Successful Amazon Sellers can rake in the profits, but without a guide to FBA fees – you may not be maximising your revenue.
Since its inception, Amazon has provided an enormous amount of advantages for eCommerce businesses. The sheer volume of potential customers being just one of many.
More customers = more sales. And for the most part that’s true!
Amazon Sellers also take advantage of other online business opportunities such as the Amazon Buy Box (but more about those winning strategies here!) and Amazon FBA.
Now, Amazon FBA is an incredible opt-in opportunity, designed for Sellers of a certain business plan – if you don’t fit the criteria, then it’s probably best you avoid it.
However, even if you do fit the criteria, without a guide to FBA fees, your business could still suffer.
That is why correctly calculating Amazon FBA fees is essential for every business to accurately project their product profitability. It is just as vital to calculate FBA fees, as it is any other part of your business strategy.
So let’s break through the technical jargon, and make this a simple guide to FBA Fees.
The Amazon FBA Program
FBM vs FBA. The red pill or the blue pill?
With the red pill you choose fulfillment by merchant (FBM) and you sell via Amazon all by yourself. This requires you to
- Pack each order
- Arrange individual shipping
- Store existing products
- Provide attentive customer support
For every single order.
This is entirely suitable for businesses which sell very few items, but have an incredible profit margin on each one (that would be the dream, wouldn’t it?!) However, more often than not, you have a lower profit margin and have to sell a large amount to make a living. Not only that, but you spend more time fulfilling orders and managing inventory than you actually do creating new products!
Or you opt for the blue pill. The Amazon FBA program.
This option naturally incurs Amazon FBA fees (don’t worry, we will get to the guide soon) but the FBA program allows you to ship your products directly to Amazon.
On arrival at an Amazon warehouse, the products are stored in secure fulfillment centres, and the Amazon team pick, store, pack and ship the products. As you let their professional team take care of the fulfillment process, you can scale up your business and expand your customer base in no time at all.
Guide to FBA Fees – Why Should You Pay?
There are multiple benefits to using fulfillment by Amazon, these include:
Higher Product Ranking
This shouldn’t come as a surprise to any eCommerce business, but Amazon’s Amazon’s search algorithm gives priority to products in the FBA program.
As customers search for products, products enlisted in the FBA program will place far higher in customer search results. The further up your products are, the greater your sales.
More Appealing Delivery
Who loves free delivery? Every single customer.
Under the Amazon FBA program, your products immediately become eligible for Free Shipping, Amazon Prime two-day free shipping and many more. This automatically makes your products more desirable, and features the Amazon Prime logo on your products.
These options are hard to offer if you are an FBM business – who has the time to manage last-minute, urgent deliveries? However, thanks to the FBA fees, the Amazon FBA team take care of it all for you!
One of the most attractive selling points is a strong, responsive customer support team. Without someone on hand to answer queries and questions, potential customers often fail to follow through on impulse purchases. However if you have excellent customer support, you will build customer retention.
Well thanks to Amazon FBA fees, there is a dedicated customer support team available to deal with any issues that may arise. Ideally, they will rarely be needed thanks to your attractive and sturdy products, but simply having that option available is enough to encourage more sales!
Your Guide to FBA Fees: A Breakdown
But you didn’t come here for a glowing review of Amazon FBA, you came for an in-depth guide to FBA fees, so let’s dig in.
In essence, Amazon FBA Fees revolve around two separate fees:
- Amazon Fulfillment Fees
- Inventory Storage Fees
And each of these fees vary depending upon the products that you are selling, and the particular channel through which you are selling them. Therefore, when you calculate your FBA fees, you must consider the:
For each and every one.
