Are YOU missing out on thousands of dollars because of hidden Amazon inventory and fulfillment fees?
Happy new year! On this installment of Follow The Data, host Cam Yoder chats with Joseph Abitol, founder of Seller Locker on how you can start 2021 on the right foot by saving your business from hidden yet costly Amazon FBA fees!
While most FBA sellers just accept Amazon-related fees as the cost of business and focus solely on driving sales, Joseph Abitol explains this is a mistake that could be costing your business a hefty amount of cash.
Well, a penny saved is a penny earned. But how exactly do you earn this money?
Cam and Joseph dive headfirst into how to identify the areas where you might be losing money. Additionally, Joseph provides a quick three-step process to remedy those losses!
Need proof of SellerLocker’s methods? Joseph shares his screen and showcases how one seller recovered over $400,000 in fees! (6:04)
In this space, unfortunately it’s common that “gurus” will use inflated or false numbers to showcase their alleged expertise. But this isn’t that. If there were any doubt about sketchy math, Joseph provides the proof that others won’t show.
The three-step process Joseph recommends that all sellers can do, with or without SellerLocker (8:36)
SellerLocker originated as a tool for the elite sellers on Amazon, but has developed methods that every seller can use to be reimbursed for lost money. Depending on the size of your business, this is an explosive, groundbreaking method to help improve your bottom line.
When you sell on Amazon, it’s easy to trust the system in place. But given the massive amounts of lost money, should sellers be skeptical? (11:30)
Cam asks the hard-hitting question. If this money has been missing, how can sellers trust the system in place? It’s less devious than you think, and Joseph breaks down why the reimbursed money and how Amazon already reimburses sellers for some of these fees you may not be aware of.
In step one, Joseph shows you how to open a claim. And too many sellers stop there. Following up on your claim is the only way to get your money back, and SellerLocker has methods to automate this process so you can save money automatically.
Always keep your receipts! This isn’t just a helpful tip for shoppers, it’s also one for Amazon sellers. When reporting these issues, Amazon asks for proof through documentation, just as a store will ask for a receipt to issue a return. SellerLocker showcases what documents you’ll need, and how to create a system to organize your documents.
Closing advice from Joseph on getting into ecommerce in 2021 (30:24)
Is 2021 too late to get into the ecommerce game? Nope! Even Joseph’s dad is looking to get into the selling space to take advantage of the massive amounts of money sellers are making. With the right tools and strategy, you could be one of them.
A special thanks to Joseph for hopping on the pod and sharing these invaluable insights! SellerLocker is a great software tool that automates this money-saving process for you that we highly recommend checking out!
We know figuring out the cost to sell on Amazon can be overwhelming. It may even be what’s been holding you back. This breakdown of common Amazon selling costs will help new sellers get a basic understanding of the main costs you’ll incur and some of the other charges you may face. Because when it comes to managing your money, you never can be too informed.
There are countless reasons why people choose to start selling on Amazon. Some just want to supplement their income, while others are looking to become their own boss and build a full-time business. Part of Amazon’s incredible appeal is that it gives every seller the opportunity to make money in a highly profitable marketplace. Just look at the graph below to see how far Amazon’s yearly sales have come. You can imagine all the possibilities for profit!
While it’s free to list products on the Amazon marketplace, all sellers incur fees. Keeping up with Amazon’s varying seller fees is crucial for the success of your business. The difference in profit and loss can be very slim, especially when you’re just starting out. If you’re not making more than you’re spending on startup, selling fees and other costs, your business will quickly be in trouble.
We encourage you to understand the following Amazon selling plans and seller fees to be a successful, well-informed seller.
The Two Amazon Selling Plans
The first cost to sell on Amazon may come sooner for some. Amazon offers two types of account plans for third-party sellers: Individual and Professional.
Available for a $39.99 monthly subscription fee, the Professional selling plan is designed for those who plan on selling more than 40 items per month.
The Individual plan has no monthly fee and is intended for people planning on selling fewer than 40 items per month. Keep in mind that this isn’t the number of listings, but the number of actual products sold. This free plan requires very little setup, and all fees will be taken out of your final payout once your product sells.
