MULTICHANNEL SALES | 5 minute read
If you’re considering selling on Amazon, you’re probably wondering how the costs are going to fit into your budget and whether the opportunity for sales is worth the expense. Well, not to fear: here you’ll find Amazon seller fees explained in full.
The costs you can expect to pay depend on a number of factors, including how you decide to sell (as a Vendor or Seller), how you choose to manage fulfillment, and the volume of products you’ll be selling, among others.
Here are some of the typical costs associated with setting up and selling on Amazon to help you get up and running as quickly and cost-effectively as possible.
When you first get started selling on Amazon, you’ll need to consider:
UPC/barcode costs – Although setting up an account is free, Amazon’s terms of service require that all products sold have a UPC (Universal Product Code) or barcode to be included as part of the listing. UPCs can be purchased online through various providers.
Product shots and logo – To maximize your sales potential, it’s also important to have clear product shots and a business logo. If you don’t already have an online store with product shots, you’ll need to either pay a professional to do a product shoot or cut down on costs by doing it yourself.
Buying samples – There’s no point in outlying a significant amount of money on purchasing products only to discover that they’re not what customers are looking for. When starting out, set aside a conservative budget for a small test order so you can gauge customer interest without taking a major financial hit. Also, make sure to shop around to find a supplier that can offer a combination of favorable price points and terms.
Integrating with TradeGecko - Our inventory management system integrates with Amazon to allow you to manage inventory, create sales orders and more from the one place. Integration is completely free as long as you have a TradeGecko account and an Amazon account.
Once you’re up and running, there are fees for selling on Amazon. If you plan on selling less than 40 products a month, Amazon’s Individual Selling Plan charges $0.99 per item plus referral fees. A Professional Selling Plan is $39.99 a month and only comes with referral fees (not per-item fees).
What is an Amazon referral fee, you might ask? Simply put, it’s a percentage of your total item price paid to Amazon after a sale is made, and the percentage differs depending on the category of product being sold.
You may also see what’s called a variable closing fee. This fee applies only to media products (books, for example), and typically costs $1.35 per item. Why does Amazon charge a variable closing fee? It’s likely to ensure the company makes a profit on low-priced items.
Finally, you’ll want to be on the lookout for the Amazon commision if sold. This is pretty straightforward - it’s the commission fee Amazon will charge if your item sells, and it represents a percentage of the overall price per item. Note that this fee changes depending on your location, but Amazon will provide you a breakdown of the commission fees once you sign up as a seller and list items.
There’s no getting around the fact that these fees add up, and it may feel frustrating when you see what your profit margin is when all is said and done. Many sellers weigh the benefits of selling on Amazon vs. eBay or other online platforms, because they can find smaller fees elsewhere. In fact, Where to Sell Online ran a side-by-side comparison of Amazon vs. eBay, and found that profit margins were somewhat better on eBay. However, their study was limited, and the fees will vary greatly on what you are selling, where your customer base shops, and what type of seller account you set up. Your best bet is to compare the two platforms yourself, using your own products to determine if you’d be better off selling on Amazon vs. eBay.
Both Individual and Professional sellers on Amazon can choose to use Fulfillment by Amazon (FBA) to stock, pack, and ship products. Although FBA comes with fees, many Amazon sellers find them to be reasonable and worth the cost in terms of reducing time spent packing orders and handling shipping. Using FBA can also make you eligible for Prime shipping, which is an additional incentive for potential customers.
FBA fees include boxes and packaging, and even cover returns handling if your buyers return items to Amazon.
There are two fees associated with Fulfillment by Amazon:
Picking, packing, and weight-handling fees – covers the entire pack-through-shipment process, including the cost of shipping.
Monthly storage fees – covers the cost of storing products in Amazon’s warehouses.
FBA fees are based on the size of the product you’re storing and shipping. Size includes any packaging for your product, such as shoe boxes, blister packs, or retail packaging.
There are two size categories:
Standard-size products – any fully packaged item weighing less than 20 pounds and not exceeding 18″x 14″x 8″.
Oversize products – any item over 20 pounds and/or exceeding 18″x 14″x 8″.
As with any business venture, selling on Amazon is all about proper planning and research to ensure doing business is as cost-effective and efficient as possible.
