Amazon has assisted thousands of businesses around the globe in leveraging online shopping opportunities and increasing their market.
Sellers are not just able to make use of Amazon’s Amazon platform to market their merchandise and expand their market share; however, they also have the option to benefit from the many solutions for business Amazon offers to increase their sales figures.
But, increasing your profit by using Amazon is dependent on knowing the costs involved to sell your products on Amazon and the best way to lower the cost. This guide on Amazon seller fees will explain everything from the costs of selling on Amazon to the cost of reducing the amount of Amazon fulfillment expenses.
Different types of Amazon seller fees explained
1. Monthly Subscription Fees
The initial Amazon seller fee you’ll face is right from the beginning when you sign-up for an account as a seller. After that, you’ll have the choice of choosing between an individual or professional account, which can make a huge difference in the future.
How much does Amazon take from sellers?
The Amazon Professional Seller account is $39.99 every month.
The fee includes with it the following benefits:
- There’s no charge per item for items that are sold.
- Management of inventory with feeds, spreadsheets, and reports.
- Management of orders with feeds and reports.
- The capability to utilize Amazon Marketplace Web Service when it involves performing API tasks (e.g., uploading feeds, receiving reports, etc. ).
- The option to determine your own shipping rates for selling items that are Books, Music, Videos & DVDs (BMVD).
- The possibility to offer special listing features such as promotional offers and gift services.
- The eligibility criteria for winning an opportunity to win Buy Box.
- The capability to determine US sales and add taxes to your purchases.
- The capability to upload items in large quantities.
- The possibility of offering free gift wrap for items.
2. Sale-Related Fees
The next kind of fees that you’ll see have to do with the sale of items and marketing, so let’s look at the sub-types.
Imagine this fee as a fee you pay to Amazon every when you sell a product through their marketplace. Most of the time, the fee is flat (around 15 percent or less); however, it could differ based on the category that which the product was offered for sale.
For instance, selling products in the Extended Warranties, Protection Plans & Service Contracts category, you’ll pay a 96 % referral fee. The other categories aren’t quite as much as the above categories, including Amazon Device Accessories being the only exception, with a 45 percent referral fee.
To keep things more interesting, the majority of categories come with a minimum fee for referrals, which means that you’ll have to pay $0.30 when the referral fee is less than. However, there are some instances where there’s no mandatory minimum referral fee, for instance, for Books, Collectible Books, Entertainment Collectibles, Fine Art and Gift Cards, Grocery & Gourmet Food Music, and extended Warranties and Protection Plans and Service Contracts.
Furthermore, the next step to make the experience more fascinating is that certain categories have their own rates for referral fees. The percentages of fees are calculated on the basis of the number of sales in dollars. Sports Collectibles, for instance, offers 20% referral fees when the sales total is less than $100; the fee is reduced to 10 percent if the amount sold falls between $1,000 and $100. it drops even further to the 6% rate if you make it possible to sell items for more than $1000. Around half or more of Amazon’s categories function similarly to this with regard to referral fees.
Variable Closing Fees
If you are selling in the category of Media (BMVD computer games, software video games, video game consoles, etc. ) You can, you can pull out your wallet to pay the additional $1.80 variable closing cost.
Refund Administration Fee
Let’s say that you’ve just concluded an online sale of gizmos and received the cash payment; however, Bob, the buyer, decides not to purchase the gadget at the end, which is why he chooses to send it back. If this occurs, you’ll be returned the money and the referral fee; however, you’ll have to pay a corresponding refund administration charge. It’s $5.00 or 20 percent of the applicable fee for referrals or less, whichever is lower.
3. FBA Fees
The most popular of Amazon seller fees. There are two kinds of FBA charges, based on which stage in the fulfillment process where the purchase is.
Amazon Fulfillment Fees Per Unit
Fees for order fulfillment are charged according to the size of the item and weight. The heavier and larger items have the highest costs as small and light products are charged less. If your product weighs 10 ounces or smaller, it’s at a lower price by paying just $2.41. At the opposite end is an additional charge for large products (151 pounds or less), and that’s $75.78 and $0.79/pound when you exceed 90 pounds.
Amazon FBA Monthly Storage Fee
Storage fees for monthly storage are charged due to the fact that Amazon allows you to utilize their warehouses for keeping your items rather than you needing to store them on your own. This cost fluctuates all of the time, from January through September costing $0.69/cubic foot, and from October to December costing $2.40/cubic foot if you’re storing things that are larger than the size of the container and the storage charge decreases by $0.48/cubic foot or $1.20/cubic foot, according to.
If you’ve suffered the bad luck of not being able quickly to sell the items that are stored within the Amazon fulfillment facility, be prepared to pay the cost of long-term storage on your invoice. This cost is calculated twice per year (February 15 or August 15, 15); it is assessed for items that were stored within the facility for more than six months and more than 12 months.
Benefits of the Amazon FBA Program
If you opt for Amazon FBA, you will get plenty of benefits, the most prominent of which are listed below.
- A significant advantage over your competition If you sell your goods through Amazon FBA, you automatically make them eligible for Amazon Prime’s Free Two-Day Shipping Free Shipping, among other advantages. In turn, your products will bear an Amazon Prime logo, thus instantly reaching out to a larger public.
- Easy to scale your business Because Amazon will fulfill all of your needs, you do not need to fret concerning the logistics that run your company. Instead, concentrate on taking your business to the next level. If you decide to receive more orders, you will be able to meet them by keeping your inventory at the fulfillment centers of Amazon.
- Higher ranking in results of searches In regards to Amazon’s algorithm for search, FBA products get preference over non-FBA items. This means that they rank higher in the search results of Amazon for items that are shipped through FBA and, consequently, higher sales. It is easy to see for yourself if you go to Amazon and look up any item you want to. The majority of items found on the first page will have Prime listings.
