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    The FBA Fee Guide: Understanding Fulfillment Costs

    Understanding Amazon Fees

    The FBA Fee Guide: Understanding Fulfillment Costs  

     

    FBA is the method of choice for many sellers to fulfill Amazon purchases. This is because sellers can use Amazon’s warehouses to stock products, and the retail giant will be responsible to pick, pack, and ship the products to customers. Despite the fact that FBA can help Amazon sellers streamline their e-commerce shipping processes, the cost of this service can be confusing. In this article, we’ll examine the costs associated with Amazon FBA.

     

    Types of Amazon FBA Fees

    Each step of the fulfillment process is managed by FBA on a fee-based system. The following are the common fees associated with FBA:

    1) Amazon FBA Fulfillment Fee

    FBA fulfillment fees are also known as the pick-and-pack or order fulfillment costs. These fees are per-unit fees for locating, labeling, and shipping items to customers. The charge is influenced by the size, weight, and category of the product. 

    The FBA fulfillment cost is calculated using the following subcategories:

     

    Standard Size Products

     

    In order to qualify as a standard-size product, an item must weigh less than 20 pounds when fully packed. Additionally, its measurements cannot exceed 18″ x 14″ x 8″.

    Two boxes that can be opened from the side as a drawer with one with contents in it
    Credit: fulfillment services
    A man packing items into a box to be sealed for shipping
    Credit: Envato Elements/ poundsaed_eco

    Oversized Products

     

    Any object that exceeds the dimensions and weight mentioned above falls under the oversized category. This means that a product will be regarded as oversized if it weighs more than 20 pounds and measures more than 18 inches on its longest side.

     

    FBA fees are constantly changing so make sure to check out the Amazon Seller Central app to obtain an accurate figure. You can also use the FBA calculator that Amazon provides to calculate fulfillment costs. In order to use the calculator, you must first conduct a search on Amazon for a product that is similar to the one you are attempting to sell. Your Amazon fulfillment cost will then be calculated by Amazon using the weight and dimensions of this item.

     

    2) Storage Fees

    Amazon charges inventory storage fees for the use of the storage space in its fulfillment center.

    There are two types of FBA inventory storage costs: monthly and long-term.

     

    Monthly Storage Fees

    If your products are still at an Amazon warehouse at the end of the month, Amazon will charge you a monthly storage fee. These costs are either deducted from your Amazon account or charged to your credit card.

    A man wearing a hard hat and stacking boxes in a warehouse
    Credit: Envato Elements/ LightFieldStudios
    A birds eye view of a warehouse that is packed with boxees
    Credit: Envato Elements/ Mint_Images

     

     

     

    Long-Term Storage Fees

    On the 15th of every month, Amazon cleans out its stock. During the clean-up, Amazon maintains note of any items that have been sitting in its fulfillment centers for 365 days or more. The seller will be charged a long-term storage fee by Amazon for these products.

    Similar to monthly storage fees, long-term storage fees are automatically deducted from your Amazon seller account or charged to your credit card.

     

     

    3) Additional Amazon Fulfillment Costs

     

    When using Amazon fulfillment services, there might be additional fees on top of those listed above. These include:

     

    Penalty Fees

    Like many other businesses, Amazon has regulations that sellers must adhere to. If these requirements are not met, there can be a fine imposed. For instance, if products are not prepared in compliance with Amazon’s rules and standards, you will be charged a penalty fee. If you fail to adhere to Amazon’s barcode label regulations, you will also be penalized. When preparing products to send to the fulfillment facilities, make sure to thoroughly study Amazon’s guidelines in order to avoid these penalties.

    An image of a person and then a hand holding a paper with fine on it
    Credit: iStock
    Some boxes on the table ready to be sealed and labelled
    Credit: Envato Elements/ FabrikaPhoto

     

     

    Package Prep Fees

     

     

    A seller can opt to have Amazon prepare and package their products for an additional fee in order to forgo incurring many of the penalty expenses. Outsourcing the effort of preparing and packaging shipments enhances the overall cost of using Amazon’s FBA services, but depending on how much inventory a seller has, it can be worthwhile.

     

    Packaging Fees

     

     

    Since FBA fees cover packing costs, Amazon ships items in boxes bearing its brand. As a result, the buyer becomes more familiar with the Amazon name. However, if you want to distinguish your company from the competition, you might consider using branded shipping.

     

    With this choice, you can more effectively sell your brand while using the Amazon platform to connect with customers. However, it has a price you must consider in your budgeting strategies.

    Cardboard boxes with the Amazon Sticker sealing them
    Credit: Amazon Fulfillment Service
    Shopping cart on building blocks with a person holding the first one
    Credit: Seller Engine

    High-Volume Listing Fees

     

    If a seller has more than 100,000 qualified ASINs, they may be requested to pay a fixed monthly cost of $0.005 per ASIN. These fees are paid at the same time as the monthly FBA storage fees. They are deducted from your Amazon account balance. If there are no funds in your account balance, the payment will be deducted from your credit card.

    Return Fees

     

    Amazon is known for its convenient return and exchange policy for customers. When Prime customers return products, there are not charged any fees. Since they are not charged anything, this burden falls on the seller.

    A man holding three boxes in his hands
    Credit: Envato Elements/ myjuly
    A man sitting at a laptop wearing a hardhat in his office
    Credit: Envato Elements/ wosunan

    Removal and Disposal Fees

     

    In order to avoid incurring long-term storage fees, sellers need to submit a removal order for products that are stored in Amazon’s fulfillment centers for more than 365 days. Amazon will impose a removal fee in order to get rid of these products. Costs for removal and disposal are calculated based on product levels (standard and oversized). Although there is a price to remove unsold stock, it is considerably less than what the seller would otherwise have to pay for long-term storage.

    When removing these items, you have the option of having Amazon ship them back to you or destroy them. If you choose to have the product shipped back to you, you will have to pay an additional fee to cover the shipping costs.

    Summary

     

    As you can see, there are a lot of associated costs with outsourcing fulfillment to Amazon. Despite these expenses, FBA provides numerous advantages. Depending on your products, these benefits could include quicker delivery, lesser delays, and occasionally lower prices. Because every company is unique, it’s critical to understand what expenses to expect from this service before signing up for it.

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