Selling on Amazon is a great way to step into the e-commerce world, largely because of how beneficial and convenient it is. Amazon has generated a revenue of $108.5 billion in the first quarter of 2021 (source: cnbc.com). This is a testament to how well the e-commerce giant has been growing.
That being said, embarking on your selling journey with Amazon is a smart move provided you intimately understand the costs associated with it. Amazon seller fees include those that you will be incurring for fulfilment facilities, inventory and other costs and for using Amazon itself as a platform to make your products available to potential buyers.
For a clear understanding of how much it costs to sell on Amazon, given below are all the fees that you will need to factor into your budget.
Amazon’s listing and selling fees
You can register on Amazon Seller Central as either an amazon Individual seller or a Professional seller. This is dependent on the size of your business and how many products you plan to sell.
The Individual selling plan is meant for those who plan to sell under 40 items per month. There is no monthly subscription fee but you will be liable to pay Amazon $0.99 for every item that you sell. It also gives you access to Amazon’s seller resources but it is limited.
The Professional selling plan is meant for larger businesses that sell over 40 items per month. Here, sellers pay only a monthly subscription fee of $39.99 and do not have to pay anything else for every item that they sell. You also get full, unlimited access to the seller services offered by Amazon.
You can watch the SellerApp tutorial for a set-by-step guide on how to go about setting up your Amazon Seller Central account.
There are two types of fulfilment options available to Amazon sellers
FBA (Fulfilled by Amazon)
Under this method, all the fulfilment options for your items will be looked after by Amazon. That includes storage in Amazon’s warehouses, shipping, packing, product returns and customer service for all your items.
You will have to pay a fee depending on your order and the size of your order is directly proportional to the amount that you will be liable to pay. This means that products with heavier weights and larger dimensions will entail higher fees.
The storage fees for a year starting from January vary between $0.69 and $2.40 and after the completion of one year there will be further charges.
The best way to gain more insight is by reading SellerApp’s article on FBA fees to help reduce your spending.
FBM (Fulfilled by Merchant)
Under this option, a Professional seller can decide on shipping rates of his choice. He will then receive credits for shipping according to his product category and the shipping services that a customer opts for.
There could be a slight problem here as a seller has to utilize appropriate shipping methods and this could mean higher costs of shipping than the actual rate of shipping credit that he acquires.
Customer returns fees
The biggest selling point Amazon has to offer is its exemplary customer service which you have to adhere to as a seller. Customers are provided with the option to return and exchange products at their convenience. This means that sellers have to incur costs for all the items that return to the warehouse. To keep track of all these factors easily, you can use tools like SellerApp’s FBA calculator.
A seller has to pay Amazon a referral fee that is charged per item sold as a barter for using Amazon as a platform that makes your items available world over.
The referral fees cost between 6% and 20%. The basic rate is usually 15% or $0.30. It varies with the category of products being sold and is calculated as a percentage of the total price of the sale.
Advertising and photography costs
For a seller to be successful, advertising is necessary and advertising costs have to be carefully calculated. On average, the cost per click is around $0.81 and it can vary depending on your campaigns. It is important to study your target audience and spend economically to achieve the widest possible reach. You can make use of tools that help manage your advertising so that you don’t have to manually do it
The photography of products is very important to your advertising and product listings. As a seller, you will have to use high-quality professional photos to distinguish yourself from the competition and this will cost money but help boost your sales.
Cutting back on fees
As unavoidable as the fees may seem there are some tricks and hacks to reduce the fees associated with your selling process. Here are some of them
- A Professional seller account is always more feasible in that it offers unlimited services and features for all your listings and results in more savings.
- Items that weigh less and have a higher profit margin make more sense to sell because warehouse fees for storage are calculated based on the weight and size of an item.
- Bundling is an effective way to lower fees because then you’re paying fulfilment charges for the bundle as a whole instead of paying separately for every item that’s in it.
- Stay abreast with the actual amount of fees that you are liable to pay because sometimes you may be overcharged for referral and storage fees due to some errors in listings.
- Use the right tools to calculate your costs and ensure that you are earning optimum profits from your sales with data analytics tools.
In order to be a successful seller, you have to reduce unnecessary expenses wherever you can. The fees set by Amazon are non-negotiable owing to the services that a seller can take advantage of, but it helps to keep in mind all the information mentioned above and minimize spending on fees.