Welcome to the ultimate guide for 2023 about fees for selling on Amazon. Amazon is the biggest online marketplace in the world and a quick way to start an online business, but it comes with some costs.
In this article, we’ll explain the different fees you might encounter as a seller on Amazon. We’ll talk about Amazon FBA fees, seller fees, and other charges you might need to know about.
Overview of Fees for Selling on Amazon
Amazon FBA (Fulfillment by Amazon) and Seller Fees play a crucial role in the world of online selling. For the purpose of convenient order fulfillment and customer service, FBA provides a practical way for merchants to keep their goods at Amazon’s fulfillment facilities. However, this convenience comes with costs.
FBA fees encompass two main components: Fulfillment Fees, which cover picking, packing, and shipping products to customers, and Storage Fees, incurred if items remain in Amazon’s warehouses for an extended period.
On the other hand, Amazon Seller Fees are applicable to all sellers, whether they use FBA or handle fulfillment themselves. The primary fee types include Referral Fees, where Amazon charges a percentage of the total item price, and Variable Closing Fees, which are flat charges per item sold. It’s important for sellers to be aware of these fees as they directly impact their overall profitability.
Image source: Amazon FBA
Effectively pricing products on Amazon is equally vital. Sellers must consider various factors, including manufacturing costs, shipping fees, competitor pricing, and desired profit margins. Striking the right balance is crucial: too high a price may discourage potential buyers, while too low a price may not be sustainable for the seller.
Overall, understanding the complexities of Amazon FBA and Seller Fees, along with adopting strategic pricing practices, is essential for success as an Amazon seller. Keeping a close eye on these fees and pricing strategies can help sellers optimize their operations, maximize profits, and deliver an excellent shopping experience to customers.
Breakdown of Amazon Seller Fees
As an Amazon seller, it’s essential to have a clear understanding of the breakdown of Amazon Seller Fees, as they directly impact your profitability and overall success on the platform. Amazon charges various fees, and understanding each component is crucial for effective financial management. Here’s a detailed breakdown of the key Amazon Seller Fees:
- Referral Fee : The Referral Fee is one of the primary charges for selling on Amazon and applies to all product categories. It is a percentage of the total item price (including shipping costs) and varies depending on the category. For example, the Referral Fee for electronics may differ from that of clothing or books. Sellers should be mindful of these varying rates while setting their prices to ensure they account for the Referral Fee in their profit calculations.
- Variable Closing Fee: Certain product categories also have a Variable Closing Fee, which is a flat fee charged per item sold. These amazon seller fees are typically applicable to media products like books, music, videos, and video games. Sellers need to consider these fees alongside the Referral Fee to accurately gauge their costs and profits.
- Subscription Fees: Amazon provides two types of selling plans: the Individual Selling Plan and Professional Selling Plan. The Individual Plan is suitable for occasional sellers, and there’s no monthly subscription fee. However, Individual Plan sellers pay a higher Referral Fee per item sold. The Professional Plan, on the other hand, requires a monthly subscription fee but offers lower Referral Fees and additional selling tools and features. Selecting the right plan depends on your selling volume and business needs.
- Fulfillment Fees: If you decide to use Amazon’s FBA service, you’ll be subject to Fulfillment Fees, which cover the cost of storing, picking, packing, and shipping your products to customers. Fulfillment Fees are determined based on the weight and size of each item. By using FBA, sellers can benefit from Amazon’s vast fulfillment network, but it’s essential to factor in these fees when pricing products.
- Storage Fees: If your products stay at Amazon’s fulfillment centers for a lengthy period of time, storage fees are applicable to FBA sellers. Amazon levies these fees to incentivize sellers to control their inventory effectively and steer clear of stocking shelves with unsold items. In order to reduce storage costs, it is crucial for sellers to keep an eye on their inventory and make appropriate plans.
- Removal and Disposal Fees: In case you want to remove unsold inventory from Amazon’s warehouses, you may incur Removal Fees or Disposal Fees. Removal Fees apply if you want to have your products returned to you, while Disposal Fees are charged for disposing of unsellable items.
