9 Hidden Fees to Be Aware of on Amazon
Sellers should be aware of hidden fees on Amazon before they to start selling their products on the platform. Watching out for hidden fees will help you get your Amazon business of the ground without difficulties. Many brands nowadays are registering on Amazon.com to increase their reach and sales. Amazon currently has around 2 million active sellers, and it keeps on snowballing. According to Feedvisor.com, about 330,000 sellers join Amazon to get e-commerce success.
Selling on Amazon can be the best decision sellers can take for the growth of their business. However, there are several hidden fees you may not know about. You must be aware of the hidden fees on Amazon so that you can plan and create the perfect strategy to sell without any hurdles and compute your profitability.
1. Referral Fee on Amazon
The referral fee is an amount deducted from the cost of any product you make a sale on. Amazon charges the referral fee according to product categories. It can range from 6% to 20%; however, many of the categories on Amazon have a 15% referral fee charged. Make sure you check the Amazon page regarding referral fees to keep an eye on it as the cost increases yearly.
2. Variable Closing Fee (VCF)
Variable Closing Fee is only applied to the products related to media and is usually $1.80. Media products on Amazon include music, books, DVDs, software, videos, and all kinds of computer games. VCF is not included in the referral fee and is charged separately.
3. Storage fees charged by FBA (Fulfillment by Amazon)
Many sellers depend on FBA to store, packages, and ships their products to the customers. However, FBA charges a storage fee that most sellers don’t know about, and it is not mentioned in the services either. FBA charges the storage fees on a monthly or long-term basis. Monthly fees between January till September are $0.69, and from October till December, it is $2.40. Similarly, $6.90 is charged after 180 days if you choose the long-term payment method, and you can also pay $0.15 per unit within 365 days.
4. Warehouse Fee for Shipping Items to FBA
Once you sign up for FBA, you must ship your items to the Amazon FBA warehouse that costs money. If you overlook this cost and ignore it, then it most like affects your profit margins. Why? Well, Amazon sometimes asks you to ship your products to different warehouses, such as in New York, Texas, or California. If you don’t handle the shipping strategically, you might face loss.
Tip: If you want to pay a lesser amount for shipping, you should use containers and ship them to the warehouses and avoid using a courier service.
5. Listing Fee for high volume sellers
If you have ASINs above 100,000, then you have to pay a high volume listing fee. Large sellers who fulfill the criteria must pay a monthly fee of $0.005 for each eligible item. The listing fee is directly deducted from the seller’s account balance on Amazon, and if you don’t have a balance there, then Amazon recovers it from your card and notifies you.
6. Label Service Fee that FBA also charges
To keep an eye on your fulfillment process regularly, FBA requires a barcode on every product of yours that is stored in the warehouse. If you choose Amazon to apply labels on your brand’s products at the warehouse, you have to pay the FBA Labe Service fee. However, you can choose to label the items yourself. Brands have to pay $0.30 per unit of products for the label service.
7. Coupon Redemption Fee
You have to be a professional seller with a valued seller account to offer your customers a coupon. Brands are held responsible for providing the discounts, and any cost suffered because of the coupon. Plus, sellers will pay a coupon redemption fee every time a customer uses their coupon.
8. Refund Administration Fee
Suppose a company decides to issue a full refund to its customer for any item in the media category as mentioned above. In that case, Amazon refunds the fee according to the order. However, if the item is not included in the media category and a brand decides to issue a refund, then Amazon gets to keep 20% of the fees. However, Amazon can only charge up to 5% for any product.
9. Seller Account Fees on Amazon
There are two options available for sellers to choose from when they decide to start selling on Amazon. You can either go for an Individual account or choose a Professional Selling plan for your business. The Individual account doesn’t have the privileges such as you can only sell on one Amazon marketplace with no running promotions and no access to the Buy Box. Buy Box is the key to becoming successful on Amazon and equally essential to get a significant part of the sales. Sellers must choose the Professional account if they wish to win the Buy Box. Sellers have to pay $0.99 per product if they choose an Individual account since there is no monthly fee. If you select a Professional account, you will have to pay $39.99 each month without paying per item.
Amazon offers a fantastic opportunity for sellers to grow their businesses online, but of course, it doesn’t come without a cost. There can be many other hidden fees that you must research to strategize efficiently and work accordingly.
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