that fact. However, as of October 2016, Amazon stopped allowing sellers to offer free products, discounts, or any other kind of incentives for product reviews unless it was facilitated through the company’s Vine program. Despite these mandates, incentivized reviews are still prevalent, and these positively skewed product blurbs can stack your competitors against you in sales. Strict Return Guidelines The old retail adage “the customer is always right” still applies when it comes to the Amazon returns process. Many individual sellers have been forced to issue refunds and accept returns simply to avoid account and listing suspensions. Customers can have unreasonable or unethical reasons for wanting out of a sale. Still, when you choose to sell on Amazon, you agree to adapt to its strict dedication to customer service. Note To remain in good standing and avoid account or listing penalties, Amazon expects individual sellers to respond quickly to a customer’s return requests (within 24 hours). Sellers must issue a refund or replacement for a return request within two business days. The issue must be fully resolved to the customer’s satisfaction to avoid further action from the customer or Amazon itself. Tips for New Amazon Sellers With millions of active sellers on Amazon, how are new sellers supposed to effectively compete for sales? Here are some practical tips to help improve your chances of making sales and avoiding common seller issues. Build Customer Awareness and Loyalty To be competitive with your product offering, you as an individual Amazon seller have to focus on creating awareness and building loyalty among your existing and potential customers. Here are a few ways to do so: Be a proactive marketer for your own business.Continue to foster active relationships with new and returning customers through curation and outreach on image-based social media channels like Instagram.To help bolster the fact that you’re offering a unique product, make sure your product images are clear and enticing, and that you’re telling a story around it in your product descriptions.Optimize keywords in your product listing for easier customer search and discovery.Personalization can pay off, and tools like Amazon Personalize let you react to customer behavior in real time to create personalized experiences and boost sales. Be Competitive With Pricing To avoid useless pricing wars with competitors and unprofitable repricing strategies, consider using an algorithmic Amazon Repricer program to keep your pricing competitive. Manual repricing based on day-to-day market changes only makes sense for smaller inventories. Note For professional seller accounts (and those who can afford the $500-a-month user fee), using a tool like Amazon Repricer by Seller Snap, for instance, enables you to focus on your business while it handles minute adjustments to your prices to help you stay competitive in the marketplace. Make the Most of the Tools Available to You To maintain seller rankings and generate more sales, you may have to get creative. Try out your competitors’ products, note how they are different from yours, what they are doing better than you are, and how you can improve your offerings. Make the most of the Amazon seller dashboard and analytics data you have access to. Amazon offers free business analytics tools for individual and professional seller accounts such as its Revenue Calculator, which you can use to compare your shipping costs with those fulfilled by FBA. The Amazon Seller App, meanwhile, is also a great introductory tool for learning how to manage your small business’s inventory and even test out FBA features. For professional sellers and those who qualify for the Amazon Brand Analytics program, you’ll have full access to valuable insights that can help you make informed, strategic decisions about your product portfolio as well as rethink and modify your marketing strategies. However, even individual seller accounts have access to tools to help visualize their business’s current stage and future growth. Try out some data analytics and optimization software tools like Datahawk, Sellonaut, or Helloprofit to get a clear picture of what’s working, what isn’t, and where to go from there. The Bottom Line Becoming an individual seller on Amazon is an excellent way for new entrepreneurs to get started in the e-commerce market. But selling in the Amazon marketplace is not without its unique challenges. With the help of some careful planning, creative strategizing, and use of small business tools, you can join the ranks of the millions of marketplace sellers bringing in a total of over $160 billion in sales annually and establish yourself among other entrepreneurs. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. eMarketer. "Amazon dominates US ecommerce, though its market share varies by category." Amazon Seller Central. "Selling Plan Comparison." June 2, 2021. Amazon. "Update on Customer Reviews." Accessed June 2, 2021. Amazon. "2019 Amazon SMB Impact Report." Pages 2-3.