Privately Owned Business Vs. Individual Amazon Business: Which is Best for You?

Virginia Miller

August 28, 2023

In this article

Being a new Amazon FBA seller, one of the most significant decisions you must make is the seller plan you choose. So, recently there are 2 types of Amazon FBA seller plans, one is an individual plan & another is a professional plan. This article consists of a comparison between

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Privately Owned Businesses vs. Individual Amazon

When starting an Amazon FBA business, you must confront a few choices. However, there are multiple benefits and cons based on the Amazon seller account type. Having information about these enables you to perform a cost-benefit analysis. Let's try to understand these factors and make a fair distinction.

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Amazon Individual Business Vs. Privately Owned Business

The primary difference between individual & privately owned businesses is the projected sales volume. The individual seller plan is designed for selling products under 40 units monthly. The privately owned business plan is for sellers who plan to sell more than 40 units monthly.

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Overview of Individual Amazon Business

Individual Amazon seller plans accounts can be created by the seller free of cost. However, the seller has to pay a commission of $0.99 for each sale they make on Amazon. The additional variable closing & referral fee is also part of this seller plan.

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If you have a low sales volume, this is the right option! As the sales volume improves, your cost will add up instantly on each sale. At this point, you can save your expenses. An Individual Amazon account provides plenty of options for individual sellers, including:

Order management & basic listing

Option to change the product status based on the availability

Access to the seller dashboard account for managing the inventory and orders

Set up the single product page

Enable sellers to print the shipping labels & packaging slips

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Individual Amazon sellers need access to perform the following things.

Receive Inventory reports

Decide the shipping rates

Sell restricted products or any other products in the prohibited categories.

Run promotional campaign

Create bulk listings

To use Amazon advertising service

Adding more than one user to your account

Create a product detailing page & changing existing ones.

There are many restrictions, but the best thing about this plan is no upfront cost. Regarding business structure, you have few options as an individual seller. You can be the sole proprietor of the online business.

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Overview of Privately Owned Amazon Business

If you are ready to move beyond the occasion selling or have high sales volume, then a privately owned Amazon business or Professional Amazon seller plan is the right solution. The huge difference in this plan is the seller must pay an up-front monthly subscription fee of $39.99.

This option can quickly save you money if you sell the most items. The professional seller account has multiple tools and other opportunities to maximize profits. The following business plan includes:

Enables you to a bulk listing tool to upload the products once via spreadsheets.

Advanced management tools that have reports, spreadsheets, and feeds.

U.S. sales & tax calculations are available for the orders.

Access to the automated Amazon marketplace & pricing web services.

The ability to customize the services and shipping rates

Eligibility for top placement on the detail pages and other special listing features.

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There are still some cons the seller must consider. As a privately owned Amazon business, you may have to pay the additional Amazon seller fee, which includes referral fee and FBA fulfillment, with another promotion fee. You must still pay the monthly subscription fee if you have a low monthly sales volume.

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Well, a privately owned business plan benefits sellers quickly growing their businesses. It allows the ability to grant access to other employees and contractors.

So, trying to figure out which plan is the best for you? If yes, here are a few things to ask yourself before selling the products on Amazon.

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Are You Going To Sell 40 Products Or More Than That Monthly?

If you plan to sell over 40+ products, consider signing up for a privately owned business. A professional seller plan is beneficial for you because of the following reasons.

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Subscription fee

The professional selling plan on Amazon comes with a monthly subscription fee of $39.99. If we compare this to Amazon's plan, you don't have to pay the subscription fee.

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Transaction fee

The individual sellers are required to pay the $0.99 fee for each sales transaction. Whereas professional seller plans don't need this. If the individual seller sells 41 products monthly, they must pay $40.59 as a seller fee. It means for each product, the seller has to pay $0.99 for each product. On the other hand, the privately owned business pays the $39.99 subscription fee.

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Do You Want To Sell Products In The Restricted Categories?

