Amazon FBA transaction fees breakdown
You have already made the decision to sell your products on Amazon and use FBA to do the fulfillment. More than likely it was the right decision, although there are certain times when fulfilling yourself is the right thing, more often than not Fulfillment By Amazon is the best way forward.
If you are like the ‘old’ me then the trouble is that you view your Amazon transactions as ‘money-comes-in’ and your cost of making the sale as ‘money-goes-out’. When trying to take your Amazon business to the next level it is helpful to step up your game by actually getting to know what the Amazon FBA transaction fees are, why they exist, and then separately code them in you accounting software. One of the keys to scaling-up is getting a good grip on what you are paying for.
What exactly are these FBA transaction fees?
FBA Order Handling Fee
Anyone that has ever made a sale on an item that is not a small media item (i.e. a CD or book) and taken a minute to look at the basic transaction detail has seen the FBA Order Handling Fee. When you look at the example transaction pictured above it doesn’t seem like a deal breaker at less than 1% gross. However, that is not the point. The point is what are the FBA transaction fees, so what is this fee really?
The FBA Order Handling Fee is literally just that – it is a fee to physically touch your product. After all someone has to do it, now that you use FBA you surely aren’t. I do not know why they give media items a pass on this fee. Perhaps it is because of sellers selling used books or because Amazon got its start in media, at the moment lets just call it a mystery and move on to the next fee.
FBA Pick and Pack Fee
The idea of the FBA Pick and Pack Fee is a familiar one. It takes a little bit less digging. Where the order handling fee can be a little confusing because as an Amazon seller you are paying extra for someone to just ‘touch’ your product, the idea that you need to pay for a worker to pick your product from one box and pack it into a new box makes a lot of sense. That is exactly what the Amazon FBA pick and pack fee is for.
FBA Weight Handling Fee
The FBA weight handling fee is sort of an extension to the FBA order handling fee – at least in my eyes. Amazon alludes to this in the title for both fees where you see the word ‘handling’. Just like the other handling fee, you are paying for someone to touch your product above and beyond a simple pick and pack.
More than the first order handling fee, I understand the concept of having a fee for ‘weight’. Objects that are small and mostly inconsequential have a very small fee, even less than order handling (although media like books and CDs do not get off so easy this time). While small items are a breeze to move around, heavy items require special attention and Amazon deserves some sort of compensation for moving weighted products around.
When you think about it, if you sell someone a heavy item then it does require special handling. Look at the example in the image below. You see that Amazon charges a whopping $124.58 for the Amazon Weight Handling Fee, but I get it.
Not only is this item heavy(ish) it is also incredibly awkward in size. What this says is that a single person can probably not move this alone and it would require two people or some sort of lifting device to transport it around.
On the other hand when you look at the original example in the image at the top of the page, the Amazon FBA Weight and Handling fee is only a dollar.
Referral Fee On Item Price
For the most part all of the fees are very cut-and-dry, but none are more relateable than the Amazon FBA Referral Fee On Item Price. Essentially this is Amazon’s commission for presenting your item to the customer and making the sale. Although it is a mouthful to say ‘Amazon FBA Referral Fee On Item Price’, we get it.
At around 15% this Amazon FBA Transaction Fee is a good bargain.
FBA Transaction Fees Conclusion
The FBA Transaction Fees all serve a purpose. They are pretty clear and whether or not you agree with them will factor in to whether or not you want to continue using FBA or even Amazon as a viable sales channel. Knowing what you are paying for is the primary purpose of this blog post and an important step in growing your Amazon business.
The secondary theme of the post is that in order to scale your Amazon business up you need to start paying attention to what all of Amazon’s fees are and what they mean to your bottom line. I would then take it a step further and separately code and track your Amazon incoming sales and outgoing expenses to make growing your Amazon business easier than ever.