Amazon Fulfillment and Fees

You know what they say. “If you can’t beat them, join them.”

If you’re an eCommerce brand, the “them” is Amazon. The eCommerce giant captures 38 percent of all online retail sales in the U.S. 

Not only that, but in the Google vs. Amazon battle, Amazon won. 54% of all product searches take place on Amazon.

If you’re intrigued by selling on Amazon, you’re not alone. Amazon offers many perks to eCommerce brands, but there are a few “gotchas” to consider — most notably, how Amazon takes its cut. Read on to get the details on how the Amazon marketplace works, the fees you can expect to pay, and whether Fulfillment by Amazon (FBA) is right for you.

Amazon Marketplace Plans: Individual or Professional?

It’s actually very easy to get started selling on Amazon. You can use your existing customer account, or create a new account with your business email. Then, Amazon will guide you through a short series of steps here. You’ll need a credit card, government ID, tax information, phone number, and bank account where you want your earnings sent. 

Once your account is set up, you’ll choose from two plans:

• Individual plan: With this plan, you pay $0.99 for every item you sell, along with the Amazon referral fee (more on that in a bit). You’re also restricted from selling certain product categories. The Individual plan is best for those just testing the waters on Amazon, and anyone who doesn’t plan on selling more than 40 items per month. 
• Professional plan: With this plan, you only pay the Amazon referral fee per each transaction, along with a $39.99 monthly fee. If you’re selling more than 40 items per month, the professional plan is the better option. It also comes with perks like advanced inventory management, advertising opportunities, bulk listing, and more. 

Amazon charges a refund fee with both plans: either 20% of the referral fee, or a flat $5 fee, whichever is lower.

How Much Are Amazon’s Referral Fees?

Regardless of which plan you choose, Amazon charges you a referral fee for each product you sell. The referral fee is a percentage of the total sales price, including delivery and/or gift wrapping, but excluding taxes. 

Amazon’s referral fees depend on the product category. Typically, they range between 8% and 15%, although they can be higher or lower. At a minimum, you’ll be charged $0.30 per sale. Here are a few examples:

• Clothing: 17%
• Gift cards: 20%
• Cameras: 8%
• Luggage and travel accessories: 15%
• Personal computers: 6%
• Office products: 15%

Some fees also change on the total sales price. For instance, the Amazon referral fee for baby products is 8% if the sale price is under $10, and 15% if it’s above $10. Amazon’s fees are subject to change at any time, so always check their pricing here to get the most up-to-date information.

Wondering how much of a profit you can make selling on Amazon? They’ve got a handy calculator you can use to find out:

Is Fulfillment by Amazon Worth It?

Beyond your plan and product category, there’s one last thing for Amazon sellers to consider: will you fulfill your own orders or let Amazon do it under their Fulfillment by Amazon (FBA) program?

Sellers who opt for FBA get the benefit of Amazon’s swift, ultra-efficient fulfillment centers managing everything for them. With FBA, you ship your products to an Amazon warehouse, and they take it from there — managing the picking, packing, shipping, and customer service for every order you receive on the platform. This allows you to instantly turn your one-man shop into an operation that can rival Amazon’s (from an efficiency perspective, at least!).

However, FBA isn’t free. When you sell through FBA, you’ll also pay for:

• Fulfillment fees: Amazon charges per item, with different fees depending on size and weight.
• Monthly storage fees: Amazon charges a set amount based on the average daily volume of all the items you have in an Amazon fulfillment center. You’ll also pay a monthly fee for all items stored for more than a year.
• Removal fees: Amazon will charge you per item if you ever want Amazon to return or get rid of your inventory.
• Unplanned services fees: Amazon charges you for each item sent to the fulfillment center without the proper labels. 
• Returns processing fees: These are charged whenever Amazon offers free returns shipping on one of your orders.

Speaking of shipping, with Amazon FBA, you get to offer the fast, free shipping Amazon made famous — including Prime two-day shipping when eligible. You don’t pay anything extra for shipping, as the costs are already baked into the FBA fulfillment and storage fees. If you choose to fulfill your own orders, Amazon will help cover the cost of your shipping by applying shipping credits to each order (as seen in the calculator above), but these credits rarely cover the full cost of shipping. 

As with Amazon’s referral fees, their FBA fees are also subject to change. We recommend you visit Amazon’s FBA page to get the most up-to-date pricing.

Develop Your Amazon Strategy

Selling on Amazon is a smart choice for many eCommerce brands, and there’s a lot you can do to make it even more profitable. You can optimize your listings for Amazon SEO, perform product research, and offer competitive pricing. 

Want help finding the best Amazon strategy for your brand? Contact Your Marketing People today for your free assessment.