Amazon FBA UK: sourcing stock that makes money

Fulfilment by Amazon means you send stock to Amazon and they pick, pack and ship it when it sells. You handle sourcing; they handle logistics and most of the customer service.

For UK resellers the appeal is that you stop packing parcels and get access to the largest buying audience in the country. The catch is that Amazon takes a substantial cut and enforces stricter rules than the marketplaces you are probably used to.

What Amazon takes

Three separate charges, and you need all three before you can judge a product.

Referral fee. A percentage of the sale price, usually 8% to 15% depending on category.

Fulfilment fee. A per-unit charge based on size and weight. This is what makes heavy or bulky low-value items unworkable.

Storage. Charged monthly by volume, and much higher in the last quarter of the year. Stock that does not sell keeps costing you money instead of just having been a bad buy.

Amazon's own Revenue Calculator gives you exact figures for a specific product. Use it every time. Estimating FBA fees from memory is how a product that looks like £6 profit turns out to be 40p.

The restrictions nobody warns you about

Gated categories and brands. Plenty of categories and individual brands need approval before you can list. New accounts are gated on more than established ones. Always check whether you can list something before you buy it, not after the boxes arrive.

Invoices. To ungate a brand, Amazon usually wants a supplier invoice from a VAT-registered supplier, generally for a decent quantity. A supermarket till receipt rarely does the job. This is the biggest practical difference between FBA and casual reselling, and it is why plenty of arbitrage sellers stay in ungated categories permanently.

Condition. FBA is a new-condition channel for most purposes. Clearance stock with damaged packaging can fail inspection.

Sourcing for FBA

The sourcing question is the same as any arbitrage: what is currently priced below what it sells for. Retail arbitrage and online arbitrage both feed FBA, and most UK sellers use both.

What is different is that FBA rewards products you can buy again. Because you ship in batches and pay storage, a line you can restock next month is worth more than a one-off find at the same margin. When you find one that works, note the retailer and keep watching it rather than treating it as a lucky hit.

That watching is the part worth automating. SAVR monitors hundreds of UK retailers for clearance and pricing errors, which is where repeatable FBA stock tends to come from. The same lines discount on a cycle, and knowing when they do is most of the advantage.

Working out if a product is worth it

Before buying, you want:

• Amazon's current selling price, and whether Amazon itself is on the listing. If Amazon is selling it, your share of the buy box will be small.
• The fee total from the Revenue Calculator.
• Sales rank, as a rough proxy for how fast it moves. A great margin on something that sells twice a year is not a good product.
• How many other sellers are on the listing. A dozen sellers means the price is going down.

If the margin survives all four, it is worth buying a test quantity.

Is it worth doing

FBA suits people who want volume without handling parcels and who can leave money sitting in stock for weeks. It suits people who need quick turnaround much less well. Between inbound shipping, receiving and payout schedules, your cash is tied up far longer than on a Vinted sale.

If that does not appeal, the same sourcing works fine for eBay and Vinted, where you keep more of the sale price and get paid faster, in exchange for doing the packing yourself.

Whichever you pick, the tax position is identical, and it starts at £1,000 of income. The full picture is here.