Sales costs on Amazon
Amazon is a platform offering not only online sales brokerage but also various services related to storage, packaging, shipping and return of goods ordered by the customer. Selling your products online is simple and has many benefits, such as the ability to distribute them outside the country and reach many different markets. However, there are costs associated with it – obligatory and additional. What do you need to know before you start offering goods online? An account on the Amazon platform can be free (Basic) or paid (Professional). Subscriptions vary in terms of how fees are calculated. The monthly subscription for Professional is €39 net (£25 net). The most important cost, which applies to both paid and free accounts, is the commission on product sales.
The amount of commission charged by Amazon
The amount of commission charged by Amazon depends on the type of product sold and generally varies between 7 and 15%. For most of the categories offered by the platform, the commission is 15% – such as books and music, automotive, education and science, video games and game accessories, and furniture. The lowest percentage (7%) is deducted when selling computers, electronics and car tires. With reference to some categories, Amazon has defined 2 thresholds for the commission charged. For categories such as children’s accessories, health and beauty, food products, the seller will pay an 8% commission for the final price of the product not exceeding EUR 10 (or GBP 10 for amazon.co.uk). If a product from the above-mentioned groups sells for more than EUR 10, then Amazon will already charge a 15% commission. The situation is similar for jewellery, watches and furniture, but here the amount is higher, which is the limit for the fees charged. The exception to this rule are accessories for Amazon devices – the brand as a manufacturer charges as much as 45% of the full sales amount when ordering them. Amazon has set a minimum commission of EUR 0.30 for a large number of product categories. Please also note that for free (Basic) accounts, Amazon also charges EUR 0.99 (GBP 0.75) for each item sold through the platform.
Additional fees charged by Amazon
Amazon also adds several types of additional fees. One of the most important is the so-called “Closing fee”. This fee is charged for the sale of popular product categories such as books (EUR 1.01), music, DVDs and films, video games (including accessories and consoles) and software (EUR 0.81). If the sale is made via the UK platform, the fee for each of these categories is GBP 0.50.
FBA program – how much does it cost?
Amazon owes its success to perfectly organized logistics. Users using Amazon Prime can expect their order within 48 hours (or 2 in 32 cities in the USA) of payment. Amazon has 180 warehouses, 28 reloading centres and 59 local parcel distribution points. The seller can use them for a fixed fee. FBA, or Fulfillment by Amazon, is a program that offers all services related to the delivery of an ordered product to a customer – storage, packing and shipping. The amount also applies to labelling and withdrawal of the order in case of damage to the package. The cost of this program along with the cost of production can be up to 75% of the price of the goods sold, so it works most often with smaller products. The user should calculate whether the profit from sales after deducting the cost of such a service will be sufficient for them.
Return of goods purchased on Amazon
If the customer chooses to return the goods, and the return address is in the same country where the product was purchased, the shipping cost is their responsibility. In the case of sale in Germany and return to Poland, for example, the seller should pay for the return. With the FBA program, the loss also applies to the return and re-positioning of the goods in one of the warehouses. Amazon reserves the right to retain the commission charged for the order – it does not refund it in full.
Sales on Amazon and law
A sale is followed by its legalization. The seller should have the registration and settle the VAT, and thus pay for the tax and legal service of their store. What is important, however, they do not have to open a business in the country where they sell through the Amazon platform.