Size of Product
Amazon categorises your products within two main categories, plus multiple sub-categories dividing your products more specifically. Standard size products, when fully packaged, should weigh under 20lbs (9kg) and not be larger than 18” x 14” x 8” (45 x 35 x 20 cm)
Here is our full breakdown of Amazon FBA categorisation:
|Product Size Tier
|Longest Side (Inches)
|Median Side (Inches)
|Shortest Side (Inches)
|Length + Girth (Inches)
|Large standard -size
Once you identify the correct product size tier of your products, you must also be aware that there are other fees involved with certain items. For example, items deemed “dangerous” include additional FBA fees, as too does “apparel“.
Multi-channel fulfillment is another incredible opportunity that the Amazon FBA program allows you to take advantage of. Essentially, you still use FBA, but you can use Amazon fulfillment centres to organise sales through your own website.
Obviously when we guide you through FBA Fees involved in multi-channel fulfillment, things become slightly more complex. However, the bonus is that the fulfillment team still take care of everything for you. These particular FBA fees take into account:
- Product Size Tier
- Number of Units (up to 5 at a time make fees cheaper)
- Delivery Speed
- Lithium Batteries Included (extra fees for each unit)
Monthly Storage Fees
Now, your inventory and products are stored in Amazon fulfilment centres, but you still have to pay “rent” on each space you use. Amazon enforces monthly charges based on the space taken up by your inventory and the season.
|January – September
|October – December
However, if your particular products are categorised as “dangerous“, the following charges apply:
|January – September
|October – December
Well the answer is simple. Amazon love to push products out – it is literally their business. They want products that don’t live on the shelves. They want sales. This is why if your products are stored for over 365 days, Amazon charges long-term storage fees for each product. These amount to either $6.90 per cubic foot, or $0.15 per unit, whichever is the greater charge.
Guide to FBA Fees – Additional Charges
Monthly Sale Fees
While you pay “rent” for using the fulfillment centre, you must also pay “rent” for using the Amazon site. This is a monthly charge in return for Amazon hosting your items online.
A commission on every item that you sell via Amazon.
Stock Removal Fees
It’s perfectly possible to contact Amazon and remove unsold products from their fulfillment centres, either to make room for more popular products, or to avoid the long-term storage FBA fees. However, Amazon charges stock removal fees for this service. This includes if the products are being returned to you personally.
Amazon FBA Export Fees
A wider market and access to Prime customers obviously involves access to international markets. In particular cases, your products will pay export fees as a result. This will be added on top of your standard Amazon FBA Fees.
Guide To FBA Fees – Our Conclusion
Selling via Amazon is a profitable venture for thousands of businesses. As we have discussed, there are certain FBA fees involved, but more often than not your SME can scale up its business with this advanced market access and opportunities available.
Amazon FBA fees may feel daunting and costly, but remember that all of the complex and time-consuming work is taken care of for you. Thanks to this factor, you can focus on creating the best-quality products and services and accurately calculate your Amazon FBA Fees.
Without proper foresight and calculation of these, your business could weaken its profit margins on every sale. That is why calculating product profitability is so important to businesses.
Luckily there are a few tools that can help.
Online Business Tools
Seller Central Connect provides you with a product-by-product view of Amazon Seller and FBA fees alongside in-depth reports so that you can make the fully-informed important decisions that it takes to run a successful business. It also provides fully-synched order management, automatic repricing to win the Amazon Buy Box, and much more!
But if you are looking ahead to calculate fees, then Product Finder is the tool for you.
This product profitability tool can look up items, and produce a complex, detailed report listing everything you need to calculate a potential business venture. These reports include:
- Amazon Specific Internal Number (ASIN)
- Potential Brands Available
- Buy Box price (but more about winning the Buy Box here)
- Amazon Referral Fees
- Amazon FBA Fees
- Total payout after charges and fees
The advantages these tools offer are invaluable to any Amazon Seller and allow our clients to build up successful, lasting businesses in any industry.
So get in contact with a member of our team today! They are available to answer any queries you may have about our products. Be sure to check out our guides section where we provide tips and tricks for businesses looking to succeed in eCommerce!
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