What Percent Does Amazon Take from Sellers?

Amazon's marketplace is a lucrative platform for many sellers, offering access to millions of customers worldwide. However, to sell on Amazon, sellers must be aware of the fees involved, which can significantly impact their profit margins. Understanding these fees is crucial for anyone considering selling on Amazon, whether they are new to the platform or experienced merchants looking to optimize their costs.

Types of Fees

Amazon's fee structure is multifaceted, encompassing various types of charges depending on the type of products sold, the seller's business model, and the services used. Below are the key fees that Amazon charges its sellers:

1. Referral Fees:
   This is a percentage of the total sale price, including shipping or gift-wrapping charges. The referral fee varies depending on the category of the item. For most product categories, the referral fee is between 6% and 20%. For example, in categories like electronics, the fee is typically around 8%, whereas for clothing and accessories, it might be closer to 17%. Some categories have a minimum referral fee, usually around $0.30 per item.

2. Fulfillment by Amazon (FBA) Fees:
   Sellers who use Amazon's fulfillment services (FBA) are subject to additional fees. These fees cover the cost of storage, packing, and shipping of products. FBA fees include:

   • Fulfillment Fees: These are charged per unit and vary based on the size and weight of the product. For example, small and light items might incur a fee of $2.50 per unit, while larger items can go up to $10 or more.
   • Storage Fees: These are charged monthly based on the amount of space your products occupy in Amazon’s warehouses. Rates vary between $0.75 to $2.40 per cubic foot, depending on the time of year (higher during the holiday season).

3. Subscription Fees:
   Sellers can choose between an individual plan and a professional plan. The individual plan has no monthly fee but charges $0.99 per item sold, whereas the professional plan costs $39.99 per month and includes additional selling tools and the ability to list unlimited products.

4. Closing Fees:
   This fee applies to media products like books, DVDs, music, and video games. The closing fee is typically $1.80 per item.

Example of Cost Breakdown

To better understand how these fees add up, let's consider an example. Assume a seller on Amazon sells a kitchen appliance for $50.

• Referral Fee: At 15%, the fee would be $7.50.
• FBA Fulfillment Fee: For a standard-sized item weighing 2 pounds, the fee might be $4.90.
• Monthly Storage Fee: If the item takes up 1 cubic foot of space and is stored for one month, the storage fee would be approximately $0.75.

So, in this example, the total fees would be $13.15, leaving the seller with $36.85 before considering the cost of the product and other expenses.

Tips for Reducing Fees

Sellers can adopt several strategies to minimize the impact of Amazon's fees on their bottom line:

1. Choose the Right Product Category:
   Some categories have lower referral fees. Researching and choosing products in these categories can help reduce costs.

2. Optimize Inventory Management:
   Storing products in Amazon's warehouse for extended periods can increase storage fees. Regularly monitoring inventory levels and sales trends can help in keeping these costs in check.

3. Utilize Amazon’s FBA Small and Light Program:
   This program offers lower fulfillment fees for small, lightweight items priced under $10, which can significantly reduce costs for sellers in this segment.

4. Consider Multi-Channel Fulfillment:
   If you sell on multiple platforms, using Amazon's fulfillment services for non-Amazon sales can help spread out the cost of FBA fees.

5. Monitor Fee Changes:
   Amazon periodically updates its fee structure. Staying informed about these changes can help sellers adapt their strategies accordingly.

Conclusion

Selling on Amazon can be profitable, but it’s essential for sellers to have a clear understanding of the fees involved. The percentage that Amazon takes from sellers varies widely depending on the product category, fulfillment method, and other factors. By understanding these fees and strategically managing their business, sellers can maximize their profitability on the platform. Regularly reviewing fees and adapting strategies is crucial for long-term success in the competitive Amazon marketplace.