Fulfillment By Amazon -- FBA Fees, Benefits & How it … · Fulfillment By Amazon -- FBA Fees, Benefits & How it Works Amazon streamlined its Ful llment by Amazon fees in 2018, and

FulfillmentBy Amazon --

FBA Fees,Benefits &

How itWorks

Fit Small Business

Fulfillment By Amazon -- FBA Fees, Benefits& How it Works

Amazon streamlined its Ful llment by Amazon fees in 2018, and the new

structure is easier for sellers to understand and manage. New FBA fees combine

picking, packing, and shipping into one ful llment fee and simplify inventory

storage fees. Plus, you can forecast costs using the updated FBA calculator. We’ll

explore new FBA fees and more in this guide.

Amazon typically only pays its sellers every two weeks, but you can get your

money much faster using Payability’s factoring service. They provide next-day

payouts of your Amazon earnings and deposit them directly into your bank

account or onto a Payability credit card–and if you opt for the card, you’ll earn

2% cash back on all your purchases. Since Payability’s fee is just 2% of your

Amazon sales, it’s essentially free!

An Overview of Amazon’s FBA FeesAn Overview of Amazon’s FBA FeesFul llment by Amazon fees are based on the size and weight of products you sell,

and where you sell them. For example, small items weighing under 1-lb. cost just

$2.41 to ll and ship when sold on Amazon. Or, sell the same item on your

website and pay just $5.95 for Amazon to ship it out for you.

As you can see, Amazon’s FBA ful llment fees are extremely competitive and are

particularly low for any products you sell on Amazon. In fact, you’d be hard-

pressed to ship items yourself at such low rates. These low fees make FBA a

popular ful llment option for businesses that sell primarily on Amazon, or on

Amazon and elsewhere, like a company website or another marketplace, such as

eBay.

Wherever you sell your products, if you use Ful llment by Amazon to stock

inventory and ll and ship your orders, you’ll pay 2 primary FBA fees. These

include:


1. Ful llment Fees –Ful llment Fees – This is your entire pick-through-shipment fee and

includes order picking and packing, shipping cost, packing boxes, and inner

packaging. It even covers returns processing, though not for items

in categories with free customer returns.

2. Monthly Storage FeesMonthly Storage Fees – This is the cost of storing your products in

Amazon’s warehouse. Inventory storage fees are based on the space

occupied by your products in Amazon’s warehouses, measured in cubic feet.

To assign ful llment and storage fees, FBA breaks products into 2 overall size

categories, and sizing includes packaging such as shoe boxes, blister packs, or

retail packaging.

1. Standard-size productsStandard-size products – Standard-size products are items that weigh

less than 20 lbs. and measure less 18″x 14″x 8″ or less, fully packaged.

Within the standard-size category, there are also 4 size subcategories that

affect fees.

2. Oversize productsOversize products – Oversize products include items that weigh over 20

pounds or are larger than 18″x 14″x 8” including packaging. Within the

oversize category, there are also 4 size subcategories that affect fees.

Now you know the factors that affect Ful llment by Amazon fees, next let’s look

at a sampling of FBA fees for the 2 different ways you can use the service. We’ll

start with FBA fees for products sold on Amazon, and then examine ful llment

fees for goods sold through other websites or marketplaces.

1. Amazon FBA Fees for Products Sold on Amazon1. Amazon FBA Fees for Products Sold on Amazon

Low fees and other perks, which we cover below, make FBA a top ful llment

choice for Amazon sellers. Here’s a sampling of FBA fees to ship various items

sold on Amazon, and pay particular attention to the October-December holiday

season storage rates listed below. Storage fees increase dramatically during

these three months.


Amazon FBA rolls pick, pack, and shipping costs up under its Ful llment FeeFul llment Fee .

This also covers the basic customer service that Amazon provides in dealing with

questions about shipping, payments, and so on. The ful llment fee also covers

return processing for certain categories. Although, for categories that offer free

returns, you’ll pay a return processing fee that matches your ful llment fee when

customers return an item.

As you can see above, FBA storage fees increase dramatically in October-

December. This is something to watch closely if you use FBA, and is a major

reason that volume sellers rarely use FBA as their sole storage option. Instead,

power sellers often store the bulk of their inventory themselves in cheap storage

units or a company warehouse. Then they periodically ship just enough stock to

FBA to cover a range of forecasted sales.

