Amazon FBA Fees - An Ultimate Guide
Are you an entrepreneur who is thinking of launching a new online business? Selling something profitable on Amazon can be a great opportunity for you. Amazon is among the largest marketplaces to sell anything. Whether you want to sell a hairbrush or a luggage bag, this online retailer provides you a fantastic platform.
Since Amazon has a huge collection of items and a massive audience, the competition is very tough so you need to be fully prepared for starting a business on this platform. From picking the right good for selling and determining relevant keywords to using the most economical fulfillment method, you must pay attention to everything.
In today’s world, there are several tools and services available for online merchants that make it pretty easy for them to run their online business efficiently. Thanks to the latest technologies, you now don’t have to spend hours upon hours on research, gathering data and details and developing a spreadsheet to analyze the data.
A smart seller is the one who utilizes all the tools and services that can help him/her in earning great profits and generating high sales. One such service is "Fulfillment by Amazon" rendered by Amazon itself for its sellers.
However, there are service charges associated with FBA and in this guide, they are discussed in detail to make it easy for the readers to understand the process and decide if it is the best option based on the investment it requires.
Purpose of FBA
It is a superb opportunity for Amazon sellers to get rid of the responsibility of storage, packaging, and delivery of their goods and give it to Amazon. The customer related matters such as exchange, feedback, etc. for your items will also be looked at by Amazon. Then what's your responsibility? Sending your stock to the storehouse.
Now, why should one utilize this facility? Firstly, it saves you from the inconvenience of finding a secure place for storing your items and packing them safely. Imagine you have taken the packaging responsibility and the goods get damaged during this process. You will have to pay for this loss but with this program, if this instant occurs, Amazon will pay you. Moreover, the shipping costs are relatively higher when managed by an individual.
Another perk of this program is the trust of consumers it brings and hence allows you to attract more shoppers. Additionally, your goods will be shipped within 2 days. If a shopper wants to exchange the item and it is under this program, Amazon will handle it but keeping tabs on your stock level is your responsibility.
Now that you are aware of all the amazing benefits you get through FBA it is important to calculate Amazon fba fees before you opt for this method.
What are its requirements?
There isn’t any specific criteria for using this program. Although a seller account mentioning the kind of goods you wish to sell is required so that Amazon can inform you which storehouse they will be stored in.
Once it is received by them, all your worries will be gone and everything will be under Amazon's control. They will look after your stock and whenever you get an order for that item, Amazon will automatically pack it and deliver it to the buyer.
Let us say, the purchaser is unsatisfied with the package they received and want to exchange it or get a refund, Amazon will contact them and manage the refunds. However, advertising and promotion of the product are up to you.
What are the costs associated with it?
It is the sum of all the expenses that have to be paid for using services such as packing, storage, customer support service, and delivery. However, there are also some other charges such as monthly fees, charges of returns, etc. that you must examine while evaluating your budget.
Since you can also perform the fulfillment activities on your own such as delivering the item directly through the supplier, it is useful to analyze the costs of both the methods and then decide which one is beneficial. The fba amazon fees can be easily calculated through any of the tools designed for this purpose.
Should I Use FBA?
There are multiple factors that influence sellers’ decision of whether they should use this service of not. The key factor in choosing this method is determining if the amazon fba cost falls within your budget and is there room for profits after paying for this service? You can only figure it out by calculating the fba fees.
You should also consider enrolling in this program if you don't want to interact with customers or if you don’t have ample space for safely storing your products. Furthermore, it is a wonderful opportunity to attract more shoppers and promote your product. Also, all the products listed under this programs will be shipped within two days, so it is an amazing opportunity to attract more buyers.
Different Types of Amazon FBA Fees
It is definitely a useful program for sellers but there are multiple kinds of charges that you as a seller have to pay. Before you enroll in this program, make sure you have determined all the costs and compare them with your investment and the estimated profits to evaluate if it is profitable or not. Below, we have discussed different FBA fees in detail.
This is the fixed amount that amazon takes on the sale of every unit that is sold on their platform. It is usually based on the goods' retail price and their category. However, for most of the items, this fee is not more than 15%. You must decide about the category of your product very carefully.
If you have a low budget and you are a new seller, it is always wise to sell an item whose referral fee is less than 15%. Usually, items in the clothing and accessories or Gift cards category have high fees and hence it is advised to review your budget before selling such products.
