The e-commerce world saw immense growth in its revenue during the Covid-19 era. E-commerce giants such as Amazon estimated at $386 Billion annual revenue in 2020 alone. Experts predicted that the revenue is going to be increasing at a faster rate in upcoming years since people have chosen online shopping as their go-to. 

This monster-sized annual revenue has made entrepreneurs, businessmen, and sellers flock to Amazon. People see an opportunity to grow their business by affiliating it with Amazon. However, one thing that confused businesses and other sellers is how to join Amazon as a seller. It’s a long list of trading fees. Amazon charges fees from its sellers depending on what program they choose, such as Amazon FBA and Amazon FBM. 

The Amazon FBA fees are different from Amazon FBM fees due to the difference in opportunities Amazon offers. To start a successful Amazon business, you first need to get a clear understanding of how the Amazon selling system works, its charges, and how you can save money. 

FBA Fees:

The Amazon FBA (Fulfillment by Amazon) charges its fee depending on your order type. If your order is large, then you will have to pay more fees compared to when your order is small. One of the biggest perks of choosing to be an Amazon FBA seller is that you can use Amazon warehouse to store and ship your products. Shipping to Amazon FBA and using its warehouse is, however, not free for its sellers. A seller has to pay $0.69 for a cubic foot in a warehouse during January and September. While during busy months such as October to December, you will have to pay $2.40 per cubic foot. It is important that you know that storing your product in an Amazon warehouse for longer than a year costs additional charges. 

FBA Label Fees:

Amazon FBA label service allows Amazon 

to label eligible product packages. A fee of $0.30 is charged for each unit that is labeled and received using the FBA Label Service. If you are an FBA seller and do not want to pay the label fees, you can choose to opt out and label your products by yourself. 

FBM Fees:

The FBM (Fulfillment by Merchant) is a program offered by Amazon where the seller itself is responsible for fulfilling its products. There is one advantage of choosing Amazon FBM over Amazon FBA, that you will have to pay less fee. However, it costs you more time and storage space. 

Referral Fees:

Referral fees are what you pay to Amazon when any of your products sell. The referral fee could be anywhere between 6% to 20% depending on the kind of product. On certain items, such as clothing, you have to pay more referral fees (up to 17%). While on electronic items, you have to pay a lesser amount of 8%.

Customer Return Fees:

Sometimes customers fail to like the seller’s product or have a change of heart. Due to this, the customer returns your product to the Amazon warehouse. In such cases, the seller will shoulder the customer return fee. 

How Can I Reduce My Amazon Cost?

If you are a new seller or your business is in its initial stage, it is understandable that you can not bear to pay many of Amazon’s costs. We have a few ideas for you to follow that will help you in reducing the amount spent on Amazon. 

Choose Professional Seller Account:

If you want your business to grow by signing with Amazon, we suggest you select a Professional Seller Account because of its many benefits. A professional seller account costs $39.99 per month, provides the seller with external features such as unlimited listing. Choosing a professional seller account is better than a free subscription if you want to save money in the long run. 

Choose the Right Product Size: 

Amazon charges from its sellers depending on the size and weight of products. So you must estimate the right size of your product if you don’t want Amazon to charge you a substantial price. Another trick of saving your money is to invest in light packaging that does not weigh much.

Summary:

Being an Amazon seller can be great for your business. A large number of fees such as account fees and fba label fees can be a hindrance. However, these fees can be nothing compared to the revenue you will make once your business becomes successful. Remember, if you’re not selling on Amazon already, 2022 can be a great year to start your success journey. Amazon users have been growing rapidly, and there’s a chance for your brand to reach them through Amazon. Not just for the private label, but third-party sellers can also take entry to Amazon and use FBA to automate their business and make significant profits.