- High-Volume Listing Fee: For sellers listing more than two million new ASINs (Amazon Standard Identification Numbers) in a given month, a High-Volume Listing Fee may apply. This fee helps manage the resources required for large-scale listings.
Understanding and managing these Amazon Seller Fees are essential for maintaining a profitable and sustainable business on the platform. Sellers should regularly review their pricing strategies, inventory management, and selling plans to optimize their operations and deliver a seamless shopping experience to customers.
By staying informed and vigilant, sellers can navigate the Amazon marketplace successfully and thrive in the ever-evolving eCommerce landscape.
Amazon FBA Fees
Amazon FBA (Fulfillment by Amazon) offers a comprehensive fulfillment service for sellers, allowing them to store their products in Amazon’s vast network of warehouses. This service enables sellers to take advantage of Amazon’s efficient logistics and customer service, but it does come with various FBA fees that sellers should be aware of. Understanding these fees is essential for accurately calculating costs and maximizing profits.
Fulfillment Fees
The core component of Amazon FBA fees is the Fulfillment Fee. Based on the dimensions and weight of each product, this cost is determined. It pays for the costs associated with selecting, packaging, and shipping the products to customers. Generally, larger and heavier items incur higher Fulfillment Fees, while smaller and lighter ones have lower fees.
Storage Fees
As sellers use Amazon’s warehouses to store their products, they may be subject to Storage Fees. These fees apply to the space occupied by a seller’s inventory in Amazon’s fulfillment centers. Depending on the season, these fees may vary, with peak seasons typically incurring higher charges. To optimize costs, sellers need to manage their inventory efficiently and avoid long-term storage for slow-moving items.
Long-Term Storage Fees
Long-Term Storage Fees apply if a seller’s goods are unsold for more than 365 days in an Amazon fulfillment center. These fees are added to standard storage fees and are intended to encourage sellers to constantly examine their inventory and choose wisely when to refill.
Removal Fees
If a seller choose to remove their products from Amazon’s warehouses, they may incur Removal Fees. These fees are charged per item and vary based on whether the item is standard-size or oversized.
Disposal Fees
In the event that a seller’s products are deemed unsellable, they can opt to have Amazon dispose of these items. Disposal Fees apply to cover the cost of handling and disposing of the unsellable inventory.
It’s important for sellers to consider these FBA fees when pricing their products and managing their inventory. By carefully analyzing their costs and sales, sellers can make informed decisions about which products to stock in Amazon’s warehouses and which fulfillment method (FBA or self-fulfillment) to choose for each item.
Leveraging the benefits of FBA while keeping a close eye on associated fees will help sellers streamline their operations and provide customers with efficient, reliable service on the Amazon marketplace.
Amazon FBM Fees
Amazon FBM (Fulfillment by Merchant) is an alternative fulfillment method for sellers on Amazon. Unlike FBA, where Amazon handles storage and shipping, with FBM, the seller manages these aspects themselves. While FBM offers more control over inventory and fulfillment, it also comes with specific fees that sellers need to consider when using this option.
Shipping Fees
With FBM, sellers are responsible for shipping products to customers. This means they need to account for shipping costs, including packaging materials, postage, and any carrier fees. Shipping fees can vary based on the size, weight, and destination of the package.
Customer Service and Returns
FBM sellers must handle customer inquiries, support, and returns directly. While this offers more control over the customer experience, it also requires resources and time for managing customer interactions and processing returns.
Referral Fee
Just like with FBA, all Amazon sellers, including FBM sellers, are subject to a Referral Fee. This fee is a percentage of the total item price (including shipping) and varies depending on the product category. It helps cover the cost of using the Amazon platform to sell products.
Variable Closing Fee
Some product categories may have a Variable Closing Fee for FBM sellers, similar to FBA sellers. This flat fee is charged per item sold and varies based on the product category.
Storage and Warehouse Fees (Optional)
FBM sellers who choose to use Amazon’s warehouses for storage (known as Multi-Channel Fulfillment) will incur storage fees. These fees are different from FBA storage fees and can be an option for sellers who want to handle their primary fulfillment but use Amazon for storage and shipping to customers from other sales channels.
