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Selling on Amazon has changed dramatically this year.
Not only have selling fees taken a sharp upward climb, but there’s also the coronavirus pandemic to contend with. A surge in online shopping has led to disrupted supply chains, huge delivery delays, and unhappy sellers.
At first, Amazon paused shipping for non-essential items, leaving sellers high and dry with no way to get their goods to paying customers. This meant that an increasing number of FBA sellers turned to 3PL warehouses to ship their goods, and the trend seems to have stuck, adding an extra cost to the already rising price of selling via Amazon’s FBA program.
Understanding the outgoings of your business is vital for growth, pricing strategies, and stock management.
A lot of Amazon FBA sellers consider the COGs their only expense and consider the leftover money profit. But with fees (however small) lurking around most corners, costs can start adding up. All of a sudden, your business isn’t as profitable as you first thought.
A lot goes on behind the scenes so, if you’re wondering what the real costs are for FBA sellers, from storage and shipping to monthly fees, here’s a helpful guide.
The Basic Fees for FBA Sellers
Before shipping, storage, and other fees are taken into account, Amazon FBA sellers have to pay standard FBA costs and referral fees.
This is a monthly fee – kind of like a subscription cost – that sellers might need to pay through the FBA program. It’s free for a personal seller account, but this will incur a $1 flat fee for every product sold.
If you sell more than 40 products a month, it’s worth upgrading to the professional seller account. This is $39.99 a month but doesn’t require the $1 flat fee for each product.
On top of this Amazon also takes a cut of revenue (it does this for non-FBA sellers, too). Usually this is around 15%, plus a $3 fee to handle and ship the product.
Your referral fee will fluctuate depending on what category your products fall into – some are far more costly than others. For example, Amazon device accessories have a 45% referral fee, gift cards have a 20% fee, and groceries have an 8% referral fee. Most other categories fall somewhere between 12% and 15%.
FBA Hidden Fees: Other Costs to Consider
Once the basic fees are out of the way, there are several other costs involved in selling via Amazon’s FBA program.
1. Weight of Product
Amazon ships products through its FBA program, which is great because you don’t have to sort out the logistics. You can put everything in Amazon’s hands and they sort it all out for you.
It costs to ship items, so understandably Amazon puts some of those costs back onto the seller. And, because it costs more to ship large, heavy items, the shipping fees are higher for weightier and larger products.
Amazon rounds up the weight of a product, so you’ll usually end up paying a little more than the real weight of the product. In 2020, this fee is going up by as much as 10%.
2. Storage Fees
Sellers that use the FBA program ship their products to Amazon’s warehouses. From there, Amazon deals with the rest.
This means that Amazon charges a fee for storing products in their warehouses – and rightly so. For the most part, there is a flat fee depending on the size of your product. The thing to note is that the price changes at different times of the year.
From January to September, standard sized items incur a storage fee of $0.75 per cubic foot and oversized items are $0.48 per cubic foot. From October to December, standard sized items cost $2.40 per cubic foot to store and oversized items cost $1.20 per cubic foot.
3. Long Term Storage Fees
If your products don’t sell, you might find yourself paying long term storage fees. For items that are in fulfillment centers for between 181 and 365 days, there is a monthly cost of $3.45 per cubic foot. For items in fulfillment centers for over 365 days, you’ll be charged a monthly fee of $6.90 per cubic foot.
4. Shipping Goods to Amazon’s Warehouses
There are many benefits of using Amazon’s FBA program. You simply ship your goods to them and they handle everything from there. But, as you probably know by now, it costs to ship products.
Amazon has a number of warehouses dotted around and they usually ask you to ship your products to several different warehouses. The costs can really add up.
As a general rule, it tends to cost around $3-4 per empty box and then between $0.20 and $0.50 per pound depending on where your items are being shipped to.
One way to keep costs down at this point is to ship your first batch of products to one warehouse, your next to another, and so on. As long as your products arrive in every warehouse Amazon needs them in at some point, you should be fine.
