Selling products on Amazon’s Marketplace can be a very lucrative business indeed. And one that nearly everyone can tap into, and take advantage of. Use IO Scout all-in-one FBA tools to find Amazon products with high margins and low competition to earn money and achieve higher goals.
For anyone selling seriously on Amazon, you need to be aware that although this can be a lucrative and successful business, there are a shedload of fees associated with selling on Amazon Marketplace. Fees that need to be taken into consideration, in order for accurate profits to be projected, and enjoyed!
Throughout this blog, we will encompass the separate categories of Amazon selling fees, subject on the various avenues you choose to take with your selling business. Some of these fees you will already be aware of, and some are hidden Amazon fees that require uncovering. This is essential information for your Amazon selling business, as this information will ensure you are profitable and making knowledgeable business choices.
Fees for Selling on Amazon
As it stands, there are three classifications of Amazon fees. They are classified as follows:
- Amazon Sales Fees
- Seller Account Fees
- FBA (Fulfillment by Amazon) Fees
Let’s take them by order.
Amazon Sales Fees
Every single sale you make on Amazon’s Marketplace is subject to a sales fee.
The sales fees are payable whether you are on an individual or professional Amazon selling plan. These particular fees are dependent on a) the price, and b) the product category.
On average, the sales fees equate to around 15%, but for an in-depth, accurate calculation, you can use Amazon’s Referral Fee tool here .
It will pay dividends to check which category your intended products fall into, and make sure the referral fees aren’t too extortionate, so you don’t end up paying all your profit to Amazon!
Variable Closing Fees
In addition to sales fees, some products are also subject to variable closing fees on Amazon. The product list that these particular fees refer to are:
- Computer Consoles
- Books
- DVDs
- Videos
- Music
- Video Games
- Computer Software
Next up – Amazon Seller Account Fees.
Amazon Seller Account Fees
The plans available for selling your products on Amazon’s Marketplace are Individual and Professional .
Individual Amazon Selling Plan
- You can sell less than 40 products each month without incurring a subscription fee
- This plan does come with a $0.99 selling fee per each sold item, plus referral & variable fees
- Sell on one Amazon site
- Limited categories to sell
If you are starting out selling on Amazon, this plan is your best bet, and you can always upgrade to the Professional plan when your business starts to take off in a big way.
Professional Amazon Selling Plan
- Plan to sell in excess of 40 products each month
- Subscription fee (currently $39.99/month), plus referral & variable fees
- Sell on numerous Amazon sites
- Unlimited item categories
Obviously, the plan you choose will depend on the number of products you sell on a monthly basis.
The next fees to discuss are FBA Fees.
The FBA or FBM Route?
Key differences between FBA and FBM .
FBA (Fulfilled by Amazon) is the service offered by Amazon to take care of your order processing, shipping and returns.
FBM (Fulfilled by Merchant) is when you take care of all this yourself!
How does FBA work?
Using FBA takes the effort out of the ordering and shipping processing out of your hands, and into the capable hands of Amazon. When you start to get to the realms of selling lots and lots of products on Amazon’s Marketplace, this may be a service considering to take the pressure off.
After all, you want happy, satisfied customers, and the peace of mind that your customers’ orders are being fulfilled, and on time.
Here’s a step-by-step of the FBA route:
- Pre-arrangement of the number of product units are sent to Amazon Fulfillment Centres to be put into storage.
- Your products are then added to Amazon’s inventory.
- People purchase your products via Amazon’s website (yay!)
- The sold products are then packed, and shipped to your customers.
- FBA takes care of all returns, and customer service queries that occur during the whole route.
FBA Advantages
- No hassle or stress of customer service queries or complaints
- No hassle or stress of shipping problems
- Elimination of ordering and shipping errors
- Your customers receive their orders quicker via Amazon Prime
- Super convenient way to sell
- Your customers enjoy peace of mind with the Amazon Prime logo against your product
- More time to spend on other aspects of your online selling business
- Increased presence on Amazon, as FBA sellers are ranked higher, so your products are guaranteed to reach a wider audience
FBA Disadvantages
- FBA Fees and Costs (we will cover this in more detail in a minute)
- Issues with Split Shipments are possible
- Limited Brand Awareness (putting all your eggs in one basket with Amazon!)
The main disadvantage of Amazon’s FBA are the fees and costs associated. They can be pretty hefty! So you can make an informed decision with your budget available, let’s take a look at what fees are involved with using Amazon’s FBA Service:
Amazon FBA Fees and Costs
Selling through Amazon’s FBA method incurs the following fees:
- FBA Fees
FBA fees depend on the size and weight of your products. This fee is incurred in place of your own shipping, management, and packaging costs. With this in mind, it’s definitely beneficial to consider selling small, and light products on Amazon’s Marketplace!
