What Are the Amazon Fulfillment Fees for FBA vs. FBM Sellers?

Today we’ll talk about Amazon fulfillment fees. What are you on the hook for if you use the Fulfillment by Merchant option, as opposed to Fulfillment by Amazon? We'll let you know.

Sellers have two ways to handle fulfillment with Amazon: they can ship items to customers themselves, or they can let Amazon ship items for them.

The latter option is called Fulfillment by Amazon, or FBA, and it can save you a lot of time and trouble. But this option has a lot of associated costs you need to weigh before you sign up.

You'll pay fewer fees to Amazon if you choose to fulfill items yourself. That doesn't necessarily mean you're saving money, however, as the shipping fees Amazon charges may or may not cover your actual shipping costs.

Fulfillment by Amazon offers low shipping costs, which you pay as a fee per unit sold — but it comes with a network of additional fees you need to consider.

There isn't a right or wrong answer here; you just have to do the math based on the kind of products you sell and what you'll pay to ship them. You could save cash by doing the shipping yourself, if you have an economical way to ship. But don't forget that your time has value, too — and using Fulfillment by Amazon can save a lot of time.

Here's the rundown of costs for each type of fulfillment.

Let's begin with Fulfillment by Seller, also called Fulfillment by Merchant.

Amazon's Fulfillment by Seller option is DIY, so shipping is all on you. Amazon charges a shipping fee when it processes an order, and that fee is returned to you in the form of a shipping credit. You'll use your credit to buy packaging and postage to send the item to the purchaser.

But your shipping credit may not actually cover the cost of packing and shipping your item. You can't set your shipping prices and simply receive Amazon's standardized shipping rates as reimbursement if you're an individual seller. According to Amazon Seller Central, Amazon's shipping credit can be as low as four bucks or so. You're on the hook for the extra cash if shipping costs more than the credit.

You can set your own shipping rates if you have a Professional plan, but you still have to do your homework to be sure you aren't losing money on shipping.

Carefully review how much you're spending on shipping, whether you have an Individual selling plan or a Professional plan. Then you can adjust prices accordingly. Make sure to include boxes, packaging materials, and postage.

You may need to raise the selling price to fully cover the cost of shipping if you're an Individual seller, whereas Professional sellers can simply set their own shipping rates.

Now we'll move on the costs of Fulfillment by Amazon.

Amazon takes over a lot of your work if you use FBA — it's for a price, of course. You'll send your products to Amazon. The megaretailer will store your goods in its warehouses, and then pack and ship them when a customer places an order. Amazon will also handle customer service and returns, so you won't need to do much more than list your products to sell.

FBA has a lot of fees, though, and it can be a headache to figure out exactly how much you'll pay ahead of time. Get out your calculator and be ready to do some math before you decide to use the FBA program. We looked at Amazon Seller Central to compile the FBA fees you can expect. 

We'll begin with fulfillment fees, which are for picking, packing, and shipping an order.

These can range from two dollars and 50 cents for a small item to over 100 dollars for heavy, oversize items. Review FBA shipping fees and compare them to what you would pay to do your own shipping.

Let's move on to inventory storage fees. They're for keeping your items. 

These fees are charged monthly and have seasonal rates. You'll pay 75 cents per cubic foot from January through September, and you'll pay two dollars and 40 cents per cubic foot from October through December. Oversize items get a discounted storage rate.

There are also long-term inventory storage fees, which are for storing items longer than a year.

They're charged in addition to the regular storage fees. The cost is six dollars and 90 cents per cubic foot or 15 cents per unit, whichever is greater.

Another fee type is removal fees.

They're incurred when removing inventory from storage, either to return it to you or dispose of it. The cost varies by item size and begins at 25 cents per unit. You may not have to worry about this cost if your items move regularly, and you aren't at risk of incurring long-term storage fees.

Return processing fees are yet another fee you may have to pay, and they're charged for customer returns. 

These are equal to the original fulfillment fee.

Finally, there are the unplanned service fees, which are charged when you don't properly package or prep items you ship to Amazon. 

For example, you may ship an item that isn't properly barcoded or is packaged in an oversize box, which Amazon has to correct before the item can be sold. You can avoid these fees entirely by carefully following Amazon's guidelines.

You can also sign up for additional services that have their own fees. You can have Amazon apply barcode labels at 30 cents per item, for instance. And they can package items to FBA standards, starting at 50 cents per item. These services are convenient, but weigh the costs before you sign up.

The FBA program can be a cost-effective way to manage your products, despite all the fees. Just do your research ahead of time. Amazon offers a few helpful tools for determining how much you'll pay for FBA, including a revenue calculator and a fee preview.

That's all for this edition of the DealNews Seller's Guide. If you liked what you heard, be sure to subscribe so you'll never miss a new one. And if you want to learn how you can turbocharge your Marketplace revenue and gain access to the exclusive DealNews traffic network, head to https://www.advertise.dealnews.com/ , or send an email to advertise@DealNews.com. Thanks for listening! 

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