Amazon FBA Costs: How expensive is shipping through Amazon?
Retailers on the Amazon marketplace can choose to ship the goods they sell to customers on their own – or use FBA. FBA stands for Fulfilment by Amazon (or officially: Fulfilled by Amazon). This means that the marketplace retailer makes its products available to the major retailer Amazon. In the event of a sale, the mail-order giant ships the items – usually with the benefits of Amazon Prime service that are popular with customers. Of course, the additional service creates some Amazon FBA Costs for the marketplace participant. How expensive is shipping through Amazon? We summarized all the important information for you.
- Basis: Registration as a marketplace retailer
- The principle behind FBA: Fulfilled by Amazon is designed to simplify sales and logistics
- Amazon FBA Costs: How to estimate prices
- International alignment of sales
- Who bears the costs for packaging licensing?
- Conclusion – Amazon FBA Costs
Among shoppers on the Internet, the mail-order company Amazon and its associated Amazon Marketplace is one of the most popular shopping platforms of all, with millions of additional sellers. Amazon charges a monthly fee for the use of the marketplace. Every day, millions of products such as books, music, clothing, electronics and much more are sold directly via the large American retailer or the marketplace providers and often sent to the customer by mail.
The mail-order market leader offers customers the popular Prime service, which, along with many other supposed benefits to the buyer, eliminates shipping charges on orders and instead charges monthly or annual Amazon fees. Marketplace sellers who sell on Amazon can also benefit by using FBA.
To do so, they make their inventory available – the products are then shipped directly from an Amazon logistics center. If a product is ordered, it is shipped directly from there to the customer – in some regions, for example, Amazon FBA enables "same day" delivery on the same day the order is placed. Marketplace merchants can offer such benefits to their customers through Fulfillment by Amazon.
As you would expect, the service also incurs Amazon FBA fees that sellers must pay for this additional service. The price is made up of shipping costs and storage fees. How high are these Amazon FBA Costs? When is it worth it to ship with Amazon? And what do sellers have to do to access the service?
Basis: Registration as a marketplace retailer
For sellers who use Amazon Marketplace, there is a relatively simple pricing process. You must first create an account. Occasional sellers can create a free account and then sell in Germany and EU marketplaces. You then pay a fee of 99 cents per item sold and a percentage of the revenue from the sale. This percentage varies depending on the category.
A subscription model is available for professional sellers: Monthly, sellers pay 39 euros plus sales tax, plus the percentage sales fee for each item. Most large marketplace sellers will make use of this option. After signing up (and registering for international account expansion), sellers can use Amazon's customer-popular sites with their marketplaces of amazon.de, amazon.co.uk, amazon.com, and many more of the vendor's country-specific offerings to sell their goods.
The principle behind FBA: Fulfilled by Amazon is designed to simplify sales and logistics
Basically, FBA is an extension for marketplace sellers who want to simplify their sales and shipping processes. For sellers from Germany, this is primarily of interest if they sell in their home market and on Amazon's European marketplaces. However, in just a few additional steps, the "international offer creation" function can also be set up for America and Asia.
FBA services go far beyond simple shipping: Amazon stores the goods in its own logistics centers and ships the products after receiving an order. In addition, marketplace sellers using FBA are marked with the Prime logo. For customers of the Prime program, sellers with this logo are more attractive – because they then do not have to pay shipping costs.
The potential advantages of shipping through Amazon for the seller:
- Warehousing of goods at Amazon's logistics centers
- Dispatch of the goods directly from the respective logistics center
- Use of Amazon's Europe-wide shipping network
- Placement in the shopping cart field, which according to Amazon leads to more orders
- Use of the FBA logo, which is preferred by customers when making purchases
- Under certain circumstances, the marketplace merchant is spared the obligation to license product packaging used (more on this below)
Basically, the world's largest mail order company takes care of some of the logistics, warehousing and some of the administrative tasks for its marketplace customers. Amazon also takes care of support via email and telephone. Of course, the company pays for all of this. In addition to the costs for participation in the marketplace and the commission on sales, there are also warehousing costs and shipping costs – but the retailer would have incurred the latter even if it had stored and shipped the goods itself.
Amazon FBA Costs are variable and depend on the individual case, which is made up of product type, weight and size. In addition, the duration of storage has a negative impact on unit costs – the longer a product is stored, the more expensive warehousing is.
Amazon FBA Costs: How to estimate prices
Retailers can determine costs relatively easily with the Amazon FBA Calculator, which is located on the website for the program. Through the FBA calculator, the possible costs can at least be estimated. Prices are performance-based and based on the volume of products. Warehousing is calculated approximately by cubic meters per month and costs between 15.60 euros and 36 euros (per cubic meter), depending on the product category and time of year. Also for shipping fees, the fee is based per unit sold and on the country to which the product is sold.
International alignment of sales
Marketplace sellers can sell abroad without much extra effort by creating their international listings in "Seller Central". Listings are automatically created on European and international marketplaces. Sellers can also sign up for the "Sell Worldwide with Amazon" program and then start selling internationally right away.
Who bears the costs for packaging licensing?
Update: As part of the amendment to the German Packaging Act, which came into force on 03 July 2021, the responsibility for packaging licensing in fulfilment has changed.
Prior regulation: If a retailer sells his goods via Amazon's fulfilment offer (FBA), Amazon packages the ordered goods in an in-house Amazon packaging (incl. filling material). Therefore, Amazon is considered the initial distributor of the shipping packaging and must bear the German Packaging Act obligations for the shipping packaging. This also includes the licensing of the packaging volumes placed on the market, so that retailers save these costs via FBA.
The retailer only has to pay for the licensing of the shipping packaging if its brand logo alone is recognizable on the shipping packaging. However, as soon as a fulfilment company such as Amazon is visible, the fulfilment service provider bears the licensing responsibility.
New regulations of the German Packaging Act Amendment: After a one-year transitional period, fulfilment service providers are no longer required to license shipping packaging as of 01 July 2022. Instead, the licensing of the shipping packaging must be taken over by the distributor. In addition, as of 01 July 2022, fulfilment service providers must verify that their retailers comply with their legal obligations. Without proof, a distribution ban applies. You can find more information in our blog post on the changes of the amendment for online traders.
This regulation only applies to the shipping packaging. For the product packaging, i.e. the protection of the goods, it is again decisive who fills the packaging with the goods. If the retailer is also the producer of the goods, he must bear the licensing of the product packaging.
Conclusion – Amazon FBA Costs
Using Fulfilment by Amazon can lead to a significant increase in sales for marketplace sellers. The Amazon FBA Costs are limited to the warehousing costs and shipping costs that the retailer would also have incurred if they had handled the program themselves at a similar level. In addition, participation in the program offers the advantage of carrying the Amazon Prime logo.
If the shipping packaging and consignments of goods are only packed in Amazon's logistics center, they also do not have to be licensed by the marketplace retailer. Only if the retailer fills cartons that ultimately end up with the end consumer do the obligations of the first distributor apply to the seller. If the items sent to Amazon are only packed there as a shipment of goods and sent to end customers – as is likely to be the case frequently – the seller therefore also saves the fees for licensing. This should lead to additional savings for many sellers and indirectly reduce Amazon FBA Costs.
Note: Due to the amendment of the German Packaging Act, the responsibility for packaging licensing in fulfilment has changed. As of 01 July 2022, the distributing retailers are always responsible for the licensing of shipping packaging.