If you are successfully selling on Amazon, the revenue you earn may outweigh the selling costs you have to bear for selling through the platform. However, selling through Amazon can prove to be really heavy on your pocket! Amazon charges the sellers different types of fees that are categorized differently according to the procedures carried out through the sales. And that is how Amazon earns its profits, which amount to billions of dollars!
Did you know that the Amazon unique visitors mark has already crossed the 200 million mark in just US? July reports by Statista have revealed that the unique monthly visitors count in the US went up to 213.56 million for Amazon. Read below to learn of the different fees Amazon charges from its sellers!
Amazon Seller Fees
Amazon charges the sellers a good amount of money for using its services. Here is an insight into 5 different types of fees that you would have to pay if you decide to use the platform to grow your sales and revenue:-
1. Monthly Subscription
The monthly subscription fee is the first fee that is charged when you register and sign up on the platform as a seller. This fee depends on the type of account you have registered with the enterprise – Individual account or Professional account. Both are charged on a monthly basis. The Professional account costs $39.99 per month. However, for Individual accounts Amazon charges the seller $0.99 per item sold.
Here’s some interesting information: The share of direct traffic registered on Amazon.com is 57.09%.
While the Professional account does offer certain perks over the Individual account such as inventory and order management with reports, carrying out API functionalities through Amazon Marketplace Web Services, uploading products in bulk, offering gift wrap option on items, permission to calculate US sales and implementing the taxes on the orders received, etc. it is not recommended to sign up into a professional account if the items sold per month is less than 40. In the case of Individual accounts, there are no subscription fees since the sellers pay according to the number of items sold.
2. Fees related to Sales
There are three types of sales-related fees that sellers need to pay Amazon. The first is the Referral Fee. The referral fee is paid every time you sell a product through Amazon and is more like commission per sale. The referral fee is not fixed and it depends on the item that is sold. However, it is usually a flat rate calculated at 15% or less than that depending on the item. Some categories of products are allotted schedules for referral fees. In such cases, the fee percentages are calculated in dollars on the basis of the sales.
The second type of sales-related fees is the Variable Closing fee and is charged on sellers selling items of the Media category. These items include computer and video games, software, gaming consoles, BMVS (Books, Music, Videos, and DVDs), and more. Selling these items charge the sellers an additional $1.80 as the variable closing fee. Did you know that Amazon Prime Video has crossed over 150 million users in 2021? Business of Apps reports claim that there are 175 million users of Amazon Prime Video as of 2021.
The third category is the Refund Administration Fee and is paid on returned items. If any of the products sold by you are returned by the buyers, you receive the referral fee and any other additional costs you would have paid Amazon on the sale. However, you would have to pay the refund administration fee which is either $5.00 or it is calculated at 20% of the referral fee on that item. Amazon collects whichever is less.
3. Fulfilled by Amazon (FBA) Fees
The FBA (Fulfillment by Amazon) fee is again of three types. The first type of FBA fee is the order fulfillment fee and is charged based on the physical dimensions of the item sold. The size and weight of the product are taken into consideration to calculate this fee. Items weighing less than or equal to 10 ounces are charged $2.41 per item. Items that weigh over 90 pounds are charged $0.79 per pound.
The second type is the monthly storage fee which Amazon charges you for storing your products in their storage facilities. Amazon does not charge the same fee all year round. Instead it divides it into two time periods: January to September where charges are $0.69 per cubic foot; and October to December where the charges go up to $2.40 per cubic foot. However, the fees are less in case of oversized products.
The third type of the FBA fee is the fee that is charged if the items are stored at the Amazon storage facilities for too long. These are FBA long-term storage fees that are charged twice a year if you are not able to sell out your products. The fee is calculated on February 15 and August 15 if the items have been in Amazon’s storage for more than 6 months and 12 months respectively.
4. Fulfilled by Merchant (FBM) Fees
FBM or Fulfilled by Merchant fee are somewhat similar to the FBA fee but are comparatively lower since the seller is responsible for the shipping process. The FBM fees can sometimes be a toll on sellers with Individual accounts because at times the total shipping costs that the sellers have to bear may exceed the total shipping credits.
In case of Professional accounts, the FBM fee is not as strict because as a seller you get the advantage to choose your shipping rates. However, the same is not true for items sold under the BMVD category. In this case, the sellers are allotted a shipping credit by Amazon. This credit is the same as the shipping rate and flexibility in the costs depends on the shipping method.
Did you know that the Amazon profits increased up to $10 billion in just two years? According to data released by Business of Apps, the total annual profit of Amazon in 2018 was just over $10 billion and rose to $21.33 billion at the end of 2020.
5. Other Additional Fees
Besides the four types of fee charged from sellers, there are some additional fees that you can classify as miscellaneous, and are usually considered to be minor fees by Amazon as they are not necessarily charged to all sellers. Some such fees are as follows:-
- Packaging service fee – This fee is charged for repackaging certain items that may have been returned by the buyers and the original packaging may have been destroyed. Amazon packs the products again and charges a service fee from its sellers.
- Additional FBA fee – An additional amount as part of the FBA fee may be charged from the sellers on items that classify as dangerous. For items of standard sizes, the fee is $0.06 to $0.16 per unit.
- Textbook rentals – This fee is charged from sellers distributing textbook rentals through Amazon. With each sale, each rental is charged at $5.00 each.
- Refurbished category – This fee is applicable on products that are attempted to be sold again as they are not very new, but if the product does not qualify for refurbishing, a fee is charged for the same by the sellers.
Here’s some more interesting information: According to Macrotrends, Amazon registered an increase in the valuation of 67% from March 2020 to March 2021. Furthermore, the valuation increased from $172 billion in 2015 to $1.5 trillion in March 2021.
We hope that the article was helpful in understanding what costs sellers have to bear for selling on Amazon, one of the largest e-commerce enterprises in the world! There are some more fees under the ‘Other Additional Fees’ – the fifth category. Do you know what the remaining ones are? Let us know in the comment section!
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