Many companies ask: When Selling On Amazon FBA Do I Pay For Shipping?
When brands are new to selling on Amazon, they often see the sales price of the product and think that people are making bank selling to customers. What you might not realize as a brand are the fees associated with selling on Amazon. The fees related to a sale on Amazon can amount to 30-50% of the sales price. So you typically see sales prices higher than MSRP because the seller needs to recoup the fees + the cost of the product and make a little money for their time.
On Amazon, you have sale-related fees that are based on the item category and sales price. These fees can be from 6% – 20% but average around 15% of the sales price. If you are selling media, you can also have a variable closing fee of $1.80 per item.
You also have a choice fo setting up an individual seller account or a professional account. The individual account incurs an additional $1 per sale while the professional account is $39.99 per month. As I have said before, if you plan to sell over 40 items per month, it’s best to get the professional account and save a little on the fees. You have more robust reporting and are able to sell in all categories. You also need a professional account if you plan on using 3rd party software, so if you are using a platform to manage inventory across several e-commerce sites, you might need it from the beginning.
The main question you might want to be answered is, When selling on Amazon, do I pay for shipping? The answer needs a bit of an explanation, so let’s get started.
In the first scenario, you are shipping the items to customers. This is called FBM or fulfilled by the merchant, or MF for merchant fulfilled. You would store the items at your warehouse or 3rd party logistical warehouse and when the item sells on Amazon, you pick, pack and ship the item. In this scenario, you pay the cost at the time of shipping through your shipping service provider or you can purchase a label on Amazon to ship to the customer.
You are able to create different shipping profiles that allow you to charge the customer for shipping at the time of purchase, so you might not lose money on shipping in this case. You can charge a reasonable fee to ship and one that would cover shipping to most of the country. While charges do vary depending on where you are located and the customer is located, you can find the rate to the furthest location and try to make your shipping charge equal to that amount. You have the ability to set shipping rates by going to settings in the upper right corner, and clicking on shipping settings and creating profiles from there. You then apply the profile to your products and voila! you are charging for shipping.
You can also choose free shipping on your products, and add some of the cost into the product price so that you are not losing money with your shipping costs. While you probably can get better rates creating shipping labels at your office as compared to purchasing them at the post office, you still have to pay for the shipment and that comes out of your price you get for the item. Customers love free shipping but you need to decide if you can add the cost into your product price to recover some of the charges.
In the second scenario, you sell the items through the FBA or fulfillment by Amazon program. In this case, the items are available in Prime, and Amazon pays to ship the items to the customer. You are responsible for paying the pick and pack fees, referral fees, and any other related fees for the sale once the item is sold. Amazon stores the items in their warehouse and ships out based on where the customer is located.
In this case, you do not pay for the shipping when Amazon ships the item from the warehouse. But, you DO pay for shipping into the Amazon warehouse and some storage fees, depending on how long the item is stored and the size of the item. Amazon allows you to use their very reasonable rates to ship to warehouses via UPS, but you still might pay from 50c + to ship an item to a warehouse. (You can lower those costs even further with LTL shipping to pennies a pound) And Amazon usually has you ship to multiple warehouses, which can increase costs because they are often on the coasts. Sometimes if you ship more than 18 of the same item (also known as a SKU), you will ship them all to a distribution warehouse. Amazon then sends them to other warehouses – which does not cost you money but it does cost you time. Those items may not be available to customers for 1-2 weeks after being received because they must be shipped to another location and checked in.
With the second scenario, your costs might be less than if you pick and pack, process and ship the item yourself because you can package the items together, ship them once, and then Amazon does the rest. You can work more efficiently and manage your processes of shipping in case packs to your wholesale customers as well as Amazon. In that case, you would not need to add additional systems to manage and ship individual items. This can make selling on Amazon much easier, and customers love the option to Prime to ship quickly and have a lot of trust in Amazon’s processes.
So if you have been wondering, “when selling on Amazon FBA do I pay for shipping?” as the manufacturer, you don’t have to pay for shipping to the end customer but you do have to pay to ship it to the warehouse, along with other fees that are associated with them handling your items and getting them out to the buyer.
If you are looking for help with getting set up on Amazon FBA or writing your listings, you can reach out to us and schedule a call to discuss your needs. We do all the things from listings to full management, and even consulting to get you started on your way to a successful business on Amazon. Whether or not you intend to sell directly on Amazon or just let your wholesalers sell on there, you can control what your brand looks like on the marketplace. Give us a chance to show you what you can do!