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What Percentage Does Amazon Take From Sellers? Guide For Sellers

What Percentage Does Amazon Take From Sellers?

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In the vast e-commerce landscape, Amazon stands out as a titan, offering a platform for millions of sellers to reach customers globally. However, the convenience and reach of Amazon’s marketplace come at a cost. For sellers, understanding the fee structure is crucial for effective financial planning and maximizing profits. One of the fundamental questions is: What percentage does Amazon take from sellers? Let’s delve into this topic to gain clarity.

What percentage does Amazon take from sellers? Guide For Sellers

Amazon’s Fee Components

Before dissecting the percentage Amazon takes from sellers, it’s essential to grasp the various components that constitute the fees.

Referral Fee:

This is a percentage of the total price (including shipping) that Amazon charges for each product sold. The referral fee varies by category, ranging from as low as 6% for personal computers to as high as 45% for Amazon device accessories.

Variable Closing Fee:

Amazon charges a variable closing fee for media products like books, music, videos, DVDs, software, and video games. This fee is applied per item sold based on the buyer’s product type and shipping method.

Fulfillment Fees:

If you opt for Amazon’s Fulfillment by Amazon (FBA) service, you’ll incur fulfillment fees. These fees cover the cost of shipping, customer service, and product returns. Fulfillment fees vary based on the product’s size, weight, and category.

Monthly Subscription Fees:

Amazon offers two selling plans: Individual and Professional. While the Individual plan doesn’t have a monthly subscription fee, it charges $0.99 per item sold. The Professional plan costs $39.99 monthly and doesn’t charge per-item fees.

Additional Fees:

Depending on your selling activity and services, you may encounter other fees, such as high-volume listing fees, storage fees for inventory stored in Amazon’s warehouses, and advertising fees for sponsored product listings.

Percentage of Revenue Amazon Takes

Now, let’s focus on the percentage of revenue Amazon takes from sellers. The two primary components to consider are the referral and fulfillment fees.

Referral Fee Percentage:

The referral fee is a percentage of the product’s price. On average, referral fees typically range from 6% to 20%, with specific categories commanding higher percentages. However, checking Amazon’s fee schedule for your product category is crucial to determining the exact percentage.

Fulfillment Fee Percentage:

If you utilize Amazon’s FBA service, the fulfillment fee is calculated based on the product’s size and weight. This fee varies widely depending on the dimensions and category of the product.

Calculating Total Fees

To calculate the total fees deducted by Amazon for each sale, you’ll need to add the referral and fulfillment fees (if applicable). For example, if the referral fee is 15% and the fulfillment fee is $3.00, and your product sells for $20, the total fees would be:

Total Fees = (Referral Fee Percentage x Product Price) + Fulfillment Fee

Total Fees = (0.15 x $20) + $3.00

Total Fees = $3.00 + $3.00

Total Fees = $6.00

Strategies to Mitigate Fees and Maximize Profits

Now that we have a clear understanding of the fees involved in selling on Amazon let’s explore some strategies to mitigate these fees and maximize profits:

Optimize Product Pricing:

Since referral fees are calculated based on the product price, optimizing your pricing strategy is crucial. Conduct market research to understand competitor pricing while ensuring your prices remain competitive. 

Evaluate Fulfillment Options:

While FBA offers convenience, there may be more cost-effective options than this, especially for low-margin products. Evaluate whether fulfilling orders yourself (Fulfillment by Merchant or FBM) might result in lower overall fees. Consider factors like shipping costs, storage fees, and handling expenses.

Reduce Fulfillment Costs:

If you use FBA, minimize fulfillment costs. This includes optimizing your product packaging to reduce dimensions and weight, which can lower fulfillment fees. Reviewing and managing your inventory helps avoid long-term storage fees.

Utilize Amazon Advertising Wisely:

Advertising on Amazon can increase product visibility and sales but comes with additional costs. Optimize your advertising campaigns to ensure a high return on investment (ROI). Focus on relevant keywords, monitor campaign performance, and adjust bids to maximize efficiency and minimize ad spend.

Diversify Sales Channels:

While Amazon offers significant reach, relying solely on the platform can make your business vulnerable to fee increases and policy changes. Consider diversifying your sales channels by selling on your website, other online marketplaces, or brick-and-mortar stores. This can help spread risk and reduce dependency on any single platform.

Negotiate with Suppliers:

If feasible, negotiate better terms with your suppliers to lower product costs. Lowering the cost of goods sold (COGS) can directly impact your profitability and offset some of the fees incurred from selling on Amazon.

Monitor Fee Changes and Policies:

Stay informed about any changes to Amazon’s fee structure or policies. Review your expenses and adjust your strategy to adapt to any modifications that may affect your bottom line.

Reduced Returns and Complaints:

Providing accurate product descriptions, high-quality images, and responsive customer service can help minimize returns and complaints. Fewer returns mean fewer associated costs, such as return shipping fees and potential refunds, helping you save money in the long run.

Improved Seller Metrics:

Amazon considers various seller metrics, including order defect rate, late shipment rate, and customer feedback, to evaluate seller performance. Maintaining high metrics can result in benefits such as Amazon Prime and Buy Box placement eligibility. These privileges can increase visibility and sales, ultimately contributing to higher profits.

Enhanced Brand Reputation:

Building a solid brand reputation on Amazon can differentiate you from competitors and attract loyal customers. Positive reviews and ratings can instill trust in potential buyers, leading to higher sales volumes and repeat business. A reputable brand can also command higher prices, allowing you to maintain profitability despite Amazon’s fees.

Long-Term Growth Opportunities:

Investing in customer satisfaction lays the foundation for long-term growth and sustainability. Satisfied customers will likely engage with your brand over time, generating a steady revenue stream. As your customer base grows, you’ll have more opportunities to scale your business and expand into new product categories or markets.

Conclusion

While understanding Amazon’s fee structure is essential for optimizing profitability, it’s equally important to prioritize customer satisfaction as part of your business strategy. By delivering exceptional experiences, minimizing returns, and building a reputable brand, you can mitigate the impact of fees and create a sustainable path to success on the platform. Remember that happy customers drive sales and contribute to your bottom line by reducing expenses and fostering long-term growth. 

FAQs

How much of a percentage does Amazon take from your sale?

Amazon typically takes a referral fee ranging from 6% to 20%, depending on the product category.

Does Amazon take 50%?

No, Amazon does not take 50%. The percentage varies based on the product category and other factors.

Does Amazon take 40%?

No, Amazon does not take 40%. The referral fee percentage varies by product category.

How much does Amazon take from your profit per purchase?

The amount Amazon takes from your profit per purchase depends on the referral fee percentage and any additional fees, such as fulfillment fees.

What fees does Amazon charge sellers for using its platform?

Amazon charges referral fees, variable closing fees for media products, fulfillment fees for using FBA, and monthly subscription fees for professional selling plans.

Do sellers have to pay additional fees for using Amazon FBA (Fulfillment by Amazon)?

Yes, sellers using Amazon FBA incur additional fulfillment fees for services like picking, packing, and shipping their products.

 

Picture of Zeeshan Riaz <br> <span class="designation">Chief Operating Officer</span>
Zeeshan Riaz
Chief Operating Officer

With education and experience in IT. Law and E-commerce industry, I have successfully helped more than 250 E-commerce businesses worldwide to reduce their operational cost with cutting edge eCommerce Marketing Services. I do manage a team of more than 250 people team which includes Amazon, eBay, Shopify, website development, SEO and SMM experts.

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