We’ve mentioned several times that your product’s size also impacts your FBA

ful llment fees. Here are some examples of how fees are applied based on

product size. You can accurately estimate the FBA fees for your own products’

size and weight using Amazon’s FBA fee calculator.

Source: Amazon


Amazon Sellers! Don’t Forget the Seller FeeAmazon Sellers! Don’t Forget the Seller Fee

Amazon sellers also have a separate fee to factor in, that’s the Seller Fee. This fee

isn’t part of your FBA fees. Amazon seller fees are charged whether you use FBA

to store and ship your products or not. On average, this fee runs 15% of a

product’s selling price, which can seem like a lot to pay to be on Amazon. But,

many Amazon sellers nd that FBA’s ultra-low ful llment fees help to offset their

seller fees, and makes selling on Amazon viable.

“Look at the big picture when selling on Amazon and using FBA. Don’t get

hung up on the fact that you’re not going to see your normal retail margins

on Amazon sales. FBA gets you the Prime listings and that means more sales

for your brand. As long as you’re still seeing profits, that’s what matters.”

— Russ & Danielle, Founders, Outlaw Soaps

Next let’s look at ful llment fees for products not sold on Amazon, but shipped

using Amazon’s fulfillment services.

2. Amazon Fulfillment Fees for Non-Amazon Products2. Amazon Fulfillment Fees for Non-Amazon Products

If you sell on several channels other than Amazon, such as your own website and

other marketplaces like eBay, you can use FBA to ll those orders, too. Amazon

calls this service Multi-Channel Ful llment, or MCF. . Your inventory storage fees

are the same, but the MCF fulfillment fees are higher.

With MCF, you can select different shipping methods: Standard, Expedited 2-Standard, Expedited 2-

Day, and Priority 1-DayDay, and Priority 1-Day . This is helpful if you offer a range of shipping options

on your own website. If you compare the MCF fees to the shipping rates you’d

pay shipping products yourself, you’ll likely nd MCF is quite a deal in many

cases. Even top ful llment centers that receive deep shipping discounts might be

hard-pressed to beat Amazon’s new MCF fees.


Here’s a look at Amazon’s 2018 MCF ful llment fees across a wide range of

product sizes and shipping methods. Remember, the product sizes breakdown is

the same as FBA, as are storage fees. Ful llment fees are the only cost

differences between FBA and MCF.

Here are the 3 noteworthy differences between FBA fees and MCF fees:

1. MCF fees only apply to products that you sell on your own website or other

marketplaces

2. You don’t pay an added Amazon seller fee since these products weren’t sold

on Amazon

3. Storage costs are the same as FBA, so storage costs increase in October-

December

FBA Fees vs MCF Fees – A Quick ComparisonFBA Fees vs MCF Fees – A Quick Comparison

Let’s look at a comparison of the overall fees you’ll pay on a product you sell on

both Amazon and your own website, and ful ll using FBA or MCF, depending on

where it’s sold. This gives you an idea of the fees related to each ful llment

method, plus shows how the costs impact your profit margins.

As you can see, Amazon’s Seller Fees make our set of mixing bowls less pro table

when sold on Amazon compared to on our own website. However, in both cases,

we’re more than doubling our $7 costmore than doubling our $7 cost, which is considered a decent return,

especially on Amazon sales where the seller fees heavily impact profits.

When running your own pro t calculations, be sure to gure estimates using

multi-unit orders and include other factors, such as any shipping fees you charge

for orders placed on your website. Every penny counts in FBA and MCF fee and

profit calculations.


“Our Amazon sales are typically single-unit purchases, whereas purchases

made directly from our website are typically multi-unit purchases. Looking

closer, our average order value on Amazon is less than $25.00, but over

$55.00 on our website. With FBA, we can let Amazon orders tick through at

high volume and with minimal effort, while we concentrate on the higher-

value orders ourselves. It’s a great benefit to our operations.”