- FBA Storage Fees
Your products are stored within Amazon’s Fulfillment Centres, so these are the costs associated with this storage. You can choose between monthly, or long-term storage, depending on your business requirements.
- Monthly Amazon FBA Fee
This fee is charged for Professional status on Amazon’s Marketplace. Professional status works for businesses who receive upwards of forty orders in a thirty-day period. There is an Individual plan for those businesses who don’t quite reach the dizzy heights of these order statistics!
We’ve now got more information on associated Amazon selling costs, but what about what to sell?
How do you establish which are going to be the best products to sell on Amazon, when it’s a veritable minefield, of both products and categories? And ensure a profitable business in the meantime, navigating the different fees.
Best Products to Sell on Amazon
We will start with Amazon itself.
Amazon offers you something very special indeed. A list of best-selling products. And this list is updated hourly. Wowee.
Amazon Best Sellers List
This list includes the categories on Amazon that sell the best at that present moment in time, and the items which also sell the best on Amazon’s Marketplace.
This really is the place you need to be to do your product research. Amazon actually have all the information you need . It’s all there for the taking. You just need to look for it.
Top Amazon Selling Categories in 2020
- Toys and Games
- Cameras and Photos
- Electronics
- Video Games
- Cosmetics
- Books
- Kitchen Equipment
- Health and Fitness
Tips and Tricks of Products to Sell on Amazon
As a great starting point, take note of these below tips for sourcing your next best seller, as, chances are – if your intended product fits all (or some) of these criteria, you may well have a star buy on your hands!
- The item has upwards of ten transactions in a day
- The item is eligible for Prime Shipping
- The item is simple to manufacture
- The item is not seasonal
- The item is small
- The item is light
- The item sells for around $21-$200 currently
- The item is simple to ship
- The item has fewer than 100 reviews already listed
One of the keys in establishing best-selling products is two-fold:
Find what products people want and need in their lives
Find out how much said people are willing to spend on said products to have in their lives
If you can put yourself in your consumers’ shoes, and visualise what they want and need, and then deliver this to them (via Amazon), you’re onto a winner.
Don’t get too carried away however with thinking the product you’ve sourced is a perfect best-seller.
Research, research, research.
Look at the potential profit margins, the competition for the product, and the niche the product sits in.
To uncover the next Amazon best seller, you’re going to want detailed data on:
- The current sales of these items
- The keywords these items are currently standing at
- Item seasonality
- The long-term prospects of the product
Products to Avoid Selling on Amazon
- The product is sold in great volumes every day
- The product is already sold in successful, branded stores
- The product is exceptionally hefty or cumbersome
- The product is difficult or expensive (or both!) to ship
Top Tips on How to Find the Best Items To Sell On Amazon
Make good use of the Customers Also Bought section of Amazon. The insights found here are invaluable, and offer great opportunities to explore other bestselling products.
Amazon helpfully offers the Amazon seller businesses a great deal of insights into which categories are the most successful, and which are the most saturated. When it comes to sourcing the best- selling products to maximize your return on investment, it doesn’t come down to one single aspect.
Take careful consideration of categories, shipping weights, breakability, and current saturation of the market. There are a multitude of helpful tools to be found on product research, product finders, product price trackers, and the like, to help you along your merry way to source the best-selling items to sell on Amazon.
Keep it simple.
The best-selling Amazon products are simple – in terms of usage and affordability. Do thorough research, but also think linear, too. Position yourself in the minds of your ideal consumers, and go from there.
But what about the hidden costs?
Yes, there are hidden costs associated with selling on Amazon’s Marketplace. And in order to provide a comprehensive guide to the Amazon fees you will encounter, we do need to delve a little deeper to extract information on….
The Hidden Costs of Selling on Amazon
To truly become profitable on Amazon, these hidden costs need to be explored. True, some fees associated with Amazon selling are unavoidable (sadly!), but some can be managed, and optimized, to ensure more of your selling profits are going into your pocket, not Amazon’s.
Manufacturing Fees
Establish negotiations with your product supplier(s) to gain the very best wholesale price. This may mean ordering in bulk, however, so these cost savings will need to be weighed up against heftier Amazon FBA inventory fees, unless your products are flying off the shelves nice and quickly!
Shop around with regards to your product suppliers, and you may be pleasantly surprised at the deals you can strike up.
