Pros & Cons Amazon FBA Individual vs Professional Selling Plans
One of the first major decisions you will need to make as a new Amazon seller is the type of seller plan you would want to use for yourself. There are two options for you to choose from, and we’ll cover both in this post to help you make an informed decision.
Don’t worry about making the wrong choice – you can change plans at any time.
Professional Selling Plan
Pros
- Warehousing & FBA : Ability to use its world-class FBA service to ship your goods to customers. This is the main selling point and allows you to focus on the business rather than “in the business”.
- Not restricted to amount of items you sell : Amazon is a great place to start your business. They have millions of users and you can store products in their warehouses, so that people don’t need to wait for their items.
- Manage inventory & payments : Amazon Seller Central has a powerful inventory management system that you can use to track your product listings. You can also connect directly with Amazon fulfilment services so that they handle the shipping of your products and customers’ orders.
- Run promotions, gifts, services : Amazon offers a variety of promotions. To run successful promotions, you need to consider the right time and price.
- Buy box : The Buy Box is an “award” given to the merchant that sells a product and ships it quickly.
- User Permissions : With this feature, you can now scale your business without any obstacles.
Cons
- Monthly subscription fee of $40
Individual Selling Plan
Pros
- Free to start and no monthly fee
- $0.99 per item fee when an item sells
- Ability to create new items in their catalog
- Suitable if you want to get rid of a few extra items lying around the house
Cons
- Limited to 40 sales a month
- Cannot sign up for FBA
- Cannot sign up for Amazon Advertising
- Cannot sell in restricted categories
- Unable to use their main portal to manage inventory.
Additionally, here are some questions to ask yourself when you’re choosing a plan:
Are you going to sell more than 40 items a month?
If you answered yes (like almost everyone who starts this business), then you should sign up for the professional seller plan.
The breakdown is simple, if you sell 40 items at the individual plan and pay a $0.99 fee for each of the sales transactions, the professional fee covers this regardless of the number of products you sell. If you add in a bunch of the cool features that come with the Professional Selling Plan, this makes it a no-brainer.
Are you interested to sell in any restricted categories?
Professional selling plans have an access to an additional 10 categories that the individual plans don’t.
The 10 categories include: Automotive Parts & Accessories; Business to Business (B2B) products; Collectibles Coins; Fashion Jewelry; Fine Jewelry; Fine Art; Grocery, Food & Gourmet; Industrial & Scientific; Professional Services; Sports Collectibles; Video, DVD, & Blu-ray; and Watches.
It’s important to note that while the category list expands in the Professional Selling Plan, this doesn’t mean you don’t have to go through an application to sell in that category.
Winning the Buy Box
The biggest advantage if you have an Amazon professional sellers account is the eligibility to win the all-important Buy Box. It’s basically a section on a product page that allows their millions of customers to automatically add your product to their shopping cart. Over 80% of purchases happen through the buy box. if a seller is not on the buy-box, a customer will have to go through more steps in order to place an order of your item.
When an item has the buy-box, you will see a Buy Now button right under the price.
When an item doesn’t have the buy-box, it will look something like below. There are many reasons that a product may not have the buy-box. A Professional Selling Plan which in turn allows FBA is just one of them.
Advertising
You don’t want to just hope that people will find you, because without advertising your product there’s only a small chance they’ll see it. But with the help of a professional sellers account, you’ll be able to create sponsored listings for any Amazon marketplace, you have much better chances!
In short, this allows you to boost your products to the top of Amazon’s search results. This often means more sales and profits against sellers who has already established themselves in that niche market. Keep in mind though that as I mentioned before, it is its own industry all together so there are also many resources out there for those interested!
Here is how you know whether a product is a sponsored listing vs not. You will see the words “Sponsored” right above the title of the product.
Here is what you’ll need to get started
- Bank account number
- Bank routing number
- An Internationally chargeable credit card (Visa, Master Card, AMEX or any debit card that uses Visa/Master Card, no pre-paid cards)
- Government issued national ID (Passport, Resident ID) … Get scanned copies of this in your computer ready
- Tax information
- A phone number so you may receive one time passwords and to gain access to your account
- In some cases, we’re seeing them ask for a utility bill and a bank statement in your name.
- All addresses / names have to match with every document to ensure a smooth registration process.
It’s best to make sure you’re doing this on a desktop computer for a friendlier navigation. It should take no more than 10 minutes if you have all this information ready.
The key take-away
For all my students or companies that I consult with, I always recommend to start with the Professional Selling Plan. Ultimately, the plan you choose to use boils down to the reasons why you’re planning to sell on Amazon in the first place. The key difference between both the plans is mainly the volume of items that you think you will sell. If you only want to get rid of a few items and make some extra cash to pay off some debt or cover some bills (nothing wrong with that either), then select the individual seller plan. However, if you’re looking to build a business and make an attempt to replace your 9-5 job income then signing up for the Amazon professional seller plan is the right choice.