On the other hand, inventory management, bulk uploads and gift wrap options aren’t offered to Individual sellers. Both selling plans allow you to list products in more than20 different product categories, with another 10 categories available only to Professional sellers who apply for and meet the requirements for them.
Choose the selling plan that’s best for you and your selling aspirations. Established eCommerce sellers with other online storefronts and driven individuals looking to start a venture that pulls in significant income are ideally suited for Professional selling plans. But if you’re just looking to get your feet wet, you can always set up a free Individual account and switch to a Professional account later.
The Main Amazon Selling Fees
Amazon selling fees will vary based upon the seller program you sign up for, the size and weight of your product, and the time of year. Because the cost to sell on Amazon is dependent upon your unique situation, this is often a source of confusion for new sellers.
That being said, there are 5 main types of fees for third-party sellers who self-fulfill orders that you need to know about:
Monthly subscription fee
Variable closing fees
Individual sellers are held responsible for per-item fees as well as referral fees and any applicable variable closing fees. Pro merchant sellers will incur referral fees and variable closing fees when applicable.
Monthly Subscription Fees
As we previously mentioned, monthly subscription fees only apply to Professional selling accounts. Warranting any special circumstance, you will first be charged during the registration process.
Similarly, only Individual sellers will be charged a $0.99 per-item item fee for each product sold.
All items sold by Individuals will face shipping and handling fees. When you ship an order, you’ll receive a standardized shipping credit from Amazon. Shipping credits for Individual sellers will vary depending on the product category and the shipping method selected by the buyer.
Keep in mind you must ship the order even if the shipping credit received is less than your total shipping cost. You may need to adjust your shipping and/or product price to offset the difference.
Only media products sold by professionals will incur shipping costs and use the same fixed rates. Media products, commonly called BMVD, include the following:
Video Game Consoles
Understanding shipping and handling fees will help make sure you don’t spend most (or even all of) your profit simply getting the product to the buyer.
Another main cost to sell on Amazon is a referral fee, which all sellers must pay for each item sold. Some categories are set up with a per-item minimum referral fee, so you’ll either pay the referral fee or the per-item minimum fee, whichever one is greater. Take a look at Amazon’s fee schedule here.
Most categories have a 15% referral fee, but it can go as low as 6% (personal computers) to a high of 45% (Amazon device accessories). Minimum referral fees are either $1 or $2, with jewelry and watch categories having the higher cost.
The referral fee for media products is based upon the item price and doesn’t include shipping and handling. All other referral fees are calculated using the total price charged to the customer with shipping and handling included.
Make sure to research your referral fees as this could impact which category you choose to sell in!
How much money do you really need to sell on Amazon?
Check out this video for a closer inspection with more detailed cost examples. Don’t forget to like, comment or subscribe:
Variable Closing Fees
Both Individual and Pro sellers have to pay a variable closing fee for each media/BMVD item sold. A flat rate of $1.80 will be added on top of your referral fee.
For third-party sellers who don’t self fulfill orders, the cost to sell on Amazon will also include FBA fees. Being a part of the Fulfillment by Amazon program means all of your orders will be picked, packed and shipped by Amazon instead of by you or your business. They’ll also provide basic customer service for your products.
FBA fees are paid in addition to all account, referral and closing fees that you meet the criteria for.
There are 2 primary types of FBA fees:
Fulfillment Fees: Charged per unit and include picking and packing your orders along with shipping and handling, basic customer service and return processing unless your product is in a category with free returns
Monthly Storage: Priced per cubic foot and is the cost of storing units in Amazon’s fulfillment centers
Order fulfillment fees are based upon the overall size and weight of your product, which is separated into 2 tiers: standard and oversize. This includes all inner and outer packaging materials like shoe boxes, blister packs and other types of retail packaging.
Monthly storage fees will depend on the product size and calendar month. You’ll pay based upon your daily average volume. Note that prices go up significantly around the holidays, October thru December. See the chart below for a full breakdown. You can find specific FBA fee examples here.
It’s important to take these standard FBA costs into consideration as they may impact your business plan.
