Fulfillment by Amazon (FBA) is a service offered by the e-commerce giant that allows sellers to outsource their fulfillment process, from inventory to shipping to after-sales customer service. It takes a lot of weight off a business owner’s plate while giving them access to Amazon’s humongous market.
Still, Amazon FBA isn’t cheap, with new sellers spending approximately $2,500 to $5,000 to offer their products on the platform. There are ways to save on the fees, and if you properly optimize your FBA business, you’ll be earning way more than what you spend, anyway.
To learn how to leverage FBA for maximum profit or how to scale Amazon FBA, it’s best to seek advice from Amazon FBA consultants for hire on Guru.
The Average Cost of Starting Amazon FBA
Many new businesses on the Amazon FBA program start with a capital of around $2,500 to $5,000 to kick-start their operations. This includes Amazon fees, product costs, and other initial investments, especially those relating to advertising.
Some even go as far as spending over $10,000, although these are usually big accounts with large inventories or brands that are already established. That said, you can also mount your Amazon FBA business with $500 (or less) and still be successful, but it’ll likely take a bit longer for you to get your returns.
Amazon FBA Fees
A large part of the costs of FBA relates to the fees that you may encounter under certain conditions in the platform, which you’ll get to know when you figure out how to start an Amazon FBA business. Here’s a quick description of each:
Seller Fees
When you create an Amazon seller account, you subscribe to either an individual plan or a professional plan depending on the nature of your business. The individual plan charges $0.99 per product sold, while the professional plan has a monthly fee of $39.99 per month, regardless of how much you sell. For bigger businesses, it always makes more sense to opt for the professional plan.
Inventory Storage Fees
Inventory storage is a part of FBA, but you must pay for keeping your products in Amazon’s fulfillment centers. The fees are charged for all items stored based on the daily average volume of inventory (measured in cubic feet).
Fulfillment Fees
The fulfillment fees, also sometimes known as “pick and pack” fees, are the cost per unit for preparing, packing, and shipping your items, as well as any after-sales activities such as customer service and product returns. It varies depending on an item’s category, size, and weight.
Aged Inventory Surcharge
It’s always in your best interest to keep your products moving, not only because it makes your business more liquid, but because it prevents you from being charged monthly fees for storing items for more than 181 days in an Amazon fulfillment center.
Unplanned Services Fees
Unplanned services fees are charged when your supplier sends your products to an Amazon fulfillment center with proper preparation, which would prompt Amazon staff to do the necessary labeling.
Removal Order Fees
If you have old inventory that you don’t want to sell (or isn’t selling anymore), you can have Amazon return or dispose of the products. In this case, you’d have to pay for removal per item.
Returns Processing Fees
If you’ve ever wondered who covers the costs when a customer returns a product on the promise of “free return shipping,” it’s the seller. You’ll be charged if a buyer sends back your item.
Other Expenses for Starting Amazon FBA
Aside from Amazon FBA fees, businesses must also spend on other e-commerce essentials to boost their business. These expenses include everything from product photos, copywriting services, staff salaries, and sales and marketing budgets–they’re more flexible because you can adjust costs based on what you’re willing to spend for each.
Does Spending More Bring Higher Profits on Amazon FBA?
Spending more money to start Amazon FBA doesn’t necessarily promise higher profits. But in most cases, businesses that spend more see a return on their investment much faster, allowing them to scale their operations more efficiently.
This isn’t to say that shelling out a lower amount will automatically put you on the losing end of the stick. With the right strategies and help from Amazon FBA consultants from Guru, you can also optimize your FBA business to be a sustainable money-making venture.
Hire Amazon FBA Consultants on Guru for a Cost-Effective Operation
Amazon FBA consultants are a great help for any seller looking to start Amazon FBA. They can offer data- and experience-backed advice to help you ensure that your operations are efficient and profitable—without you having to pay insane fees. Hire a reliable freelance FBA consultant on Guru today!
