Amazon is one of the largest retailers worldwide, so its marketplace is among the best options to boost online sales for a small business. To do this, it makes available to sellers a variety of tools and operating modalities that fit your needs and products. Among these modalities we find the Fulfillment By Amazon, FBAwhich, summarized in a very general way, consists of transferring the management of the storage and shipping of the products to Amazon itself.
That is to say that when working under this modality, the seller sends his products to a storage and distribution center of the company that is within the reach of his main clients. Specific, the FBA service groups all these tasks:
- Delivery of the goods by the merchant
- Packaging and labeling of articles
- Distribution of the products to the different FBA warehouses
- Placement in warehouses and possible transfer of stocks
- Pick, pack and label
- Returns Management
- Scan and post all movements of goods/stock
This format is quite practical, since it offers the seller the support of Amazon’s delivery and storage system. That is why we have decided to delve a little into the costs that this service entails for sellers.
What costs does the Amazon FBA service entail?
By charging for the entire delivery process of the products by Amazon, this service also represents an additional cost for the sellers. Below we list the main amounts involved in this service.
FBA account
In order to enjoy the FBA service, you must have an Amazon seller account. This account costs 39 euros, not counting VAT.
inventory storage
As we had mentioned with the FBA, both the storage and distribution process are carried out by Amazon, and of course it has an additional cost.
Storage fees are charged monthly based on average daily volume (measured in cubic feet) by the space occupied by your inventory in the fulfillment centers. Volume measurement is based on the size of the unit properly packaged and ready to ship.
As a curiosity, the monthly fee for inventory storage is collected between the 7th and 15th of the following month to which the fees correspond.
Long-term storage fees
Amazon applies a monthly long-term storage fee to those inventory products that they carry in their fulfillment centers more than 365 days. Non-media products will be charged a monthly inventory storage fee of €170 per cubic metre. The greater amount will be charged: a monthly long-term storage fee of €170 per cubic meter or a minimum long-term storage fee of €0.10 or £0.10 per unit. The inventory evaluation date will be the 15th of each month.
additional costs
Here would enter the minimum expenses, such as product labeling, which must also be taken into account, and occasional expenses. In the latter we would be talking about advertising campaigns, for instance.
Commissions for sale
For every sale made Amazon will take a commission between 8% to 15% of the total cost of the product, depending on the category to which it belongs.
Shipping costs: logistics handling fee
A flat rate per unit, based on the dimensions and weight of the shipment. Amazon calculates shipments based on 10 kinds of packet sizes. Of course, the type of supplier you have greatly influences; If the seller is national, the added costs for shipping the merchandise will be easier to manage.
For example, Amazon has the service Small and Light Products designed for products priced under €10, small, light and with a high sales turnover. Only references with sales of 10 units or mores in the last four weeks meet the basic requirements for the FBA Small and Light Program, and when shipping inventory to the warehouse, a certificate is required. Minimum quantity of 24 units per product. To continue with this example, and as you can see in this table, the costs in this modality are predetermined in advance.
returns
Finally we come to returns, these types of situations always present a loss for any type of business. And, in the online sphere, they are even more difficult to avoid due to the lack of the physical factor at the time of purchase. As Amazon itself explains, if the customer decides to return this product, A returns processing fee equal to the fulfillment fee will be charged.
As we have seen, there are several factors that must be taken into account when deciding whether or not to use the FBA. And for this there are applications such as the one that allows you to evaluate not only the expenses, but also the market in which you work in order to create a more appropriate market strategy.
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