A Complete Guide to Selling on Amazon Australia: Legal Considerations and Best Practices

Selling on Amazon Australia has become an increasingly popular option for businesses looking to expand their reach and tap into a large customer base.

This means it is a perfect opportunity to reap the benefits of the growing trend. So how do you get your company to sell products on Amazon? And more specifically, what steps can you take to give your company the best chance of success? 

To make sure that your business is successful and legally compliant, it is crucial to understand the legal considerations associated with selling on Amazon. A substantial number of Australian businesses, including a significant portion of small and medium enterprises, contribute to the Amazon stores’ marketplace, exceeding 14,000 in the count.

This guide will explore the key legal considerations and best practices for selling on Amazon Australia, empowering you to navigate the platform confidently.

5 Key consideration when getting started on Amazon

Although Amazon started as a small online bookstore in 1995, it’s one of the world’s largest online stores today. Today, it sells virtually everything from beauty products to home appliances and car parts. The great news is that 40% of the sellers on Amazon are third-party sellers. 

There are a number of key considerations that businesses need to be aware of when getting started on Amazon:

1. Broaden your business’s reach: Whether you are a new company or seeking to expand your products’ reach, leveraging Amazon’s vast customer base can significantly boost your sales potential. Here are some steps you can follow to set up your business and expand your reach on Amazon:

• Understand Amazon’s fee structure: Familiarise yourself with Amazon’s fee structure to calculate your costs accurately. A professional account costs $39.99 per month, but additional selling charges and fees can add up to 15% or more. Consider these expenses when setting your product prices and determining your profitability.

• Create a dedicated business Amazon account: Separate your personal Amazon account from your business operations by creating a distinct account for selling. This allows for better financial management and gives customers a more professional image.
  
• Provide complete account details: Ensure you fill in all the necessary account information on Amazon, including your company details and billing information. This information is essential for monthly subscription fees and to address any negative account balances.

• Determine profitable and competitive pricing: Finding the right price point is crucial for attracting customers while maintaining a healthy profit margin. Conduct market research to analyse your competitors’ pricing strategies. Use quality accounting software to calculate your profitability based on product cost, shipping rates, and Amazon fees. 

• Select the appropriate product category: Choose the most suitable category for your products on Amazon, as it helps customers easily find your listings. Be aware of any restrictions or limitations regarding the sale of certain items. Familiarise yourself with Amazon’s category, product, and listing restrictions guidelines. 

• Optimise content for higher sales: Create compelling content that attracts customers and convinces them to purchase from you. Use relevant keywords in product titles and descriptions to improve search visibility. Provide useful and accurate product information. Utilise high-quality product photography to showcase your offerings effectively. Leverage social media platforms to promote your products and engage with potential customers.

2. Choose the Right Selling Plan: When starting on Amazon, you must select the appropriate selling plan that aligns with your business goals. Amazon offers two plans: individual seller and professional seller. Individual sellers pay $0.99 per sale, while professional sellers pay a monthly fee of $39.99 and have to sell over 40 items per month. Consider your sales volume and frequency to determine which plan suits your needs and ensures you get the best value for your investment. 

You will also need to decide on shipping options, packaging and product options before you can start selling:

• Decide on shipping options: Consider whether to handle shipping yourself or use Amazon’s Fulfillment by Amazon (FBA) service. FBA provides warehousing, shipping, and returns handling but incurs additional costs. If you prefer self-fulfilment, weigh the potential savings against the impact on customer experience, particularly for Amazon Prime customers who may expect free shipping. Utilise accounting software to analyse the profitability of each option.
• Brand and prepare Packaging: Use every package you send as an opportunity to reinforce your brand. Utilise a laser printer to print shipping labels and ensure you have sturdy packaging materials. Invest in scales to accurately weigh packages and calculate shipping costs. While Amazon handles the outer packaging, consider branding your internal packaging to enhance brand recognition.