No one likes to talk about returns, but here we are.
One of the reasons Amazon is so popular with shoppers is because it’s incredibly easy to return goods. This is great for the buyer, but not so much for the seller.
As a result, the return rates on products can be quite high. When a product is returned, you don’t get the FBA fee or referral fee back, which means you tend to end up out of pocket. A lot of Amazon FBA sellers forget to factor in this cost and it can come as a nasty surprise when the cost of returns keeps on adding up and adding up over time.
Aside from the FBA fees, there’s also the costs of running a business in general. These are often known as overheads and can be listed as expenses. However, they should always be taken into account when you’re calculating your true profit.
Overheads might include costs like:
- Product photographs and copy – especially if you get these done professionally (this can range anywhere from $50 for a low-budget service to thousands of dollars for a high-quality professional service)
- Seller permits (often you won’t need these as most products sold on Amazon aren’t Federally regulated and are consumer products that don’t need government approval. However, if you’re selling something that is regulated, you’ll need to look into permits both nationally and locally)
- Product liability insurance and general business insurance (product liability insurance spans a range of prices, depending on how many units you sell and what they are. The average cost of product liability insurance for low-risk products is $0.25 per each $100 in revenue)
- Trademarks (obtaining a national trademark typically costs around $300-$400 for each class of products you want to protect)
- Any staff or contractor costs (this cost will vary hugely depending on how many staff you have, how often they work, and what roles they’re taking on. A seller with one part-time member of staff will pay far less than one with two full-time members of staff)
These can add up if you don’t keep a close eye on them. For example, a professional photo shoot for your new product line might help you sell more products overall, but make sure you factor the cost into your per-product profit.
7. Intermediate Warehouse Costs
Sometimes, you might want to send your products to a processing center to undergo quality control testing before they are sent on to Amazon’s warehouses.
This means you’ll need somewhere to store them in the interim. Which, again, incurs costs. The costs here will vary depending on where you decide to store your goods and how long you’re storing them for before shipping to Amazon’s warehouses.
8. 3PL Companies
Amazon is now allowing non-essential items to be delivered in an acceptable time frame after pausing the process for a while at the start of the coronavirus outbreak.
However, many Amazon FBA sellers are organizing their own shipping anyway via third-party logistics companies. This gives them more control over how and when their products are shipped, but it does cost to do so.
The fees here will vary depending on the 3PL company you choose, but as a general rule, going to a third-party works out to be more expensive than having Amazon ship your products directly.
9. Amazon Getting it Wrong
At the end of the day, no company is perfect, and a company as big as Amazon is bound to make a mistake or two at some point. Unfortunately, this can end up costing you. They have been known to lose shipments (in fact, this happens quite often), lose products in the warehouse, fail to ship on time, and damage goods in transit.
These are things you can’t account for in your fees calculation, but it’s good to have them in mind as a buffer just in case.
The last thing you want is to go into the red because of something out of your control.
10. PPC and Advertising Costs
If you want to get eyeballs on your products, there’s a good chance you’re going to have to splash out on some advertising. The competition on Amazon is high, so every little helps when it comes to your marketing strategy.
Amazon has an in-built PPC or Sponsored Products feature that lets you target specific keywords related to your products to attract more buyers. These can be a great way to boost exposure on your products and get more sales, but they cost money to run.
The costs here will vary considerably depending on the keywords you choose to target (some come with a higher price tag than others), the audience you want to reach, and how much money you can afford to pump into them.
The key is to keep your advertising costs below the cost of your products.
For example, if you’re selling a $25 product on Amazon and we use the typical Amazon conversion rate of 10%, that means that for every 10 people who click through onto your product, one of them will make a purchase.
This means you want your ads for this specific product to cost no more than $25 per 10 click throughs – and actually, you want the cost to be far lower than that if you want to make a profit of any kind.
