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If you are an eCommerce business with a product that you sell, such as a clothing brand, you may consider becoming an Amazon seller. Many online sellers and new sellers, including small businesses, sell with an Amazon seller account which is not surprising considering 90% of British people use Amazon to shop. However, whether you are a new seller or not, if you sell your online product in a product category on Amazon UK, you must ensure you are legally compliant. This article will explain how an eCommerce business like yours can be legally compliant when selling on Amazon UK.
Why Sell Your Goods on Amazon?
As an eCommerce business, you may choose to use Amazon UK to sell your products online. Whilst you may have your online site to sell your products, using Amazon means you have the products your online store stocks, displayed elsewhere too. Amazon is a well-known and popular eCommerce site, so you can be confident many online visitors go to the site. In fact, Amazon UK is the largest online marketplace in the UK, with 281,000 UK sellers back in 2020. If your online product from your online store is on Amazon UK, it increases the likelihood of you selling your eCommerce products to online customers. There are other reasons why you may use Amazon UK to sell your online product, such as:
- the platform is easy to use;
- Amazon offers optimised search results; and
- your marketing costs are reduced.
How to Be Legally Compliant
If you sell your items on Amazon UK, you must ensure that you follow legal rules, including Amazon’s own rules, to be legally compliant. Below are some ways to be legally compliant when selling on Amazon UK.
1) Compliance With the Amazon Services Europe Business Solutions Agreement
The primary way to ensure you are legally compliant when selling items on Amazon is to sign and abide by the Amazon Services Europe Business Solutions Agreement. This contains the main terms and conditions you must abide by as an eCommerce e-seller on Amazon UK. The agreement includes the following:
- you give Amazon UK a broad intellectual property licence for your eCommerce business’s intellectual property which can include trademarks and designs;
- it may be cancelled by Amazon with 30 days’ notice with no reasons or immediately where you do not deal with any breach of the terms and conditions within seven days; and
- you indemnify Amazon if a third party makes a claim through them against you or your wrongdoing.
2) Adherence to Packing and Shipping Requirements
When you use Amazon UK to sell your online products, you must adhere to their strict packing and shipping requirements. This includes providing a smooth returns procedure when your customers want to return a product. An easy way to ensure you comply with this is to use Amazon’s process, Fulfilment by Amazon (FBA). This means that your eCommerce products will meet the Amazon criteria when they are:
- stored;
- packed; and
- shipped; and
- returned.
By using the Amazon FBA process, your eCommerce business may get Amazon Prime, which means you can offer online customers next-day delivery. As such, if you use the Mazon FBA process, this can help your sales increase further.
3) Comply With Value Added Tax (VAT) Regulations
If you decide to sell your products on Amazon UK, you must ensure that your company meets VAT regulations. VAT is a tax specifically for when people buy goods or services, so if you meet the threshold, you will charge your customers VAT on top of the price of your product as long as you also:
- store our goods in the UK; and
- sell them to customers who are in the UK.
This means that if you are an eCommerce business that has a turnover that reaches or goes over the threshold HMRC sets for VAT and you meet the above two requirements, you must register for VAT. The current threshold by HMRC for 2023 is £85,000.
4) Take Out the Required Insurance
Selling your eCommerce product on Amazon UK means you need to be legally compliant regarding online business insurance. If you get product liability insurance when you sell on Amazon UK, it can protect your eCommerce business from any legal claims. If the product hurts someone or something, the insurance protection can pay for your fees.
Amazon UK will require you to take out and pay for public third-party liability insurance in certain circumstances. These are when, for a period of three consecutive months, your business makes at least £4000 per month.
This checklist will help you identify areas in your business that may need further protection or assistance to ensure you are legally compliant.
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Key Takeaways
As an eCommerce business selling your product on Amazon, you must ensure you are legally compliant. This article explains some ways to ensure you comply with laws, including Amazon’s terms and conditions, when you sell online with Amazon. It details that you must adhere to the Amazon Services Europe Business Solutions Agreement, which you may sign. It also explains that you should ensure you meet Amazon’s strict packing, shipping and return standards. The article also explains that selling your online business products on Amazon can mean complying with VAT requirements and insurance rules.
If you are unsure whether or not your eCommerce business complies with the law when you sell goods on Amazon, contact our experienced eCommerce lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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