How to start selling on Amazon in the UK for beginners

Learning how to start selling on Amazon is one of the most common entry points into ecommerce for individuals and businesses looking to generate online revenue. Amazon is no longer just an online retailer. It is a global marketplace that enables third-party sellers to reach millions of customers already in a buying mindset. For beginners, this offers a powerful opportunity to launch products without building a website, managing complex payment systems, or generating traffic from scratch.

Amazon Marketplace allows sellers to list products alongside Amazon’s own retail offerings. Customers browsing the platform are presented with options from multiple sellers, often without distinguishing whether the product is sold by Amazon or a third party. This structure means new sellers can compete directly with established brands, provided they understand how the marketplace works and follow best practices from the outset.

This guide explains how to start selling on Amazon step by step, covering everything from market research and business models to fulfilment, costs, and long-term growth. It also addresses common questions such as how much it costs to start selling on Amazon, whether it is possible to sell digital products, and why working with an accountant for Amazon sellers is essential as your business grows.

What is Amazon Marketplace?

Amazon Marketplace is the platform that enables third-party sellers to list and sell products directly to Amazon customers. Instead of Amazon owning all inventory, independent sellers manage their own product listings, pricing, and stock. Amazon then facilitates the transaction, processes payments, and, depending on the chosen fulfilment method, may also handle storage, delivery, and returns.

Over time, Amazon Marketplace has evolved into one of the largest e-commerce ecosystems in the world. A significant percentage of products sold on Amazon now come from third-party sellers rather than Amazon itself. This shift has transformed Amazon from a traditional retailer into a global marketplace, creating opportunities for sellers in almost every product category.

In recent years, Amazon has made changes to improve fairness within the marketplace. For example, updates to how products compete for the Buy Box have reassured sellers that Amazon does not automatically prioritise its own products. These changes have encouraged more businesses to consider Amazon as a viable long-term sales channel.

What are the advantages of the Amazon marketplace?

One of the reasons Amazon is so attractive to new sellers is its accessibility. There are no minimum turnover requirements, no limits on the number of products you can sell, and no requirement to hire staff. Sellers can operate as sole traders, limited companies, or partnerships and scale at their own pace. Many people begin selling on Amazon as a side project and gradually turn it into a full-time business as revenue grows.

Another significant advantage is trust. Customers trust Amazon’s checkout process, delivery systems, and customer service standards. This built-in trust removes one of the biggest barriers faced by independent ecommerce websites, where customers may hesitate to purchase from an unfamiliar brand. By selling through Amazon, new businesses benefit immediately from the platform’s reputation.

However, while the opportunity is significant, success is not automatic. Amazon is highly competitive, and sellers must understand costs, fulfilment, product selection, and compliance from the beginning. Many beginners underestimate the importance of planning, particularly regarding fees, accounting, and tax obligations. Understanding these elements early can prevent costly mistakes later.

How much does it cost to start selling on Amazon?

A common question for beginners is how much it costs to start selling on Amazon. The answer varies widely depending on the chosen business model.

Typical startup costs may include:

• Amazon seller account fees

• Initial product sourcing or manufacturing
• Packaging and branding
• Fulfilment and storage fees
• Advertising costs
• Professional services such as accounting or tax advice

Understanding exactly what Amazon charges is essential before you commit to a business model. Here are the key fees for 2026:

Plan	Cost	Best for
Individual	£0.75 per item sold	Low volume (under 40 items per month)
Professional	£25 per month + VAT	Anyone selling regularly

Referral fees (deducted from every sale):

Category	Typical referral fee
Electronics	8%
Clothing and accessories	15%
Home and kitchen	15%
Books	15%
Toys and games	15%

FBA fulfilment fees (per unit, based on size and weight of the package):

• Small standard item (up to 400g): Fees are approximately £2.70–£3.50 per unit
• Large standard item (up to 1kg): Fees are approximately £3.50–£4.50 per unit
• FBA storage fees: approximately Fees are £0.51–£1.41 per cubic foot per month (the fees are higher throughout October and December due to demand)

Worked example: You sell a dog toy for £15. Amazon deducts a 15% referral fee (£2.25) and an FBA fulfilment fee of £3.20. Before cost of goods sold, advertising, and tax, your net revenue is £9.55. Pricing correctly from day one, accounting for all fees, is critical to profitability.

