First things first. What is FBA or Fulfillment by Amazon?
It may be defined by simply saying you sell your goods and let Amazon handle the shipping. But there’s a lot more to know for you to ensure you are getting enough profits on your Amazon business. Because fees are costs. And costs are a reduction to your margins. So you should be able to properly account the costs that you incur if you are utilizing FBA or planning to do so.
Let’s dive in! How do FBA work?
Please note that FBA can also be utilized by non-Amazon sellers. You can sell via your own website and let Amazon handle the shipping. But based on actual figures, fulfillment fees being charged by Amazon for orders they fulfill for other platforms are higher.
Before we start working on numbers, let’s get to know the benefits of using the renowned Fulfillment by Amazon.
All FBA items are eligible for free shipping. This puts FBA items on top of the search results page for products with no shipping costs. As we all know, shipping speed and price are two of the most important things that customers consider before buying a product. Amazon is well-known for their Prime Free Two-day and even their Standard shipping, so rest assured that your customers would be happy receiving their orders on time.
Using FBA saves you from the burden of customer concerns as Amazon will take care of it for you as part of their fulfillment process, therefore, you can focus on managing the rest of your business operations. But you are still able to provide customer service for customer concerns if ever needed.
As we know, Amazon had been providing exceptional customer service making them one of the largest online selling platforms worldwide. Using FBA lets you ride on their reputation.
Returning of products when needed is easier for customers because returns management is solely taken cared of Amazon for FBA orders. However, a processing fee is charged for every returns processed.
As mentioned earlier, non-Amazon sellers can also utilize FBA. In case you are selling in other platforms such as eBay, where they don’t handle fulfillment, you can opt to send your inventories to Amazon and let them ship your eBay orders. This way, you can manage order processing all at one place.
Alright! Let’s get to it! From benefits, let’s get to know the costs of using Fulfillment by Amazon (FBA).
To assign fulfillment and storage fees, FBA breaks products into 2 overall size categories, and sizing includes packaging such as shoe boxes, blister packs, or retail packaging.
The table below shows the most recent fulfillment and monthly inventory Storage that you should take into consideration when using FBA.
Source: https://services.amazon.com/fulfillment-by-amazon/pricing.html
You may also be able to get a rough estimate of the FBA fees your product would incur through Amazon FBA Fee and Revenue Calculator on the links below:
US
https://sellercentral.amazon.com/hz/fba/profitabilitycalculator/index?lang=en_US
UK
https://sellercentral.amazon.co.uk/gp/fbacalc/fba-calculator.html
France
https://sellercentral.amazon.fr/gp/fbacalc/fba-calculator.html
Germany
https://sellercentral.amazon.de/gp/fbacalc/fba-calculator.html
Italy
https://sellercentral.amazon.it/gp/fbacalc/fba-calculator.html
Spain
https://sellercentral.amazon.co.uk/fba/profitabilitycalculator/index?lang=es_ES
Mexico
https://sellercentral.amazon.com/fba/profitabilitycalculator/index?lang=es_MX
Canada
https://sellercentral.amazon.com/fba/profitabilitycalculator/index?lang=en_CA
India
Managing FBA Tips and Maximizing your FBA Profits
These fees are issued on August 15th and February 15th of each year and are charged $11.25 per cubic foot of space that they take up. If after a year your products remain on the shelves, Amazon doubles your fees and charges $22.50.
These fees can be pricey and result in a loss in potential revenue. It’s important to practice good inventory management and only ship enough inventory to meet forecasted sales demand.
With all the above-mentioned fees, selling on Amazon may sound a bit costly. But trust us. With patience, skills and proper automation help, selling on Amazon success is at your fingertips.
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