If you’ve decided to start your own Amazon business, you are probably considering whether to open an individual or professional selling account. There are advantages and disadvantages to both, so HomeRev is here to help you decide what is best for your business when selling HomeRev units or other home goods and lifestyle products.
There are two types of Amazon selling plans: Individual and Professional. As the name suggests, the Individual Selling Plan is for individual sellers, those who sell or offer only a few items. These plans are often for single units without significant inventory.
Professional Selling Plans are for higher volume sellers. Often these sellers are looking to create a fully formed brand or business through their online selling.
The Individual Program does not have a monthly fee. Amazon charges $0.99 per item that the individual sells. The Individual Program allows only single listing creation and the seller can only sell up to 40 items per month.
The Professional Program has a monthly subscription fee of $39.99, and Professional Sellers are allowed to create multiple listings and sell upwards of 40 units. Each month, the Professional Program is renewed and the seller is charged the $39.99 fee. There are no additional charges per item or closing fee, and the $0.99 of the Individual Program is waived.
One of the most important benefits of being a Professional Seller is the eligibility to win the Buy Box. If you are an individual seller, you cannot show up in the buy box on the right-hand side of the screen.
As we discussed in our article How To Win Amazon’s Buy Box – Top Tips & Secrets, winning the Buy Box is one of the best ways to optimize your listings, boost your conversion rate, reach more potential sellers, and sell more product! Winning the Buy Box is an incredible boost to getting your products seen, making money, and growing your brand. This is only possible with a Professional Selling account (along with certain sellers’ performance-based metrics).
Selling only 40 units with the Individual Program limits your potential profit and growth. Most eCommerce sellers want the option to sell as much product as their consumers will purchase. That 41st consumer who can’t buy from you is automatically lost to a competitor.
With the Professional Selling account, you can manage dozens, hundreds, even thousands of listings at once. There is no cap to how much you can sell or how many customers you can gain.
Individual Sellers cannot create new listings; they can only list products that are already active on Amazon. This means that there has to be existing competition (often Professional Status competition) in order for Individuals to enter the market.
Professional Sellers, though, have the option to create new product listings. This means that there is an opportunity to expand not only your inventory and volume but also your product selection and private, unique branding.
In this way, Professional Sellers can also create product bundles. (Individual Sellers are unable to bundle since they cannot create new listings). Bundles can help gain more exposure and win out over competitors. We will have more on bundles in a future article.
If you’re selling thousands of items, you need tools to manage and keep track of your business. Amazon offers data spreadsheets to help Professional Sellers easily track orders, active listings, inventory, fulfillment, marketing, and more. Individual Sellers have a much more basic system that follows listings and orders without advanced reports or feeds.
The Professional Seller also gets access to Amazon Marketplace Web Service, which helps to program and exchange data of listings, orders, payments, reports, and more.
Professional Sellers have the option of using third-party sites and services, whereas Individual Sellers may not. Although you need to do your research before involving a third party service, it’s always nice to have the option to obtain outside help if your business’ demands start to grow past your personal capabilities.
If you want to participate in Amazon’s marketing and promotional opportunities, such as Pay Per Click advertising, you must be a Professional Seller. Even if you do not see yourself using this feature, it is nice to have the opportunity to do so in the future. You never know what some paid promotion can do to launch your business to the next level.
Finally, the most important part. Let’s crunch some numbers.
Let’s say you’re a small business and you think that 40 units sound like the number you’ll sell. You’re thinking that you may want the Individual Selling program so you don’t have to pay the subscription fee. If you are an Individual seller and you sell 40 items, Amazon will charge $0.99 for each unit. This means that your fees to Amazon will be $39.60:
40 x $0.99 = $39.60.
So, if you sell exactly 40 items with your Individual Plan, you are saving $0.30 as opposed to the Professional Plan. If you sell fewer items, you will obviously be saving more.
At 41 units, though, a Professional already breaks even on the cost, and they can begin to make profits without continued expense. Assuming that you want to grow your business, cutting out the per-item-fee highly increases your margins for any quantity sold over 40. You can sell 1,000 items, and you will still only be charged $39.99 by Amazon.
This, in turn, can help keep you motivated to sell more than 40, thus boosting your profit margins and working harder and harder to expand and grow your company.
Don’t worry if you don’t have the answer just yet. You can still start your Amazon business in the selling program you feel is best. You won’t be locked into that status forever. You can switch your selling plan from Professional to Individual if you find your business slowing down, and you can also upgrade from Individual to Professional status if your business takes off (which hopefully it will!).