It’s worth taking other advertising costs into consideration here too. You can market your products on Facebook, via Google PPC campaigns, YouTube ads, Instagram ads, and various other ways. Determine which methods will work best with your products and go from there.
11. Manufacturing Costs
Manufacturing is likely to be a big cost for FBA sellers, but again this will depend on the kind of items you’re selling. Not only do you have to produce a glut of products to get you up and running, you’ll also need to consider the costs of ongoing production.
First of all, you’ll need to find a manufacturer that produces the quality of product you want to sell. Sites like Alibaba can connect you up with affordable manufacturers, but even to order a sample you’ll have to pay out (this is usually around $100 per sample, but it’s worth it for finding the right, reliable producer).
Once you’ve chosen your manufacturer, you’ll need to bulk order for your inventory. This works out cheaper than buying each product individually when a customer makes a purchase.
On average, products sold via the Amazon FBA program cost around $20 and can often be manufactured for less than $5 each.
12. Inspection Costs
You might decide to get your products inspected before they leave the factory to ensure they’re of the highest possible quality. This isn’t mandatory, but it means you can have peace of mind that you’re selling a great product.
There are two options here:
- You can hire an inspection service which costs around $300 (this is a static cost and doesn’t change regardless of the size of the order you want inspected)
- You can ask your supplier to run a self-inspection and then get them to send you a full report. They can then ship you a finished sample, which costs around the same of a usual sample ($100)
13. Damaged and Lost Reimbursement
Amazon runs a Lost and Damaged Reimbursement Policy to reimburse sellers who have had a product lost or damaged either in the fulfillment center or by the designated carrier.
The issue to bear in mind with this is that you won’t always get the full amount of your product returned back to you.
Instead, Amazon take into account:
- Your sales history
- The average FBA selling price of the product on Amazon
- The sales history of the specific ASIN
They will then grant you a refund based on this information. While you’ll get some money back, it’s worth noting that it’s usually not the full amount you paid out. For example, the reimbursement cost won’t include the FBA fees you already paid out for the product.
14. Early Reviewer Program
The Early Reviewer Program is a great way to promote your products by getting reviews for them. It lets you submit one of your product SKUs to be promoted by Amazon for review by a specific, pre-chosen (and pre-vetted) reviewer.
Taking part in this program costs $60 per SKU.
Again, it isn’t mandatory, but it can really give your products a boost in the listings. The payment isn’t taken until you get at least one review, so you don’t lose any money if the reviewer doesn’t uphold their part of the deal.
15. Lightning Deals
Lightning Deals give you a chance to run flash discounts on your products and get more sales. Amazon charges a flat fee to run a lightning deal. This is usually $150, but it can vary depending on the week you’re running it and if that clashes with any major selling holidays.
You’ll be charged the fee for every Lightning Deal you run.
To qualify, you have to be a Professional Seller, have a sales history, and have more than a 3-star seller rating.
Amazon also requires that you give at least a 15% discount on products included in Lightning Deals, so be sure to work out how much profit that leaves you with after you take all the other fees into account.
Amazon’s FBA Fee Calculator
If the thought of trying to work out all these costs on your own is overwhelming, you’re not alone.
Luckily, Amazon has an FBA calculator that helps sellers compare the costs of using the FBA program and FBM (fulfilled by the merchant) option. It also allows you to simply calculate the fees that go into selling via the FBA program.
Here’s an example of Amazon’s FBA calculator in action.
As you can see, the two columns let you compare the costs of Amazon fulfillment and your own fulfillment. It takes into account the costs of shipping and any basic FBA fees to work out how much profit you’re likely to get from each method.
It’s Important to Know Your Costs
2020 will be an interesting year for Amazon sellers. Fees are set to increase by quite a large margin, and the coronavirus pandemic has forced sellers to switch up their strategies.
But knowing (and, more importantly, understanding) the true costs of selling via Amazon’s FBA program is vital for figuring out the bottom line of your business, increasing profits, and long term growth.
