Please feel free to ask your questions using the comments link and I will do my best to provide the most complete answer. For this post please keep your questions about FBA (Fulfillment by Amazon). I will create additional Q&A posts on WebStore, Seller Central, and other Amazon programs as I move forward.
Here is the most common FBA question:
Q. How much does FBA cost?
A. The simplest way to answer this question, is link you to their website, so open up that page in a different window, as you read my explanation. Here is how it works:
- Inventory Storage is .45 cents per cubic foot, per month (January to Sept.). So, if your item is 1 cubic foot in size and stays in the warehouse for an entire month, you would be charged $0.45 for warehousing it. This fee is actually charged by the day (1/30th of the monthly fee) so if the item only stays in the warehouse for 10 days, your warehouse fee would be 1/3 of the .45 cents or .15 cents. A 1 cubic foot item that stayed in the warehouse for 6 months before it sold, would cost $2.70 in inventory storage fees. Amazon only charges you for the space you use and the time it is in the warehouse, so in my case the average DVD would cost me about 2 cents per month in inventory storage, if it took 6 months to sell, my total inventory cost for that item would be $0.12 cents.
To put this into perspective: I sell media items and roughly 75% of the items I warehouse at FBA sell during a 30 day period. At any one point during a month I may have 800 items sitting in the warehouse. My total warehouse fee for the month of January was under $3.00.
Not: The inventory fee does rise to $0.6o per cubic foot, during the 4th quarter because of the increased demand during that period.
- Shipping - Your shipping charges are broken down into two categories. Amazon Fulfilled (Amazon.com or WebStore orders) and Basic Fulfillment (all other orders)
Amazon Fulfilled orders have an order handling fee, a pick and pack fee and a weight fee.
Let's take an example from one of my orders for a CD under $25: Since I sell media items I am not charged an order handling fee (see pricing schedule), my pick and pack fee is $0.50 and my weight fee is around 7 cents (they only charge you for the raw weight of your item, not the whole pound rate, which is $0.40 per pound) My total FBA charge to ship that item is $0.57 cents. When I shipped items myself with Glacier Bay, an avg. CD would have cost me about $1.56 including packaging, delivery confirmation, direct labor and postage.
Basic Fulfillment shipments are orders that are created outside of Amazon's system and fulfilled by Amazon from your inventory ie. eBay and Website orders. Basic Fullfilment orders have a pick and pack fee, a shipping method fee and a weight fee.
Let's take an example of shipping a CD under $25 to an eBay customer: my pick and pack fee is $0.60 (for media) and I'm shipping it "standard" so my shipping method fee is $1.90 my weight fee is around 8 cents (they only charge you for the weight of your item, not the whole pound rate, which is $0.45 per pound) My total FBA charge to ship that item is $2.58 cents.
Basic Fulfillment is certainly more expensive than Amazon Fulfillment, so do the numbers to determine if it is worth it for you. IMO, it certainly is worth using FBA for all of your Amazon orders and if you sell multi-channel and can control your S&H prices to the customer it may be worthwhile to use Amazon to fulfill all of your orders.
- In-Bound Freight Charges - Since you have to ship your inventory to Amazon's warehouses, make sure to calculate the fees in your cost structure. Amazon does give you the ability to use their UPS rates, which can save you a ton of money. My avg cost per item to ship to Amazon's Reno warehouse is around 10 cents each, using Amazon's UPS rates.
What else would you like to know? Just use the comments section to ask me any question related to FBA and I'll try and get you the answer as fast as possible.