Currency Conversion Fees
This one is a real hidden fee. If you are selling in one country, but from another country entirely, or indeed, selling on various different markets in more than one country, currency conversion fees come into play.
If you receive your Amazon payments in a distinct currency to which you are selling in, Amazon integrates it’s very own rate. And unfortunately for you, this rate is particularly high, and also has associated fees!
The currency conversion fees equate to from 3.5-5% of the original cost during conversion. As you can imagine, this fee can add up substantially.
A few ways around this include:
- Open bank accounts in the countries you are dealing in
- Utilize a platform to convert your profits like PingPong.
FBA Long Term Storage Fees
As well as incurring fees for storing your inventory in Amazon’s Fulfillment Centres, you are liable for further long-term storage fees if your products are stored over a year.
These storage fees are payable per unit, and can add up rapidly. Choose your products wisely to store in your inventory to avoid having to pay these long-term storage fees.
Advertising Fees
In order to successfully sell products, you will need to advertise them. These adverts can come in the form of voucher promotions. Pay-per-click adverts can add up substantially, so keep a close watch on your advertising fees.
Customs Fees
Sometimes, some products require the necessity of a customs broker, which can mean your profits are not, well, profitable.
This can happen with items over the threshold of $2,500, and could potentially cause hazards.
UPC (Universal Product Code) Fees
Before you can start selling one single item on Amazon’s Marketplace, you require a special barcode (FNSKU) which stands for Fulfillment Network Stock Keeping Unit. This special barcode has a requirement to be printed on every one of your products’ packaging which you sell.
Note that the UPC is a requirement for each listing , not each item.
The UPC code fees cost $215 for the first registration cost, and an annual fee for review, which is currently $50, and covers up to ten barcodes.
Professional Product Photo Fees
This is one which you can skip, as of course you can take your own images using your mobile, but for a professional touch, you can enlist an expert to take photos of your products.
If you are brand new to the Amazon game, and therefore have no reviews for your products, you’re going to need a way to stand out from the crowd. And professional product photos might just do the trick.
Inspection Fees
There is a one-off cost for inspection of products. This is to look for any defects or problems with your products, all in an aim to reduce negative customer feedback, and for quality control purposes.
How much money do you need to start your Amazon Selling business?
A valid question, as it’s all very well investigating the Amazon-incurred fees, but in order to gain complete perspective of your costs, you need to know how much it will cost you to get started in the first place.
There are some interesting statistics on sellers who commenced their Amazon selling career with $500, compared to those who began with more than $10,000.
Surprisingly, 33% of sellers that started with approx. $500 are still selling on Amazon’s Marketplace five years later (or more). This is compared to 13% of those who started at the upper end of the scale. It appears that in general, it takes longer to earn a substantial, and regular, profit selling on Amazon when you start out with a bigger cashflow.
Sourcing Product Fees
Smart FBA sellers source a lot of their inventory through platforms such as Alibaba.
This platform is an online marketplace originating in China, enabling FBA sellers to generate and build their own products to sell on Amazon. When buying products in bulk using such a platform, there are potential profits to be made.
When sourcing the perfect products to sell on Amazon, there’s some good rules of thumb to follow, to save you lots of headaches later on! These are:
- Try and choose items that are small in size, this diminishes the shipping costs incurred
- Try and source items that don’t weigh very much, again this reduces the shipping costs
- The sweet spot for pricing on Amazon is roughly between $20-$50
- Aim for items that are low in competition, yet high in demand
- Seek out items that, upon reviewing on Amazon, have a fairly low number of customer ratings
To seek out these kinds of items, you can turn to Amazon Product Tools, of which there is a seemingly endless supply of in the market today.
What are Amazon Product Research Tools?
Amazon Product Research Tools take the work out of product research and product pricing and tracking for you.
Instead of wasting your valuable business time observing product inventories, struggling to summon up a brand-new, never-seen-before, product to jump out at you, you can alleviate some of this strain by using these tools.
The best Amazon Product Research Tool will help you to:
- Uncover brand -new product niches
- Follow your competitors’ prices
- Precisely determine competitive but lucrative prices for your items
- Collect essential data from the Amazon Marketplace.
All of which are a minefield to accomplish purely using a spreadsheet!
When you start to think about all the aspects of running an Amazon FBA business, and all the tasks that are involved, such as….
- Product Research
- Product Sourcing
- Sales Tracking
- Inventory Tracking
- Competitor Monitoring
- Gaining Customer Testimonials
- Creating Quality Product Listings
…… it can be very advantageous to have in your armour (i.e. toolkit) a set of tools to help you manage your selling business, in order for you to focus fully on your business. This is especially the case if you are the sole team member in your business, with no back-up!