Did you know that small businesses account for 99.9% of all United States businesses? It’s true. The vast majority of markets are made up of the little guys. Mom and pop shops, artisans, and teams of close-knit startups are all essential, contributing drivers of the economy.
Amazon is the world’s largest platform for products.
With millions of transactions every day, an Amazon listing is ‘your voice’ to the world. A powerful product listing copy that converts is crucial to being an A-List Seller.
In the world of online business, particularly Ecommerce and a large online platform like Amazon, your product listing page and its success depends on a strong Amazon Product Keyword Strategy.
Nearly 50 percent of U.S. online transactions take place on Amazon. The ecommerce giant continues to grow its market share across a large range of product categories.
This is why Amazon Keyword Research is important. It is the fuel that can succeed an Amazon business in the right direction.
In this guide, we will cover important topics such as:
- How to find Amazon keywords
- How to choose the right keywords for your Amazon listing
- How to use keyword research tools
- Advanced keyword research tips
And lots more!
So if you want higher Amazon rankings and increased traffic, leading to more sales – you’ll love this guide. Let’s get started!
Amazon Keyword Research
In this section, we will overview the important areas of Amazon’s Keyword Research and what it means to a Seller, Buyer, Product and Storefront.
You’ll also learn about the strategies and ways to master Amazon Keyword Research yourself like a pro!
What is Keyword Research?
When it comes to Keyword Research for Amazon, the things that matter are:
- What exactly are people searching for?
- How people are searching for it?
By search terms, we mean ‘keywords’. What are the keywords? They are the phrases or words typed by people online to find the item of their interest.
Amazon Keyword Research is a process to find relevant keywords for your product in your category. When customers search for any keywords related to your product, your product comes in Amazon search results.
The product is visible to the potential consumer and increases your chances of selling the product. Amazon Keyword Research is similar to general SEO Keyword Research.
For Amazon Sellers and Storefronts, Keyword Research is important to the product getting listed on the top page of search results. The higher your product ranks, the more clicks it gets. The more clicks it gets, the higher are the chances of people buying it.
Why Keyword Research is Important in Amazon?
Amazon is a big name in e-commerce. Long gone are those days when you were able to filter your search by categories. Now a huge percentage of users shop by simply utilizing the search box.
They type in their search terms, which are phrases that describe the products they want to purchase and that appear in the first pages of the search results.
This is why Keyword Research is an important part of your Amazon product launch. Investing the time to properly assess the most important keywords in your niche can maximize your revenue potential.
It can also position your product to be the highest asked item for valuable search queries.
Have you seen Amazon product listings with the super-long, keyword-stuffed product titles?
You may wonder what human would actually read such a title and be convinced to purchase the product. This is a valid question. Humans don’t naturally like long sentences. And most of all, humans don’t like being confused.
Sellers who know this use these long titles so that their product shows up in more searches. They’ve done keyword research to get the exact search terms they want to target.
How To Find Seed Keywords
Finding the right Seed Keywords is important for beating your competitors, increasing product visibility, higher traffic and an increase in sales.
In this section, we will discuss exactly that!
What are Seed Keywords?
When you’re selling online, the most important piece of the puzzle is getting your product in front of the right audience. It may sound simple, but if your product isn’t being seen when customers search for it you’re not going to make any sales.
A Seed Keyword is a broad term that is related to your product.
Sellers need to start by generating four or five seed keywords. These are terms, usually made up of one or two words that really describe what your product actually is.
So, for example, if my product was an apple corer, that term would be my first Seed Keyword. I would then also have “apple slicer,” “apple cutter” and “fruit slicer.”
To generate your Seed Keywords, start by having a good think about your product. If you had to describe it to someone in just two or three words, what would you say? Note these thoughts down.
As a sense check, it is always worth looking at the five best selling products for your Primary Seed Keyword. So, I would take the top five ranking products for “apple corer” and carry out a reverse ASIN search.