There are many benefits of FBA, including Prime eligibility and being eligible for Free Super Saver Shipping on orders over $25. Both will lead to better product placement on Amazon. So while there are extra costs involved with FBA, for many sellers, the increased product visibility and less hands-on inventory management make it worthwhile. Ultimately, this is up to you.
You may face additional FBA fees on top of the 2 primary fees. Some are optional and others only apply to certain sellers and situations. They include:
Inventory Removal: Charged per item removed if you pull inventory or remove unsold stock
Return Processing: Charged to products with free customer returns and will be the same amount as fulfillment fees
Repackaging: Charged to repackage eligible items following a return in order for resale
Labeling Service: Charged per item when you have Amazon apply barcodes to your products for you
Long Term Storage: Charged if inventory sits unsold for 6 months to 1 year
FBA Prep Service: Charged per unit to items you have Amazon package and prep for fulfillment
Unplanned Prep Service: Charged if a product isn’t packaged or prepared for storage to Amazon’s standards
Multi-Channel Fulfillment: Charged when you have Amazon fill orders for any products you sell on other eCommerce websites
Inventory Placement: Charged when you send all of your inventory to one fulfillment center and Amazon distributes it to other fulfillment centers for you
These aren’t all of the additional FBA fees you could incur. Be aware there may be extra costs involved. Pay attention to your monthly invoice to see what you’re being charged for! You can typically rectify the situation to avoid being charged in the future.
Other Costs to Consider
While fees will be a considerable part of your total costs, don’t forget there are initial startup and other optional charges to consider, especially for private label sellers, that can help you get ahead of the game.
When it comes down to it, your main cost to sell on Amazon depends upon the product you choose as fulfillment and shipping fees will vary from there. You need to make smart product choices, but with so many items out there, how are you supposed to choose? And how do you even know if it’ll be profitable?
Sure, you can search manually, but automated product finders will streamline and simplify the process. The Viral Launch Product Discovery tool can help you quickly find high-potential products that meet your unique wants and needs. After inputting criteria like your desired monthly sales, selling price, review count, and monthly revenue, it provides you with a comprehensive list of products, keywords, brands and categories that match your search parameters.
Sourcing and Manufacturing
When ordering samples, keep in mind that you’ll likely be paying a much higher price for manufacturing and air shipment. This can usually be negotiated into the cost of the initial order, but it’s an additional expense to be prepared for. Samples typically cost $100-200 with shipping, but this will depend on the size, weight, and type of product.
Once you have your first product figured out, you need to place a larger order. During this phase, you’ll also want to determine packaging options from the supplier and obtain a UPC for the product to get an FNSKU from Amazon. You can purchase a new barcode from GS1 as a GS1 Barcode can typically be linked to an FNSKU.
Since shoppers can’t see your product in person like they would at a store, your listing copy and photos need to convey all pertinent information about your product. A great listing gives you a competitive edge and helps persuade a shopper into purchasing.
At its core Amazon is a search engine, and you need to optimize written content to work within this search engine. Relevant, high-volume keywords bring shoppers to your listing. Using a Keyword Research tool helps you find valuable keywords with high search volumes or opportunity, which will increase the ranking of your listing and allow it to be seen by more shoppers.
Putting your listing copy and photos in the hands of experts like those at Viral Launch not only minimizes the work for you, it ensures your listing will be optimized in a way that maximizes your ranking and purchasing potential.
Marketing and Giveaways
Amazon is a crowded marketplace that’s all-too easy to get lost in. When shoppers visit your category, you want to be the first product they see. Organic sales and keyword ranking are crucial, and marketing and giveaways can help accomplish this.
Giveaways, called Launches at Viral Launch, are targeted giveaways to project your listing to Page 1 for a major keyword, with the goal of increasing your organic sales. We typically recommend running a giveaway for a period of 7-10 days. This period of time is long enough for Amazon to recognize the sales but short enough to limit the number of products being given away.
PPC, short for for Pay Per Click, is another way to drive visibility to your Amazon listing through paying for sponsored ad content. Set a daily budget and bid on a click price. Amazon will post your listing as an ad for targeted keywords. You won’t pay anything unless the ad is clicked on by a shopper.
