Having a firm grasp on your expenses is key to maintaining a healthy bottom line. Understanding Amazon Seller Fees and charges is not only crucial for selling on Amazon India but also helps in crushing the competition. With a myriad of fees associated with selling on Amazon, it’s easy to feel overwhelmed. But fear not because we’re here to break it down for you.
We have done the heavy lifting for you, simplifying and demystifying the fee structure that Amazon uses. By the time you finish reading this guide, you’ll be well-equipped with the knowledge you need to make informed decisions and optimize your business for success.
How to calculate Amazon Seller Fees and charges?
Identify the product category: Determine the category your product falls under, as referral fees vary depending on the product category.
Determine the selling price: Set the selling price of your product, keeping in mind that referral fees are a percentage of this price.
Choose the fulfilment mode: Select the fulfilment mode that suits your business, such as Easy Ship, Self-Ship, Amazon FBA, or Amazon Seller Flex, as each mode has different shipping fees.
Calculate referral fees: Using the percentage for your product category, calculate the referral fee by multiplying the percentage by the selling price. If the calculated fee is lower than the minimum referral fee for that category, use the minimum fee instead.
Calculate closing fees: Refer to the fixed closing fee structure based on your fulfilment mode and the price range of your item.
Calculate shipping fees: Based on the fulfilment mode, calculate the shipping fees considering factors like shipping distance, weight, and dimensions of the product.
Example: Let’s say you are selling a book priced at ₹300 through Amazon FBA.
Referral Fee: Books have a referral fee of 2%. Therefore, 2% of ₹300 is ₹6, which is higher than the minimum referral fee for books (₹1); thus, the referral fee is ₹6.
Closing Fee: For Amazon FBA, the fixed closing fee for items priced between ₹251-₹500 is ₹20.
Shipping Fee: Assuming the book weighs 500g and is shipped within the same region, the FBA
The Weight Handling Fee for a 500g item in the regional zone is ₹35.
Total Fees = Referral Fee + Closing Fee + Shipping Fee
Total Fees = ₹6 + ₹20 + ₹35 = ₹61
Types of Amazon Seller Fees in India
Referral fees, an essential component of Amazon Seller fees, are calculated based on the product category you are selling in and the selling price of the item. The referral fee rate starts at 2% for books priced below ₹250 and can go up to 22.5% for fashion jewellery. The highest referral fee is 38% for warranty services.
Closing fees are charged at a fixed rate per unit sold. They are used to cover the costs of various services provided by Amazon, including payment processing, customer service, and return processing. The closing fee amount varies based on the shipping type chosen for the order – prepaid or Cash on Delivery (COD).
- Easy Ship: Easy Ship offers sellers a convenient way to handle shipping with local, regional, and national rates. Pricing is determined by weight and dimensions, utilizing both weight-based and volumetric pricing models.
- Self-Ship: With Self-Ship, sellers take full responsibility for the delivery and courier costs, as Amazon does not charge any shipping fees.
- Amazon FBA: Fulfilment by Amazon (FBA) handles the storage, packing, and shipping of products, charging weight handling fees based on the product’s size and destination.
- Amazon Seller Flex: Seller Flex is a customized fulfilment solution that combines the benefits of FBA with the flexibility of self-ship.
- Pick & Pack Fee (FBA Only): The Pick & Pack Fee applies to products sold through Amazon FBA and is charged per unit. For Standard items, the fee is ₹13, while Oversize, Heavy & Bulky items incur a ₹26 charge.
- Storage Fee (FBA Only): The Storage Fee is applicable to products stored in Amazon Fulfillment Centers and is charged at a monthly rate of ₹45 per cubic foot.
- FBA Removal Fees (FBA Only): FBA Removal Fees apply to products removed from Amazon Fulfilment Centres, whether for returns, disposal or return to the seller. The fees are charged per unit, with Standard items costing ₹10 for Standard Shipping and ₹30 for Expedited Shipping, while Heavy & Bulky items are ₹100 for both shipping options.
