What is Amazon FBA and how much does it cost to set up?

Without question, Amazon has come up with probably the most advanced and complete fulfilment networks ever created. Not only that, but it’s the number one platform for both buyers and sellers. To keep up with the day-to-day demands of sellers, this is where FBA comes in: Fulfilment by Amazon.

When using FBA, sellers can use Amazon’s fulfilment centres to store, pick, pack and ship products. Best of all, any refunds and/or returns are handled by Amazon as well.

Now that we know what FBA is, let’s walk you through how much it costs to set it up

Amazon FBA fees explained

Nearly all aspiring sellers dealing on Amazon inevitably find themselves asking: “What are Amazon fulfilment costs for FBA?”

And that’s perfectly fair – you’re going to be selling on the largest eCommerce network, after all, so you definitely need to know how to profit after Amazon fulfilled costs are deducted.

So let’s go ahead and breakdown those Amazon fulfilment fees:

Amazon FBA fees all sellers must pay (whether they are selling via FBA or FBM)

Referral fees – This is the commission you pay to Amazon for every item sold on their platform. This fee is usually a flat percentage, so mostly 15% or lower. The fee is taken out from your account after the sale. You can find the current list of referral fees here.

Subscription fee – Depending on which type of seller account you’ve registered (Individual or Professional), you may need to either pay the individual per-item fee, which is charged when you make a new sale transaction – or, you’ll need to pay a subscription fee each month. Individual sellers must pay 72p per item while professional sellers must pay £28.93 subscription fee each month.

Refund administration fee – When a buyer requests a refund for an item for which they already paid you, and Amazon processes the refund, then you will be charged a fee. This is either £3.62 or 20% of the refunded amount, whichever one is less.

Amazon fulfilment fees only FBA sellers pay

Fixed FBA fee per weight per item – Amazon takes care of storing, picking, packing and shipping goods. While they do it all on your behalf, they do charge a fee which is determined by the size and weight of each product category. You can find the current ‘fulfilled by Amazon’ fees right here.

FBA storage and new IPI scores – Since your products are stored at Amazon’s fulfilment centres, you are required to pay a fee to have your inventory maintained. This has recently changed now to incur into Amazons “IPI” inventory performance score. These fees are calculated in the terms of a credit score like system where our of 999 you will be given a score based on your inventory’s performance, the higher it is, the less you will pay – if your score is over 500, you will be very little in terms of storage costs, this is also calculated if your “sell-through” is too high, in other words if your not restocking your inventory quick enough.

Final thoughts on ‘cost of fulfilled by Amazon’

This article is by no means a comprehensive guide on Amazon FBA fees or Amazon fulfilment fees. We recommend getting in touch with our expert Amazon consulting team to determine the exact fee that’s applicable to you.

Chris is the managing director of Ecommerce Intelligence, a full service Amazon agency. He has over 13 years experience selling on Amazon and other marketplaces. Follow Chris on LinkedIn for daily tips and advice.

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