Amazon is one of the largest marketplaces in the world, utilized by millions of buyers and sellers worldwide every day. Amazon is one of the most popular selling channels of eCommerce businesses and online stores. Amazon does its best to make selling as easy as possible, but of course, nothing is free. If you are an Amazon Seller or have been considering joining the millions of people who sell on Amazon marketplace, you should be aware of the fees involved.
We sometimes see confusion among our customers, when it comes to Amazon fees. Some of our customers gain understanding of Amazon's fee structure, and the financial impact it has on their bottom line only after reviewing their reports on the Finaloop platform. In this blog, we provide an overview of Amazon Seller fees, so you get a better understanding of your costs as an Amazon Seller, and can plan you revenue and cost structure.
What are Amazon Seller Plans?
Amazon Seller can choose between the Individual or Professional plans. The Individual plan costs $0.99 per unit sale. The Professional plan costs $39.99 per month no matter how many units you sell.
If you expect to sell less than 40 units per month, and do not plan to advertise or use Amazon's advanced selling tools (such as APIs, reports, adding multiple users, run promotions and more), the Amazon Seller Individual plan is probably the right one for you. With an Individual plan, you will not be able to sell in the following categories: automotive parts, tools, equipment and accessories, beauty products, clothing, collectible coins, collectible items, fine art, gourmet and grocery food, handbags, health and personal care, jewelry, luggage and travel accessories, shoes, sunglasses videos, DVD's and Blu-ray discs, watches and wines.
To the extent you expect to sell more than 40 units per month, the Professional plan is likely the right fit for you. You will be able advertise your products, use Amazon selling tools and sell products in restricted categories.
Besides the selling plans fees, there are additional Amazon fees which will be further discussed below.
Amazon Referral Fees
In addition to selling plan fees, Amazon charges a referral fee for each item sold. The referral fee ranges between 8% and 15%. Most product categories have a minimum referral fee of $0.30 per sale. The referral fee depends on the type of product category:
It is important to note that the Amazon calculates its referral fee based on the total sales price, including the item price, shipping cost, and any gift-wrapping charges.
Amazon charges an additional closing fee of $1.80, on top of the referral fee, for product categorized as "media": Books, DVD's, Gaming consoles, Music, Software and Video or computer games.
If an Amazon Seller refunds a customer for an order for which the Seller has already received payment for, Amazon will refund the amount of the referral fee for that item, minus an administration fee, which is the lesser of $5 and 20% of the referral fee.
Amazon Fulfillment Fee
Amazon Sellers can choose whether to ship their own orders (Fulfillment by Merchant (FBM). Yet, many eCommerce sellers would prefer not to worry about shipping costs, boxing items, and getting them out the door, which is why many have chosen to switch to Fulfillment by Amazon (FBA) services. If you choose to use FBA services, Amazon will handle shipping, customer service, and returns of your products. An Amazon Seller can also choose the Seller Fulfilled Prime (SFP) option, which means that you, Amazon Seller, will be responsible for the the fulfillment of your products, yet the products will be listed as Amazon Prime products (that is - your products will carry the Prime badge).
Fulfillment by Merchant (FBM) & Seller Fulfilled Prime (SFP)
Under FBM and SFP, Amazon charges shipping rates based on the product category and shipping service selected. Amazon then passes the shipping rate collected to the Amazon Seller in the form of a shipping credit.
Sellers with the Individual plan can use Amazon's set shipping rates for all products. Under this plan, Amazon Sellers have to ship orders at the set rates even if the shipping credit is less than total shipping costs.
Sellers with the Professional plan set their own shipping rates, except for books, music, video, and DVD products. Under this plan, the Amazon Seller receives a credit from Amazon that matches the actual shipping rate determined by the Seller.
Fulfillment by Amazon (FBA)
Under FBA, Amazon charges FBA fulfillment and storage fees. The FBA fees are per unit, and include picking and packing orders, shipping and handling, customer service, and product returns.
The FBA fulfillment fees are different for apparel and non-apparel products, and is determined based on the product's size, max dimensions, shipping weight and packaging.
The FBA storage fees are for the inventory storage at Amazon fulfillment centers. The FBA storage fees are based on the daily average volume for the space the inventory occupies in Amazon fulfillment centers. The volume measurement is based on unit size when properly packaged and ready to ship.
Amazon is well aware of the high season for online shopping – the winter and fall months, and specifically around Black Friday weekend, Thanksgiving, Christmas and New Year's Eve. Therefore, the FBA storage fee is lower in the spring and summer months, and higher in the winter and fall months.
Rental book service fees
If an Amazon Seller sells textbook rentals, Amazon would charge a rental book service fee of $5 for each rental.
High-volume Listing Fees
In case an Amazon Seller has a high volume of active, non-media product listings that have not sold in 12 months, Amazon would charge a monthly fee of $0.005 per eligible listing to cover cataloging costs. Amazon waives this fee for the first 100,000 listings.
Amazon Advertising offers a cost-per-click, auction-based pricing model for advertising on Amazon. As an Amazon Seller, you can set the maximum amount you are willing to pay when a potential customer clicks on your ad.
Paid Account Services
Amazon offers paid account management and other services to help craft a business plan. As part of their services, Amazon offers personalized coaching and training, and provide information to help grow the Amazon Seller's sales on Amazon.
As an Amazon Seller, it is important to choose the right selling plan and fulfillment method for your online business. Your choice will affect the majority of your Amazon Seller account fees. As in any business, knowing your costs can help you calculate profitability and effectively manage your Amazon campaign's costs.
Amazon Seller accounting can be complicated, as it requires to group and book for all the various Amazon fees. Finaloop is here to support you and other Amazon Sellers who are looking for an effective accounting and bookkeeping service for their Amazon eCommerce business. We have automated the bookkeeping, accounting and tax processes for Amazon Sellers to give you the full picture of your revenues, expenses, fee and profits, in real time. This will help you manage your business better, and avoid losses associated with incorrect pricing of your online products. Our platform can easily integrate with your Amazon Seller account, identify and record your Amazon transaction, and put all this data in a single financial dashboard.
The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only. Readers are advised to consult with their attorney or accountant with any questions or concerns.