Amazon selling fees depend on the following factors:
Product Category: The product category plays a significant role in determining the referral fees charged by Amazon. Each category has a specific referral fee percentage, which is applied to the product’s selling price.
Product Sub-category: Specific sub-categories within the main category may have additional fees or variations in referral fees. It’s essential to understand these nuances to calculate accurate selling fees.
The selling price of your product: The selling price of your product impacts the referral fee percentage calculation and the fixed closing fees, which are based on different price ranges.
Fulfilment mode: Amazon offers various fulfilment options, including Easy Ship, Self-Ship, Amazon FBA, and Amazon Seller Flex. Each mode has its fees and charges that affect the overall selling fees.
Source and destination locations of the order: Shipping fees depend on the source and destination of the order, whether it’s local, zonal, national, or international. These fees vary based on the locations involved.
Weight and dimensions of the product: The weight and dimensions of your product affect the shipping fees, with weight-based and volumetric pricing playing a significant role. Oversize, heavy, and bulky items may have additional fees.
Storage duration: For sellers using Amazon FBA, storage duration matters. Short-term and long-term storage fees apply, depending on how long your products are stored in Amazon’s fulfilment centres.
Shipping type: The shipping type, either pre-paid or cash on delivery (COD), affects the closing fees. Different closing fees apply to each shipping type.
Return Type: Return fees depend on the type of return, whether initiated by the customer, returned by the courier (RTO), or due to a replacement request. To understand it fully, you can check Amazon’s return policy for sellers.
As an Amazon India seller, you can’t stress enough the significance of effectively managing your fees to maximize profits and grow your business. With the knowledge of calculating Amazon seller fees & charges, you’ll always play ahead of your competition.
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Is Amazon FBA profitable in India?
Yes, Amazon FBA (Fulfillment by Amazon) can be profitable in India for sellers who carefully manage their costs and inventory. FBA allows sellers to store their products in Amazon’s fulfilment centres, and Amazon takes care of storage, packaging, and shipping. In addition, this program provides benefits like faster delivery times, Prime eligibility, and improved customer trust. However, to make Amazon FBA profitable in India, sellers must diligently monitor their product pricing, storage fees, and shipping fees while maintaining a strong focus on product quality and customer satisfaction.
How do I calculate my Amazon profit?
To calculate your Amazon profit, follow these steps:
- Determine the selling price of your product.
- Subtract the cost of goods (product manufacturing or acquisition cost) from the selling price to find the gross profit.
- Calculate your Amazon fees, which may include the following:
- Referral fees (a percentage of the selling price based on the product category)
- Closing fees (fixed fees based on the price range of the product)
- Shipping fees (depend on the fulfilment method chosen, such as Easy Ship, Self-Ship, FBA, or Seller Flex)
- Subtract the total Amazon fees from the gross profit to find your net profit.
By carefully considering these factors, you can determine your overall profit from selling products on Amazon. Keep in mind that additional fees may apply based on the specific services or programs you use on the platform.
What percentage does Amazon FBA take?
Amazon FBA fees consist of two primary components: fulfilment fees and storage fees.
Fulfilment fees are typically charged per unit and can range from around ₹20 to ₹70 for standard-sized items, with additional fees for oversized, heavy, or bulky items. Storage fees are calculated per cubic foot per month, with rates starting at approximately ₹45 per cubic foot. It’s important to note that these fees can change based on the time of year and other factors.
In addition to FBA fees, Amazon also charges referral fees, which are a percentage of the selling price, typically ranging from 6% to 45%, depending on the product category. Keep in mind that these percentages are subject to change, so always check the latest Amazon fee structure for accurate information.
What is the minimum quantity to sell on Amazon?
There is no minimum quantity requirement to sell on Amazon. As a seller, you can list and sell as few or as many products as you want. This flexibility makes it easy for new sellers to get started and test the market with a small inventory, as well as for established sellers to expand their product offerings. However, it’s essential to ensure that your inventory levels are sufficient to meet customer demand and maintain a good seller performance rating.