Amazon appear to have announced a minimum fee waiver for sellers on their UK platform. Effective from the 1st of September 2017, merchants will pay the applicable referral fee on the total sales price paid by the buyer, including any shipping or gift wrap charges.
This is brilliant news for sellers of low value items, previously Amazon Referral Fees were applied as a percentage of the total sales price with a minimum fee of £0.40. No minimum fee means that you can list lower value items (or smaller quantities) without being unprofitable due to Amazon’s take.
Amazon.co.uk Fees from 1st September
From the 1st of September, Amazon’s Applicable Referral Fee will be applied as a percentage of the total sales price (no minimum fee).
NB Amazon say that “This minimum fee waiver is not definitive and Amazon reserves the right to make changes in the future“. Make sure you keep an eye out for any future announcements reinstating a minimum charge.
How the new fee structure will work
Fee Waiver Example 1
The current fee for an item with a total sales price of £2.00, belonging to a category with a referral fee of 15% and a minimum fee of £0.40, would be £0.40, calculated as the greater of 15% of the total sales price or £0.40 per item.
After the 1st of September 2017, the applicable fee would be £0.30, calculated as 15% of the total sales price.
Fee Waiver Example 2
The current fee for an item with a total sales price of £2.00, belonging to a category with a referral fee of 12% and a minimum fee of £0.40, would be £0.40, calculated as the greater of 12% of the total sales price or £0.40 per item.
After the 1st of September 2017, the applicable fee would be £0.24, calculated as 12% of the total sales price.
5 Responses
This does make a change, fees being taken away, but at the end of the day we know Amazon have only done this for their own benefit, it must have impacted their bottom line somewhere having that minimum fee, and it could be reintroduced later, no guarantee it will not come back, so could just be a carrot dangled for peak.
Media items on the other hand are a joke now, 50p plus the 15% commission, at least the above was one fee or the other 40p or 15%, media is 15% plus 50p, making low price items near impossible, fees could end up accounting for 30-40% of the sale price.
For us it is especially unfair because we are in a grey area category of gaming accessories, clearly these are not media, but Amazon class them as media and we are therefore landed with the new additional 50p
We can sell a cable for a Playstation in the gaming accessories category (media) and pay an extra 50p close fee and 15% commission or we can see the same cable for a PC in electronics and pay 12% with no close fee.
In our view these is very unfair, we might be biased but it is certainly a grey area.
Media was also hit with the increase in FBA fees to be inline with FBA fees of other products, so we have been forced to switch many products to small and light FBA which does not promise next day delivery, the result is slower sales.
We have had to put prices up to cover the new close fees which has seen a big decline in sales also.
We may look to move our products to the electronics category because as said we are in a grey area category, but there are pros and cons to anything like this.
I welcome Amazon reducing charges, but i am also very aware that their motives only benefit Amazon in the long term, remember Amazon is a long term plan, these fees may come back once they have hooked the sellers of lower priced items, in the hope that sellers will suck up the fees or still sell on Amazon with a slightly higher price perhaps.
Have Amazon FINALLY woken up and smelled the coffee??
In Jewellery @ 25% commission and £1.25 minimum fee, selling the jump rings and split rings singularly we had to stop, as we are not into making a loss.
I just wonder what the reason for this turnaround is.?
So does this do away with the 50p referral fee on media items?