Electronic devices such as personal computers and cell phone devices have a fee of less than 10% whereas music instruments, office products, and outdoor items typically have 15% fees. So its best if you as a beginner starts from these categories. Such kinds of goods are sold easily and have the capacity to generate high profit margins.
Let us assume, you are offering a mobile phone cover for $20, the referral fee that is to be paid for each item will be $3 which is 15% of its price.
Fulfillment by Amazon Fee
This fee is the sum of all the costs for the services that amazon provides you such as picking, packaging, and shipping. Amazon also charges you for interacting with shoppers on your behalf. If you don’t want the inconvenience of handling all these services by yourself, it is the perfect option for you.
This fee mostly depends on the weight, size and overall dimensions of the item that is why it is more economical if you choose a lightweight item with a small size that is easy to pack and deliver. Not to mention, such products also don’t cost much when you ship them to Amazon or import it from a supplier.
The fee is also charged per unit and isn’t fixed. Amazon regularly updates its fee structure based on the shipping charges and several other factors. It is charged on the basis of the category your goods fall in. These categories are then further divided into 4 sub-categories. Each sub-category has its own cost based on the size of the product.
This method of fulfillment is reliable as it is operated by Amazon and is trusted by both sellers and buyers.
With FBA comes the storage charges. Amazon looks after your stock when it is kept in their warehouse so they charge you for it. It is actually Amazon’s way of ensuring that you don’t store more than the required units in their item.
Sellers have to pay monthly for storage. It is charged per cubic foot and has two categories.
If you are introducing goods with high demand and they don't take much time to sell, you won’t have to pay much for storage. However, if your goods don't sell quickly, you should try to store the inventory worth of around 2 months so that you won’t have to pay much for storage. If you have extra stock, it would be better to store it somewhere else.
There are the charges that every seller has to pay for using the platform no matter what the no. of sales or size and weight of the item are. One of the two plans (individual and professional) can be selected based on sales
The individual plan doesn’t ask for any subscription charges but $1 has to be paid every time you sell an item when you have subscribed to this plan. This plan is for those sellers whose monthly sales are less than 40.
The professional plan is for more serious sellers who want to earn a fortune through it. However, it requires a subscription fee of $39.99 but doesn’t ask for any additional charges per unit. It is ideal for those sellers who have monthly sales of more than 40.
Amazon also charges an extra fixed fee on products such as DVDs and products.
How to Calculate Fulfillment Charges?
Fulfillment costs can be calculated manually by determining the charges of referral fees, storage fees, etc. but there are high chances of human error. Not to mention, it will consume a lot of your precious time. It is useful to know how the fee is calculated so that you can choose your product accordingly but calculating it by yourself is not a good idea. That is why several reputed companies have developed a tool for this purpose which does all the work for you.
Within a few minutes, the sales estimator will tell you what are the expenses of the goods based on its weight and dimensions. It will also determine the charges of fulfillment by merchant and makes the comparison easy for you.
It factors in the storage cost, shipping and other costs such as customer support, etc. for the item. Remember the fulfillment fee is determined by considering product packing price, customer support service charges, and shipping charges while the monthly fee is based on the space occupied by the goods.
Through this tool you can find out the possible profit and revenues you can make on your items if you were to use fulfillment service by Amazon. It is also useful in setting a profitable price of your product because when you know the expense of shipping and other service charges of selling your product, you can charge the buyers accordingly.
Best tools for Sellers
There are several top-notch tools in the market for Amazon sellers that provide reliable results and are trusted worldwide by top sellers on Amazon. Some of these are paid while others are available for free. Below are some of the best tools that can help you operate more efficiently on a huge site like Amazon.
- IO Scout
- Viral Launch
- Jungle Scout
- Helium 10
- IO Scout
IO Scout is a wonderful software that lets you discover the items that people are looking for but has low competition. This way you can have the idea of the sales and profits that a specific item can produce. IO Scout has a good reputation for delivering accurate statistics and its database includes zillions of Amazon products. The database is updated every hour to bring you real-time data.
By just signing up you can find the goods with the capacity to produce high profits for you. You just need to pick the category your item falls in such as shoes, consumer electronics, books, etc. and fill in all the details including ratings and weight to proceed. The data is required in terms of minimum and maximum values.
