Online selling via Amazon is increasingly popular, making it essential to understand the brand’s fulfillment service known as Fulfillment by Amazon, or FBA. This blog covers all you need to know about different types of FBA fees. It also explains FBA’s benefits and the different types of Amazon seller accounts available for selection.
What Is FBA?
Once you complete your product research, the next step is finding a suitable selling platform for your items. FBA is a service that enables you to accomplish this goal. This option allows you to pay Amazon fulfillment fees and have your products stored in Amazon fulfillment centers. The company takes charge of picking, packing, and shipping orders sold to your customers.
Types of Amazon FBA Fees
You can find two primary types of Amazon seller FBA fees. Below are the two main fee types and some additional fulfillment charges many sellers often forget to consider:
- Fulfillment Fees
Typical fulfillment services offer pricing plans that individually incur picking, packing, and shipping costs. However, the Amazon FBA fees bill the end-to-end fulfillment process as a single cost. This quality gives it the most significant advantage over other options in the market.
Amazon placed a 5% fuel and inflation surcharge on the FBA fulfillment fees beginning in April 2022. The costs also significantly differ since Amazon calculates the figures based on a product’s size and weight. These variable factors mean you cannot get a one-price-fits-all solution.
It becomes necessary to learn weight and size breakdown to understand the fulfillment fees. You can find two primary categories used to determine the Amazon FBA cost:
- Standard size – A product has dimensions smaller than 18×14×8 inches or weighs less than 20 lbs. Fulfillment fees for small, standard-sized items weighing from 6 oz. to 16 oz. range between $3.07 and $3.77. Large standard items weighing 6 oz. or under to 20 lbs. charge from $3.72 to $6.44. Any item over 3 lbs. incurs charges $0.32 per lb. above the first 3 lbs.
It is essential to note that Amazon categorizes these items into dangerous or non-dangerous, and non-apparel or apparel goods. The small and large apparel categories charge between $3.43 and $7.01 for weights between 6 oz. and 20 lbs. Dangerous goods weighing 6 oz. to 20 lbs. cost from $4.04 to $6.90. The two categories also incur an additional $0.32 per lb. above the first 3 lbs.
- Oversize – This category features any item that does not qualify as standard size, exceeding 18×14×8. It breaks down its products into non-dangerous and dangerous goods, including apparel and non-apparel. The oversize group divides its size tiers into small, medium, large, and special.
The small, oversized, non-dangerous products weighing less than 70 lbs. have low-end fulfillment fees of $9.39. They charge $0.40 per lb. above the first lb. The special oversized items weighing over 150 lbs., incur charges of $158.49 and $0.83 per lb. above the first 90 lbs.
Dangerous goods similarly weigh between 70 lbs. and over 150 lbs. Their fulfillment fees cost from $10.14 to $179.28, with additional charges for extra weights ranging between $0.40 and $0.83.
- Inventory Storage Fees
Amazon charges all your items stored in a fulfillment center. It calculates the rate based on your daily average inventory volume in cubic feet.
- Long-term storage – Amazon changed this storage fee to Aged Inventory Surcharge as of May 2022. You incur this charge when you store units in a fulfillment center for 271 to 365 days. Furthermore, you pay these long-term storage fees when you use the Amazon fulfillment storage center for over 365 days.
Amazon uses an inventory snapshot on the 15th day of every month to assess the aged inventory surcharge. It calculates the fees on a first-in, first-out basis across the whole fulfillment network. You incur the surcharge monthly between the 18th and 22nd day.
- Monthly storage – This fee pays for using the fulfillment center per month. You can also use it for short-term utility, ranging between 181 and 365 days. Amazon calculates the monthly storage charges based on your daily average volume in cubic feet. It bases these findings on the size of an adequately packed unit ready for shipping. Amazon follows FBA policies and requirements when making these calculations.
- Additional Amazon Fulfillment Costs
You may need to pay additional charges when using Amazon fulfillment services. These include:
Like all businesses, Amazon has strict requirements that you need to observe as a seller. Failure to meet them results in you incurring penalties. For example, the platform has an unplanned fee penalty. It charges you if you do not prepare items according to Amazon guidelines and policies. You can also incur a labeling penalty for failing to adhere to Amazon’s barcode label regulations.
FBA Amazon fees include packaging costs, meaning Amazon ships items in its branded boxes. Consequently, the consumer becomes more familiar with the Amazon brand first. However, if you wish to make your brand stand out, you can consider using branded shipping.
This option lets you use the Amazon platform to reach customers while better marketing your brand. However, it comes at a cost that you need to factor into your budgeting plans.
Inventory removal fees
You must pay some fees when discontinuing using the platform’s fulfillment service. Amazon charges you to remove and return your remaining inventory from its centers. The price per product varies according to the size. Furthermore, you can pay slightly less to have Amazon dispose of the items rather than return them.
You require paying extra fees to facilitate returns if your item is eligible for free return shipping through Amazon Prime.
How to Calculate Amazon FBA Seller Fees
You can assess your associated costs using an Amazon FBA fee calculator. It provides valuable insights into shipping costs and taxes. You can use this information to optimize sales while decreasing risk since it helps sellers choose products more accurately. It also enables you to prepare your expenses accordingly and increase your potential for success.
