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Amazon commission: how do seller fees work?
Temps de lecture : 5 minutes
In 2023, Amazon earned over $21.38 billion in commissions and other fees charged to third-party sellers on its marketplace. And yes, selling on Amazon does involve costs. How do these various fees and commissions charged by Amazon work? How can you anticipate them and optimize your margins? We explain in this article.
Sommaire
What kind of commissions does Amazon charge?
All charges levied by Amazon are shown on pricing page on the platform's website. There are 3 types:
Commission per sale by product category
Amazon charges a percentage of each sale made on the platform. This percentage is applied to the total invoice, i.e. the price of the item plus shipping and gift-wrapping costs.
The rate varies according to the type of product: from 6% for personal computers to 45% for Amazon devices.
Logistics management costs with Amazon FBA
Ils incluent shipping, order fulfillment, storage or return shipping costs .
These charges differ depending on whether you choose to ship your orders yourself (Amazon Fulfilled by Merchant- FBM) or use the Fulfillment by Amazon (FBA) service.
If you choose FBA, you will be charged a shipping fee based on product category, size and weight. These charges start as follows to $2.41 and can reach over $137.32.
Subscription fees for business accounts
Subscription fees for Amazon business accounts are as follows 39 euros (excl. VAT) per month . In addition to these monthly fees, we charge a fee per sale.
How do I calculate commission on Amazon?
To know your costs for each product sold, you need to identify all the charges that apply for each item sold.
Commission rates by product category
Commissions on products sold vary according to the category to which they belong, with a minimum charge of 0.30 euro.
Some categories have a single percentage applied to the total price. This is the case for the following examples:
Backpacks and handbags: 15%.
Beers, wines and spirits: 10%.
Professional, industrial and scientific supplies: 15%.
Other types of products, on the other hand, are subject to tiered percentages based on the total sales price. This is the case for the following product categories:
Cars and motorcycles, motor sports 15% for the portion of the total sales price less than or equal to 50 euros and 9% for the higher portion.
Baby and nursery : 8% if the total sales price is less than 10 euros and 15% for a total sales price of more than 10 euros
To calculate the commission due, simply apply the corresponding percentage to your sales price.
Other costs to consider
We have already seen that, in addition to the commission on sales, additional charges may apply:
Advertising costs
Amazon allows sellers to boost their sales through advertising campaigns. This is an additional service that sellers must pay for on top of their subscription and sales commissions.
Return shipping costs
Amazon applies a return policy that complies with the legal 14-day right of withdrawal. Within this legal period, you are obliged to refund the price of the product and the shipping costs.
The platform also requires third-party sellers to apply a minimum 30-day return policy. Thus, for any product returned between 15 and 30 days after delivery, the seller is obliged to refund the sale price, excluding delivery charges.
Storage costs
These are billed monthly by the platform for the use of Amazon shipping centers to store their products.
Their amount varies according to several criteria:
Product category. The charges applied range from 0.51 euros/m 3 /month to 242.90 euros/m 3 per month for the "Clothes, glasses, shoes, bags" category.
They range from 0.74 to 431 euros/m 3 /month for dangerous goods and between 0.76 and 444.65 euros/m 3 /month.
Storage period . The platform applies higher storage charges for the period between October and December.
Product size . Fees vary depending on whether the product is a standard or oversized size.
Sample calculation for an Amazon commission sale
Here's a concrete example to help you understand Amazon fees. A seller sells a book for 40 euros. The commission is 15%. You'll have to pay a commission of 6 euros for this sale.
On the other hand, if you use Amazon FBA, you'll have to pay an additional 2 euros for packaging and 5 euros for shipping.
Your total cost is therefore 13 euros.
How can you optimize your margins with Amazon commissions?
Here are our tips for optimizing your margins on the platform:
Choose the right business model (FBA or FBM) to reduce costs
When you sell on Amazon, you can choose between FBA, the platform's fulfillment service, or ship your orders yourself or via a third-party service provider (FBM or Fulfilled by Merchant).
Both shipping/storage methods have their advantages and disadvantages.
