Amazon UK Selling Fees Explained
October 17, 2023
For those looking to break into the ecommerce market, selling on Amazon is one of the most - if not the most - lucrative options for new businesses. With immense reach, brand trust and expansive infrastructure already in place, there’s little for sellers to do but find a profitable niche and start selling!
However, selling on Amazon does come at a price; after all, the seller’s tools, logistics, and customer service that the platform offers have to be paid for somehow! But how much does Amazon charge to sell, and what percentage do Amazon take from sellers? For answers to these questions and more, let’s keep reading.
Types of Amazon UK Selling Fees
Referral fees are a core part of Amazon's selling fee structure, but what are they? Essentially, every time a sale is made, Amazon takes a percentage of the sale price, and this is known as the referral fee. These fees can vary significantly depending on the product's category. For some categories, the percentage can be relatively low, while for others, it may be higher - it’s important to research and understand the specific referral fees associated with their product category before launching an Amazon storefront.
Many sellers opt for Amazon's fulfilment services which means that Amazon handles storage, packaging, and shipping of products to the customers. While incredibly convenient, this service, known officially as Fulfilment by Amazon (FBA), comes at a price: fulfilment fees depend on the size and weight of the product, but cover the cost of storage in Amazon's warehouse as well as the picking, packing, and shipping of the product. While this fee simplifies logistics for sellers, it's essential to factor it into overall costs to determine profitability for your niche or product.
Other Possible Fees
Besides referral and fulfilment fees, sellers might encounter other charges; for example, a monthly subscription for those with a Professional seller account. Additionally, if you opt for services like Amazon PPC advertising, which can boost product visibility, there are associated costs to think about. Other potential charges could stem from long-term storage (for products stored over a certain period in Amazon's warehouses) and removal fees, should you wish to have items returned or disposed of.
Factors Influencing Amazon UK Selling Fees
Product Category and Size
The category in which your product is listed on Amazon greatly influences the referral fee percentage: for example, electronics might have a different fee percentage compared to smaller beauty products. Additionally, the size and weight of the product also plays a pivotal role in the fulfilment fee if you're using FBA.
Your choice of fulfilment method - whether it be Fulfilment by Amazon (FBA) or merchant-fulfilled - can also significantly impact overall fees. FBA might seem more expensive due to the added fulfilment fees, but it saves sellers the hassle of handling storage, packaging, and shipping on their hand. On the other hand, merchant-fulfilled might appear cost-effective, but it demands more hands-on involvement from the seller (not to mention the space needed for fulfilling orders and storing stock).
Amazon Seller Account Type
Amazon offers two primary account types for sellers: Individual and Professional. While Individual accounts don't have a monthly subscription fee, there's a fixed fee for every item sold. Professional accounts, on the other hand, come with a monthly subscription fee, but do away with the per-item fee in exchange. Generally, whether you opt for a professional or independent account will depend on the volume of sales you get; one account type may be more economical than the other.
Calculating Amazon UK Selling Fees
To precisely understand how much it will cost to sell on Amazon, you as a seller must consider the cumulative impact of the aforementioned fees: you need to take into account the referral fees, fulfilment fees (if using FBA), any additional service costs (like Amazon PPC advertising), and potential other charges; this will give you a clearer picture of the profit margins.
Strategies to Minimise Selling Fees on Amazon
While selling on Amazon UK comes with unavoidable fees, there are ways sellers can strategize to ensure they maximise profitability.
One way to potentially reduce fulfilment costs is by sending bulk shipments to Amazon's warehouses: when consolidating shipments, you could save on both shipping costs to the warehouse as well as the per-item fulfilment fee. This strategy is particularly useful for sellers with fast-moving products.
Optimal Product Pricing
Having a keen understanding of the competition and market trends can help you price your products optimally; setting the right price point can ensure a balance between competitiveness and covering the Amazon selling fees while still making a profit.
As we mentioned above, effective inventory management can help reduce long-term storage fees; this means regularly monitoring inventory levels and sales forecasts, allowing you to stock products optimally and avoid overstocking fees or potential stockouts.
Consider Alternative Fulfilment Methods
While FBA is convenient, it may not always be the most cost-effective method for all products or sellers. For smaller businesses, exploring alternative fulfilment methods, or even a combination of FBA and self-fulfilment, might help in reducing the bulk of Amazon fees.
For those interested in taking a closer look at Amazon's fee structure or finding strategies to optimise their selling process, official Amazon resources can be invaluable. Here are some official links for further reading:
Amazon's Referral Fees Breakdown: A detailed look at referral fees for various product categories.
Fulfilment by Amazon Pricing: Understand the ins and outs of FBA pricing, including storage and fulfilment fees.
Amazon Seller Central: An essential portal for all Amazon sellers. This platform offers a range of tools, insights, and forums that can help sellers navigate the complexities of selling on Amazon UK.