Benefits of Amazon FBA
The fulfillment by Amazon service offers various seller advantages that make it stand out against the competition. Some benefits you can expect when using the platform include:
- Additional Storage Space
The extra storage space you get is among FBA’s biggest benefits. You pay a fee and essentially access unlimited storage space. In addition, Amazon has warehouses nationwide and in multiple countries for added convenience. To put this advantage into perspective, consider how much inventory you can store without FBA.
- Shipping Rate Discounts
Amazon is a global giant in fulfillment services. As a result, you spend less on shipping costs when working through the FBA platform. You can also qualify for a free two-day shipping service via Amazon Prime.
Even though the prices may vary depending on certain factors, the Amazon seller FBA fees help you save expenses. It offers a cheaper solution that would otherwise be more expensive when managing your shipping and fulfillment in house.
- Effortless Logistics and Management
Amazon shoulders the weight, doing all the work for you, from picking and packing to shipping. The FBA service only requires you to monitor your listings and maintain your stock. You pay a small fee and enjoy effortless logistics to reduce your stress.
Additionally, the platform deals with refunds and returns since they are components of the fulfillment process. This management takes more weight off your shoulders. The burden relief gives you more time, energy, and costs that you can invest in growing your business.
- Customer Service
Amazon provides customer service for FBA sellers. You can depend on the platform to address your customer care requirements. Thus, this option enables you to take care of all your service on a single platform, facilitating convenient and efficient management.
The FBA customer support is available 24/7, enhancing accessibility via email or phone to suit your needs. Amazon offers this service at no additional charge, except when dealing with the returns of select product categories.
- Facilitates Business Growth
Amazon fulfillment centers do not restrict the number of products you can send. You can build your inventory according to your business needs and development strategies. Furthermore, FBA takes care of the fulfillment process to save time, allowing you to concentrate on your company.
Fulfillment by Amazon offers specialized services to help you grow your business. For example, the FBA Pan-EU has fast delivery in Prime-eligible European countries. The multi-channel fulfillment service lets you sell from your site or third-party websites. Using this option, Amazon still picks, packs, and ships to your customers.
Which Amazon Seller Account Is Best for You?
Amazon provides two seller account types to suit different clients’ needs. It categorizes them as individual and professional plans.
The Individual plan presents Amazon’s first kind of seller account. It targets sellers intending to sell less than 40 items each month. In addition, this category charges you $0.99 per product sold. It also requires you to pay Amazon seller FBA fees, basic referral fees, and variable closing fees.
The second seller account type is the Professional plan. This option permits you to sell over 40 products every month. You pay $3.99 monthly rather than the recurring $0.99 per item sold in the Individual plan. Like the first seller account, the Professional type requires additional payment. It charges you the variable closing fees, Fulfillment by Amazon fees, and referral fees.
The two plans let you list products on Amazon, allowing it to handle your shipping, customer service, and fulfillment processes. Nevertheless, the Professional account offers more advantages than the Individual option.
For instance, it enables you to access the Amazon Marketplace Web Service and benefit from the multiple selling tools. You also have the choice to offer gift-wrapping and special promotions. The Professional plan offers eligibility for top placements in product detail pages. You can also take advantage of its offers to customize the shipping rates.
The individual and Professional seller accounts have different benefits that make it challenging to choose. Generally, you want to make smart decisions by carefully considering your needs, goals, and understanding of FBA. For example, you have less than 40 items but have a high demand. The Professional plan is best for you, letting you pay a monthly rate instead of the Individual plan’s recurring cost.
Regardless of the Amazon seller account you choose, using FBA correctly improves your success chances. The following two tips offer the best practices to follow, enabling you to integrate and utilize the service properly:
- Begin small
It might be tempting to suppose that you must sell everything on FBA. However, you want to remember Amazon FBA charges you for warehousing and storage. It is wise to consider trying a few products before knowing what will sell.
You can use this period to work your way systematically into various items. Hence, you avoid wasting money on excess and uncertain inventory. An excellent recommendation is to select a well-cultivated range of products and list them via FBA. This approach makes it slightly easier to identify the best practices as a beginner.
- Pick products wisely
It is crucial to pick your items carefully. Even though you may think a product will sell, it does not mean it will. The Amazon market is ultra-competitive and features plenty of similar items. You need to select the most profitable products to prevent dealing with stagnant inventory.
Using a comprehensive product research tool, you can find market analysis and product insights. This information can help you determine the most appropriate item to sell and boost your chances of success. A wise choice means you can stand out in the market despite not being in the top-selling options.
Understanding how FBA Amazon fees work enables you to make well-informed decisions and optimally use this service. The proper application lets you save time and expenses, helping you focus on other business aspects like production and marketing. You want to remember that market changes and FBA program updates by Amazon often influence pricing and features available. Thus, it is critical to find proper Amazon FBA research tools to ensure you stay up-to-date with market trends.
At Algopix, we provide the correct data to guide you in taking the proper steps for your online business. Our platform helps you know your product categories, understand your catalog, evaluate the competition, and simplify price management. Try us today to get fast and accurate pricing and demand analysis across multiple channels to build your online business!