Creating an Amazon business can be an incredibly lucrative business to start, where you have the ability to reach a vast audience through an already established platform. Established in 1994, Amazon quickly rose to become the favourite source for online shopping for millions of customers, currently generating revenues of nearly $350 billion annually. All sizes and scopes of businesses make up the Amazon community, from large corporations to artisans working from home.
Business in Canada continues to trend towards online. And, even with the economic downturn over the past year, Amazon’s profits actually doubled, showing that they continue to be a solid force in the market and that selling on Amazon can be profitable, regardless of the economic circumstances. And, while Canadians plan to spend about $300 less during the holidays in 2020, nearly two-thirds say they will be doing their shopping on Amazon. In fact, Amazon Canada saw record-breaking sales for their 2020 Prime Days. So, although they are spending less overall, more of their spending will be done through Amazon.
Starting an Amazon business lets you become a member of this growing community of sellers, giving you access to access to their millions of customers in the Amazon marketplace and giving you an advantage through their prominent and internationally recognized name. If you have decided to start an online shop, Amazon might just be the right place for you to get started. Here are some things you will want to understand as you get your Amazon business underway.
Steps to getting started on Amazon
1. Register your Amazon Seller plan
Amazon offers two different selling plans, either the Individual Plan or the Professional Plan, and which one you choose will depend on a few different factors. With an Individual Plan, you will pay a fee of $1.49 per sale, so if you are anticipating selling less than 40 items per month, this may be a more cost effective option. If you foresee selling a larger number of items, the Professional Plan, which runs at $29.99 per month, may be the better option for you. But, if you start off with one Amazon selling plan and find that the other would work better, you can switch at any time.
The Professional Plan does have a few more bells and whistles than the Individual Plan, which may prove helpful in increasing your sales and keeping things more organized. This plan includes advanced selling and reporting tools at no extra charge, and the option to sell in multiple product categories, while the Individual Plan only allows one product category to be selected. There are 18 product categories that are available to either plan, and 10 additional categories open to Professional Plans only.
Either plan lets you sell to customers across the Canadian marketplace, and the Professional Plan also gives you access to customers in the United States and Mexico through a North American Unified Account. This unified account makes it easier to share your product listings in multiple online marketplaces, track orders, and get revenues sent directly to your Canadian bank account through Amazon’s currency converter. You also have the option to let Amazon handle your customer service and shipping through signing up for Fulfillment by Amazon (FBA).
2. Know your fees
It is important to understand all of the fees you will be paying to Amazon for using the platform to promote and sell your products. As already noted, you will have to pay fees based on the subscription plan you have selected, but there are additional fees you should make note of. Understanding these fees means you will know how much of a cut Amazon is taking, so you can properly price your products.
Other fees you will see include selling fees and shipping costs, which are calculated based on the price of the item sold and the category it is listed under. Amazon’s fee schedule breaks down the amounts for each category, as well as some additional fees you may pay depending on what you are selling.
3. Understand Seller Central
One of the amazing tools you will get with your Amazon sellers plan is Seller Central. This is one resource you will want to familiarize yourself with right away. Here is where you will manage your account, update product and inventory information and manage your sales – essentially, it is your one-stop-shop for everything your business will need to succeed and grow. And, you can even access all of the tools in Seller Central through an app on your phone, so your business is always at your fingertips.
4. Register or incorporate
Amazon requires you, as a business owner, to follow the legal requirements within your own jurisdiction to operate your business. Within Canada, in general you have three options;
- Use your own personal name and not register or incorporate. In most jurisdictions, you are able to use your own personal name without the requirement to register or incorporate. This option may limit your ability to gain wholesale pricing from third parties, if a business registration or corporation is required. Amazon will require your SIN number to connect Amazon sales to your personal tax filing if a Business Number is not registered.
- Register your business as a Sole Proprietorship or General Partnership. This allows you to operate a business under a business name instead of your own personal name. There is no name protection for the business name, you are personally liable and personally taxed. This registration is an inexpensive start to your business, with the easy ability to both register and cancel the business if required. Your personal SIN is required for Amazon with this option as well, if a Business Number is not registered with Revenue Canada.
- Incorporate your business and gain the advantages to name protection for the business, personal liability protection and tax advantages along with a number of other parameters. Revenue Canada will automatically issue a Business Number when the corporation is registered, and Amazon will request this number for the corporation. There are some benefits of incorporation that you may want to consider in deciding whether registering or incorporating is better for you.
If you choose to operate a business under your own personal name or if you register a small business as a Sole Proprietorship or General Partnership, you will be required to provide your SIN (Social Insurance Number) to Amazon for taxation purposes. If you incorporate the business, Revenue Canada will automatically send a BN number for the corporation by mail to the corporate address you have listed. Amazon will require the BN number from you to set up the sellers account. The BN number typically takes a week to ten days to receive after you have incorporated.
Every month, Ontario Business Central Inc. helps thousands of individuals register and incorporate their new businesses and we are here to help you. We provide the ability to register or incorporate within many jurisdictions across Canada including Ontario, Alberta, British Columbia, Manitoba, Saskatchewan or with the federal government.
Where to register or incorporate?
If you are registering your business, simply choose the Province where the business operates. As an example, if the business operates in British Columbia, you would register your business within that jurisdiction.
