How to make money on Amazon: A guide

If you’ve ever shopped online - or just used the internet for research before buying in a local store - the chances are that you’ve visited Amazon. As one of the first online marketplace sites, Amazon has changed the way people around the world shop, connecting customers and sellers globally.

If you’re interested in getting involved in Amazon as a seller, you’ll want to know a bit about how it works. This guide includes all you need to know to get started”

• What is Amazon, how does it work and what you can sell
• How to get started
• The Amazon selling fees in Canada
• How you can withdraw money from Amazon, and info about the fees
• An alternative way of receiving money from abroad

Making and receiving international business payments

When you want to be able to do business internationally, this could mean you also have to pay suppliers abroad, or get paid from customers/clients from abroad. You can, of course, use your bank for this, but there’s an alternative solution as well.

With Wise Business you can make international payments for low transparent fees, and your money will be converted with the real, mid-market exchange rate. No additional fees will be tucked away in the exchange rate, so you’ll always know upfront how much a transfer will cost you.

When you open a multi-currency account with your Wise business account, you’ll also be able to get account details for USD, AUD, NZD, GBP and EUR which means you can get paid in these currencies via local transfers. These are usually free, but if there’s a fee it’s normally lower than the fee for an international money transfer.

If you have to make a large number of transfers at once, you can use the Wise batch payment tool, or integrate with the API, to make your life easier.

Sign up for Wise, and start saving!

What is Amazon?

Amazon is the largest digital marketplace in the world, and considered to be one of the most influential tech companies around. Since being founded by Jeff Bezos, some 25 years ago, Amazon has revolutionised retail, allowing people all over the world to buy and sell all sorts of products without ever leaving home.

How does Amazon work?

You can sell on Amazon as a professional, or set up an individual account if you just want to list a few items as a part time job or hobby. Simply set up an Amazon account, list your products for sale, and customers in your chosen countries - known as marketplaces on Amazon - can view and buy them. Once you make a sale, you ship the item and Amazon processes payment.

Amazon also offers lots of additional services for experienced sellers, including warehousing and fulfillment.

What can you sell on Amazon?

You’ll be able to sell a broad range of products through Amazon. There are 18 product categories open to all sellers, with a further 10 product types available for professional sellers only. Open product categories include books, DVDs and home items. To sell in some categories, such as grocery and healthcare, you’ll need to set up a professional account with Amazon, and apply for permission to sell before you get started¹.

There are also some restrictions on what can be sold via Amazon. Most of the restrictions won’t come as any great surprise, such as some limits applied to food products for health and safety reasons, or items which can’t be sold due to government restrictions².

How to start selling on Amazon: Step-by-step

Getting set up to sell on Amazon is pretty straight forward. Here are the basic steps you’ll need to consider³.

• Decide what you want to sell, using the product categories as a guide. Check there are no restrictions on the items you choose
• Decide if you want to open a professional plan, or an individual selling account. There are different fees and features to these plans - more on that later
• Set up your chosen account type, using the prompts online to guide you
• List your items. This can be done using the Add a Product tool, or by importing your inventory list if you have a professional account. Don’t forget to make them active, as well
• Customers can now see your products and buy them via the Amazon webpage. You’ll be notified when you make a sale
• Ship items as they are sold - or choose to have Amazon take care of that using the FBA (Fulfilled by Amazon) service

What are the Amazon selling fees in Canada?

When you sell via Amazon you’ll pay a range of different fees depending on your plan type and the exact products you’re listing.

Here’s a rundown of the main fees you’ll need to know about - you can get more online on the Amazon website⁴.

The referral fees that Amazon charges deserve a bit more explanation because they vary greatly, and may seem a bit complicated. Check the Amazon site for a full table with the percentages per category, but in short you should keep this in mind⁴:

• You pay the referral fee on each sold item
• The fee is calculated over the total sales price (this is the total amount paid by the buyer)
• The fee is a percentage which varies per category, and some categories have a minimum fee amount → you pay the one that is higher
• Some categories have different percentages on different amounts → for example in the category Baby: 8% on items with a total sales price of CA$15.00 or less, 15% on items with a total sales price of CA$15.00 or more
• Some categories have different percentages for portions of the price → for example in the category Jewellery: 20% up to CA$325.00, 5% for the amount over CA$325.00
• The referral fee for Amazon device accessories is 45%, and for extended warranties, protection plans, and service contracts the fee is 96%

How can you withdraw money from Amazon?

