Operating Profit Margin: Definition, Formula and Calculation
Check out our guide to understand operating profit margin and how to calculate it. Also learn how it can be used to show the health of your business.
Amazon’s UK site attracts over 400 million visits a month, making it one of the most lucrative ways to sell online to the UK market. But there are plenty of decision points where inexperienced retailers might leave money on the table.
In this article, we give a step-by-step guide to selling your product on Amazon UK, with specific instructions for both British and international retailers.
We’ll also discuss how Wise can help you avoid hefty fees, such as for currency exchanges and withdrawals to your bank account, that would otherwise eat into your profit margin.
If you’re selling domestically (i.e., you’re a UK resident), here are the steps to follow:¹
1. Pick your product category. Amazon has a list ofproduct categories that they permit on their marketplace. Some of these come with special conditions, noted in the table.
2. Decide whether you want to register as a Professional or an Individual retail account. The fee structures vary; Professionals can sell an unlimited number of products, and pay a flat monthly subscription. Individuals face a cap on their volume (35 a month), and pay Amazon a commission when items sell.
3. Register your account with Amazon. This requires giving some basic identification information, alongside your banking details. You’re required to give them a bank account (which they use to pay you), and also to provide a credit card or debit card (which they charge in the event of customer refunds leaving you with a negative balance.) For more details on the credit card, see Amazon’s Seller Central page.
4. Once you have your storefront up and running, it’s time to list items, sell them, ship them, and get paid.
a. There are two ways to list items on Amazon UK. If the item is already in their catalog, you merely need to provide details about your specific merchandise (like quality, quantity, shipping options, etc.)
b. If the product is unlisted (i.e., it’s something that nobody else is selling on Amazon UK), you need to give the UPC/EAN and SKU numbers, and give some information about what the product is.
c. At this point, someone can buy your product and trigger an order.
d. You have two choices for shipping: either mailing it yourself (for example, by using Royal Mail), or having Amazon deliver the product using Fulfilled by Amazon.
e. Amazon then collects money on your behalf, and pays out your revenues in regular installments. The standard interval is every 14 days.
For foreign retailers (people outside the UK, who want to sell products on the Amazon UK market), there are a few additional points to remember:
f. For Amazon’s guide on registering for the VAT, seehere.
When following steps (1) and (2) above, note that if you’re already a Professional user in your own country, you can connect your existing account to your new one on Amazon UK. That way, you can manage all your markets from a unified interface using Amazon’s Seller Central tool.
Building your listings is also a bit different here; Amazon’s Build International Listings page is what you’ll use to see the various acceptable markets for each product, and select which ones you want to list on.
Fulfill your orders. Amazon FBA (Fulfilled by Amazon) is a hassle-free way to ship internationally. Amazon provides additional details about the various options and best practices atthis link.
g. This is probably the most complicated part of selling internationally. You’re responsible both for filling out the customs forms properly, and for making sure that all import duties are paid. As the link mentions, sometimes customs brokers can help take care of this for you.
Note that the payout step can be quite costly for international retailers without proper banking support. Wise offers an international business account with zero-fee receipts in all major currencies, as well as conversion using the real market-rate for a small fee. |
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It’s crucial to ensure that your products are permitted for sale, both on the Amazon UK marketplace and in the UK in general.
Amazon UK has anacceptable products list, which describes the various categories. If a category says “Approval Required,” it means that only Professional users can use it. Examples include groceries, cosmetics, health care products, and jewelry.
Examples of product categories without such restrictions include video games, garden equipment and household items, automotive equipment, and sporting goods.²
Note that the following product categories are prohibited to all users.
As above, there are two cases to consider when listing your products for sale on Amazon UK.³
If your product already exists in the Amazon UK catalog, you can use the inbuilt web tool to add each item for sale. Note that Amazon also offers a bulk listing tool, which requires UPC/EAN codes. If you need a barcode, that data may be available from third-party services like these.
If your product doesn’t yet exist in Amazon UK’s database, you can add it using the web tool. You need the following information:
f. EAN, UPC, or ISBN code
g. The product title
h. Product description
i. An image of the product
j. Price
k. Available stock
Sometimes, Amazon might ask you for more information about the product you’re trying to add (such as technical details.)
As above, the key restriction from Amazon is that you respect their list of prohibited products.⁴
On the UK government side, you need to:
1. Register for the VAT if you are based outside of the UK, or if you exceed the annual VAT threshold of £85,000.
2. Acquire an EORI number if you will be importing goods into the European Union (which includes the UK through December 2020.)
Amazon collects payment from customers using a variety of gateways (e.g., credit cards, debit cards, gift cards.) Note that Amazon UK doesn’t accept PayPal from customers, nor any sort of bank transfer or wire transfer.⁵
They disburse revenues to sellers’ bank accounts every 14 days.
Especially for international retailers, a Wise e-Commerce account helps reduce the payment cost. Currently these accounts are up to 14X cheaper than PayPal’s offering, and include the following benefits:
Dodging fees on all receipts.
Giving you the capacity to hold money in over 40 currencies.
Giving you Wise API access to make payments on a schedule, and to automate things like budget reconciliation and accounting includes integration with Xero and Quickbooks.)
Batch payment support up to 1000 transfers in one go to smooth complicated refunds, commissions, etc.
A debit card (Wise Business Mastercard) that does automatic, market-rate currency conversion to help you make payments faster and easier.
Sources:
*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
Check out our guide to understand operating profit margin and how to calculate it. Also learn how it can be used to show the health of your business.
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