When using FBM, sellers have more control over their fulfillment process and may find it suitable for specific scenarios, such as selling unique or oversized items. However, they must carefully factor in the shipping costs, manage customer service, and adhere to Amazon’s performance metrics to maintain their selling privileges.
It’s crucial for sellers to analyze their business needs, product types, and shipping capabilities when deciding between FBM and FBA. By understanding the FBM fees and comparing them with FBA costs, sellers can make informed decisions that align with their business goals and provide the best possible experience for their customers on the Amazon marketplace.
FBA vs. FBM Fees
Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) are two distinct fulfillment methods available to sellers on Amazon, each with its own set of fees and cost considerations.
With FBA, sellers benefit from Amazon handling the storage, packing, and shipping of their products. While FBA offers convenience and access to Amazon Prime customers, it comes with fulfillment fees based on the size and weight of each item, as well as storage fees for products held in Amazon’s warehouses.
Sellers also need to consider long-term storage fees if products remain unsold for an extended period.
On the other hand, FBM allows sellers to manage their fulfillment process. While FBM gives sellers more control and may be cost-effective for certain products, it requires sellers to handle packing, shipping, and customer service.
FBM sellers do not incur FBA fulfillment fees but should account for shipping costs, including packaging and postage. Additionally, FBM sellers are still subject to referral fees and, in some cases, variable closing fees, which apply to both FBA and FBM sellers.
Choosing between FBA and FBM involves weighing the convenience, costs, and business needs. Sellers with high-volume sales and limited storage capabilities may find FBA beneficial despite the associated fees. Conversely, sellers with unique products or a strong fulfillment infrastructure might opt for FBM to retain more control over the fulfillment process and potentially reduce costs.
Careful analysis of seller fees and fulfillment requirements is vital to making an informed decision and maximizing profitability on the Amazon platform.
Trends that Increase Seller Costs
Selling on Amazon comes with its own set of challenges, and several trends on the platform can increase seller costs. As the eCommerce landscape evolves, these trends can impact sellers’ profitability and require them to make strategic adjustments. Here are some key trends specific to Amazon that can increase seller costs:
- Increased Competition: As more sellers join the Amazon marketplace, competition intensifies. To stand out and win the Buy Box, sellers may resort to lowering prices, resulting in reduced profit margins and potentially increased advertising spending to gain visibility.
- Rising Advertising Costs: Amazon’s advertising platform, Amazon Advertising, has become more popular among sellers. The increased demand for advertising space can lead to higher advertising costs, particularly during peak shopping seasons.
- Amazon Referral Fee Adjustments: Amazon periodically reviews and revises its referral fee structure. Changes to referral fees in certain product categories can impact sellers’ overall costs and influence pricing strategies.
- Storage Fees and Long-Term Storage : As sellers scale their businesses or introduce new products, they may require more space in Amazon’s fulfillment centers. This can lead to increased storage fees, particularly during busy seasons. Moreover, products that do not sell well can accumulate long-term storage fees, further impacting costs.
- Amazon FBA Fee Changes: Amazon occasionally updates its FBA fee structure, affecting the cost of utilizing Amazon’s fulfillment services. Sellers must account for these changes when assessing the feasibility of using FBA for their products.
- Product Return Rates: High return rates can significantly impact a seller’s costs, as they may need to cover return shipping and handling expenses. Additionally, managing returned products efficiently is crucial to avoid additional costs.
- Cross-Border Selling: Expanding to international markets can be lucrative but also brings increased costs. Sellers need to consider factors such as customs duties, international shipping, and currency conversion fees.
- Amazon Brand Registry and Protection: To protect their brands from counterfeits and unauthorized sellers, sellers may need to enroll in Amazon’s Brand Registry program. While essential for brand integrity, this program can involve additional fees.
- Performance Metrics and Penalties: Failure to meet Amazon’s performance metrics can result in penalties and increased costs. Sellers may face higher referral fees or even temporary account suspensions if their performance falls below Amazon’s standards.
- Packaging and Sustainability: Amazon’s emphasis on sustainable packaging may require sellers to invest in eco-friendly materials. While this promotes environmental responsibility, it can also lead to higher packaging costs.
