If you're an Amazon seller, you've probably already considered Fulfillment by Amazon (FBA). But does it provide a better ROI, does it increase your costs, and is it right for your business? This guide should clarify this issue. First, let's see how much Amazon actually charges for FBA and how their fee schedule is set up. How does Amazon's fee schedule work? Amazon charges three types of fees. these are: Shipping Fees: The cost of picking up, packing, and shipping your item. Seller fees. You either pay a per-item fee or opt for the pro version and pay a monthly fee. Storage Fee: The cost of storing items in Amazon's warehouses when you use Amazon's FBA program. To understand how these fees work, we need to understand them in more detail. Shipping fees Amazon's fulfillment fees are fixed costs that depend on the size and weight of the item: Standard size44 + 38 cents/lb over 2 lbs Large Oversized (150 lbs or less, 108 inches or less on the longest side, 165 inches or less on the longest side plus girth) $73 + 79 cents/lb over 90 lbs Special oversize (over 150 lbs, over 108 inches on the longest side or 165 inches on the longest side plus girth, or products that require special handling or deliver $137.32 + 91 cents/lb over 90 lbs source seller fee.
The seller fees you pay on Amazon depend in part on whether you have a personal or professional Amazon account. Here's the key difference: Individual sellers pay a sales fee of 99 cents per item, while professional sellers don't. Professional sellers pay a monthly membership fee of $39.99, individual sellers do not. So, if you plan to sell 40 or more items on Amazon, choosing the pro version can save you money. In addition to these seller fees, there are referral fees and variable closing fees. Referral fee is a percentage of item price. What percentage depends on the item category, some categories have a industry mailing list fee per item. In these cases, you will pay a minimum fee or a percentage referral fee, whichever is higher. Amazon's referral fee is as follows: category Amazon charges a minimum referral fee or a percentage referral fee - whichever is higher. Referral fee percentage Minimum Referral Fee Amazon Device Accessories 45% $1.00 Baby products (excluding baby clothes) 15% $1.00 books 15% No minimum requirement camera and photo 8% $1.00 Mobile device* 8% $1.00 Consumer electronics products 8% $1.00 DVD4 15% No minimum requirement Electronic Accessories 15% off sale up to $100; 8% off sale over $100 $1.00 Furniture and Decor 15% $1.00 Home & Garden (including pet supplies) 15% $1.00 kitchen 15% $1.00 large appliances 15% off sale up to $300; 8% off sale over $300 $1.00 music 15% No minimum requirement musical instrument
Amazon handles them 24/7 and they rate their customer service highly. Marketing advantage Being an FBA seller can provide some marketing advantages. It qualifies you for Super Saver Shipping, Amazon Prime, and Amazon's Buy Box, all of which mean you're likely to see higher conversion rates. Getting into the Buy Box is a major coup for anyone selling on Amazon. Because Amazon displays product information, not supplier information, the vast majority of sales go to top suppliers through yellow buy buttons or offers from other suppliers: Amazon Buy Box Example source BigCommerce's Eyal Lanxner advises that it's far from certain: "There's no magic factor, but a whole bunch of factors that determine who wins." The main factors that influence who gets into the Buy Box include: seller account. You need a professional seller account to appear in the buy box Buy Box Eligibility Status. You can check it in Amazon Seller Central New thing. Your items must be new, not used - although only used items have a separate buy box If you don't have any items in stock, Amazon will rotate to the next supplier Amazon Offers Buy Box Priority for Suppliers with Great Customer Service and Fast Delivery Being an FBA seller does not guarantee that you will be able to buy on the Buy Box.
But it will take care of reputation, making sure your customer service and delivery are as good as Amazon's own -- because they're doing it. reduce costs (sometimes) For some sellers who sell certain items, FBA saves significant financial costs over handling their own fulfillment. A higher conversion rate doesn't necessarily help your business, and the same thing that offers it can eat into your profit margins in unacceptable ways. How effective FBA is for you depends on what you sell and how you sell it. Build a customer base quickly FBA means you're more likely to make a sale. Is it worth it if you barely make any profit on the initial sale? I don't know - ask Amazon. That's their entire business model. Building a customer base that you can market over and over after the initial sale is one of the most important foundations in a successful ecommerce business strategy and can be profitable in the long run, even if you have to accept a penny About your initial sale. Once you make those sales, how your product is presented to your customers when they arrive and how you communicate with them afterwards can determine whether they become profitable long-term customers.