It’s worth mentioning some super worthwhile tools to help you on your merry way to lucrative Amazon selling.
IO Scout Amazon FBA Calculator
IO Scout Amazon FBA Calculator is a free tool is found on IO Scout website, and also within the IO Scout App.
Primarily used for calculating profit margins for your Amazon selling business.
As we well know, selling via FBA (Fulfillment by Amazon) comes with a wide variety of fees!
The IO Scout Amazon FBA Calculator takes the hard work out of these calculations for you. Breaking down the fees (order processing fees, storage fees, picking and packing fees, weight handling fees, delivery fees, returns fees, sample fees, marketing fees, referral fees, customer service fees, and the list goes on!).
The researching new products phase is where IO Scout’s FBA Calculator really comes into its own.
Detailed research can be carried out into potential valuable sellable products to gain a comprehensive understanding of your potential profit margins. You can also tweak these margins by adjusting the item costs on the FBA Calculator.
Next up…
IO Scout Amazon Sales Estimator
Located within the Products area of IO Scout, you’ll come across another free tool within the IO Scout platform to aid your Amazon selling business.
The benefits of IO Scout Amazon Sales Estimator :
- Calculation of Number of Sales
- Product BSR
Sales estimates for each product can be examined either on IO Scout’s App, or in IO Scout Google Chrome Extension . Each product indicates a total tally of sales against it, so you can make an informed decision as to whether to sell this particular item on Amazon, and if it’s worth including it in your itinerary of Amazon products for your online business.
How much should you invest in initial Amazon inventory?
Recommendations come in at least 400 to 500 units of your product. This figure allows enough stock to launch your product well, start ranking on Amazon’s Marketplace, and potentially start offering giveaways and discounts to boost your initial product sales.
And, as you can imagine, starting your Amazon business with a relatively low price point product enables you to invest in enough stock to get started, without a)breaking the bank, and b) not running out of stock.
Tactics to Successfully Sell on Amazon FBA
- Research your intended products using a site like IO Scout to determine the likelihood of them selling, and selling well.
- Consider sales rankings of existing similar products on Amazon’s inventory. This can have an impact on your FBA storage fees, if your products are hanging around in Amazon Fulfillment Centre’s shelves!
- Bundle! Bundle products together that share similarities to reduce competition.
- Get to grips with selling on Amazon by starting small to test the water, and not investing too much initially.
Sourcing the Perfect Product to Sell on Amazon
If you can put yourself in your shoppers’ shoes, so to speak, and imagine what they want and what they need, and then produce this to them (via Amazon), you’re onto a winner.
Don’t get too carried away however with thinking the product you’ve sourced is a perfect best-seller.
Research, research, research.
Look at the potential profit margins, the competition for the product, and the niche the item belongs to.
To uncover the next Amazon best seller, you’re going to want detailed data on:
- The current sales of these items
- The keywords these items are currently standing at
- Item seasonality
- The long-term prospects of the product
Amazon Fees in a Nutshell
In order to successfully navigate your route to successful Amazon selling, being completely in the loop with all the associated fees is absolutely paramount. Forewarned is forearmed, as the old saying goes.
To sum up:
Referral Fees
The referral fees is made up by 6-20% of the item’s value, and is category dependent
Minimum Referral Fees
$0-2 payable on certain categories
Variable Closing Fees
Variable closing fees are media dependent, and vary from $1.35-$1.80
Selling fees
Fees payable monthly ($40) for the Professional selling account or per product ($0.99) for the Individual selling account
Shipping fees
Shipping fees are covered by the seller
FBA (Fulfillment by Amazon) fees
A fee dependent on product dimensions, weight and size
Monthly inventory storage fees
Inventory fees are dependent on the time of year your inventory products need to be stored. See the guideline below:
Standard
January – September – $ 0.64/ cubic foot
October – December – $2.35/ cubic foot
Oversized
January – September – $ 0.43/cubic foot
October – December – $1.15/cubic foot
It’s worth bearing in mind that even if you are an FBM Amazon selling business, you will still have to pay Amazon’s Referral Fees (otherwise known as Amazon’s commission!). This fee is typically a flat-cost, and payable once sales have been made.
Good advice would be to thoroughly research the FBA and FBM services respectively, so you can make an informed decision.
Stay updated as to all the correlated costs (hidden and otherwise), so you can stay profitable, and make small adjustments as necessary to maximize your profits.
Best of luck with your Amazon selling business!
