Fulfilled By Amazon (FBA) enables ecommerce retailers to store their products in Amazon warehouses — regardless of whether they actually sell on Amazon — and lets Amazon handle the packing and shipping of those products.
In addition to offering fast fulfillment, FBA also provides customer service for retailers, as well as certain marketing advantages, such as being eligible for Super Saver Shipping and Amazon Prime. Because of these benefits, FBA has been key in helping small businesses grow their sales. In fact, according to Kiri Masters, founder of Bobsled Marketing, FBA can give online retailers a 30 to 50 percent increase in sales.
But while it may be tempting to jump right in and follow the FBA trend, it’s important to note that FBA involves various costs — some obvious fees and other not-so-obvious ones — that users must carefully weigh before taking the plunge.
FBA fees depend on product size and weight
The size and weight of your product, as well as the channels you use to sell them, will determine your FBA fees. There are two main types of fees customers can expect to pay:
- Fulfillment fees: These fees include the cost of packing and shipping products, as well as Amazon’s customer service.
- Storage fees: These fees cover the cost to store items in Amazon’s warehouses, which are known as fulfillment centers.
As noted, the size and weight of your product determine the cost of these fees, and Amazon breaks these into two categories: standard size and oversize.
- Standard-size products weigh fewer than 20 pounds after packaging and their dimension isn’t more than 18” x 14” x 8”.
- Oversize products are any that exceed 20 pounds in weight after packaging and/or have a dimension larger than 18” x 14” x 8”.
Whether your product qualifies as standard size or an oversize will affect both its fulfillment fee and its storage fee. For example, a standard-size product that weighs 10 ounces or fewer would be charged a fulfillment fee of $2.41.
Fulfillment fees for standard-size products apply to both domestic and international orders. It’s also important to note that apparel products will be charged an additional 40-cent fulfillment fee per unit. However, this fee doesn’t apply to apparel accessories, such as belts and wallets.
Oversize products, on the other hand, have a different set of tiers to determine their fulfillment fees, as demonstrated below. These tiers apply to domestic orders only.
Take a look at the table below to see how the size and weight of different products affect their fulfillment fees.
As you can see, a small, light item like a T-shirt has a fulfillment fee of only a few dollars. However, as a product increases in size and/or weight, the fulfillment fees increase as well.
Whether a product is considered standard size or oversize will also determine its storage fee. As you’ll see in the table below, FBA storage fees are more expensive during holiday months, from October through December.
Storage fees are also higher for certain products, such as those deemed “dangerous goods.” Long-term storage fees are charged in addition to monthly storage fees for products stored at an Amazon fulfillment center for more than a year.
FBA fees for products sold outside Amazon are higher
Amazon has nearly 50 percent of market share in e-commerce; however, 80 percent of Amazon merchants sell their products on channels outside of Amazon. You can use Fulfilled by Amazon for products you sell on your own website or another platform, such as eBay or a Shopify-based store. This is called multi-channel fulfillment (MCF), and the fees are a bit higher.
Sellers who use MCF ship their products to an Amazon fulfillment center and they’re charged storage fees based on product size and storage month. When a customer places an order for that product — whether directly from your business’ website or a third-party sales channel — Amazon will receive the order and pack and ship it directly to the customer.
You may have a variety of shipping options available for the products you sell, so Fulfilled By Amazon offers MCF fees for standard, expedited, and priority shipping. In addition to the shipping option selected, MCF fees are also determined by whether your product is standard size or oversize.
For example, if you sell a standard-size product, such as a T-shirt that weighs 5 ounces after packaging, and ship it via standard shipping, the MCF fee would be $5.85, as illustrated in the chart below.
For a complete list of multi-channel fulfillment pricing, click here.
Other FBA fees to consider
There are several other types of FBA fees that users should keep in mind. While not all of these fees will apply to every seller, it’s important to consider them in your budget.
If you’re selling items on Amazon with an Individual Selling plan, you’ll pay a per-item selling fee of 99 cents on each product sold. If you have a Professional Selling Plan, you’ll pay $39.99 a month and have no per-item fee.
Sellers pay a referral fee on each item sold on Amazon, and this fee is determined by which category your product falls into. For example, a book has a 15% referral fee, while a T-shirt has a 17% referral fee. Consult the table below for a complete list of categories and their referral fees.
Removal order fees
These fees are charged per item removed from Amazon warehouses, and they’re determined by the product’s size and weight, as indicated in the chart below.
Returns processing fees
These fees apply only to customer-returned products sold on Amazon for those categories for which Amazon offers free return shipping. These include apparel, jewelry, shoes, handbags, and luggage. Amazon offers free returns on these items to build customer trust and encourage consumers to make purchases.
The returns processing fee is equal to the total fulfillment fee for the product. For example, in the example below, both the fulfillment fee and the returns processing fee for the handbag are $3.19.
Unplanned service fees
Amazon requires that all merchandise be labeled and barcoded to certain specifications. If inventory that hasn’t been properly prepared or labeled arrives at an Amazon fulfillment center, Amazon will charge a per-item fee to fix the issue.
Enroll in FBA Small and Light to lower costs
Products in new condition that measure 16”x 9”x 4” or less, weigh 15 oz. or fewer, and are priced at $15 or less are eligible for Small and Light, which reduces the cost of fulfillment. Check out the table below to compare the costs of Small and Light fulfillment versus standard FBA costs.
Some types of products, including food, alcohol and certain electronics aren’t eligible for Small and Light. For a complete list of restricted products, click here.
Free tools to determine your FBA fees
Amazon offers several free tools and calculators to help you figure out the various fees you could be charged per item when using FBA.
The FBA Revenue Calculator, for example, allows users to input their fulfillment costs, including the item price and shipping fees, to view real-time cost comparisons.
You can also use Amazon’s Fee Preview tool, which provides users with a fee estimate. You can access this tool from the Manage Inventory page of your account and clicking “fee preview” to view a breakdown of anticipated fees.
Keep in mind that Fee Preview provides only an estimate of fees and doesn’t include all possible costs. To view fulfillment fees for FBA products, you must enter dimensions for your product.
Is Fulfilled By Amazon right for your business?
As you can see, there are numerous fees involved in using Fulfilled By Amazon. While not all Amazon sellers use the service, there are numerous benefits to FBA, including fast fulfillment, fewer individual business operations, marketing advantages, and occasionally lower costs, depending on your product.
However, every business and product is different, so it’s important to determine what costs to expect from FBA before signing up for the service.