Have you ever considered selling on Amazon, setting up an eCommerce business, or a little side hustle?
If this sounds like you, it seems you are not alone.
More and more people these days are selling online to boost their income, sometimes just for a bit of fun and with no higher plans, and other times in the hopes of turning this so-called side hustle into their dream job and their very first foray into entrepreneurship.
We have been receiving lots of enquiries recently about accounts and tax for Amazon sellers, so I’ve recorded a little video outlining our top tips if you are thinking about giving it a go yourself, please watch below:
If you found the video helpful or interesting and want to learn more about how we can support you, then please visit our dedicated accountants for Amazon seller page, where we detail our accountancy services that can support your Amazon seller business.
Your Top Five Tips for Successfully Selling on Amazon
1. Business Structure: Sole Trader or Limited Company?
When selling on Amazon, it’s incredibly important to decide your business structure early on.
Are you in it for a side hustle or dreaming of a full-fledged business?
Whether you choose to be a sole trader or a limited company has significant implications, especially if you plan to transition between the two.
Check out more in-depth discussions around on this topics and the pros and cons of each option in our other videos:
2. VAT Registration: Know Your Obligations
Understanding whether you need to VAT register is crucial.
Certain items are exempt, some are zero-rated, and others are standard-rated for VAT.
Consider how this affects your pricing strategy, especially if you’re selling to end-users.
Failure to plan for VAT can impact your margin and potentially disrupt your business model.
3. Cash Flow is King: Navigate the Ebb and Flow
Cash flow is critical, especially in the world of e-commerce, where sales can be seasonal or cyclical.
Knowing when to buy and when to expect returns is vital for sustaining and growing your business.
Turnover might be impressive, but remember, profit and cash are the real game-changers.
Here’s one from the archives… Alex’s Keep it Simple video on the importance of cashflow:
4. Pricing Strategy: Factor in all Costs
Your pricing strategy should be comprehensive.
Consider VAT, corporation tax, your salary, and any associated costs.
Do not fall into the trap of pricing too low, purely and simple to try to buy business, unless you have a very clear strategy as to how you will bring these customers back to buy again at a more healthy margin!
Too many businesses go bump not due to poor volume of sales, but due to inadequate margins.
Ensure that with every sale, you’re making a profit.
5. Fulfilment Methods: Choose Wisely
How you ship through Amazon matters.
You can hold the products yourself, opt for drop shipping, or use Amazon’s fulfilment centres.
Each method comes with its own set of pros and cons, and costs.
Don’t forget to integrate these costs and future growth costs into your pricing strategy to ensure continued profitability.
Bonus Tip: Long-term Strategy Beyond Amazon
And finally, if you have any plans at all beyond selling a few items as a hobby, then please think beyond the immediate Amazon success.
Building your own sales channels through a website gives you control over margins, brand, and customer relationships.
It’s a safeguard against potential changes in Amazon’s policies and ensures you have a direct connection with your customers.
So, there you have it – a breakdown of our top tips for selling on Amazon and eCommerce success.
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And if you have any specific questions relating to this matter, then please do Contact Us – the team will be happy to help!
Happy selling, and see you next time 😊