• Start with a small product range: If you’re new to online selling, starting with a limited range of products is wise. This allows you to gain experience, test the market, and familiarise yourself with billing, payment handling, and customer service processes.

3. Understand the Competitive Landscape: Amazon is a highly competitive marketplace, with numerous sellers offering products similar to yours. To succeed, it’s crucial to identify and highlight your unique selling points. What sets your products apart? You can follow these steps to set your product apart and ensure you are catering to your customers:

• Utilise customised offers and promotions: Differentiate your products by offering special promotions, gift-wrapping options, or unique sales items. These strategies can help attract customers and help you stand out from your competitors. 

• Utilise Amazon’s reporting features: Leverage Amazon’s Seller Central area, which provides valuable reports on inventory, sales promotions, and other essential information. Utilise these reports for sales forecasting, inventory planning, and adjusting your sales strategy. Consider seasonality and prepare for increased sales during peak periods, such as the holiday season.
  
• Measure and analyse results: When making changes to your stock, presentation, or promotions, measure the before-and-after sales figures to evaluate the effectiveness of your modifications. Collect data and insights to refine your selling strategy continuously.

4. Adhere to Strict Rules and Regulations: Compliance with Amazon’s rules is paramount to ensure a successful and sustainable presence on the platform. In addition to adhering to the regulations set by the Australian Competition and Consumer Commission (ACCC), familiarise yourself with Amazon’s seller guidelines. Violations of these rules can result in penalties or even a ban from selling on the platform. To mitigate potential risks, consider maintaining a backup sales channel, such as your own website.
   
5. Protect Your Intellectual Property: Before selling on any online marketplace, it’s crucial to safeguard your intellectual property. Registering trademarks for your company logos, slogans, and designs can help protect your products from counterfeit sellers and unauthorised use. Unethical sellers have been known to register duplicate product codes and provide counterfeit products, which can harm your reputation and lead to negative reviews. Engage an intellectual property lawyer and refer to IP Australia’s resources to determine the appropriate protection measures for your products.

Additionally, consider whether becoming a Fulfillment by Amazon (FBA) seller aligns with your business’s needs. FBA sellers benefit from Amazon handling shipping, logistics, and customer returns, but it comes with additional fees. Evaluate your stock volume, profit margin, and fulfilment capabilities to decide if FBA is right for your business.

By carefully considering these key factors, you can set your business up for success when selling on Amazon. Embrace the opportunities that Amazon offers, protect your products, and prioritise customer satisfaction to maximise your growth potential in the global market. 

How to choose the right business structure when selling on Amazon 

The type of business structure you choose will have a number of implications for your taxes, liability, and other legal obligations. Some of the most common business structures for selling on Amazon include:

• Sole proprietorship: A sole proprietorship is the simplest type of business structure but offers the least liability protection.
• Partnership: A partnership is similar to a sole proprietorship but involves two or more people. Partnerships can be either general partnerships or limited partnerships.
• Limited liability company (LLC): An LLC offers the limited liability of a corporation with the flexibility of a partnership.
• Corporation: A corporation is the most complex type of business structure, but it also offers the most protection from liability.

Do I need an ABN to sell on Amazon? 

Yes. You need an Australian Business Number (ABN) to sell on Amazon Australia. An ABN is a unique identifier that is used to track business transactions for tax purposes. When it comes to obtaining an Australian Business Number (ABN) for your Amazon Store, the answer depends on various factors, including your profit and intentions. 

To assess your eligibility, take a moment to reflect on the following questions:

• Is your Amazon Store a business or a hobby?
• What is the turnover of your venture?
• Will you be applying for Goods and Services Tax (GST) or Pay As You Go (PAYG)?

While anyone can apply for an ABN, receiving it hinges on meeting certain criteria, such as:

• Carrying on an enterprise within Australia.
• Operating a business that is connected with Australia.
• Undertaking sufficient activities to kickstart an enterprise.
• Demonstrating the presence of a well-defined business structure.