HMRC treats all Amazon fees as allowable business expenses, deductible from your taxable profit.

Some sellers start with a few hundred pounds through retail arbitrage, while private-label sellers may invest several thousand pounds. Understanding costs upfront helps prevent cash flow problems and unrealistic expectations.

Start selling on Amazon

Almost anyone can start selling on Amazon. The platform supports sellers of all sizes, from individuals selling a single product to large organisations managing thousands of listings. There are no restrictions based on experience level, and many successful sellers started with no prior e-commerce background.

This low barrier to entry makes Amazon appealing, but it also means high competition. To succeed, sellers must approach Amazon strategically, treating it as a business rather than a quick way to make money. This includes understanding pricing, customer expectations, fulfilment options, and financial responsibilities such as bookkeeping and Amazon tax filing.

Researching the market before you start selling

Before you invest money into products or inventory, effective market research is essential. Many new sellers fail because they choose products based on assumptions rather than data.

• Competitor analysis: Review competing products on Amazon to identify their strengths and weaknesses and understand where your brand fits within the industry.
• Social engagement: Explore content on TikTok, Instagram, and Pinterest to see what is trending among your target audience. This insight will help you understand your customers’ interests and your unique selling point.
• Customer research: Understand what your customers are buying and what influences their decisions. Some prioritise quality over price, while others prioritise affordability and are less concerned about long-term durability.
• Price and product insights: Analyse competitor pricing, product variations, and delivery options. Customers’ expectations are shaped by competitors, and pricing and availability are key factors in whether they buy your product.
• Product restrictions: Check for any barriers to selling your products on Amazon by reviewing prohibited items and familiarising yourself with UK ecommerce regulations.
• Make use of existing technology: Use digital marketing tools to uncover market gaps. Platforms like AnswerThePublic reveal what people are searching for, while Google Trends highlights emerging and popular topics.

Choosing the right Amazon business model

There are several established business models for Amazon sellers, each with different cost structures and risk levels. Selecting the right one depends on your budget, experience, and long-term goals.

• Handmade products can be sold on Amazon Handmade, a platform designed for artisans and creators offering unique items. Dropshipping allows sellers to sell products without holding inventory, but it limits control over the quality of fulfilment.
• Private-label selling allows sellers to create their own branded products, manufactured to their specifications. This model offers greater control and higher margins but requires higher upfront investment and careful supplier management.
• Wholesale selling involves purchasing branded products in bulk from suppliers and reselling them on Amazon. This model is relatively straightforward but highly competitive, as many sellers may list the same products.
• Retail arbitrage involves buying discounted products from retailers and reselling them on Amazon for a profit. This approach has a low barrier to entry but requires constant sourcing and monitoring.
• Dropshipping is the only method that removes the need to manage physical inventory. With dropshipping, products are shipped directly from the wholesaler to the customer, meaning you never have to handle or store inventory yourself. Because other sellers can offer the same products, dropshipping does not provide a unique product range. However, this does not prevent it from being a highly successful business model. With an effective marketing strategy, dropshipping can become a profitable venture, particularly by avoiding fulfilment costs and eliminating the need to invest in inventory upfront.

For more details on this model, see our guide to starting a UK ecommerce business, which covers dropshipping in detail.

Setting up your Amazon seller account

Once you have completed your research and chosen a business model, the next step in learning how to start selling on Amazon is setting up your seller account. All sellers register through Amazon Seller Central, the central hub for managing listings, orders, inventory, payments, and performance metrics. There are a few steps to follow in order to open an Amazon seller account.

Step 1: Go to sell.amazon.co.uk and click “Sign up.” You can use an existing Amazon customer account or create a new one, but most sellers create a separate business account.

Step 2: Choose your selling plan. Individual (£0.75 per sale) or Professional (£25 per month + VAT). Choose Professional if you plan to sell more than 40 items per month or want access to advertising and reporting tools.

Step 3: Provide your details. Amazon requires your legal name or business name, address, phone number, national ID or passport, UK bank account details, and a credit card for fees.

Step 4: Complete identity verification.  Amazon uses a video call verification process for new UK accounts. Have your passport or driving licence ready.

Step 5: Provide tax information. Amazon will ask for your tax details, including whether you are a sole trader or limited company and your National Insurance number or Company Registration Number.