- Customer Service and Returns Provided: When shopping online, shoppers prefer buying items that can be easily returned. Furthermore, If the customer support option is offered on a product, you are more likely to sell as opposed to those that do not have customer service.
4. FBM Fees
FBM or Fulfilled By Merchant (where the seller is responsible for the shipping of products) is also associated with charges; however, they’re different from the fees that are charged for FBA sellers. The fees are lower due to the fact that Amazon acknowledges that the seller is responsible for the shipping expenses; however, they’re not completely removed.
FBM sellers who use individual selling plans are bound to follow the shipping costs provided by Amazon regardless of whether the credit for shipping works out in a lower amount than the shipping cost. If this is the case for you, it’s essential to price and price items in a way that is judiciously and quickly so that you don’t overpay for Amazon’s shipping rates.
If your business is an FBM seller with a Professional selling plan, you have a lot more flexibility as you’re able to pick the shipping costs. However, you have one exception to the rule, and that’s when you’re selling through BMVD. If this is the case, then Amazon will offer you the shipping credit in line with the shipping cost, which depends on the shipping method (e.g., domestic standard expedited, domestic standard, domestic two-day, standard international, as well as international expedited).
5. Miscellaneous Fees
If you think that you’re out of the fee sphere, There are additional fees worth considering prior to putting your products up on Amazon.
- The high-volume listing fee is applicable when more than 100,000 products are listed. It’s an annual flat rate of $0.005 per item that is eligible that is due simultaneously with your FBA storage costs.
- Dangerous products (excluding clothing) come with an additional FBA fee added and range from $0.06 up to $0.16 for each unit for standard-size units. If the items are considered to be dangerous clothing items, then the fee based on size increases from $0.08 up to $0.29.
- If you are selling textbook rentals, Amazon will be charged $5.00 for each rental that is due at the moment of sale.
- If you’re the FBA seller, you’ll be required to send your products to an Amazon warehouse to ensure that Amazon employees will be able to manage the fulfillment process. A majority of sellers pack their merchandise in boxes. If you’d like Amazon to utilize their boxes to ship out your item, the cost is $0.15/unit from November through December and $0.10 throughout the year.
- Amazon offers the “category” called Refurbished, which allows them to spruce up non-new products and then resell the items. It is completely free. However, you may be charged charges if there is something that makes the product unsuitable to be refurbished.
- When customers return items to Amazon, however, they aren’t always able to retain the packaging in good shape or choose to use a different container altogether. If this occurs, Amazon will repackage the item and charge you a fee for service.
- One benefit when you are an FBA seller is that you have Amazon handle the majority of the fulfillment work for you, such as packaging and labeling your items for you. However, this benefit comes at an expense that ranges from $0.50 to $1.20 per standard-sized unit and $1.00 or $2.20 for units that are larger. Sellers with multi-channel fulfillment can also receive (custom-made) packaging slips for an amount in the range of $0.07 for every box. Additionally, you can choose to have Amazon use barcodes on your merchandise through the fulfillment center at the cost the amount of $0.30 for each unit.
How to reduce Amazon seller fees
Despite sometimes high prices having your business even if you pay a bit more, being on Amazon can provide you with greater visibility, more customers, and more sales.
Amazon can be a costly market to sell your products; however, by reducing your Amazon costs in the maximum amount you can, it’s possible to dramatically boost your profits from eCommerce. Here’s how:
Choose a professional seller account
Amazon Individual’s no-monthly fee seems appealing, but if you list over 40 products each month or pay more than $39.99 per item, this isn’t the cheapest alternative.
Make the Amazon Professional account switch to receive unlimited listings and no per-item charges. You’ll immediately save money and have access to additional conversion-increasing benefits, including the ability to run promotions, sell on different Amazon sites, and access the buy box.
Reduce referrals fees
While you can’t reduce Amazon fees for referrals, you can be more strategic in the products sold on Amazon. Make use of Amazon for items that have lower referral fees, and look at other marketplaces (such as Walmart as well as eBay) for products with higher referral fees.
Reduce shipping charges
Costs for shipping can become costly, particularly when you are fulfilling the order on-site or via FBA. It is also possible to reduce through:
- Use packaging with no branding for packaging to cut down on the cost of packaging (with an added advantage of speeding up delivery);
- Utilizing a fulfillment calculator to determine if outsourcing to a fulfillment service is more affordable or not.
- Working together with an external fulfillment service in order to cut shipping carrier costs (as well as gaining the benefits from their management of inventory software).
Increase your ROI
Achieving a higher ROI won’t decrease the amount Amazon charges; however, it will ensure that Amazon’s fees don’t make much of a dent in your profit. You can increase the ROI of your business by
- The focus is on customers and the quality of service and not on price by providing excellent customer service and an effortless purchasing experience.
- Improve your conversion rates by joining Amazon Prime and catering to those who shop online and prefer speed.
- Selling through different sales channels can increase the reach of your business through Multi-channel list instruments along with fulfillment companies.
Enhance your visibility
If you’re paying for a listing on Amazon, you’re looking to be noticed. Increase your visibility on Amazon by ads by:
- Shipping is a fast and free option, which will show up in the results of a search that is filtered
- Enhancing the quality of your Amazon listings with product titles as well as descriptions
- Achieving five-star customer reviews by responding promptly to problems by providing accurate tracking data and providing timely service
There’s no question about it selling on Amazon places you before thousands of customers, which could propel your business’s eCommerce up to the next step. To ensure that your earnings do not suffer while you’re there, be aware of the amount you’re spending on Amazon, explore different types of amazon seller fees, and the ways you can cut costs by converting as well as fulfillment and visibility.
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