What Does Amazon Take From Sellers?

Selling on Amazon can be profitable, but the fees can also be expensive. Amazon charges various fees, which is how it makes billions in profits.

Amazon has over 200 million unique visitors in the US alone. In July, Statista reported that Amazon’s US monthly visitors reached 213.56 million. Below, we’ll cover the different fees Amazon charges sellers.

Amazon Seller Fees

Amazon charges the sellers a good amount of money for using its services. Here is an insight into 5 different types of fees that you would have to pay if you decide to use the platform to grow your sales and revenue:-

1.    Monthly Subscription

When you sign up on the platform as a seller, your account incurs a monthly subscription fee. The amount varies based on whether you choose an Individual or Professional account, both billed monthly. A Professional account costs $39.99 per month, offering advantages like advanced inventory and order management, access to Amazon Marketplace Web Services for API tasks, bulk product uploads, gift wrapping options for products, and the ability to manage US sales taxes on transactions.

In contrast, Individual accounts are more flexible, with Amazon charging $0.99 per item sold, instead of a fixed monthly fee. This makes the Individual account cost-effective for sellers who move fewer than 40 items monthly.

Additionally, it’s noteworthy that Amazon.com’s direct traffic accounts for 57.09% of its total traffic, indicating a high level of direct user engagement on the platform.

2.    Fees related to Sales

Amazon sellers encounter three main types of sales-related fees:

Referral Fee:

This fee acts like a commission, charged with every product sale on Amazon. Its rate isn’t fixed; typically, it hovers around 15% or lower, depending on the product category. Certain product categories have specific referral fee schedules, where fees are percentage-based and calculated in dollar terms relative to sales figures.

Variable Closing Fee:

Applicable to media-related items like computer and video games, software, gaming consoles, and BMVS (Books, Music, Videos, DVDs), this fee is an additional charge of $1.80 per sale. Interestingly, Amazon Prime Video’s user base exceeded 150 million in 2021, with Business of Apps reporting a rise to 175 million Amazon Prime Video users by the same year.

Refund Administration Fee:

Imposed on returns, this fee is either $5.00 or 20% of the referral fee for the returned item, with Amazon opting for the lesser amount. This fee is deducted when a sold product is returned by the buyer, ensuring that while sellers get refunded the referral fee and other costs paid to Amazon for the sale, they are still responsible for the refund administration fee.

These fees contribute to the economic ecosystem of Amazon, where transactional costs are aligned with sales activities and product categories, impacting the overall profitability and operational costs for sellers on the platform.

3.    Fulfilled by Amazon (FBA) Fees

The Fulfillment by Amazon (FBA) program incurs three distinct types of fees for sellers:

1. Order Fulfillment Fee: This fee is based on the size and weight of the item sold. Amazon calculates this charge by considering the physical dimensions of the product. For example, items weighing 10 ounces or less cost $2.41 each to fulfill. For heavier items, specifically those over 90 pounds, Amazon charges $0.79 per pound, emphasizing the cost’s dependency on the item’s weight.
2. Monthly Storage Fee: Amazon charges sellers for storing their products in its warehouses, with rates varying seasonally. From January to September, the fee is $0.69 per cubic foot. This rate increases significantly during the peak shopping period from October to December, rising to $2.40 per cubic foot. Oversized products, however, benefit from lower storage fees, reflecting Amazon’s pricing strategy to accommodate larger items.
3. Long-term Storage Fee: If items linger unsold in Amazon’s facilities, sellers incur long-term storage fees. These fees are assessed semi-annually, specifically on February 15 and August 15, targeting products stored for over 6 and 12 months, respectively. This fee structure encourages sellers to manage their inventory efficiently and avoid prolonged storage.

These FBA fees are designed to cover the costs of storage, handling, and shipping for sellers using Amazon’s extensive logistics network, with the fee structure encouraging efficient inventory turnover and optimizing warehouse space usage.

4.    Fulfilled by Merchant (FBM) Fees

FBM (Fulfilled by Merchant) fees differ from FBA (Fulfillment by Amazon) fees, primarily because the seller handles shipping. These fees are generally lower than FBA fees since the seller takes on the shipping responsibilities. However, for sellers with Individual accounts, FBM can be challenging. They might find the total shipping costs they incur exceeding the shipping credits provided by Amazon, leading to higher out-of-pocket expenses.

For sellers with Professional accounts, the FBM fee structure is more lenient. These sellers have the freedom to set their own shipping rates, giving them control over shipping costs. This flexibility does not extend to products in the BMVD (Books, Music, Videos, DVDs) category, where Amazon dictates a fixed shipping credit. This credit matches the shipping rate, and any cost flexibility is influenced by the chosen shipping method.

Amazon’s financial growth underscores the impact of its business model, with profits soaring from just over $10 billion in 2018 to $21.33 billion by the end of 2020, as reported by Business of Apps. This dramatic increase in profits highlights the scale and efficiency of Amazon’s operations, including its various seller fee structures like FBA and FBM.

5.    Other Additional Fees

Besides the four types of fee charged from sellers, there are some additional fees that you can classify as miscellaneous, and are usually considered to be minor fees by Amazon as they are not necessarily charged to all sellers. Some such fees are as follows:-

• Packaging service fee – This fee is charged for repackaging certain items that may have been returned by the buyers and the original packaging may have been destroyed. Amazon packs the products again and charges a service fee from its sellers.
• Additional FBA fee – An additional amount as part of the FBA fee may be charged from the sellers on items that classify as dangerous. For items of standard sizes, the fee is $0.06 to $0.16 per unit.
• Textbook rentals – This fee is charged from sellers distributing textbook rentals through Amazon. With each sale, each rental is charged at $5.00 each.
• Refurbished category – This fee is applicable on products that are attempted to be sold again as they are not very new, but if the product does not qualify for refurbishing, a fee is charged for the same by the sellers.

Here’s some more interesting information: According to Macrotrends, Amazon registered an increase in the valuation of 67% from March 2020 to March 2021. Furthermore, the valuation increased from $172 billion in 2015 to $1.5 trillion in March 2021.

We hope that the article was helpful in understanding what costs sellers have to bear for selling on Amazon, one of the largest e-commerce enterprises in the world! There are some more fees under the ‘Other Additional Fees’ – the fifth category. Do you know what the remaining ones are? Let us know in the comment section!

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Team EMB

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