Both the professional and Amazon individual seller can sell into 20 Amazon categories. The professional sellers have access to the ten more restricted categories. The ten privately owned businesses have the categories:

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B2B products

Collectibles coins

Automotive Parts & Accessories

Fashion Jewelry

Industrial & Scientific

Fine Art & Jewelry

Sports collectibles

Grocery, Food & Gourmet

Professional Service

Video, DVD, & Blu-ray

Watches

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Certain product variations, including collectible books, require a professional seller account. Consider the Amazon professional seller account if a seller wants to sell any categories.

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Does The Seller Want To Win The Buy Box?

The most significant benefit of Amazon professional sellers over the Individual Amazon seller is the eligibility to win the crucial buy box. The buy Box is the section of the product listing page that allows buyers to add the product to the shopping cart automatically.

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However, if you aren't an Amazon professional seller and the only seller on the listing, buyers must go through more steps to purchase. Based on Statista, more than 82% of purchases happen through the Buy Box.

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Are You Excited To Advertise The Products On Amazon?

When you enroll yourself in the amazon professional seller plan over the individual seller plan, is the ability to create a sponsored listing on Amazon. Utilizing Amazon PPC advertising, an experienced seller spends money on the products to Amazon's top search engine listings. It can ultimately improve the profit and sales for the sellers. Individual Amazon sellers can't generate advertising campaigns for the product on Amazon.

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Do You Know The Features Of Both Seller Plans?

In Amazon's professional seller plan, when a seller sells more than 40 products per month, they will receive some bonus categories. Here are some benefits of Amazon's professional seller over the individual seller.

Manage the inventory through spreadsheets, reports, feeds

Set the own shipping cost for the non-media products

Improve the selling efficiency through API integration

Build promotions, including FBM and free shipping offers.

Build listings in bulk through inventory files

Measure the U.S. sales and taxes on the orders.

Grant permission to use and account privileges for other users.

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Why Must Sellers Choose A Specific Seller Plan While Listing On Amazon?

The biggest question a seller must have is which plan they should choose. Understand why you should select an Amazon individual or Amazon professional account and what the features are. It also depends on the level of involvement you can give to build the Amazon business.

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The individual Amazon business plan is suitable for sellers who want to prevent a few additional items around the house. This is also an ideal option for those who wish to sell on Amazon before expanding the business to private labels. The individual seller account is the best way to access the Amazon seller dashboard and forums without paying a $39.99 monthly payment.

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Privately Owned Business Vs. Individual Amazon Business- What To Choose?

The difference between the Amazon Privately owned business and Individual plan depends upon the seller's involvement. You must determine whether you are a business owner or selling just for your hobby. It is also based on whether you are just starting to sell or have already committed to selling.

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If a seller sells 40 or more products in a month individually, then 0.99$ each item fee will be added to the cost of a monthly subscription. At this point, you are losing access to additional tools for professional sellers.

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However, what if you plan to sell for a short time but must hit the goal of selling 40 items monthly? Do you want to try the different seller-level options but are still deciding about sticking with the long-term business? Recently Amazon has added a certain level of flexibility that is:

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Switch between the plans

A seller can upgrade from an individual to a professional account without setting up a new one.

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Switch the plans every month

In this plan, sellers can change the plans from a monthly plan without committing to a quarter or full-year plan. But make sure to do it before the billing month ends! As a seller, you can switch the plans for the subsequent months. But you won't need to prorate the subscription cost of the current month if you downgrade.

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If you are a newbie seller on the online platform and have many products, then enrolling in an individual Amazon business is the right choice. Track your sales to check if you are near reaching the 40-item threshold.

Are you all set to invest in the e-commerce business? Enrolling in a professional account is the best thing you can choose.

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Features Of Choosing an Individual Amazon Seller Account

Let's check the Individual Seller Account benefits.

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Sales Fee For Each Item

As mentioned, the individual seller account operates on each product sales fee. In this setup plan, the seller has to pay a fee when they sell a product. The cost for each product is $0.09.

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Creating Product Page

The essential feature of Amazon's seller account is the ability to create pages in the Amazon catalog for the products you upload to the inventory with proper descriptions and images.

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Listing The Deactivation

If a seller cannot check the account for a specific period, the seller can set the product listing to inactive. It prevents customers from buying the product when the seller cannot ship them.

