Amazon, the world’s largest online marketplace, offers unparalleled opportunities for sellers to reach millions of customers globally. However, selling on Amazon comes with various fees and charges, which can be confusing for new and experienced sellers alike. Understanding these costs is crucial to managing your business effectively and maintaining profitability.
In this guide, we’ll break down all the charges Amazon imposes on sellers, their purpose, and tips to optimize your selling costs.
Types of Amazon Seller Accounts
Amazon offers two types of accounts for sellers, each with distinct pricing structures:
1. Individual Seller Account
- No monthly subscription fee.
- A flat fee of ₹40 (in India) or $0.99 (in the US) per item sold.
- Suitable for sellers with low sales volume or occasional sellers.
2. Professional Seller Account
- Monthly subscription fee: ₹499 (excluding GST) in India or $39.99 in the US.
- No per-item selling fee.
- Recommended for businesses with high sales volume.
Amazon Seller Fees
Amazon charges a variety of fees based on the type of product, sales channel, and fulfillment method. Here’s a detailed breakdown:
1. Referral Fees
Amazon charges a referral fee for every item sold, calculated as a percentage of the item’s total sale price (including shipping and gift-wrapping charges).
- Range: Typically between 6% and 45%, depending on the product category.
- Example: For electronics, the referral fee is 8%, whereas for apparel, it can be around 17%.
2. Closing Fees (India-Specific)
For Indian sellers, Amazon charges a closing fee based on the item price and the shipping method:
| Item Price (₹) | Standard Delivery Fee (₹) | Prime Delivery Fee (₹) |
|---|---|---|
| 0–250 | 15 | 15 |
| 251–500 | 18 | 18 |
| 501+ | 25 | 25 |
3. Fulfillment Fees
If you use Amazon’s Fulfillment by Amazon (FBA) service, you’ll pay fulfillment fees for storage, packing, and shipping.
- Example (India):
- Small item (<500 g): ₹10–₹50 per item.
- Large item (>1 kg): ₹150+ per item.
- Example (US):
- Standard size (0.75 lb): $3.22.
- Oversized (2 lb): $8.26+.
4. Storage Fees
Amazon charges sellers for storing inventory in its warehouses. Fees depend on the volume of your products and the time of year.
- Monthly Storage Fee (India): ₹16 per cubic foot (January–September) and ₹22 per cubic foot (October–December).
- Monthly Storage Fee (US): $0.87–$2.40 per cubic foot, based on size and season.
5. High-Volume Listing Fee
For sellers with a large number of active listings, Amazon may charge a high-volume listing fee:
- US: $0.005 per listing for over 100,000 listings.
6. Return Processing Fee
For product returns, Amazon charges a fee based on the fulfillment method:
- Refunds for the referral fee are subtracted if the customer gets a refund.
7. Advertising Costs
To boost product visibility, many sellers use Amazon’s advertising services.
- Types of Ads: Sponsored Products, Sponsored Brands, and Sponsored Displays.
- Costs: Typically pay-per-click (PPC) with costs varying based on competition and keywords.
8. Currency Conversion Fee
If you’re selling on Amazon marketplaces outside your home country, Amazon may charge a currency conversion fee of 3% on payouts.
Example of Amazon Fees Calculation
Let’s say you’re selling a product priced at ₹1,000 in India:
- Referral Fee (15%): ₹150.
- Closing Fee: ₹25.
- FBA Fulfillment Fee: ₹50.
- Total Amazon Charges: ₹225.
Your earnings would be ₹775 before deducting costs like advertising and product sourcing.
Tips to Reduce Amazon Selling Costs
1. Choose the Right Account Type
- If selling more than 40 items per month, opt for a Professional account to save on per-item fees.
2. Optimize FBA Inventory
- Use Amazon’s Inventory Performance Index (IPI) to maintain optimal stock levels and reduce storage fees.
3. Minimize Returns
- Provide accurate product descriptions and high-quality images to reduce return rates.
4. Leverage Promotions
- Use promotions strategically to boost sales volume, balancing the cost of advertising with potential gains.
5. Audit Listings Regularly
- Remove inactive or low-performing listings to avoid high-volume listing fees.
6. Consider Multi-Channel Fulfillment (MCF)
- Use Amazon’s fulfillment network to process orders from other sales channels, potentially saving on logistics costs.
How E-com Grow Support Can Help
At E-com Grow Support, we specialize in helping sellers optimize their Amazon businesses. Our services include:
- Fee analysis to identify cost-saving opportunities.
- Inventory management to reduce storage fees.
- PPC campaign management to maximize ROI.
- Strategic account management to boost overall profitability.
By partnering with us, sellers can focus on growing their business while we handle the complexities of Amazon’s fee structure.
Conclusion
Selling on Amazon can be highly lucrative, but it’s essential to understand and manage the platform’s fees effectively. From referral fees to FBA costs, every charge impacts your bottom line. By carefully monitoring your expenses and leveraging expert support like E-com Grow Support, you can optimize costs, increase profitability, and thrive in Amazon’s competitive marketplace.