To navigate these trends and mitigate the impact on costs, Amazon sellers must adopt a data-driven approach to pricing, optimize their operations, and remain adaptable to the changing marketplace dynamics. Regularly analyzing expenses and adjusting strategies accordingly can help sellers maintain profitability and succeed in the competitive Amazon ecosystem.
Alternatives to Avoid Amazon Seller Fees
There are several alternatives to Amazon for both sellers and buyers in the eCommerce space. These alternatives offer unique features and cater to different types of products and audiences. Some of the prominent alternatives to Amazon include:
eBay
eBay is one of the oldest and most well-known online marketplaces. It allows individuals and businesses to buy and sell a wide range of products through auctions or fixed-price listings.
Recommended reading: Selling on eBay vs Amazon – A Comprehensive Comparison
Shopify
Shopify is an eCommerce platform that enables businesses to create and manage their online stores. It offers various customizable templates, payment gateways, and shipping options.
Walmart Marketplace
Walmart Marketplace is a platform where sellers can list their products on Walmart’s website. It offers a large customer base and a diverse range of products.
Recommended reading: Latest Updates in Amazon Vs. Walmart Grocery Wars
Etsy
Etsy is a marketplace focused on handmade and vintage items, as well as unique craft supplies. It’s a popular platform for artisans and crafters.
Newegg
Newegg is a specialized marketplace for electronics and tech products. It is a go-to platform for tech enthusiasts and businesses in the tech industry.
Target Plus
Target Plus is an invite-only marketplace within Target’s website, where third-party sellers can list their products. It offers sellers access to Target’s customer base.
Alibaba
Alibaba is a massive B2B platform that connects buyers and sellers globally. It’s a great option for businesses looking to source products in bulk.
Google Shopping
Google Shopping is a comparison shopping engine where users can search for products and compare prices from various retailers.
These alternatives provide sellers with additional channels to reach customers and diversify their online presence. Buyers can explore these platforms for unique products and potentially find better deals on specific items.
Each platform has its strengths and weaknesses, so sellers and buyers should consider their individual needs and preferences when choosing among these Amazon alternatives.
Conclusion
In this 2023 Guide to Fees for Selling on Amazon, we have explored the costs and charges that sellers need to know about on the popular online marketplace. Knowing how these Amazon fees work can help sellers make better decisions and manage their business more effectively.
It’s essential to be aware that Amazon might change its fees over time, so sellers should stay updated to adjust their strategies accordingly. By using this guide and staying informed about the latest changes, sellers can make the most of their experience on Amazon and have a successful selling journey.
Recommended reading: How to handle chargeback on Amazon?
Frequently Asked Questions (FAQs)
What are Amazon FBA fees, and how are they calculated?
Amazon FBA fees cover the cost of packing, picking, and shipping products to customers. The fees vary based on the dimensions and weight of each item. Sellers can use Amazon's FBA revenue calculator to estimate these costs for their products.
Can I use both FBA and FBM (Fulfillment by Merchant) for my products?
Yes, sellers have the option to use both FBA and FBM. This is known as Multi-Channel Fulfillment (MCF). Sellers can fulfill orders from other sales channels using Amazon's FBA infrastructure.
How often are Amazon seller fees charged?
Amazon charges seller fees every two weeks. These fees are deducted from sellers' available balance in their Seller Central account.
Can I remove unsold inventory from Amazon's warehouses, and does it come with any costs?
Yes, sellers can choose to remove unsold inventory from Amazon's fulfillment centers. However, removal fees may apply, which vary based on the product's size and whether it is a standard-size or oversized item.
Are there any restrictions on the types of products I can sell on Amazon?
Yes, Amazon has specific guidelines and restrictions on the types of products that can be sold on its platform. Sellers must adhere to these guidelines to avoid account suspension or removal of their listings.
Can I see a breakdown of my seller fees in my Amazon Seller Central account?
Yes, sellers can access a detailed breakdown of their fees in their Seller Central account under the “Payments” section. The “Transaction View” shows a summary of fees for each transaction and the overall charges for the given period.