Step 6: List your first product. Once approved, you can create your first listing through Seller Central.

Account approval typically takes 24 to 48 hours, but can take longer if additional verification is needed.

Choosing the correct plan depends on expected sales volume, but many sellers upgrade to the Professional plan once their business begins to scale.

Understanding Amazon Fulfilment Options

Fulfilment is one of the most critical operational decisions an Amazon seller will make. It affects costs, delivery speed, customer satisfaction, and workload. Amazon offers two primary fulfilment methods: Fulfilment by Amazon and Fulfilment by Merchant.

• Fulfilment by Amazon, often referred to as FBA, allows sellers to send inventory to Amazon warehouses. Amazon then handles storage, picking, packing, shipping, customer service, and returns. Products fulfilled through FBA are eligible for Prime delivery, which can significantly improve conversion rates and costs

However, FBA comes with multiple fees, including fulfilment, storage, referral, and long-term storage charges for slow-moving inventory. These costs must be tracked carefully, which is why accurate accounting is essential for Amazon FBA sellers.

• Fulfilment by Merchant, or FBM, means sellers handle storage and shipping themselves or through a third-party logistics provider. This option offers more control and can be more cost-effective for certain products, but sellers must meet Amazon’s strict delivery and customer service standards.

For a deeper dive into costs and setup, see our ecommerce accountants page for FBA-specific support.

Managing inventory and orders

Regardless of the fulfilment method, sellers must manage inventory carefully. Running out of stock can harm rankings and customer trust, while overstock increases storage costs and ties up cash. Amazon Seller Central provides tools for tracking inventory levels and sales velocity, helping sellers make informed just-in-time reordering decisions.

Order management is largely automated for FBA sellers, but FBM sellers must ensure they can meet demand without delays. Consistently meeting delivery expectations is critical to maintaining account health and avoiding penalties.

Accounting for Amazon FBA sellers

Accounting for Amazon FBA sellers requires particular attention because Amazon controls much of the fulfilment and payment process. Funds may be held temporarily, inventory may be stored across multiple locations, and returns may occur weeks after a sale. Without detailed reconciliation, sellers can easily lose track of costs and margins.

Specialist accounting support helps ensure that inventory valuation, cost of goods sold, and Amazon fees are recorded accurately. This level of detail is essential for understanding business performance and preparing reliable accounts.

Understanding the Amazon Seller Central dashboard

Every Amazon seller has access to the Seller Central dashboard, which allows you to:

• Monitor inventory levels
• Manage and fulfil orders
• Handle customer enquiries and resolve issues
• Track sales and performance metrics
• Set up and monitor paid advertising campaigns
• Contact Selling Partner Support

Amazon Seller Central is comprehensive yet user-friendly, enabling sellers to maintain a clear overview of store activity while also drilling down into detailed performance data or responding to individual customer messages.

How to start selling digital products on Amazon

Many beginners also want to understand how to start selling digital products on Amazon. Unlike physical products, digital products do not require storage or shipping, but they are subject to different rules and platforms within the Amazon ecosystem.

Amazon allows digital sales through specific programmes, such as Kindle Direct Publishing for eBooks, Amazon Music for audio content, and approved software or digital media platforms. Sellers must comply with content guidelines, pricing rules, and royalty structures specific to each programme.

Digital products can offer higher margins because there are no fulfilment costs, but competition can be intense, and success often depends on marketing, branding, and content quality.

Planning for long-term growth on Amazon

Once the foundations of an Amazon business are in place, attention can shift toward growth and optimisation. Long-term success requires ongoing analysis, adaptation, and reinvestment.

Pricing strategies must be reviewed regularly to remain competitive. Inventory planning should account for seasonal demand and promotional events such as Prime Day or Black Friday. Advertising through Amazon Ads can increase visibility, but campaigns must be closely monitored to remain profitable.

Many sellers also explore international expansion, using Amazon’s global marketplaces to reach new customers. While this can unlock significant growth, it also increases accounting and tax complexity, making professional support even more important.

Building a sustainable Amazon business

Learning how to start selling on Amazon is only the beginning. Sustainable success depends on treating the business professionally, maintaining accurate financial records, staying compliant with tax rules, and continually improving operations.

