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Amazon FBA Fees, Returns & More: Know the Numbers Before You Sell

Amazon Fees

The appeal of starting an Amazon business is evident. The possibility of tapping the vast client base and creating an online empire that is thriving is extremely exciting. However, for those who are aspiring to sell on the internet trying to navigate the world’s most popular online marketplace could be like entering an unending financial maze. Fear not, potential entrepreneur! This guide will explain Amazon’s fee structure, return policies, and other vital aspects of finances, allowing you to make informed choices before diving in.

Understanding the Costs: How Much Does Amazon Take From Sellers? 

Transparency is crucial to the success of Amazon. Here’s a list of the most common fees you’ll face:

  1. Selling Fees: The Selling Fees are Amazon’s cut of a proportion of your product’s sales price, which varies based on the type of category. For example, if you sell a t-shirt for $30 under the “Clothing, Shoes & Jewelry” category, you’d be charged an estimated 17 percent referral fee. This translates to $5.10.
  2. The FBA fees(optional): If you select Fulfillment through Amazon (FBA), Amazon handles the storage, pick up, packing, and shipping of your products to your customers. FBA fees are determined by the weight of your product, size, and the amount of storage time. Be aware of these costs when you calculate your profit margins.

Tips: Utilize Amazon’s Seller Central fee calculator to calculate the total cost of making a listing for a product. It will benefit you to select items that have a healthy profit margin after taking into account Amazon’s fees.

Important Note Concerning Returns:

Although Amazon doesn’t charge sellers a separate fee to handle returns, there are associated costs. Based on the reason for return and the method of fulfillment you use (FBA or FBM, Fulfillment By Merchant) You could be responsible for the cost of shipping to return the item. In addition, if the returned item is damaged or ineligible for sale it could result in an expense for disposal. Be sure to consider possible charges for returns when determining the price of your product.

FBA vs. FBM: Choosing Your Fulfillment Path

The most important decision for aspiring sellers is whether to use FBA or fill orders by themselves (FBM). Here’s a quick comparison:

Fulfillment through Amazon (FBA):

Pros: 

  • The speed of shipping is faster, possibly increasing Buy Box eligibility (the prominent placement of the product that drives sales). 
  • It’s less hassle for you because Amazon manages fulfillment.

Cons

  • Additional FBA costs. 
  • Less control over the fulfillment process.

Fulfillment By Merchant (FBM):

Pros 

  • Lower costs (no FBA charges). 
  • More ability to control the process of fulfillment.

Cons: 

  • Slower shipping times. 
  • More effort is required – packaging, shipping, and customer service.

The most appropriate choice will depend on your company’s structure, the product’s type, and the budget. Consider starting with FBM for smaller, lighter products that can be used to reduce the initial costs. If your business expands it is possible to move to FBA for quicker delivery and perhaps higher sales.

Financial Considerations Other Than the Fees

Now that you know the fundamental charges as well as fulfillment alternatives, we’ll take a look at some extra aspects of finances to be aware of:

  • Price of the Product: This includes the cost you pay to purchase the product through your provider. Add in any extra expenses such as packaging or labeling.
  • Shipping costs (if the FBM opportunity is chosen): If you opt for FBM, you should research shipping costs with reliable companies such as USPS, UPS, or FedEx to ensure that your margins of profit remain good.
  • Marketing and advertising costs (Optional): Consider Amazon Seller Central tools to advertise to new customers and increase sales. Create a budget for advertising when you are planning to use these tools.
  • Storage Costs (if FBA): If you select FBA and your goods are stored in the Amazon fulfillment centers over prolonged periods, you could be charged extra storage costs. Control your inventory efficiently to avoid such charges.

A Guide to Amazon’s Return Policy Controlling Costs and Risks

Although Amazon provides a return policy that is centered on the customer policy, it’s vital to know the consequences for sellers:

  • Return window: The typical customer has 30 days in which to return all products that are not opened on Amazon by Amazon sellers.
  • Who pays for returns?: The party responsible for shipping the return depends on the reason behind the return.
  • The mind changes: If a customer decides to change the way they think, then you could be liable for the return shipping cost (FBA or FBM).
  • Product that is damaged or defective: If the product arrives damaged or defective, Amazon typically covers return shipping.
  • Returns and Profit Margin: Be sure to consider possible return costs when determining the price of your products. Think about offering free returns as a reward for customers; however, you must be aware of the financial consequences.

Conquer Amazon Marketplace.

The process of launching an Amazon business is a rewarding experience. Ecom Automized can provide further assistance and guidance. When you know Amazon’s costs, returns policies, fees, as well as other financial issues You’ll be able to make informed choices to manage expenses effectively and clear the way for success in the largest online marketplace in the world. Get in touch with our experts today. Go forth and take on the Amazon world!

 

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David Roberts

Co-Founder & CRO

With 10+ years of experience in e-commerce, digital solutions & business strategy, David possesses immense success in the e-commerce automation and business space. Keeping a vision to build an Automated Business Solution at a rate where quality, performance, and ethics take the forefront with every partnership.