This will then show me the keywords that it is currently ranking for on Amazon.
While in theory, you could insert these terms straight into your Amazon listing, it’s important to get some more data on them first.
Even though we know that these terms are being searched for, we don’t know anything about the traffic they receive or how many listings are currently ranking for that term. To get this kind of information, Sellers need to use a keyword tool.
There are a number of tools that you can use to do this including:
- Brand Analytics
- Jungle scout
- Google Keyword Planner
- Helium 10
- Keyword Inspector
You can then compare the results to your listing of seed keywords, making sure that they are both relevant and receive a good level of traffic.
How To Use Amazon Suggest
In any Amazon Keyword Research Strategy, be it for Amazon or Google, you always have to start your Seed Keyword research with Amazon itself. It’s your best bet, while researching for Seed Keywords. The below screenshot shows exactly how.
For example, let’s say your product is a brand of ‘Headphones’. On Amazon, simply enter “Headphones” in the main search bar.
As always, Amazon will then provide you with all the relevant listings based on the keyword you provided.
But that’s not what we came for. On the left side of the screen, you should be able to find a handful of other Seed Keyword ideas you can use for further research.
Of course, the Seed Keywords you choose must be relevant to the product you’re trying to sell. Most of the time, you should be able to find one or two that matches your product. In relation to the example above, some of the useful ones include:
- Portable Bluetooth Headphones
- Outdoor Headphones
- Portable Line-In Headphones
- Music Headphones
Google Searches Related To Similar Terms
Google’s search feature uses a predictive search algorithm based on popular searches to predict a user’s search as it is typed, providing a dropdown list of suggestions with it.
To use it, just type any keyword into the search box of Keyword Tool and press enter. Keyword Tool will then take your keyword and plug it into Google search box. It will pull Google autocomplete suggestions and present them to you in a clean format.
Using the same ‘Headphones’ keyword example, we can see in the screenshots below how the Google search platform shows applicable and relevant keyword suggestions.
Find Keywords On Reddit
The results of your SEO efforts depends on the keywords you choose to target.
Even if you’re willing to invest a ton of money, effort, and time on amazing content and link building, you still won’t come close to ranking for many high competition terms ( e.g “auto insurance”, “buy books”, etc.).
This isn’t a new problem. SEO gets tougher every year because competition consistently rises. There’s always going to be new people wanting to rank for the same keywords that you do.
The solution? Find keywords that still have significant search volumes, but everyone else isn’t targeting.
The reason they don’t target them, is because they can’t find them.
That’s why Reddit is always a great addition to your Keyword Research tools.
Reddit is a massive community, essentially built of millions of small forums about all topics. Spend a few minutes browsing it if you haven’t before.
It’s the 9th biggest website in the United States, and the 25th biggest globally according to Alexa.
There are many places to find keywords to target, but Reddit is an amazing place to start, and what we’re looking at in this post for 2 reasons:
- There are communities about almost every topic, with tons of content
- Content is all user-generated. You get keywords that your audience actually uses in real life
Using the same ‘Headphones’ keyword example, we can see in the screenshots below how the Reddit platform shows applicable and relevant keyword suggestions.
Best Tools for Amazon Keyword Research
Helium 10 is a great tool that allows you to rank for other keywords relevant to your products and find the actual search volume behind them, allowing your products to be more visible to the people who are searching for them!
Its tools and features include product and keyword research, listing optimization, product launches, keyword tracking, competitor spying, refunds, and more.
Helium 10 includes several Amazon FBA tools. It has established itself on the American market and now also offers its ingenious tools in Germany, such as the Helium 10 Chrome Extension (also known as Helium 10 XRay) or the Helium 10 Black Box.
In general, Helium 10 is a very comprehensive suite of Amazon FBA tools that offers a wide range of functions.
Jungle Scout is where you can start your product research and narrow down what you will sell. In Jungle Scout you can use filters to pinpoint products in Amazon’s catalog that meet your criteria. You tell it what you want to see by inputting the data and products listings are returned.