— Craig Boyd, President of Furniture Clinic

3. Other Costs that Factor Into the FBA & MCF Equation3. Other Costs that Factor Into the FBA & MCF EquationAs we covered above, FBA and MCF fees include standard ful llment services

such as picking, packing, and shipping orders, and inventory storage fees. These

mirror the types of fees that any ful llment company would charge for these

services. However, these may not be the only fees you end up paying to Amazon.

Other fees you may encounter include:

Labeling FeeLabeling Fee — Amazon has strict barcode label speci cations for all stock

you ship to FBA. If not labeled properly, you can be assessed a labeling fee.

FBA Prep Service & FBA Unplanned Prep ServiceFBA Prep Service & FBA Unplanned Prep Service — FBA has strict

product packaging and prep guidelines. You can opt to have Amazon package and

prep products for a fee, or if you send improperly prepped products, you’ll be

assessed an unplanned prep fee

Returns ProcessingReturns Processing – Basic returns processing is free for many categories,

but not for categories with free customer returns. In these, FBA bills a return

processing fee equal to your original ful llment fee. Plus, if returned products

need repackaging for resale, Amazon charges a repackaging fee

Long-term storageLong-term storage – if your stock sits unsold for longer than 6 months,

Amazon charges a long-term storage fee

Stock Removal FeeStock Removal Fee – FBA charges a removal fee if you want to pull inventory

from Amazon or dispose of unsold stock.


If you’re considering FBA, you need to be aware of these fees to ensure they

don’t unknowingly creep into your bill. If you don’t stay on top of these, your

pro ts can slip away. So be sure to understand the FBA ful llment and storage

fees, and how they apply to your products, before taking the plunge.

Now that we’ve covered FBA pricing let’s explore other factors that make FBA a

top fulfillment choice among Amazon sellers.

5 Reasons why FBA is the Best Ful llment5 Reasons why FBA is the Best Ful llmentService for Amazon SellersService for Amazon SellersAmazon wants its marketplace sellers to use Ful llment by Amazon for inventory

storage and ful llment. Their reasoning is twofold. First, they make more money,

and second, FBA helps all sellers uphold Amazon’s high delivery standards. So,

along with the highly competitive FBA fees and versatile MCF options covered

above, Amazon throws in many sales-driving perks for FBA users. These include:

1. Prime Free Shipping Eligibility1. Prime Free Shipping EligibilityAs shown below, FBA product listings prominently feature the Amazon PrimeAmazon Prime

logologo, signaling to Prime members that your product can be purchased with free

Prime 2-day Shipping or other Prime shipping offers. Prime boasts nearly 85

million subscribers who look for the Prime logo while shopping. So, FBA products

can attract far more buyers than non-Prime products.


Source: Amazon

2. Amazon Free Shipping & Coupon Offers2. Amazon Free Shipping & Coupon Offers

Amazon offers free shipping on orders over $25 to all buyers, Prime or not. But,

the caveat is that these must be eligible productseligible products , and that list of eligible

products includes FBA items. The same applies to Amazon coupon deals or buyer

events like Prime Day and Cyber days; FBA products qualify for these offers, too.

Here’s Amazon’s description of its $25 Free Shipping offer. Notice how it

mentions eligible itemseligible items ? These include FBA products as well as the products

that Amazon sells direct.


Source: Amazon

3. Higher Search Rankings3. Higher Search Rankings

FBA products get the edge over non-FBA items on Amazon’s product search

algorithm. This leads to higher rankings for FBA products in Amazon’s product

search results and thus, more sales. Below, you’ll see our search for kabob

skewers brings up row after row of options. In fact, the entire rst and second

page is lled with Prime listings. The rst non-Prime listing appears on page

three, which isn’t very likely to get many sales.


4. Increased Buy-Box Placement4. Increased Buy-Box Placement

The coveted Buy Box (A) Buy Box (A) is the spot every Amazon seller wants their listing to

occupy. The top listing is what automatically sells when the Add to CartAdd to Cart button

is clicked. FBA Prime-eligible products take preference if there’s a price tie, and

can even win the Buy Box over lower-priced non-FBA products (B)lower-priced non-FBA products (B), as shown

below.

Source: Amazon

And, finally…

5. The Amazon Trust Factor5. The Amazon Trust Factor

FBA product listings prominently display “Ful lled by Amazon,” which is a badge

of trust for Amazon shoppers familiar with Amazon’s stellar delivery reputation.

