One way to reduce your Ecommerce costs is to make sure you’re not being overcharged for any Amazon FBA fees, which we explain in this guide.
One way to reduce your Ecommerce costs is to make sure you’re not being overcharged for any Amazon FBA fees. Professional sellers on the platform have the opportunity to make profits, develop their brand, and learn the ins and outs of the online retail industry. But when building a successful Amazon store, it’s important to optimize for the best results – and that means lowering your FBA fees wherever you can.
Amazon’s FBA selling fees can sometimes throw you for a loop, so as online entrepreneurs we have to stay informed and on top of all aspects involved with our business.
We’ve built this guide to help you get a better understanding of all the Amazon FBA fees for professional sellers. And if you’re wondering how you can reduce your business expenses this year, we’ve also included some expert tips on how to spot those often ignored FBA fees that end up costing sellers a ton of extra cash.
Amazon’s fulfillment fees are paid by sellers that have signed up to let the online retailer store their inventory and ship their orders out to customers. To better understand FBA fees and what they do/do not entail, here’s a breakdown of the 3 different ways to fulfill your orders when selling on Amazon:
All fulfillment options come with different fees, benefits, and setbacks. In this article, we’ll be focusing solely on Amazon FBA.
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FBA selling fees can be broken down by calculating the major costs involved when Amazon takes care of your orders. The main costs to consider include:
If you have a professional seller account, you can check your Amazon FBA fees by heading to Seller Central. Just type in your product name or ASIN to get the calculated fees. If you’re looking to list new products, this page has a box where you can type in the dimensions, weight, and category to get an estimate on the FBA fees for that product.
Merchants should note that there’s a difference between seasonal and yearly rates with FBA fees. So keep track of what you pay to Amazon per quarter versus paying annually.
Wondering how much of a percentage Amazon takes for FBA? It’s typically between 8-15% of the total price excluding taxes. This amount is known as the referral fee, and the rate will vary depending on the category of product that you’re selling.
As of January 2022, Amazon’s referral fee can go as high as 45% - this is if you choose to sell official Amazon Device Accessories in the Marketplace. The lowest referral fee is currently 6% for items that list under the Personal Computers category.
The total amount of your FBA referral fee will also depend on the product listing price, all delivery/shipping charges made, and any applicable gift wrapping charges. So if your products are listed at a higher price, then your overall fee to Amazon will also be greater. Just FYI, the minimum amount that sellers will pay Amazon is typically $0.30 per unit sold.
If you choose to build your brand on such a giant Ecommerce space, then fees paid to them for using that platform are inevitable. But you don’t have to get bogged down with all of the FBA fees – there’s a ton of ways to minimize your costs in this area. Or at the very least, make sure you don’t get overcharged for any of those fees.
Amazon’s fees for FBA sellers will depend on what types of products you sell. Along with the category factor, your seller costs will vary based on product dimensions as well as shipping weight. There are six size categories ranging from a small standard item to special oversize, and the cost per item increases by size category and weight.
To give you an idea, here’s a screenshot of the updated FBA fulfillment fees posted on the Amazon website. The fees noted below are valid starting January 18, 2022.
Sellers note: FBA fulfillment fees for those selling products in the apparel and the dangerous goods categories will be higher. As of January 18, 2022, the FBA fees for apparel items range from $3.27-$6.68 + $0.30/lb above the first 3 lb.
Now that you know the basics behind how Amazon’s FBA fees are calculated, let’s go over the ways you can reduce your selling fees and cut out any unnecessary costs for your online business.
When searching for new products to sell in Amazon’s Marketplace, one of the most important things to factor into your decision making process is the product category.
Take the situation with apparel fees. In early 2018, Amazon raised fees for products sold under the apparel category and a number of small businesses had to reassess if their apparel products would still be profitable if sold through the online retailer.
Stay on top of your profit margins by following any Amazon FBA fee updates and make sure your product listings still stand a chance for success on the platform.
Another way to help reduce your Amazon FBA fees is by always making sure your products are accurately listed in the system. When you create a new ASIN and send the product to an Amazon fulfillment warehouse, your product will be scanned for its dimensions and weight and will be assigned its correct fee. Items will also be routinely scanned in order for operations to stay up-to-date.
However, operational errors aren’t unheard of. On the seller's end, it’s important to also habitually check on the dimensions and weight Amazon has on file for your products to avoid being overcharged any FBA fees.
Don’t be afraid to call out any errors made by Amazon’s operating systems. If you discover that Amazon is overcharging you for any item, know that you can raise a ticket to reclaim your money. US sellers can find out more about filing an FBA inventory reimbursement claim here. FBA sellers should also note that you get a time limit of 9 months to rectify any inbound shipments in the US.
This is an important management strategy that’s often overlooked by many sellers.
While it’s essential to manage your FBA inventory to be sold, don’t allow yourself to be overcharged fees on any returned items either. If a product is returned by a customer to an Amazon warehouse and the company deems it “unfulfillable”, then you will be charged storage fees for that item. Even though products will be resold, it is common for unsold items to just sit there in the warehouse. And sellers are the ones paying for that real estate.
Cut out any extra FBA costs by running an Inventory Health Report to see if you have any unfulfillable items taking up space in an Amazon warehouse. You can choose to sign up for the FBA Liquidations Program to help manage that extra stock or get the products returned directly to you.
We know there’s a lot of ways sellers can optimize their product listings. Another tip to try to significantly reduce your FBA fees is to find ways of minimizing your package dimensions and weight. Access weight and empty space in a delivery box can really add up, especially if you’re selling 1,000+ items or more a month.
It will take some prep on your end, but try to flesh out a system where any/all extra space in a box can be eliminated. You can also try taking out any oversized packing material, and having any product accessories packed inside the product. This may be a work in progress, but you’ll end up reducing your FBA fees in the long run.