Sellers who invest in proper accounting, seek advice from experienced professionals, and make data-driven decisions are far better positioned to build resilient, profitable businesses. Amazon Marketplace is competitive, but for those who approach it strategically, it offers long-term opportunities that extend far beyond initial sales.

Understanding the realities of selling on Amazon

While Amazon offers significant opportunities, it is essential to approach it with realistic expectations. Many beginners assume that learning to sell on Amazon guarantees fast profits, but success usually comes from consistent effort, careful planning, and ongoing optimisation. Amazon is a competitive marketplace, and sellers must be prepared to adapt as conditions change.

One of the biggest challenges sellers face is competition. New products are launched daily, and price competition can be intense. This makes it essential to differentiate through quality, branding, customer experience, or operational efficiency rather than relying solely on low prices. Sellers who focus only on short-term sales often struggle to maintain profitability over time.

Another consideration is policy compliance. Amazon frequently updates its seller policies, category requirements, and performance metrics. Failing to stay informed can lead to listing suspensions or account restrictions. Successful sellers make a habit of reviewing policy updates and regularly monitoring account health.

Managing risk as an Amazon seller

Risk management is an often-overlooked aspect of selling on Amazon.

• Diversification. Over-reliance on a single product, supplier, or marketplace can leave a business vulnerable to sudden changes. Diversifying product ranges, sourcing options, and even sales channels can help reduce this risk.
• Cash Flow Management. Amazon does not pay sellers immediately after each sale, and funds may be held to cover refunds or chargebacks. Without proper financial planning, sellers can find themselves short on working capital even when sales appear strong. This reinforces the importance of accurate bookkeeping and forecasting.
• Insurance is another area sellers should consider. Product liability insurance may be required for certain categories and protects against claims related to product safety. While insurance adds to costs, it can prevent far greater financial losses in the event of a dispute.

Using data to improve performance

Amazon provides sellers with a wealth of data through Seller Central. This includes information on sales trends, conversion rates, advertising performance, and inventory turnover. Sellers who regularly analyse this data are better positioned to identify opportunities and address issues early.

• Declining conversion rates may indicate pricing issues, poor images, or negative reviews.
• Excess inventory may signal over-ordering or reduced demand.
• Automation tools can further support performance improvements. Many sellers use third-party software to manage repricing, inventory forecasting, advertising optimisation, and reporting. These tools save time and reduce manual errors, allowing sellers to focus on strategic growth.

Data-driven decision-making allows sellers to respond quickly and minimise losses.

Preparing for scale and expansion

As your Amazon business grows, operational complexity increases. Managing larger inventories, multiple suppliers, and international marketplaces requires structured processes and reliable systems. Sellers should document workflows, establish clear responsibilities, and consider outsourcing time-consuming tasks.

International expansion can unlock new revenue streams, but it also introduces additional challenges. Different marketplaces have unique regulations, tax rules, and customer expectations. Sellers expanding internationally should seek professional advice to ensure compliance and profitability.

This is particularly important for tax matters. Selling across borders can trigger additional VAT or sales tax obligations. Working with professionals who understand international e-commerce reduces the risk of non-compliance and unexpected liabilities.

Do I need to pay tax when selling on Amazon UK?

One of the most common questions from new Amazon sellers is whether they need to declare their income to HMRC. The answer depends on how much you earn:

• If your total gross Amazon income is £1,000 or less in a tax year, you do not need to register as self-employed, and no self-assessment tax return will be needed.
• If your gross income exceeds £1,000, you must register as self-employed with HMRC and declare it through a self-assessment tax return, even if your profit after fees and expenses is zero.

The £1,000 threshold applies to gross income. Your total Amazon sales before any fees are deducted, not your profit. If you sell £2,000 but pay £800 in Amazon fees and £600 for stock, you have still crossed the threshold and must register.

Amazon is also required to automatically report seller transaction data to HMRC under the OECD Digital Platform Reporting Rules, making undeclared income increasingly detectable. Declaring correctly from day one is always the right approach. See our guide to registering for Self-Assessment for the full registration process.

Understanding Amazon tax rules in the UK

Selling on Amazon comes with tax responsibilities that vary depending on location, turnover, and business structure. In the UK, sellers may need to register for VAT, submit regular returns, and comply with HMRC regulations. Amazon also shares seller data with tax authorities, making compliance increasingly important.