When they see this, they know they can order your product with con dence.

Sorry! But buyers know and trust the Amazon brand more than yours.


”If you’re not FBA, you’re simply not relevant on Amazon. You get more

traction and boost your product up the Amazon search algorithm by making

your product FBA.”

— Chad Rubin, Amazon & Multichannel Seller, Founder, Crucial Vacuum,

Think Crucial & Co-founder, Skubana

Clearly, Amazon gives FBA products preferential treatment in its marketplace,

but does that make it the best choice for your particular products? Let’s looks at

scenarios where FBA tops other options, and where another ful llment solution

might be better for you.

When FBA is the Best Option to Fill & ShipWhen FBA is the Best Option to Fill & ShipYour ProductsYour ProductsIn every selling situation, you need to run the numbers to decide if Ful llment by

Amazon is the right choice for your particular products. However, if you fall into

one these 2 categories, FBA usually comes out on top.

1. You primarily sell on Amazon1. You primarily sell on Amazon

If Amazon is your main selling outlet, then FBA’s many sales-driving bene ts can

kick your sales up a notch. Plus, handing all of your ful llment tasks off to

Amazon frees up your time. This lets you concentrate on sourcing new products

to sell on Amazon, improving the quality of your listings, and managing other

sales-building tasks.


2. You sell products on both Amazon and other websites2. You sell products on both Amazon and other websitesIf FBA is the best ful llment solution for your Amazon sales, then there’s a good

chance that MCF’s competitive ful llment fees are a cost-effective option for

your off-Amazon sales, too. This way, you only have to manage one ful llment

partner for all of your ecommerce sales on Amazon, your own website, and other

marketplaces like Walmart, eBay, and Etsy.

When Another Ful llment Option is BetterWhen Another Ful llment Option is Betterthan FBAthan FBAThere are few situations where Ful llment by Amazon isn’t the best choice for

Amazon-focused sellers. But if you sell via many sales channels, using FBA for all

orders can be costly and sometimes more trouble than it’s worth. Here are 5

scenarios where other fulfillment options can beat FBA & MCF.

1. You sell very little on Amazon1. You sell very little on Amazon

If you don’t sell a sizable portion of your collection on Amazon, then FBA may not

be worth the work of shipping products into Amazon and managing inventory. In

this instance, you may be better off shipping orders yourself or handing these

tasks over to a ful llment partner, who has fewer restrictions and stock prep

requirements than FBA.

If you’re a smaller seller and not hitting the 40 items per month required to use

FBA, consider working with our recommended ful llment company, ShipBob.

They can also assist you with orders coming from other channels, such as your

own online store or Etsy. Click here to see why they’re our recommended

ful llment company, and get $100 off your quote by reaching out with the button

below.


2. Your products have very low profit margins2. Your products have very low profit margins

Combined, Amazon seller fees and FBA fees quickly add up. If you’re not starting

with at least a 250-percent markup on your products, you may not be pro table

selling on Amazon, whether you use FBA or not.

3. You sell slow-moving large or heavy items3. You sell slow-moving large or heavy items

Storage costs quickly add up for oversize items, so if you stock large or heavy

items with FBA in the long-term, you can rack up hefty monthly fees and face

added long-term storage fees as well.

4. You have an existing fulfillment setup4. You have an existing fulfillment setup

If you already pack and ship products in-house, or outsource these tasks to a

ful llment partner, then MCF may not be the best deal for your non-Amazon

orders. Often, multichannel sellers nd that combining FBA with their own

shipping solutions can be the best option.

“What I really like about Ful llment by Amazon is that now my products are

eligible for Prime. That in and of itself has boosted sales tremendously. I still

sell through other online channels, like Etsy and my website, and those

orders I ful ll myself. Amazon and FBA are like an add-on. It’s new revenue I

would certainly not have had, and new customers I would certainly not have

gotten.”

— Erika Kerekes, CEO of Not Ketchup

Sellers like Erika use FBA for Amazon sales to garner the sales-driving perks of

Prime free shipping and low ful llment fees for Amazon sales. Then use an in-

house or outsourced ful llment center for their off-Amazon sales. If this appeals

to you, take a look at our recommended ful llment companies to see how they

can help you manage fulfillment for non-Amazon shipping needs.


