There are many benefits to selling products on Amazon. These include incredible customer service, shipping logistics, and access to the largest online marketplace in the world with millions upon millions of visitors each day. These benefits do come at a price though in the form of Amazon seller fees.
Whether you are new to selling on Amazon or have been at it for a while, Amazon seller fees can seem overwhelming and difficult to understand. This post will break down the most common Amazon seller fees you will come across and give you tips on how to understand and lower them, even if you don’t have the accounting budget.
Amazon Seller Fees: What are They?
Most of the seller fees that you will come across on Amazon can be broken down into one of these four categories.
Subscription Fees
These are the fees required to sell products on Amazon. Sellers can choose between a free Amazon Pro Merchant account and an Amazon Professional Seller account that costs $39.99 per month. The major difference between these two subscription models is that Pro Merchant sellers will pay a $0.99 flat fee on every item they sell. This per-item fee is waved on Professional Seller accounts.
Referral Fees
Referral fees are the fees that Amazon charges on each sale for giving you access to sell on the world’s largest e-commerce site. These fees vary depending on category and product, usually ranging between 6% and 20% of the price of the sale. The most typical referral fee is around 15% of the sale price, but you can review all of the different individual category referral fees from your seller account.
Shipping Fees
Whether you choose to ship products yourself through the Fulfilled by Merchant (FBM) option or utilize the Fulfilled by Amazon (FBM) program, you will be charged fees for shipping and handling. These fees will be charged to your account if you use FBA and you will pay them yourself if you use FBM, though you will receive a shipping credit from Amazon to help with the costs.
Other Amazon FBA Fees
Most third-party sellers on Amazon prefer to take advantage of Amazon’s FBA program due to its ease of use, though this program does include additional fees. These include short-term and long term FBA storage fees, fulfillment fees based on unit size, and standard shipping fees. Specific categories sometimes incur additional fees as well, such as clothing products and products with lithium batteries.
How to Lower Amazon Seller Fees
Seller fees are just part of the price of doing business on Amazon. While most of these fees are unavoidable, there are a few tips and tricks you can use to lower your Amazon seller fees.
Signing up for a Professional Seller account
The biggest mistake that new sellers make is forgetting to switch to a Professional Seller account after their store has grown to the point that it is generating 40 or more sales a month. That $0.99 per-item fee can add up in a hurry as your sales grow on the platform, so be sure to cap your monthly subscription fees at $39.99 with a Professional Seller account.
Controlling inventory fees
It’s tempting to just load up your store with inventory so you don’t have to worry about restocking or missing out on potential sales. Unfortunately, overstocking will cost you a lot of additional fees each month when it comes to storage fees. Optimizing your inventory and stocking can have a major impact on the amount of fees you pay.
Checking for overcharges
Amazon does a good job of charging the correct referral and storage fees on your products and compensating you for products damaged in the warehouse. The system isn’t perfect though, and it isn’t uncommon to find a standard-sized item mistakenly being charged at an over-sized rate, or for a product to go missing from your inventory without being reimbursed. Make it a habit to comb your account for these types of mistakes from time to time and report any discrepancies to Amazon’s customer service team.
Cutting down on your shipping costs
Whether you ship your products directly to the consumer through FBM or to Amazon through FBA, you are going to use plenty of shipping products along the way including boxes, shipping tape, and other materials. Acquiring these materials is another area that sellers often fall into habit on without giving much thought about finding better rates. Evaluate your options; look for local businesses that might offer free boxes, products offered in bulk at a discount, and other ways to save some money on packaging.
Small Accounting Teams Can Lower Fees with an Amazon P&L Tool
Keeping track of all of these fees isn’t as hard as it sounds if you have the right tools at your disposal. With FeedbackWhiz’s Profit & Loss Tracking Tool, you can view and analyze all of the important data in regards to your business with ease.
Identify your most and least profitable products
The Profit & Loss Tracking Tool has a built in section that displays your top five most profitable and least profitable products. Being able to gauge exactly how much money you are making on each sale with everything including cost of goods, advertising, and fees factored in can help you to decide what’s doing well and what needs more of your attention.
Analyze trends to prepare inventory
Under-stocking leads to losses in sales due to being out of stock. Over-stocking leads to additional fees. Stocking is never an exact science, but with the FeedbackWhiz Profit & Loss Tool, you can view sales trends on all of our products based on the parameters that you choose. With customizable charts and graphs at your disposal, it’s easy to check both recent and seasonal trends to fine-tune your inventory strategy.
Get a complete picture of your businesses
Simple inventory management systems generally don’t include a reconciliation feature, balance sheets, and monthly profit and loss reports like a solid Profit & Loss Tracking Tool provides. This tool’s clean and intuitive interface makes it easy to track every aspect of your business with detailed records on costs and fees.
FeedbackWhiz is currently offering a 30-day free trial on The Profit & Loss Tracking Tool as well as its other useful tools including feedback management, email automation and 24/7 listing monitoring. Take advantage of this offer and start lowering Amazon seller fees on your account today. Learn more at FeedbackWhiz.