Fulfillment By Amazon (FBA) enables ecommerce retailers to store their products in Amazon warehouses — regardless of whether they actually sell on Amazon — and lets Amazon handle the packing and shipping of those products.
In addition to offering fast fulfillment, FBA also provides customer service for retailers, as well as certain marketing advantages, such as being eligible for Super Saver Shipping and Amazon Prime. Because of these benefits, FBA has been key in helping small businesses grow their sales. In fact, according to Kiri Masters, founder of Bobsled Marketing, FBA can give online retailers a 30-50% increase in sales.
While it may be tempting to jump in and follow the FBA trend, it’s important to note that FBA involves various costs — some obvious fees and other not-so-obvious ones — users must carefully weigh before taking the plunge.
Amazon FBA fees depend on product size and weight
The size and weight of your product, as well as the channels you use to sell them, will determine your Amazon FBA fees. There are two main types of fees that Amazon charges sellers:
- Fulfillment fees: These fees include packing and shipping costs, as well as Amazon’s customer service.
- Monthly inventory storage fees: These fees cover the cost of storing items in Amazon’s warehouses, which are known as fulfillment centers.
As noted, the size and shipping weight of your product determines the fees, and Amazon breaks these into two categories: standard size and oversize.
- The dimension of standard-size products shouldn’t be more than 15″ x 12″ x 0.75″.
- The dimension of oversize products is larger than 18” x 14” x 8”.
Whether your product qualifies as a standard size or an oversize will affect both its fulfillment fee and its storage fee. For example, a standard-size product that weighs 6 ounces or fewer would be charged a fulfillment fee of $2.70.
Amazon FBA fees for standard-sized products apply to both domestic and international orders.
Oversize products, on the other hand, have a different set of tiers to determine their fulfillment fees, as demonstrated below.
Take a look at the table below to see how the size and weight of different products affect their fulfillment fees.
As you can see, a small, light item like a T-shirt has a fulfillment fee of only a few dollars. However, as a product increases in size and/or weight, the fulfillment fees increase as well.
Whether a product is considered standard size or oversize will also determine its storage fee. As you’ll see in the table below, FBA storage fees are more expensive during holiday months, from October through December.
Storage fees are also higher for certain products, such as those deemed “dangerous goods.” Long-term storage fees are charged in addition to monthly storage fees for products stored at an Amazon fulfillment center for more than a year.
For a more detailed look at Amazon’s product size guidelines, check here.
FBA fulfillment fees for products sold outside Amazon are higher
Amazon has nearly 50 percent of the market share in ecommerce; however, 80 percent of Amazon merchants sell their products on channels outside of Amazon. You can use FBA for products you sell on your own website or another platform, such as eBay or a Shopify-based store. This is called multi-channel fulfillment (MCF), and the fees are a bit higher in these cases.
Sellers who use MCF ship their products to an Amazon fulfillment center, and they’re charged storage fees based on product size and storage month. When a customer places an order for that product — whether directly from your business’ website or from a third-party sales channel — Amazon will receive the order and pack and ship it directly to the customer.
You may have a variety of shipping options available for the products you sell, so Fulfillment By Amazon offers MCF fees for standard, expedited, and priority shipping. In addition to the shipping option selected, MCF fees are also determined by whether your product is standard size or oversize.
For example, if you sell a standard-size product, such as a T-shirt that weighs 5 ounces after packaging and ship it via standard shipping, the MCF fee would be $5.95, as illustrated in the chart below.
Other Amazon FBA fees to consider
There are several additional fees that sellers should keep in mind. While not all of these fees will apply to every seller, it’s important to consider them in your budget.
Selling fees
If you’re selling items on Amazon with an Individual Selling plan, you’ll pay a per-item selling fee of $0.99 on each product sold. If you have a Professional Selling Plan, you’ll pay $39.99 a month and have no per-item fee.
Referral fees
Sellers pay a referral fee on each item sold on Amazon, and this fee is determined by which category your product falls into. For example, a book has a 15% referral fee with a $1.80 closing fee, while a cell phone has an 8% referral fee. Consult this table below for a complete list of categories and their referral fees.
Removal order fees
These fees are charged per item removed from Amazon warehouses, and they’re determined by the product’s size and weight, as indicated in the chart below.
Here’s a more detailed guide to removal order fees.
Returns processing fees
These fees apply only to customer-returned products sold on Amazon for those categories for which Amazon offers free return shipping. These include apparel, jewelry, shoes, handbags, and luggage. Amazon offers free returns on these items to build customer trust and encourage consumers to make purchases.
Unplanned service fees
Amazon requires all merchandise to be labeled and barcoded to certain specifications. If inventory that hasn’t been properly prepared or labeled arrives at an Amazon fulfillment center, Amazon will charge a per-item fee to fix the issue. Here’s a more detailed guide to FBA’s unplanned service fees.
Enroll in FBA Small and Light to lower costs
Products in new condition that measure 15”x 12”x 0.75” or less and weigh 12 oz. or fewer are eligible for Small and Light, which reduces the cost of fulfillment. Check out the table below to see which product sizes qualify for the program.
Some types of products, including food, alcohol, and certain electronics, aren’t eligible for Small and Light. For a complete list of restricted products, check here.
Want to enroll in FBA Small and Light? Check out the guidelines here.
Free tools to determine your FBA fees
Amazon offers several free tools and calculators to help you figure out the various fees you could be charged per item when using FBA.
The FBA Revenue Calculator, for example, allows users to input their fulfillment costs, including the item price and shipping fees, to view real-time cost comparisons.
You can also use the fee estimate tool, which provides users with a fee estimate for the items listed in your Amazon inventory. You can access this tool from the Manage Inventory page of your Seller Central account by clicking “fee preview” to view a breakdown of anticipated fees.
Keep in mind that Fee Preview provides only an estimate of fees and doesn’t include all possible costs. To view fulfillment fees for FBA products, you must enter dimensions for your products and have Amazon Standard Identification Number— ASIN codes — for them. Here’s a more detailed guide to how fee estimating works.
Is Fulfillment By Amazon right for your business?
As you can see, there are numerous fees involved in using Fulfilled By Amazon. While not all Amazon sellers use the service, there are numerous benefits to FBA, including fast fulfillment, fewer individual business operations, marketing advantages, and occasionally lower costs, depending on your product.
However, every business and product is different, so it’s important to determine what costs to expect from FBA before signing up for the service.
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