When you start to make sales, you’ll want to know how to withdraw the money from your Amazon account so you can spend it. Amazon will process customer payments, deducting their fees as they do so. This is described as your account being settled. Once the account is settled, Amazon will initiate a payment to your linked bank account via ACH or electronic funds transfer. This can take around 5 days⁵.

You can’t link your Amazon account to a credit card or intermediary like PayPal because you will need bank details to get set up. However, you can choose to link a bank account which is based in another country if you want to - more on that below⁶.

When you are a Canadian resident you may not have a bank account in a different country to link to your Amazon account. But if you open a Wise multi-currency account you can open a virtual account in US dollars, British pounds, Australian dollars or euros and link this to your Amazon account.

Open a free Wise international business account

What are the fees?

If you have a CAD balance and are withdrawing it to your CAD denominated linked bank account, you won’t usually pay any fee. All fees are deducted before being posted in your settlement account.

However, if you want to send money from your Amazon account to a bank account held in a different currency, you’ll pay a fee. This fee is included in the exchange rate you’re offered when you come to withdraw the money to a different currency⁶. You’ll be able to see the cost by comparing the exchange rate offered with the mid-market exchange rate you can find on Google, or an online currency converter.

What’s Amazon’s exchange rate, in case your customers pay in a foreign currency

Amazon is a global platform, so you’ll have the option of listing your products across different marketplaces if you want to. If you sell your items in a different country, payment will be made in the local currency there. It’ll then show in your Amazon balance in that currency.

To withdraw a balance held in a foreign currency, you have a few options⁷:

• Withdraw the money to a local bank account in the marketplace you’re listing your products
• Convert the money with Amazon Currency Converter for Sellers before you withdraw it
• Make use of a third party currency conversion service

Let’s say you want to sell in the UK, as well as Canada. You could open a bank account in the UK and link this to your Amazon account to withdraw British pounds directly. If you aren’t physically located in the UK, this may turn out to be a complicated process or it might not even be possible at all. Another option you have is to open a Wise multi-currency borderless account to withdraw payment there.

If you don’t want to set up a new bank account in the country you’re selling in, you can also choose to use the Amazon Currency Converter to exchange the funds and withdraw to your linked Canadian bank account. This will include paying a fee, which is included in the exchange rate you’re quoted when you set up the withdrawal⁷.

What’s an alternative to receive money from abroad?

If you’re being paid on Amazon in a foreign currency, and want to exchange it back to Canadian dollars, you may choose to use a multi-currency account to get your hands on your money. You can then use the local bank account details that come with your multi-currency account to withdraw money from different marketplaces, and exchange it to Canadian dollars within the account for ease.

One option is to use a Wise multi-currency account, which comes with local bank account details for the euro area, US, UK, Australia and New Zealand. Link these local bank details to Amazon to withdraw income from these regions, and then hold or convert the balances to spend later. All currency conversion is done using the mid-market exchange rate, with no hidden fees, which can work out much cheaper than alternative services. Check out the fees associated with Wise here.

Receiving money from your Amazon marketplace isn’t the only thing you can do with your Wise Business account. If you have international suppliers, you can pay them as well. The fees you pay are always shown upfront, and your money will be converted with the mid-market exchange rate, without fees hidden in there.

Sign up for a Wise business account, and start saving

Selling on Amazon can be a great way to make some extra money - or even create a full time income. Choose a product you love, and which has good profit margins, and you could be earning before you know it.

Make sure you take some time to understand the Amazon payment processes, so you’re not hit with any surprise fees. If you decide to expand your business and sell internationally, it’s definitely worth finding ways to cut the costs of currency exchange so you can get your hands on your money as cheaply as possible. Have fun building your business, and spend less on fees too.

Sources used for this article:
1.Become an Amazon seller
2.Restricted products
3.How to start selling
4.Amazon selling fees
5.How you can get paid
6.Amazon currency converter for sellers faq
7.Payments for global accounts
*All sources checked on May 20, 2020