“Amazon FBA Fee Calculation
With the rapid development of e-commerce, more and more people turn their attention to overseas markets. And Amazon is the world’s largest e-commerce platform, so many merchants choose to settle in Amazon.
Amazon’s operations include two major modes, namely the Amazon (FBM) self-shipping model and the Amazon (FBA) Amazon delivery model.
1. Advantages and disadvantages of self-shipping model (FBM)
These two modes have their own advantages and disadvantages. Self-delivery means that Amazon only acts as a sales platform, the seller’s own source channel. After a customer places an order in the store, it will be delivered to foreign customers through international express parcels.
Advantages: low investment, you can wait until the order is issued before purchasing, packaging and distribution are also operated by yourself, directly facing customers, and it is easier to build a good brand. The categories are more extensive. Some categories, including product characteristics, do not support FBA logistics (large-scale goods), and only self-delivery can be done.
Disadvantages: slow aging, slightly less orders than FBA mode. In fact, FBM is similar to the domestic Taobao store. The seller opens a store on it, and when someone places an order, it can be shipped according to the address.
2. Pros and cons of the Fulfillment by Amazon (FBA) model
Amazon (FBA) Fulfillment by Amazon means that the goods are delivered to Amazon’s FBA warehouse in advance, and then someone places an order and then the Amazon warehouse delivers it to the buyer.
Advantages: fast with aging. And Amazon will also have traffic support, which is much higher than FBM’s exposure. Returns and exchanges do not require the seller’s consent and are handled directly by Amazon customer service, so most people prefer FBA products.
Disadvantages: The operating cost is much higher than that of FBM, and storage fees need to be paid every month (calculated according to the product volume). If the product does not sell, you need to pay the storage fee on an ongoing basis.
What are common Amazon FBA fees?
Amazon charges all sellers 15% of the sale price of each item, regardless of the e-commerce fulfillment method.
In addition to seller fees, Amazon FBA charges two main fees: fulfillment fees and inventory storage fees.
FBA fulfillment fees include the entire picking, packing, and shipping process for each shipped order.
FBA inventory storage fees include storing your products in Amazon fulfillment centers.
Here’s exactly what each fee is and why the price of each fee varies so much.
FBA fulfillment fees
Unlike many fulfillment service pricing models that charge for picking, packing, and shipping as separate line items, FBA fulfillment fees cover every step of the fulfillment process.
Fulfillment charges depend on the product size and shipping weight of the item being shipped. There are two main categories of product sizes: standard and oversized.
Standard-sized products are those that weigh less than 20 pounds or measure less than 18x14x8 inches.
Oversized shipping includes items that are larger or heavier than those listed above.
Within these categories, there are several additional subcategories.
Both size and weight of shipping items are important because Amazon uses dimensional weight to calculate shipping costs, which takes into account the density of the shipment.
Fulfillment fees for standard-sized items range from $2.41 (under 1 lb) to over $4.71 (over 2 lbs), with an additional $0.38/lb for items over 2 lbs.
For oversized items (over 18x14x8 inches), the fee for small oversized items (over 70 lbs or 60 inches on the longest side) starts at $8.13, plus an additional $0.38/lb for the first two pounds.
On the other hand, delivery fees for special oversized items (over 150 pounds or 108 inches on the longest side) start at $137.32, with an additional $0.91 per pound for the first 90 pounds.
FBA also charges an additional $0.40 per garment delivery fee.
At the end of the day, your FBA fulfillment fees will mostly depend on what exactly you’re selling—there’s no one-size-fits-all fee here.
It’s also worth noting that while packaging is included in the FBA fulfillment fee, Amazon will pack your product in an Amazon-branded box. This means that Amazon’s branding is paramount, and it can overshadow any branded experience you intend to create with shipping. While this may not be a deal breaker, it’s worth keeping in mind.
Other FBA Fees Explained
Depending on your business needs, there may be additional charges for fulfilling Amazon orders using FBA.
Product return fee
For example, if your product is eligible for free returns through Amazon Prime, you will incur additional fees for FBA returns. (Return processing is included in the fulfillment fee for products that do not have free returns.)
Inventory clearance fee
Also, if you decide to no longer use FBA, removing your inventory from their fulfillment centers can be costly. If you choose to have Amazon remove your inventory and return it to you, they will charge a fee of $0.50 to $0.60 per item based on the item size. Amazon handles the inventory for you at a cost of $0.15 to $0.30 per item.
fine
Amazon has very strict requirements for sellers, and they also use fees to punish sellers who don’t follow the rules (here’s an article on avoiding mistakes when selling on Amazon). For example, Amazon will charge a labeling fee for sellers who do not adhere to its strict FBA inventory barcode labeling specifications. Sellers who do not prepare products in accordance with strict packaging and preparation guidelines are subject to unplanned FBA preparation fees.
Package preparation fee
Of course, you can always choose to have Amazon prepare and package your products for you—for an additional fee. Depending on your profit and order volume, this can save your business from hassle or unnecessary extra costs.
Note: This is intended as a high-level overview and is by no means comprehensive – Amazon FBA comes with some additional potential fees. See their Seller Central documentation for more information.
Long-term storage fee
Inventory stored in an Amazon fulfillment center for more than 365 days will be charged a monthly long-term storage fee of $6.90 per cubic foot or $0.15 per item, whichever is greater. Long-term storage fees are calculated using an inventory snapshot on the 15th of each month. FBA calculates inventory age based on FIFO.
Is Amazon FBA right for your business?
That’s up to you to decide. Once you’ve done the math and determined the cost, it’s up to you to figure it out.
Nor is there necessarily a right or wrong answer. For some startups, Amazon FBA can be a no-brainer, while others prefer to control the entire shipping and delivery process.
You also need to remember that the decision to use Amazon FBA is not just about numbers. You should consider other factors such as customer service, branding, and return frequency.
For example, when you ship with Amazon FBA, you lose your creativity with packaging materials. If this is an important factor for your brand and product experience, then FBA may not be the right choice for you.
Ready to master Amazon FBA?
The world of Amazon FBA is vast, exciting, and full of potential. However, this is far from simple.”
