How Much Does Amazon Take If You Sell on Their Platform?

Selling on Amazon is a popular option for many entrepreneurs and businesses due to its vast reach and well-established infrastructure. However, understanding the costs associated with selling on Amazon is crucial to ensure profitability. This article breaks down the various fees and percentages Amazon takes from sellers, helping you make informed decisions about using their platform.

1. Amazon Seller Account Types Amazon offers two types of seller accounts: Individual and Professional.

• Individual Account: This account is suitable for those who sell less than 40 items per month. Amazon charges a per-item fee of $0.99 in addition to referral and other fees.
• Professional Account: For sellers who plan to sell more than 40 items per month, this account costs $39.99 per month, regardless of the number of items sold. Sellers still pay referral fees and other applicable fees.

2. Referral Fees Amazon charges a referral fee on each sale, which is a percentage of the item's total sale price, including shipping or gift wrapping charges. The percentage varies by product category but typically ranges between 6% to 45%, with most categories around 15%. For example, if you sell an item for $100 in a category with a 15% referral fee, Amazon would take $15.

Here is a breakdown of some common referral fees by category:

• Books, Music, DVDs: 15%
• Electronics: 8%
• Jewelry: 20%
• Clothing and Accessories: 17%

3. Fulfillment by Amazon (FBA) Fees If you choose to use Amazon's FBA service, which handles storage, packing, and shipping for you, there are additional fees to consider:

• Fulfillment Fees: These are per-unit fees based on the product's weight and dimensions. For example, standard-size items may incur a fee of $2.50 to $5.00 per unit.
• Storage Fees: Amazon charges monthly storage fees based on the space your products occupy in their warehouses. The fee is usually between $0.87 to $2.40 per cubic foot, depending on the time of year.

4. Closing Fees For media products like books, DVDs, and music, Amazon charges a closing fee of $1.80 per item sold. This fee is in addition to the referral fee and any other applicable fees.

5. Miscellaneous Fees There are other fees that may apply depending on your selling activities:

• High-Volume Listing Fee: Sellers with more than 2 million active listings may incur a fee of $0.005 per additional listing.
• Refund Administration Fee: If you refund a customer, Amazon keeps 20% of the referral fee, up to a maximum of $5.
• Advertising Fees: Amazon offers various advertising options for sellers, such as Sponsored Products. The costs for these campaigns vary and can significantly impact overall costs.

6. Example Calculation Let's say you sell a $50 product in the clothing category using FBA. Here's a rough breakdown of what Amazon might take:

• Referral Fee (17%): $8.50
• FBA Fulfillment Fee: $3.00
• Storage Fee (monthly): $0.50
• Total Amazon Fees: $12.00

In this example, Amazon would take $12 out of the $50 sale, leaving you with $38 before accounting for the cost of goods and other expenses.

7. Strategies to Minimize Amazon Fees To maximize your profits, consider the following strategies:

• Optimize Product Pricing: Price your products to cover all fees while remaining competitive.
• Leverage Promotions and Advertising Wisely: Use Amazon’s advertising tools, but monitor costs closely to ensure they lead to profitable sales.
• Minimize Returns: Ensure product descriptions are accurate and products meet customer expectations to reduce costly returns.

8. Conclusion Selling on Amazon can be lucrative, but it’s essential to understand the fees involved. By choosing the right seller account, being aware of referral fees, and considering the benefits and costs of FBA, you can better manage your profitability on the platform. Always keep an eye on the fee structure and continuously evaluate whether selling on Amazon remains a beneficial option for your business.