Amazon tax filing involves more than submitting a single return each year. Sellers may need to file VAT returns quarterly, report overseas sales, and maintain detailed records to support their filings. Errors or late submissions can result in penalties, interest charges, or account issues.

Amazon VAT obligations for UK sellers

VAT is one of the most important and most misunderstood areas for Amazon sellers.

VAT registration threshold. You must register for VAT once your total taxable turnover exceeds £90,000 in any rolling 12-month period. This is based on gross sales, not profit. Amazon’s high volume can push sellers through this threshold faster than expected.

Amazon and VAT on fees. Amazon charges VAT on its seller fees (Professional plan, referral fees, FBA fees). If you are VAT-registered, you can reclaim this VAT. If you are not registered, it is simply an additional cost.

FBA storage in EU warehouses. If you use Pan-European FBA, Amazon may store your inventory in EU countries, which can trigger a VAT registration requirement in those countries, even if your UK turnover is below £90,000. This is a frequently missed obligation that results in significant penalties.

Amazon’s role is deemed a supplier. For sales to UK consumers by overseas sellers, Amazon acts as the deemed supplier and collects VAT on their behalf. UK-based sellers are responsible for their own VAT compliance.

Making Tax Digital for VAT. If you are VAT-registered, you must already file returns through MTD-compatible software. Amazon Seller Central is not MTD-compatible on its own, and you need an integration such as Xero. Our VAT returns service manages Amazon VAT compliance end-to-end.

Making Tax Digital and Amazon sellers

From 6 April 2026, Amazon sellers operating as sole traders with income above £50,000 must use Making Tax Digital for Income Tax (MTD). This requires keeping digital records and submitting quarterly income and expense updates to HMRC in addition to the annual Self Assessment return.

The threshold drops to £30,000 from April 2027 and £20,000 from April 2028, capturing the majority of active Amazon sellers over time. Amazon Seller Central reports are not MTD-compatible. You need accounting software such as Xero integrated with your Amazon account to meet these requirements automatically. See our full Making Tax Digital guide for details.

How does bookkeeping for Amazon work?

Amazon’s payout reports show what lands in your bank account, not your actual revenue. Amazon deducts fees, refunds, and adjustments before paying out, meaning your bank balance significantly understates your gross income. HMRC requires you to report gross revenue, not net payouts.

Every Amazon seller should track monthly:

• Gross sales (before all deductions)
• Amazon referral fees
• FBA fulfilment and storage fees
• Advertising spend
• Cost of goods sold
• Refunds and returns
• VAT collected and paid (if registered)

Tools such as A2X or Link My Books connect Amazon Seller Central to accounting software like Xero, automating this reconciliation and eliminating the most common errors. Our Amazon bookkeeping service provides fully managed reconciliation for sellers at every stage.

Working with an Amazon tax advisor helps sellers navigate complex tax rules, particularly when selling internationally or using Fulfilment by Amazon. A tax advisor can explain when VAT registration is required, how cross-border VAT works, and which expenses can be legitimately claimed.

Knowing when to seek professional support

As your Amazon business grows, financial management becomes increasingly complex. Many new sellers focus heavily on sales and marketing while overlooking the importance of accurate bookkeeping. However, without proper accounting, it is impossible to understand true profitability, manage cash flow, or confidently meet tax obligations.

Amazon charges multiple fees, including referral fees, fulfilment fees, storage fees, advertising costs, and refunds. These charges are often deducted automatically, which can make revenue figures misleading if they are not reconciled correctly. This is why many sellers choose to work with an accountant who understands how Amazon reports transactions and payouts.

Accurate accounting enables sellers to properly track expenses, identify profitable products, and make informed decisions about pricing and inventory. It also provides clarity when preparing financial statements or seeking external funding.

Taking the next steps with confidence

Learning how to start selling on Amazon is an important first step, but long-term success comes from continuous learning and improvement. Sellers who treat Amazon as a serious business, invest in systems and knowledge, and remain adaptable are far more likely to achieve sustainable results. Amazon Marketplace is not without challenges, but it offers unparalleled access to customers, infrastructure, and tools. For those willing to approach it strategically and professionally, it remains one of the most powerful platforms for building a scalable e-commerce business.

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