It’s important to note that a hobby alone doesn’t qualify as an enterprise. However, your Amazon Store can be considered an enterprise if you have a solid business plan, maintain business-like practices, and keep detailed records. 

Ultimately, the decision lies in how you conduct your store and align it with the requirements for obtaining an ABN. You can apply for an ABN online at the Australian Taxation Office (ATO) website. 

What are Amazon’s policies and agreements? 

Navigating a new platform can be daunting. It is important that before you start selling on Amazon that you are fully compliant with all of Amazon’s policies. In this section, we will delve into some of the essential policies and agreements set forth by Amazon.

1. Amazon Services Business Solutions Agreement

The Amazon Services Business Solutions Agreement serves as the governing document between sellers and Amazon. It outlines the terms and conditions that sellers must abide by when utilising the Amazon marketplace. Key elements of this agreement include:

• General terms and conditions: The agreement establishes the fundamental guidelines for sellers operating on the platform.
• Payment requirements: Sellers must understand the accepted payment methods, security measures, payment disbursement procedures, and situations in which Amazon may withhold payment.
• Termination options: The agreement outlines the available options for both sellers and Amazon to terminate their relationship and exit the terms and conditions.
• Indemnification clauses: Sellers and Amazon share specific obligations and responsibilities that ensure protection for both parties.

2. Selling Policies and Seller Code of Conduct

The Selling Policies and Seller Code of Conduct are designed to maintain fairness and integrity within the Amazon ecosystem. Sellers are obligated to comply with these requirements, which include:

• Providing accurate information: You must accurately and comprehensively describe your products and correctly categorise them.
• Acting fairly and lawfully: You are prohibited from misusing Amazon’s services or providing misleading information to customers.
• Customer ratings and reviews: You must not attempt to influence customer ratings or reviews by offering incentives for positive feedback.
• Responsible handling of customer information: You should use customer data solely for order fulfilment, deleting all information after processing.

3. Tax Considerations for Selling on Amazon

As an Australia-based seller on Amazon, you will be responsible for collecting and remitting taxes on the products you sell. If you operate your Amazon store as a business rather than a hobby, including your Amazon income in your tax return is important. The following steps are recommended:

• Obtain an Australian Business Number (ABN): Applying for an ABN is essential for your business’s tax obligations.
• Voluntary GST registration: If your Amazon Store exceeds $75,000 in turnover, consider registering for goods and services tax (GST) voluntarily. This allows you to claim back GST embedded in your costs.
• Mandatory GST registration: GST registration becomes compulsory if your Amazon Store’s turnover reaches $75,000 or more.
• Sole trader taxation: If you operate as a sole trader, your business revenue is treated as personal income for tax purposes.

Staying informed about tax obligations and seeking professional advice can help you navigate the tax landscape effectively while running your Amazon business.

Do I need a Trademark when selling on Amazon? 

If you aspire to expand your shop and establish a strong presence in the marketplace, considering the registration of your shop’s name as a trade mark is crucial. By registering a trade mark, you gain the ability to protect your business name and any associated logo. 

A trademark can set your business apart and create an unforgettable identity. One example of the significance of trademarks can be found in the Apple brand and its iconic bitten apple logo. 

The combination of this logo has been instrumental in Apple’s remarkable success, emphasising the need for legal protection. 

As your business flourishes, it becomes increasingly vital to safeguard your brand and logo. 

As consumers begin to place trust in your brand, its value grows, making brand protection even more essential. This is where a trademark can legally protect you from counterfeit items on the market.

Conclusion 

Selling on Amazon can be rewarding for businesses as you can target a large consumer base. 

This article provides key information which can help you quickly set up your business on Amazon. If you are still unsure about the process of becoming an Amazon Australia seller, you can hire one of our qualified lawyers to discuss this further.

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