It presents you with an opportunity to make an informed decision based on the exact data by calculating average price, reviews, and total sales, etc. You can also view the rank to determine if people actually like to purchase this type of stuff.
A chrome plugin is also available for those who like to see the statistics instantly while browsing the products. It doesn’t require you to leave the page and open a separate tab. Many people also utilize this toolset to keep tabs on their rivals by tracking the stats of their goods.
- Viral Launch
This app offers a complete package that consists of every tool that has to do with selling something online. With this toolset, you can earn a high income by picking the right items.
Run an efficient PPC campaign by automating the process with the help of the “Kinetic PPC” feature and analyze the details of the gazillions of goods such as expected income, ratings, and volume of sales to select the best products.
The performance of competitors including the keywords they are targeting for can be monitored closely with “competitor intelligence software” whereas you can discover the suitable phrases and keywords for your items through keyword finder which has an efficient AI for examining large information and presenting it accurately.
Revenue estimation and costs such as fulfillment charges can be determined through the estimator software for free. However, to access the advanced functions, one of the 4 subscription plans can be bought.
For newbies beginner plan is ideal and it only costs $42/month while more experienced sellers can use kinetic of brand builder plan available for $166 and $106 respectively. To get the idea of how this toolset works, you can sign up for the free trial.
- Jungle Scout
From the precise estimation of the sales and monitoring performance of goods to discovering the suitable keywords and ideal item for generating a high income, this is a complete toolset for both newbies and experts.
The database for products can be used for estimating the income and discovering the rank in terms of no. of sales while a separate database consists of hundreds of suppliers, vendors, and manufacturers with all their details.
Track the products through the tracking software and analyze them thoroughly by looking at the trends and history of sales and while you are at it don’t miss out on the opportunity to learn valuable tips through the academy of Jungle Scout.
Looking for the keywords that people mostly search for? The keyword tool is pretty useful in this regard while promoting goods is also made easy through the “Launch” features.
The users of both web app and browser plugin can access these features by purchasing one of many pricing packages. By just paying $69 every month, you can get access to both the extension and web app. Both of these and be purchased separately for $39 and $49 per month respectively. If you wish to use only the sales estimator tool it is available for free.
- Helium 10
Helium 10 is infused with several useful functions to help sellers operate more efficiently. A huge database of over 400 million amazon goods ensures the users get accurate details and stats and enables them to pick the best niche.
Users can figure out the monthly sales and analyze the price trends through “Blackbox” and sell goods accordingly. Discovering the right phrases and keywords was never this easy as it is with this toolset; it only requires ASIN to find out keywords.
If you are using Helium 10, don’t forget to remove the extra keywords for the listings to optimize them properly. Keywords of the competitors can also be monitored through this toolset. These features are accessible through four pricing package including a free one. The other three packages named Platinum, Diamond and Elite cost $97, $197 and $397 per month respectively.
For someone wishing to introduce something in a competitive marketplace like Amazon, it is quite important to know all the expenses associated with it. One important factor that influences the success is how you deliver the goods to consumers. Fulfillment service rendered by Amazon is a great option but one must determine all the costs that come with it such as referral fee, storage costs, etc.
However, there are multiple options for selling on this medium but finding the most economical one requires accurate statistics can details that can be obtained through the assistance of tools and software available for this purpose.
Knowing the possible income that you could make and the expenses that must be paid beforehand aids in determining if selling a certain item is actually profitable or not.
Before you decide to use a free or paid estimator think carefully what details are you looking for because different toolsets provide different kinds of details.
Q: Do I have to pay for selling something on Amazon
A: Yes. There are several costs that a seller must pay. These include a fixed price that you have to pay every time your goods are sold. As a newbie, it is beneficial if you select goods with less than a 15% referral fee. If you choose to go for FBA, charges for services such as storage and shipping have to be paid as well. Goods with less weight and size don’t cost much in terms of fulfillment charges.
Q: Should I calculate the fees with a tool?
A: It is better to get an estimate through a tool rather than doing it manually. This will not only save time but reduces the chances of error as well. Many free tools are available for not only determining the expenses but expected income after paying for all the services. Moreover, they also help in listing a profitable price for goods.
Q: Which is the best tool for sellers?
A: There isn’t one specific tool that can be declared as best because one tool might be perfect for you but other sellers may not find it ideal because every seller requires different kinds of details. No matter which toolset you use, make sure it provides the statistics that you need.