Amazon FBA: advantages and disadvantages
Regarding FBA, costs may well be higher for heavy, oversized and slow-selling items. What's more, you'll lose all control over your stock because you don't have access to Amazon's warehouses.
However, the service offers many advantages:
Prime delivery eligibility . A customer who subscribes to Amazon Prime can therefore benefit from a fast 2-day delivery service, at no extra cost. This can be a powerful selling point on the platform .
A competitive advantage to win the Buy Box. It's a feature on an Amazon product page that indicates the preferred seller for a given product, subject to fulfillment. Integrating the Buy Box enables you to increase your sales chances in the face of stiff competition on the platform.
Delegate logistics tasks to focus on your core business on the sale. Amazon FBA has a well-oiled process for order processing, shipping and warehousing. What's more, it also covers returns management and customer service, so you can concentrate on selling.
Amazon FBM: advantages and disadvantages
The seller is responsible for the entire logistics of his sales:
Storage
Shipment (own or third-party)
Returns management
Customer service
In this case, however, the seller must comply with Amazon's service quality standards.
They themselves are responsible for the return policy. This certainly calls for greater responsibility.
On the other hand, it also gives them the opportunity to better understand customer expectations as they interact directly with them.
However, FBM offers the following advantages:
Better control over logistics customized labeling and packaging, and the ability to inspect stock
Better control of the customer experience
Less Amazon fees if execution costs are lower
Maximize your profits by adjusting your selling prices
Price is also a factor criteria selected by the platform to win the Buy Box.
Your pricing strategy must be competitive to maximize margins and attract customers.
Compare Amazon commissions with other marketplaces (Cdiscount, eBay)
Marketplaces all have their own fee-setting policies. We have seen that Amazon charges a monthly subscription fee, commissions on sales and management fees.
Other platforms don't charge commission on sales. Take eBay, for example. The marketplace offers 3 subscription plans ranging from 19.50 to 149.50 euros.
Cdiscount, on the other hand, does not charge any management fees but sales commissions based on product condition and type .
The platform also applies a single subscription of 39 euros per month.
It's up to you to compare these different fees and see which marketplace offers the best value for money.
Amazon tools for managing commissions and margins
To best manage your commissions on the platform, you can use the services offered by the platform or a third-party solution.
Use Amazon Seller Central to track your commissions
Seller Central, in a way, the dashboard, the one-stop shop for your Amazon seller account. You can access them as soon as you create your account on the platform.
You can :
Manage your products
Set up your sales operations
Adjust your prices
Monitor your sales
Monitor customer reviews and ratings
Etc.
You can also track your commissions and expenses . The tool gives you visibility on costs that you must pay to the platform on your transactions.
Analyze your costs with the margin calculation tool
Amazon also provides a gross margin calculator . It is an application that can be downloaded free of charge on the platform. It's an offline tool that uses very little memory on a phone.
Simply enter the cost price, number of units and selling price, and the tool will calculate your gross margin.
Solutions for automating commission management
There are tools on the market that you can use to automate the management of your commissions:
Software such as AMZScout or Jungle Scout for managing sales on Amazon, as well as for analyzing margins, costs and tracking sales.
Accounting software such as QuickBooks or Xero which are integrated into the platform. They enable sales and payment data to be synchronized and commissions to be calculated automatically.
Amazon Selling Partner API ou API Amazon Marketplace Web Service (MWS). These are tools integrated into the platform that you can use to track your commissions. To take full advantage of them, however, you'll need development skills.
Hero helps you maximize your cash flow with Amazon
Hero est a payment solution specially designed to meet the needs of small and medium-sized businesses. who sell their products on marketplaces like Amazon.
To limit these risks, Hero advance payment of their sales .
The company can then repay it while enjoying easy payment terms such as deferred payment (after 30 or 40 days) or fractional payment (in 3 or 4 instalments).
Request a customized quoteSimilarly, the payment platform can ease the financial burden of inventory purchases by bringing forward the payment of supplier invoices.
In short, understanding Amazon fees and commissions is the key to optimizing your margins on the platform.
You can use tools that automate the calculation of these commissions to gain ongoing visibility and adjust your pricing strategies accordingly.
You can also use Hero to optimize your cash flow management and avoid suffering from the platform's payment delays.
