What is Amazon FBA?
For those new to it, Amazon FBA, or "Fulfilment by Amazon," is a service where Amazon stores your products in their fulfilment centres and handles storage, packaging, shipping, customer service, and returns. Essentially, Amazon FBA allows you to focus on growing your business instead of logistical details. However, it's important to understand the associated costs, as they can impact your profit margins if not managed properly.
Our guide to Amazon FBA Fees is essential for anyone looking to maximise profit in their Amazon business. By understanding and optimising these fees, you can operate more efficiently and boost your bottom line. Let's dive in!
Different FBA Fees to Consider
Amazon FBA fees include a variety of costs, each calculated and applied differently. The three main types are Fulfilment Fees, Storage Fees, and Referral Fees.
Amazon FBA UK Fulfilment Fees
Fulfilment Fees cover Amazon’s services for picking, packing, shipping, handling returns, and providing customer service. These fees are based on the weight and dimensions of your product, with distinct rates for standard-size and oversize items. Note that Amazon calculates shipping weight, which includes packaging, not just the unit weight.
Amazon FBA UK Storage Fees
Amazon charges two types of storage fees: Monthly Inventory Storage Fees and Long-Term Storage Fees.
- Monthly Inventory Storage Fees: Applied to all items stored in an Amazon fulfilment centre, calculated per cubic foot based on your daily average volume of inventory. Rates are lower from January to September and higher during the peak season (October to December).
- Long-Term Storage Fees: Charged for inventory stored for more than 270 days, per cubic foot. These fees are significantly higher than regular monthly storage fees, encouraging quicker turnover of inventory.
Amazon calculates storage volume based on the unit size when packaged according to FBA policies. Understanding these fees is crucial for your pricing strategy and overall profitability.
Amazon FBA Referral Fees UK
Amazon Referral Fees are a commission for selling on Amazon, charged per item sold and calculated as a percentage of the total sales price (including shipping and gift wrap, but excluding taxes). This percentage varies by category, typically ranging from 6% to 45%, with an average around 15%. For instance, selling a book priced at £20 with a 15% referral fee means you pay Amazon £3. Factoring in these fees is essential for accurate cost and pricing strategies.
Apart from these, additional fees may be incurred for services like removal orders or special handling.
Maximising Profit
To maximise profits, consider these fees when sourcing products. Ignoring FBA fees can lead to underestimating true costs and thin margins. Integrate these fees into your product cost and pricing strategy from the start to ensure financial success.
Working with FastPack FBA
FastPack FBA offers comprehensive FBA prep services to save you time and energy. We handle product receipt, quality inspection, shipping plan creation, preparation, and dispatch. With quick turnaround times and competitive pricing, we focus on maximising your bottom line. Learn more about our services here.
By partnering with FastPack FBA, you can streamline your operations and focus on growing your business while we manage the logistics.
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