Keyword Scout is Jungle Scout’s keyword research tool. Jungle Scout helps you to:
- Identify Keyword Volume → Know the exact and broad match search volumes for high-converting keywords
- Get Direct Insights into which keywords your competitors are ranking for so you can add them to your own listings
- PPC Bids → Suggested bids for Amazon PPC
- Estimates for ease to Rank and Recommended giveaways → Estimate how easily you can rank for the keyword and how many daily promotional giveaways are suggested to move to the top of the ranks.
Google Keyword Planner
Google Keyword Planner is a great tool which must always be included in your Keyword Research no matter what! Here are some of the top benefits of Google Keyword Planner:
- Find new keywords using words, phrases, websites, and categories.
- Discover search volume trends and historical data of different keywords.
- See performance forecasts for keywords based on your budget and average bid prices.
- Narrow your results based on geographic location, language, and date ranges.
- Filter results by average monthly searches, competition level, organic impressions, ad impressions, suggested bids, and organic average position.
It’s worth noting that some of these features are only available if you sync your Google Ads account with your Google Analytics account.
The main benefits of Ahrefs are its large backlink checking solution, its assistance in digging deeper into your competitors’ search traffic, and its identification of what content generates better income. The software offers the large, best backlink checking platform in the business.
In essence, Ahrefs is a robust SEO tool that can be used to:
- Perform Backlink Audits
- Find Link Prospects
- Perform Keyword Research
- Validate Keywords and Analyze Competitors
- Track Individual Keywords
- Track Total Organic Visibility
- Brand Management
- Site Audits
How to Filter Keywords
So, you have an extensive list of keywords generated during your keyword research for a page you wish to rank high with. Fantastic!
But which ones are the best keywords for your needs? A generated list of keywords can have hundreds or thousands of keywords and handpicking even a few keywords from such a huge list can be a difficult task.
The Keyword Research Tools we discussed in the previous section do include Keyword Filtering features.
Simply use tools like AMZDataStudio, Sonar, Brand Analytics, Jungle Scout, Google Keyword Planner, AHREF, Helium 10 and Keyword Inspector to also Filter your Keywords and export them to an MS Excel Sheet for reference/viewing/records.
Advance PRO Amazon Tips
When you’re selling on Amazon, the last thing you want to do is spend hours sourcing products to then create listings that your ideal customers can’t find.
Getting your Amazon keyword research right helps you avoid this problem and brings more potential customers to your listings.
Finding the right keywords can seem like a hard task at first. But, over time, you’ll learn what tools you like, which ones you don’t and the best ways to generate those all-important seed keywords.
If you clearly define the process you use and repeat it on a regular basis it’ll become second nature and you’ll enjoy a consistently high organic search ranking.
Here are some advance PRO Amazon tips you should keep in mind:
- Adding Keywords Sensibly in the Title
- Utilizing Keywords in the Product Descriptions and Bullets
- Reducing Bounce On Your Listing
- Make Your Own Keywords
- Find Keywords In Customer Reviews
- Make A Keyword Out of Your PPC
Conclusively, Amazon keyword research is not a one-time process. To achieve a good search ranking, it needs to be repeated on a repeat basis. Keep putting your seed keywords and your competitors’ ASINs through keyword tools. This way you can spot any new, high traffic terms that people are using to find products like yours.
You also need to keep a close eye on your listings and see how they are performing in search. After you’ve made your initial changes, leave it a month and then compare it to your performance before you optimize your listings. If your search ranking has improved, then there’s no need to make any further changes.
Don’t be afraid to change things up. Go back through the process, see if you’ve missed any crucial keywords and make changes to your listing. Then, give it a month and see if that’s made any difference. If not, repeat the process again until you see an improvement.
We hope this Ultimate Guide to Amazon Keyword Research for 2019/2020 helps you in growing your business with higher sales, increased traffic and better search rankings!