Retail Merchant Accounts - Do You Need One?
The way people shop these days has changed drastically. Gone are the days of a physical, in-store shopping experience, and now a significant amount of retail sales take place on the internet. One way that some retailers have been able to stay relevant is by selling their products online.
One type of retail merchant account that has become increasingly popular for online retailers such as Amazon is called an Amazon Seller Account (ASA). An ASA gives you access to various tools and resources designed specifically for sellers; it lets you sell your products on Amazon's website from your own account, which also allows you to keep more 85% off all your profits with each sale.
While this sounds great in theory, there are a lot of factors that need to be taken into account before considering an ASA. While the benefits at the end of the day can be very promising for your ecommerce business, you also need to keep in mind some of the other drawbacks that you may or may not be aware of. In this article, I will take a detailed look at what exactly an ASA is and why it may or may not be right for your business.
What Is An ASA?
Before we go into why you might not be a fit for an ASA, let's first understand what exactly an ASA entails.
An ASA is a merchant account that you as a seller can use to sell products on Amazon.com, which means you can access the tools and resources offered by the company to manage your sales in addition to selling on the Amazon marketplace. Since you're using Amazon's website, any payments received from customers that you would normally process through Amazon Payments are also going directly into your bank account rather than going through them. (For more details on this, see this article. )
Why You Need An ASA
Here's the good news: you can process your payments through Amazon at a very low cost. However, if your sales are too low you may experience a monthly fee that is higher than what other merchant accounts charge. But the biggest reason why you would want an ASA is because it allows you to keep 85% of all your profits on all sales that are made while being able to access the tools and resources Amazon offers sellers. In short, an ASA provides a way for you to make as much money as possible selling on Amazon.
Why You Might Not Need An ASA
While an Amazon Seller Account is a great option for many online merchants, it may not make sense in every instance. Here are some factors that you should take into consideration before deciding if an ASA is right for you:
#1 – Do You Have High Sales Volume?
In order to qualify for the very low fees associated with the services provided by Amazon, you need to have a certain amount of sales volume per month. Even after hitting this mark, there's potential that you could be charged a monthly fee that is higher than what other merchant accounts charge.
#2 – Do You Need Order Fulfillment?
If you don't need to handle orders, then an Amazon Seller Account is a great choice. The fees associated with processing payments for orders are very expensive and could potentially cost you more than what other merchant accounts charge. So while it may be free to use the services offered by Amazon, if you want to offer your customers customer support and fulfillment options, you will need to pay a fee for that as well.
#3 – Do You Need To Manage Inventory? If your inventory is managed through an online affiliate program such as Shopify or BigCommerce, then an ASA might not be right for you. The reason for this is because Amazon only allows you to sell the products that you have listed on your account, and even if you want to sell on other marketplaces, they will not be utilizing your inventory management processes.
#4 – Do You Have Multiple Accounts? While many online stores have more than one seller account, Amazon requires that each seller has their own separate account. If you are planning on selling in different marketplaces, then once again an ASA might not be right for you.
#5 – Do You Want To Set Your Personal Hours? Another thing to consider is that even if your sales volume is high enough to qualify for the lower fees, Amazon does operate according to their own hours. This means that you would have to make sure that you are able to process payments from customers all day, every day.
Lastly, if you're planning on outsourcing most of your work (and potentially processing orders) through an Amazon Vendor Account, then this may be a better option for you. For more information on this and other types of merchant accounts, visit Merchant Accounts in Minnesota .
How To Setup Your Own ASA On Amazon
As a seller, the first thing that you'll need to do is open up an account with Amazon. From there, as long as everything checks out with their system (namely your contact information and business address), they'll provide you with an invoice number. Next, you'll need to setup a free Web Services account – this will also have a unique invoice number. Now all you have to do is merge the two together by selecting the option that says "Merge Invoice".
There are a few other steps that need to be taken in order to get your account up and running, but overall it's a pretty simple process. Just make sure that you understand what all the fees are and how much it may cost you in the future before going through with this, because once it's setup it might be difficult to change things around.
Other Merchant Account Options
For those of you who are not eligible for an ASA and don't want to take the risk, there are other options available.
The first is to use an Amazon Vendor Account, which is perfect for outsourcing most or all of your work to a third party so that you can focus on making sales. The second option would be to open up a traditional merchant account with a provider of your choosing. You can then utilize the API functions provided by Amazon in order to process payments. This approach is great if you only plan on selling on Amazon but still want the ability to manage your inventory through another system. The last option is something called an EBC (or Electronic Business Card). This is a virtual processing card that doesn't charge you any monthly fees but instead charges you 3% for every transaction and as a result, might not be the most cost effective solution for you.
ASA or No ASA, Amazon Provides Options
The bottom line is that if you are able to qualify for an ASA it can save you money and provide you with the options that other accounts might not. If none of these emailing work for your business model, then there's no reason to stress – Amazon will still process your payments through whichever account meets your needs. Either way, as long as your payments are processed through Amazon Payments, it's essential to have fraud protection.
Conclusion
All things considered, whether you're eligible for an Amazon Seller Account or not you should always have fraud protection in place. This is especially true if you're new to the world of eCommerce and just starting to get your business up and running. Whether it's through Amazon, PayPal, or a service provider of your choosing, there are plenty of options available to make sure that your transactions are protected so that you can focus on what matters most – making sales.