These optional, though very beneficial, costs can help you in the long run and should be taken into consideration as you develop and grow your Amazon business.
New sellers need to be aware of the following costs:
Purchasing and/or manufacturing products
Packaging, shipping and handling
Other business fees
Although these may not be applicable to all sellers, it’s important to know they exist and could come into play in the future.
Amazon seller fees hinge upon your account plan, product, product category and type of fulfillment. Barring any special circumstance, sellers are paid every 2 weeks. Make sure your profit margin can cover your expenses—doing so right from the start will boost your ability to become a successful Amazon seller.
Subscribe to the blog for more advice on how to start your Amazon FBA business!
You want to start selling on Amazon, but you’re wondering about Amazon seller fees? Seller fees include:
Storage and shipping fees (if applicable)
The total fee depends on what products you sell and how you choose to sell them.
Selling on Amazon is an amazing opportunity for individuals looking to make money online. All you have to do is find a great product to sell, buy it, and put it up on Amazon. Oh yeah, and pay Amazon seller fees.
Amazon seller fees vary depending on the product you sell and the way you choose to sell on Amazon. If you sell under an Individual account, fees are different than if you sold under a Professional account. Fees also vary depending on how you ship your products.
Every selling option has its own set fees. So let’s break them down.
If you are selling items on Amazon under an Individual seller account, you will be charged a $0.99 fee for each item that you sell. So if a shopper finds your product, adds it to the cart, and checks out, you’re being charged $0.99. If a shopper finds your product and adds 3 of it to their cart and checks out, you’re being charged $2.97.
If you’re just selling your old textbooks or lightly used products from you garage, this fee is no big deal. You’re probably just happy to get rid of what was taking up space in your house. But if you’re selling products as a side-hustle or growing an entire brand, the $0.99 fee starts to add up and cut into your margins.
That’s why Amazon offers another option. If you’re selling more than 40 items a month, you will want to look into a Professional selling account. With a Professional account, you pay a flat fee of $39.99/month and have no per-item fees.
The second fee sellers have to pay is a referral fee. Depending on the product category, the referral fees may be higher or lower. For example, Amazon device accessories have a 45% referral fee, but personal computers only have a 6% referral fee.
If you’re selling an Amazon Echo charger, that means 65% of the selling price for that product goes straight to Amazon in referral fees. And if 65% of the selling price is less than $1.00, Amazon will charge you their minimum fee of $1.00. See the full breakdown of referral fees by category.
For orders that are packed and shipped by the seller, Amazon adds the shipping cost to the sale price before calculating the referral fee. For example, if you are selling salt and pepper shakers for $12.99 with $2.38 shipping charge, your referral fee would be $2.31.
For all media items, sellers also have to pay a closing fee of $1.80 per item sold. Media categories include Books, DVDs, Music, Software & Computer/Video Games, Videos, and Video Game Consoles.
FBA Shipping Fees
Sellers who are part of the Fulfillment by Amazon program also pay FBA fees. Sellers are charged for storage, order fulfillment, and optional services like gift wrapping. This is in addition to the $39.99 they pay each month for a Professional Seller account, Referral fees and any Closing fees.
Amazon inventory and storage fees vary based on product size and time of year. If you have a standard size product, storage fees are $0.69 per cubic foot January through September and $2.40 per cubic foot October through December. If you have an oversized product, storage fees are $0.48 per cubic foot January through September and $1.20 per cubic foot October through December.
Amazon order fulfillment fees for your product depend on size and weight. Because storage and fulfillment fees are dependent on size and weight, these fees are important in your product selection process.
For instance, laundry baskets might look like a decent product market. But if the price point is about $24.97 and Referral fees are $3.75 and FBA fees are $18.62 because of the size and weight of the item, that leaves you with almost no margin. And then you still have to subtract the landed cost of the item.
When you subtract Amazon seller fees and calculate profit, a market that once looked appealing with $13,000 monthly revenue may not match your goals anymore. You can use the Viral Launch FBA Calculator to see your potential profit after Amazon fees. Or you can access the cost calculator inside the Market Intelligence web app or Chrome plugin. Make sure you’re getting the most accurate calculation by adjusting the size, weight, and landed cost of your product.