If you are incorporating, you have the choice to either incorporate in the Province where the physical address is for the corporation or to incorporate with the federal government and to import your corporation into the Province where the business will operate.
Why choose a federal incorporation?
The federal incorporation is available to anyone across Canada looking to incorporate where 25% of the directors are either Canadian Citizens or Permanent Residents. The federal incorporation offers the best name protection for your business outside of completing the more expensive and time consuming Trade Mark. You will, as a secondary step be required to establish the federal incorporation within the Province of operation. Some Provinces have no additional fees to complete this task, other Provinces charge additional charges. If you are considering the federal incorporation, our website lists many of the Provinces where you simply click to add your Province to the federal incorporation with any additional details and fees requirements.
If you have any questions related to any of the options available to you whether you wish to operate under your own personal name, register or incorporate, please feel free to reach out to us directly for support.
When you are ready to register or incorporate, Ontario Business Central can get either done quickly, and completely electronically, so there is no need to travel anywhere to get the documents you need.
REGISTER A BUSINESS
INCORPORATE A BUSINESS
Once you are registered or incorporated, you can complete all of the other registrations that Amazon will require to set up your account. These include:
- Bank account information
- Chargeable credit card
- Copy of your ID
- Revenue Canada account information
- Phone number for your business
5. List your products
When listing your products, you can either create new listings if you are the first or only online seller offering the product, or you can piggyback off another seller and match their listing. Depending on whether you have signed up for an Individual or Professional selling account, you will upload and list your products differently. Individual sellers list their products one by one, whereas Professional sellers can list in batches.
For each product being listed, Amazon will request a UPC or other identifying number, title, description, images and keywords.The success of your Amazon business will hinge largely on the quality and accuracy of your listings and how easy it is for customers to find those listings. Ensure your listings meet with Amazon’s requirements, including image compliance and product ID requirements.
You have most likely seen an Amazon product page before, but may not have realized the requirements for each product listing. These include:
- Images – sized at least 500×500
- Product title – maximum 50 characters, with the first letter of each word capitalized
- Variations – including colours, sizes or other available variations
- Description – optimized for SEO
- Featured offer – if multiple sellers offer the same item, those who meet performance-based requirements are eligible for ‘Featured Offer’ placement
- Bullet points – short, descriptive key product features
Amazon aims to make online shopping as easy as possible and instill confidence in their customers. Having these listing requirements helps to maintain a level of consistency to achieve both of these.
6. Fulfill your orders
As an Amazon seller, you have two options for shipping orders out to your customers – either do it yourself, or have the Amazon fulfillment center do this. There are different benefits to each option, so understanding each can help you decide which is better for your business.
If you choose the do it yourself option, you will store and ship products yourself, directly to your customers. Based on what you are selling, Amazon will charge set shipping rates, then provide those fees to you as a shipping credit. Taking these set fees into account can help you price products properly, so you are making a profit. You can get discounts for shipping costs through Amazon’s Buy Shipping tool, which is comprised of a network of trusted shipping companies.
Alternatively, Amazon offers the option to have them handle this side of your business through Fulfillment by Amazon (FBA). They handle everything from storage and shipping to returns and customer service inquiries. All you have to do is send inventory to the Amazon fulfillment center, ensuring they meet FBA’s labeling requirements, and they will take care of the rest. You will pay a fulfillment fee per item sold, as well as a monthly storage fee. Another huge benefit of FBA is that you will have access to Amazon Prime customers. Amazon FBA essentially automates your business, so there is very little you have to do on the product fulfillment side of it.
7. Grow your business
Once you begin selling on Amazon, you are going to start looking for ways to grow your business and increase your sales. Of course, there is marketing and advertising, promotional offers and creating a strong brand and online presence. But there are a few additional ways to do this with your Amazon store.
First off, Amazon takes customer service and satisfaction very seriously, and they closely monitor several key metrics in order to keep the standards of their sellers as high as possible. These metrics include order defect rate, orders cancelled by the seller and late shipment rates. Keeping these numbers within what Amazon accepts can help boost your visibility on Amazon and provide customers with a great experience.
Second, never underestimate the power of reviews. Shoppers will trust other shoppers’ experiences, so getting positive reviews from real customers can really have an impact. Along with your shipments, you may want to include a card requesting feedback on your Amazon page. And, if there are customers who have a bad experience, it is a good idea to do your best to turn their experience around to avoid a negative review.
A third great resource is Amazon’s online resource Seller University. This is Amazon’s YouTube channel, filled with helpful videos and tutorials that teach you everything you will need to know about starting and growing a successful Amazon business.
Starting an online store to sell products on Amazon can grow to be hugely successful by piggybacking on what Amazon has created. When you are ready to get started selling on Amazon, Ontario Business Central is here to help.
At Ontario Business Central, our commitment is to assist entrepreneurs as they build and grow their business successfully. If you have any questions about how to take the first steps to start, please reach out to our helpful and knowledgeable staff.
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Ontario Business Central Inc. is not a law firm and cannot provide a legal opinion or advice. This information is to assist you in understanding the requirements of registration within the chosen jurisdiction. It is always recommended, when you have legal or accounting questions that you speak to a qualified professional.