Cost You Need To Know When Selling On Amazon

Selling on Amazon has become an attractive trend for businesses and individuals aiming to tap into the global market. One of the key questions every Amazon seller asks is: What costs are involved in selling on Amazon? Understanding these costs is essential for creating an effective financial plan and optimizing profitability. This guide provides an overview of the main fees sellers need to know before starting their journey on Amazon.

I. What Costs Are Involved In Selling On Amazon?

1. Account maintenance fees

Amazon offers two types of seller accounts with different fees and features:

Individual account:

This account has no monthly subscription fee, but you will need to pay $0.99 for every product sold. This type of account is suitable for those who sell a small number of items, with a maximum of 40 products per month. Additionally, you cannot upload multiple listings at once but must create them manually by entering each listing individually.

Professional account:

For this account type, the maintenance fee is $39.99 per month, with no limit on the number of products sold. This account provides many advanced selling features, such as bulk uploading and inventory management. If your business has stabilized with a steady number of monthly sales on Amazon, paying a fixed fee can be more advantageous compared to paying a small commission per product sold.

Comparing advances between Individual and Professional account (source: Amazon)

2. Referral fees

Amazon charges a referral fee on each product sold. This fee is calculated as a percentage of the total sales price (including the product price, shipping, and any gift wrapping). The percentage varies by product category, typically ranging from 8% to 15%.

Examples:

Beauty products: 8% for items priced under $10; 15% for items priced above $10.

Furniture: 15% for the portion of the price up to $200; 10% for any amount above $200.

Some categories have a minimum referral fee, usually $0.30 per item.

3. Fulfillment fees (FBA)

If you use Amazon’s Fulfillment by Amazon (FBA) service, you’ll incur fees for storage and shipping:

Fulfillment fees: Charged per unit sold, based on the size and weight of the product. Fees start at $2.35 per item.

Storage fees: Calculated based on the volume of inventory stored in Amazon warehouses. Rates range from $0.48 to $2.40 per cubic foot, with higher rates during the holiday season.

4. Shipping Costs

Shipping costs significantly affect your profit margins. Depending on your fulfillment method, shipping fees may include:

FBA Shipping fees: Included in the fulfillment fees but vary by product size and weight.

Self-fulfillment shipping costs: If you handle shipping yourself, you must negotiate rates with carriers like FedEx, UPS, or USPS. International shipping adds complexity and expense.

Amazon Partnered carrier program: Provides discounted shipping rates for sending inventory to Amazon warehouses or directly to customers.

5. Closing Fees

Applicable to specific categories such as Books, DVDs, Music, Software, and Video Games. The fee is $1.80 per item sold.

6. Other Costs

In addition to the above, sellers may incur the following expenses:

Long-term storage fees: Charged for inventory stored in Amazon warehouses beyond a specified time.

• Advertising costs: Many sellers use Amazon's advertising services to boost product visibility. Options include:
  Sponsored products: Promotes individual listings.
  Sponsored brands: Highlights your brand and multiple products.

To enhance visibility and increase revenue, you can also choose advertising campaigns such as Sponsored Products or Sponsored Brands.

Return Processing Fees: When customers return products, sellers may face additional handling fees.

II. LianLian Global - Your Comprehensive Payment Partner On Amazon

Beyond understanding the costs associated with selling on Amazon, one of the biggest challenges for international sellers, such as those in Vietnam, is finding an efficient way to receive payments from Amazon. This is where LianLian Global becomes your trusted partner.

As a leading name in cross-border payments, LianLian Global operates in over 100 countries and supports more than 130 currencies. It offers a modern, secure, and cost-effective payment solution, which especially costs no fees for Amazon sellers. With seamless integration into Amazon’s Seller Central, LianLian simplifies financial management, eliminating the need for complicated procedures. Additionally, LianLian provides comprehensive financial solutions, helping sellers maximize profits and grow sustainably.

III. Conclusion

Selling on Amazon not only opens the door to a global market but also poses challenges in effectively managing costs. By understanding the various fees and partnering with a reliable payment provider like LianLian Global, you can streamline your financial processes, save costs, and focus on scaling your business. Ensure you meticulously calculate, optimize costs, and consistently monitor your business performance to succeed on the world’s largest e-commerce platform.