Many sellers dismiss Fulfilment by Amazon (FBA) out of hand on the grounds of expense. That’s fair enough because it does come at a cost. You despatch your consignments of goods to an Amazon Fulfilment Centre and they store, pick and pack and then despatch your stock as if it were their own in Amazon packaging. Many Amazon buyers won’t even know the difference.
FBA won’t be a good solution for many items. It won’t work for many lower margin goods but it does bring significant benefits too and some Amazon merchants swear by it. You’re not burdened with the expense of holding stock and despatching it, for starters. And FBA does give you an option to flex with seasonality. Your everyday operations may be entirely adequate for 11 months of the year but come the Christmas rush it offers a scalable temporary solution to meet demand.
It’s also flexible in that you can use it for key lines (you don’t need to send all your stock). And don’t forget that it probably greases the wheels of getting that all-important Buy Box and also gives you access to those high spending Prime buyers who are becoming more and more numerous. So if you’ve considered it in the past and dismissed it, perhaps it could be well worth examining the service again. But there’s a big question.
What does Amazon FBA actually cost?
And there is no easy answer there. Amazon, even more than eBay, has a complex fees structures in general and the FBA fees vary too. And, naturally, whether FBA will work for you depends on your stock acquisition costs and margins.
That’s why the Fulfilment by Amazon Revenue Calculator is a useful tool to furnish you with information to inform your decisions. You can find it here. You can get a flavour for it in the image below.
By entering in various bits of data they can tell you what FBA will cost you for specific items and from that you can extrapolate how it can (or can’t) work for you. Why not give it a try?
4 Responses
What you need to also remember is returns / refunds will be much higher for FBA than merchant fulfilled. Amazon Customer Services will make no attempt to resolve issues with buyers and will either just refund or give free returns on the first contact even after 30 days.
It is swings and roundabouts. We manufacture a fair amount of our stock. We have engineered some items so that FBA is a cheaper option than postage.
Small and light is also worth a mention with a different price structure.
Amazon fees structure is complicated is is designed to be like that.
We are always more expensive on Amazon plus our area has become very crowded (plus one dodger who constantly sell used and re-packages as NEW), these characters are not good for the industry. The amount of items we had back “customer damaged” was a total joke, and they charged us for this, we recalled it and there was nothing wrong with it . Also we stopped sending in certain product with use once codes are these just get used and returned claimed faulty it was just fraud. We pay for their returns system and “no quibbles returns” and get charged again for this it is not right.
We were still getting returns last week from November more than 2 months later, claiming unwanted. We have stock stuck in reserved for over 6 months plus Amazon seller support are pretty useless, just gave up with them in the end.
2015 we did £34k on Amazon but the net profit was terrible, so we cut back 2016 and really concentrated on PEAK only and Dropped to £20K for 2016 but at least made some money. We just went hell for leather on eBay where cheapest does not always win this is by far our strongest market again now.
We have not sent a delivery into Amazon since end of Nov 16 they were taking weeks to get stock on and it lost it’s value and have switched to merchant sales it has dropped behind Game.co.uk on sales now, again the fees are so high it is not worth it, we even got rid of multi channel we have high volumes of stock so can just pull a few out for Amazon and concentrate on profitable channels.
Amazon is a battle to the bottom whatever way you look at it. The FBA does have it’s uses but for us it will be PEAK only, and we holding lines back already while the rest penny fight it out all Spring and Summer then we put the stock in, plus We did it with a whole 3 lines this year and it worked, we were making decent margin and found less was actually more. If am also honest the stories about how they treat the drivers and warehouse workers does not impress me and put me off, least when I use RMG I know the workers are paid properly.
The returns on FBA orders are just ridiculous….Amazon just do not inspect any returns!….You can get away with buying a gold watch and return a silver watch (whilst fraudulently retaining the gold one) and get a full refund after 6 months of purchase.