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Receive Shipping Assistance

When a seller sells a product, Amazon notifies the seller of a "sold, ship now" email. This mail includes the process of shipping products along with the shipping label and packing slip to print out.

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Amazon Set Shipping Rate

In individual sellers' accounts, Amazon sets the product shipping rates automatically.

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Secured Transfers

Rather than using the 3rd party platform like Paypal, Amazon transfers profits directly to the banking account as per your choice. During the transaction, Amazon secures the process.

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Features Of a Privately Owned Business Plan

Here in the below section, we explore Professional Seller Account Benefits:

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Inventory Management

When a seller enrolls into the privately owned business plan, they can manage the product inventory and customer orders by selecting customer spreadsheets and reports.

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Amazon Web Marketplace Service

The Amazon marketplace service enables various API features within the account, including receiving reports and uploading feeds.

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Seller-Set Shipping Rate

Instead of Amazon generating shipping rates for all the products, the seller can create their own. This setup plan gives better control over the net costs of products.

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Gift And Promotional Services

With a professional or privately owned business account, a seller can run promotions for the products. It includes several types of Amazon PPC advertisements.

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Tax Application & Calculation

The privately owned business account lets the sellers calculate the sales tax and apply them to the orders.

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Allowed To Buy A Box

The buy box on every product page contains the buy and "add to cart" buttons. With the Buy box eligibility, the seller can be the top seller listed in the box for specific products.

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How To Create An Account On Amazon As A Seller

Enrolling to sell on Amazon is a simple process. It doesn't take more than an hour, and you can streamline the process by following the documents and information listed below.

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Keep the documents for legal name, business name, and address. Your legal name won't be public, but your business name will be public, and customers can view this.

Any proof of identity that the government issues.

Create a separate mail address for the Amazon business. Amazon will use the seller's contact information to contact the customers. The phone number you provide should be working.

You must have the "ship for" address if you ship the products from the address, not the business address.

Keep the bank account information details. At this account, Amazon will send the amount. The seller will receive money every 14 days.

A seller can provide the SSN or the company's Federal Tax ID number in the U.S. The seller must submit the tax information, which must be verified.

The seller has all the rights to set the business to sole proprietorship, LLC, and private limited for registering the account. Specific plans, like LLCs, would have legal and financial benefits over others. So, select your plan wisely.

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Once you gathered all the above-discussed elements, you are all set to create an account on Amazon. To create an Individual seller account, visit the official website and explore their plans. Click on the signup button to create an individual seller account. Now you will be redirected to the seller's central account. If you don't have a Seller Central account, click on the signup process by entering all the relevant details.

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Do you want to switch your seller account to a privately owned or professional business account? Let's check how to upgrade the account!

Check the setting option by scrolling down the page's bottom.

Under the setting section, click on the Account info.

Visit the "Your service" section and click Manage.

In account type, the seller notices an option "Upgrade." Click on that and change your seller account to the professional one within minutes.

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Sellers who want to switch their professional plans to individual Amazon business plans can follow the same process. The only difference is to click on the Downgrade instead of the upgrade option.

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Once you finish all the above-discussed processes, you are all set to list your products on Amazon. Search for the product you want to list on Amazon and open the product page and open it. Scroll down and hit the button "sell on Amazon." Once you have clicked the button, you are redirected to the page where you must add information like SKU, price, fulfillment period, condition, and quantity. Once you are done with this, wait for the product to sell.

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Conclusion

Ultimately, the idea of starting an online business is an exciting and rewarding one. However, it's essential to weigh your options carefully to make the right choice for your goals. Before entering the world of online entrepreneurship, it's necessary to understand both the advantages and shortfalls of individually rolling out on the Amazon marketplace or establishing a private brick-and-mortar business. Although Amazon offers various incentives such as speed and trustworthiness, more comprehensive eCommerce solutions are available through a privately owned company that can guarantee control over taxation and inventory management. Simpl is here to help with all of your eCommerce needs so you can be sure that you set off with everything in place for a successful business venture. Whether you're planning on embarking on Amazon or want to launch your store, Simpl has the tools and services you need to get set up quickly and easily! Contact us today to see what we can do for your online business ambitions.

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