eCommerce Tips & Trends

How to Cut Costs When Selling Through Amazon

Amazon seller fees and other expenses can add up fast. Here's a closer look at how you can reduce your cost to sell on Amazon today!
How to Cut Costs When Selling Through Amazon
Jules

By Jules

 

October 14, 2019

Amazon is one of the world’s leading eCommerce platforms - but selling on the massive online marketplace comes at a price: Amazon seller fees.

The cost to sell on Amazon can be greatly impacted by the platform’s seller fees, so online merchants need to know how to cut costs in order to maximize their profit. To that end, here’s a closer look at how to cut costs when selling on Amazon!

How Much Does Amazon Charge for Selling?

Listing products on Amazon is free. However, as soon as sales are made, the platform takes a percentage of the sale. The cost to sell on Amazon is based on three factors:

  • Shipping fees
  • Referral fees
  • Variable closing fees (VCF)

If you opt for an individual selling plan on Amazon, you should expect to pay $0.99 for each item you sell and variable closing fees that range between $0.45 and $1.35, including shipping fees. This plan is most suitable for small business owners that sell less than 40 items per month.

If you opt for the professional selling plan, Pro Merchant, you must pay membership subscription fee of $39.99 per month and six to 25 percent in referral and variable closing fees. Pro Merchants don’t pay any per-item $0.99 Amazon seller fee, however. This selling plan is generally best suited for businesses that sell 40 products or more every month.

Take note that the referral and variable closing fees are usually subtracted from the total amount a particular product is sold for, and this includes selling price, shipping fees and other related charges. The percentage charged depends on the category of products being sold.

For those who sell using Fulfillment By Amazon (FBA), the fees payment structure is very different and usually calculated using an Amazon FBA fee calculator. Although this selling plan is convenient, it comes with additional charges based on the size and weight of your products and the duration they’ve been kept in Amazon’s warehouse.

How are Amazon Seller Fees Calculated?

Calculation of fee payment on Amazon are done based on the seller’s location. This is why many factors are taken into consideration when calculating Amazon seller fees. Some of these factors include:

  • Order handling
  • Picking and packing of orders
  • Outbound shipping
  • Product weight handling
  • 30-day storage
  • Inbound shipping
  • Prep service

The Amazon seller fees calculator takes the above factors into consideration in coming up with the final fee structure for selling your products on the platform. If you’re fulfilling orders yourself, there are certain aspects you won’t be charged for, such as weight handling and storage.

How Often Does Amazon Pay Sellers?

Amazon pays its third-party sellers every two weeks.

However, this might take longer for new sellers, with the main reason being that it takes some time to have the new seller’s banking information set up. This usually takes as little as one week or as long as 30 days.

Having set up your account, things get easier going forward. With the Amazon FBA calculator, fees are calculated, subtracted and your accrued earnings paid out every two weeks. For example, payments are usually processed every other Saturday and by the following week Tuesday, funds are made available to the seller.

How to Reduce Amazon Fees

Amazon seller fees and other expenses can take a bite out of your profits faster than you’d realize. Fortunately, there’s plenty that online merchants can do to lower their Amazon selling costs. Here’s just a few tips on how to reduce the cost to sell on Amazon!

1. Print Your Labels Online

Printing your own labels online is a simple but effective way to save money if you’re shipping through Amazon. Learn how Easyship’s label printing options here!

2. Use USPS Priority Mail

This is especially beneficial for online merchants always ship lightweight items. USPS Priority Mail also comes with free boxes and can often be cheaper than the postal service’s flat rate option too!

3. Always Negotiate with Couriers

If you send out large shipments consistently, you can always negotiate for significant discounts with the courier you’ve been using. With discounted shipping rates, you’ll be able to save money!  

4. Choose Your Product Categories Wisely

As stated, product categories determine the Amazon referral fee you must pay. For example, if you sell fashion items, the referral fee is up to 20 percent, while beauty products and backpacks are as low as six percent and three percent, respectively.

5. Source Free Packing Materials

You don’t always have to use brand new boxes and packaging materials for packing! You can look for used boxes and packing material both offline and online. You can even use shredded magazines and newspapers to pad items too.

6. Consider Volume

Being that UPS, FedEx and many other couriers calculate most of their fees based on volume as against weight, you can save money by making shipping adjustments. For example, your Amazon FBA fees can potentially be cut if you ship two smaller boxes instead of one large box!

7. Increase Your Average Selling Price

The more expensive your product price is, the higher your product margin. On this note, always try to sell products that cost $35 and above. For example, $15 earrings attract fees of up to 36.2 percent while a $144 kitchen appliance attracts a fee of 16.2 percent.

8. Go For Exclusive Products

This is another great way to cut cost while selling through Amazon. Try to get exclusive rights from specific suppliers and become the sole distributor of their items. This way, you can charge a significant amount for them without fear of losing sales to any competitors.

9. Aim for Marginal Variable Closing Fees (VCF)

In order to further reduce your Fulfillment by Amazon fees, you should take your time to calculate the VCF of the product you intend to sell. It wouldn’t make any sense to sell books for $5 and incur up to 20 percent VCF when you can sell books in the range of $30 or more!

10. Be Selective with Products You Sell and Which Amazon Plan You Use

Finally, being selective can be important when it comes to cutting those Amazon seller fees. If your products are priced under $15, try to avoid using Fulfillment By Amazon (FBA). This is because charges are made by weight, not by price. Essentially, this means that a $5 item and $150 item that weigh the same will be charged the same fulfillment fees!

Cut Your Amazon Costs Today

Amazon seller fees can add up and increase your cost to sell on Amazon fast. However, by reducing referral and variable closing fees, being selective of the items you sell, splitting packages into smaller boxes, negotiating for discounts and using free and lightly-used packing materials, you can cut your Amazon selling costs just as fast too!

Another way to cut those Amazon selling costs? With Easyship, of course! We offer 250+ shipping solutions from major couriers around the world with discounted rates of up to 70 percent. Sign up for Easyship today to sync up your Amazon store and start saving money!