Amazon FBA – How It Works and Breakdown of Its Fees

More than 68% of Amazon’s top 10,000 sellers use FBA [Fulfillment by Amazon] network. It allows high-earning sellers to focus completely on product marketing, while Amazon handles the other half i.e. order fulfillment. As a new seller, you may waver to use FBA because of the variety of charges. Let’s understand FBA working, related fees, and tips on how to save costs.

How fulfillment by Amazon works?

The concept of Amazon FBA is simple. Sellers sell products and Amazon handles the shipping. They are also responsible to answer client’s queries and handle order returns.

• Your supplier delivers your product to the Amazon fulfillment center.
• Products are stored at Amazon’s warehouse.
• When a customer places an order Amazon picks, packs, and delivers the order.
• All customer questions are handled by Amazon.
• When customers return the order due to dissatisfaction Amazon manages it.

For Amazon account suspension contact Constants at YoungLanes Appeal Services.

Is it worth joining FBA?

FBA centers operate in an advanced environment from where the process is managed from start to end. It is more than a storage facility, where 250,000 employees work with 100,000+ palletizers, robotic drive units, and Robo-stews. Robots and humans work in synch making the order fulfillment process look seamless.

FBA can make your Prime-eligible

The prime-eligible process is rigorous, which includes getting on a waiting list as well as completing a trial.

• With the shiny blue badge, sellers gain a chance to sell their products to ready-to-buy customers with an offer of free two-day shipping.
• Amazon is a pioneer of complimentary same-day shipping because of its competence to manage orders in high volume, which a prime seller can enjoy.
• Amazon’s search engine algorithm appreciates FBA product listings and prioritizes them over non-FBA items.
• Your product listing has a high possibility to win the BUY BOX.
• Join FBA small & light, Multi-channel fulfillment, and FBA subscribe & save. Thus, shape a scalable business.

Read also: Amazon Account Suspension Reasons and Reinstatement Process

What items to sell on FBA?

Your items need to be promising or you’re joining FBA will be a waste of time and money. Choose product after a thorough research. The characteristics to consider while selecting feasible products are –

• High demand
• Low competition
• Offers space for improvement
• Not trademarked or patented
• Easy to sell

After figuring on what to sell it is time to educate about FBA related fees.

Understand FBA fees

Seller’s central account fees

Two kinds of plans are –

1. Individual seller plan – There are no monthly fees. No access to AMZ’s advertising tools. You will need to pay – $0.99 + extra selling fees per product sold.
2. Professional seller plan – There is a monthly charge of $39.99 and you can use AMZ’s marketing tools.

Start with an Individual seller plan and upgrade to Professional once you choose the right items to sell.

Inventory storage fees

• Monthly – $0.48 to $2.40/cubic foot.
• More than 365 days – Monthly inventory fees + $0.15/unit or $6.90/cubic foot.

Fulfillment fees

The perks like picking, packing as well as shipping costs $2.41 to $132.32/unit.

Return processing fee

It is equivalent to fulfillment fees

Referral fee

15% per product is charged by Amazon.

Labeling fee

Amazon labels items with barcodes and charges $0.20/unit.

Tips to reduce FBA fees

• Limit item’s dimension & weight.
• If applicable try bundling items.
• Schedule inventory cleanup.
• Promote clearance sale or unwanted items sale for the old inventories.
• Create a shipping plan to specify the preferred shipping location.

How much you invest in FBA business doesn’t matter, how you handle the project matters!