Walking into Amazon is like walking into a giant supermarket: pretty much anything you want will be there. marketplace. Many companies and people have decided to go one step further with their businesses and start selling online through this platform. The truth is that, despite the fact that it is a very profitable channel, we must bear in mind that Amazon is not free and that we must add its commissions to our “costs” section. For this reason, in this post we want to clarify how much it really costs to sell on Amazon and above all, we want to clarify what are the commissions that you will have to pay once you start selling on Amazon.
Selling on Amazon, is it a profitable business?
If you are here, it is because, possibly, you are thinking of starting to sell on Amazon and you want to know if it is really a profitable business. The truth is that it depends a lot on the type of business, the product, the category in which it is located… For this reason, it is advisable to seriously study the market and, above all, keep in mind that it will be an initial investment that may not always seem profitable, but if it is maintained over time it can bring us great benefits. As a production company or manufacturer you will always have greater advantages, but in any case, it is important to know what the commissions are that Jeff Bezos’ marketplace charges to determine whether or not it will be profitable to sell on Amazon.
Amazon Commissions
To know how much it really costs to sell on Amazon we have to know all the commissions that it will charge us. Therefore, we have to include additional costs such as the , which will be very important to give visibility to our listings, especially if we have just started selling. You also have to keep in mind that even if it is a small cost, selling on Amazon is not free: it will cost you €39 + VAT.
Referral Fees
These rates are those that apply to each product, which generally corresponds to 15%. In other words, for the simple fact of selling on Amazon, you will have to pay a percentage of the total of each product to the Marketplace itself. How to know what is the exact percentage that you will have to pay? Very simple, you can check the percentages of each category in the Amazon Seller rate tables. We leave you here one of them. Keep in mind that these percentages or commissions change depending on whether you sell in Europe or in Amazon United States. In addition, they may vary over time, so it is best to check the rates for product references directly on the Amazon page.
Amazon Fulfillment Fee
Selling your products through the or FBA will bring you many advantages, but it also implies an added expense. Quickly, the FBA program implies that your inventory goes to the Amazon warehouses, and there they take care of distributing it and all the subsequent management, so you only have to be aware of the stock and send it to the Amazon warehouses. Amazon. This can make your life much easier, in addition to allowing you to access the Premium program (something that users value very positively) or get the Buy Box.
To know what the cost of logistics management will be, it will be necessary to use a table where the price is specified by size and weight of the item in different categories. If your item with packaging exceeds any of the specified measurements, you will only have to go to the next box. And so with all items. You must also take into account the market in which you operate to know if the payment is made in euros or pounds.
inventory storage fee
When you ship a batch of products to Amazon fulfillment centers, they will charge you based on the space you use to store them. The prices of this rate vary according to the average daily volume in cubic meters per month, in addition to the season. Therefore, the low season, between January and September, will be cheaper than storage in the high season, from October to December.
advertising costs
Although it is not a mandatory cost, it is especially recommended to take it into account when it comes to seeing whether or not it will be profitable to sell our products on Amazon. PPC or Amazon Ads campaigns are essential to give visibility to our product and make the listing rise in the ranking. The really positive thing about this cost is that it can be flexible. A good way to calculate it is allocating 20% of the price of the product to advertising, but as we say, it is only an estimate and can be flexible. We usually recommend a budget of between 5 and 10 euros per day per campaign, always keeping as few ACOs as possible.
Refund fees
Amazon works for the customer, whether we like it or not. Therefore, to calculate your margin, we recommend that you always take into account the fees or cost of returns or refunds. This cost is equal to the total logistics management fee for a specific product, and is made on those items that have a free return (which the customer must physically return).
Long-term storage fees
Those products of the FBA program that are stored in an Amazon logistics center for more than 365 days, will have an extra fee called long-term storage. That is why it is essential that before you ship 2,000 products, you make sure that you will be able to afford the storage fees and that you will release the product. It is best that you go little by little if you have just started selling on Amazon.
Inventory Removal Fees
In case you have shipped more products than you can sell and start to notice that storage costs are a heavy burden, there is also the option to withdraw your inventory. However, you will be charged a fee for such withdrawal. This rate will be charged for each unit, and they are completed in an approximate period of between 10 and 14 working days.
Therefore, in conclusion, we must affirm that selling on Amazon can be a wise decision as long as we take into account the fixed costs of doing so, but also the possible fees that they will charge us in case there is a problem with our inventory. The best?
- Be aware of the supply and demand of the products you are going to sell on Amazon and make decisions about yours based on it.
- If you already have the product, it’s best to make sure it’s profitable to sell on Amazon based on the competition.
- If you go with FBA, start with a small number to see if it sells the way you expect.
- A suitable listing for the product (we told you earlier) will prevent you from having to deal with returns, because the customer will be satisfied with their purchase.
Selling on Amazon can be very profitable if you know how to choose your products and have the right tools. In addition, if you need help so as not to incur unnecessary costs and for them to get out of hand, you can always count on our help. We will advise you and help you to carry out your business on this platform.
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