5. Your existing ecommerce systems don’t integrate well5. Your existing ecommerce systems don’t integrate wellwith FBA and MCFwith FBA and MCF

This is something to consider if you’re using older ecommerce or order

management systems that don’t readily integrate with FBA. If your systems don’t

connect, you’ll end up placing MCF orders manually which can be tedious and

time-consuming if you have many to do. Amazon has a video that explains how to

place a manual MCF order.

But, if you use newer ecommerce platforms that readily connect to Amazon like

Shopify, BigCommerce, or WooCommerce for online stores, or inventory

systems like Ordoro or SellBrite, you can quickly route your website orders to

MCF for fulfillment.

If after weighing the pros and cons, you think FBA or the FBA/MCF combo is

right for your business, here’s how the FBA process works.

How Fulfillment by Amazon WorksHow Fulfillment by Amazon WorksWhether you sell only on Amazon and use Ful llment by Amazon for all orders,

or sell on Amazon and other channels, thus combine FBA and MCF, the process

begins the same way: getting your inventory to an Amazon ful llment center.

After that, your major ful llment task is done, aside from checking stock levels

and replenishing when necessary.

1. You ship products to Amazon1. You ship products to Amazon

Following Amazon’s FBA stock prep guidelines, you’ll label, prep, and pack the

stock that’s headed to FBA, then set up a shipping plan in your Seller Central

dashboard. Most sellers use one of Amazon’s Partnered Carriers for inbound

stock since Amazon’s inbound shipping fees are nearly impossible to beat.


2. Amazon stores and tracks your products in their2. Amazon stores and tracks your products in theirwarehousewarehouse

Once received, Amazon sorts and stores your inventory in their warehouses.

They may shift your stock from one warehouse location to another if they see a

geographical need. For example, if a great portion of your orders come from the

east coast, they may shift the bulk of your stock to their eastern warehouses to

deliver orders faster. This is internal and doesn’t involve you in the process.

3. You list products for sale on Amazon, your Website, or3. You list products for sale on Amazon, your Website, orother marketplacesother marketplaces

You add your products to Amazon and/or add products to your online store or

other seller marketplaces. Then market your products via email, social media,

Amazon PPC ads, and other marketing avenues, and wait for orders to roll in.

4. Customers place orders4. Customers place orders

When a customer places an order on Amazon, it’s automatically processed within

their system and immediately sent for ful llment. When orders are placed on

your website or other marketplaces, you’ll either route these to Amazon for MCF

ful llment via your connected system or manually create an MCF ful llment

order.

5. Amazon picks products, packs boxes, and ships orders5. Amazon picks products, packs boxes, and ships ordersto customersto customers

All orders are ultimately routed to Amazon’s warehouses for ful llment. There,

products are picked, boxes are securely packed, shipping labels are printed, and

your orders head out the door to your buyers. For Amazon orders, Amazon

emails tracking information and handles any shipment-related customer service

issues for you, too. There are even third-party Amazon seller tools that help

streamline FBA management tasks as you grow.


Bottom LineBottom LineFul llment by Amazon is not just about ful llment. It’s about leveraging

Amazon’s brand and the Amazon Prime loyalty program to boost your exposure

and sales on the Amazon marketplace. FBA offers nearly unmatched ful llment

rates and seamless order processing for Amazon sales. Simply put, if you are

selling on Amazon and not using FBA, you’re probably losing out on sales.

But Amazon is not interested in ful lling just your Amazon orders. They recently

improved their Multi Channel Ful llment (MCF) fee structure to make it more

competitive. Now, if you sell on Amazon and on your own website and other

marketplaces, MCF is a viable ful llment option, if the numbers work out

profitably for the products you sell.

Remember, if you decide to use FBA’s services you’ll get paid much more quickly

by signing up for a factoring service such as Payability.

Documents

Fulfillment By Amazon -- FBA Fees, Benefits & How it … · Fulfillment By Amazon -- FBA Fees, Benefits & How it Works Amazon streamlined its Ful llment by Amazon fees in 2018, and