Amazon referral fees and other Amazon FBA fees are sometimes neglected or overlooked by some Amazon sellers. Understanding the importance of these Amazon seller fees will help influence your business transaction and approach.
For Amazon FBA sellers to calculate the growth of their Amazon business and understand exactly what they are paying in fees, we’ve highlighted useful facts regarding Amazon referral fees and other Amazon FBA fees.
Things Sellers Should Be Mindful of Regarding Amazon Referral Fees
What are Amazon Referral Fees?
Briefly stated on Amazon Seller Central’s help page, referral fees are fees that sellers pay on each item sold. Since Amazon plays a role in facilitating the transactional relationship between an Amazon seller and its buyer, it deducts a certain percentage of the total payment the seller receives. Hence, the referral fee.
How Are Amazon Fees Calculated Along With Referral Fees?
The referral fees on Amazon follow certain criteria, depending on the category a product belongs to. The majority of the Amazon referral fees are calculated on a percentage basis, which will be discussed later.
In general, listed Amazon products are categorized into two, namely the Media and Non-Media Products. Any sale transaction made in both of these general categories is inclusive of Amazon referral fees.
As per Amazon’s own statement, the company “deducts the greater of the applicable referral fee percentage or applicable per-item minimum referral fee calculated on the sale price” (total sales price for media products).
To give you an overview of how media and non-media product Amazon seller fees, along with the Amazon referral fee are calculated, below is a guide on how to calculate Amazon referral fee.
How Is the Amazon Referral Fee Calculated?
As previously mentioned, Amazon referral fees are calculated on a percentage basis. For example, the referral fee charge for an item is 15% and the item is priced around 100 USD, the calculation for the referral fee is –
$100 x 15% (referral fee percentage) = $15 Amazon referral fee
And if by chance the product goes on sale during a particular day, Amazon calculates the referral fee of the $80 sale price, not the original $100 price.
$80 (sale price for the day) x 15%(referral fee percentage) = $12 Amazon referral fee.
What Are the Referral Fee Percentages?
When doing a Google search for the Amazon referral fee, sellers will normally see 15% as the usual referral fee percentage. However, new sellers should realize that the referral fee percentage for an Amazon product varies, depending on its category.
The idea that 15% is the standard Amazon referral fee could perhaps be associated with the fact that the majority of the referral fee percentages are 15%. Notwithstanding the usual referral fee, there are other referral fee percentages based on the product category, even as low as 6% and a minimum fee of $0.30 minimum per item.
Please refer to the image below for guidance on referral fee percentages. Worth noting US marketplace updated referral fees for 2020.
Amazon Seller Central: A screenshot (cropped of) Amazon referral fees, Retrieved Aug. 28, 2020, From https://amzn.to/3lMH479
Can Referral Fees Be Reduced?
Strictly speaking, sellers cannot directly reduce referral fees. Amazon referral fees are compulsory, they cannot be avoided. Although the referral fees are unavoidable, sellers may be strategic about which items they sell on Amazon. With the help of the Amazon FBA calculator, sellers can choose certain items that can lead to reduced referral fees.
Other Amazon FBA Fees and Selling Fees You Should Know
If you are a newbie Amazon seller or a tenured one wanting to refresh your knowledge about Amazon selling fees, here are some of the fees associated with Amazon FBA transactions.
Amazon FBA Fees
Simply put, the FBA fulfillment fee refers to the flat fee that Amazon charges to FBA sellers for fulfilling their orders. Such a fee covers the order and weight handling of the item.
Sellers can calculate possible fulfillment fees using the revenue calculator provided by Amazon. Similarly, since dimensions and weight are critical components in calculating FBA fulfillment fees, sellers should also be familiar with its classification as seen in this Amazon Seller Central article.
Monthly Inventory Storage Fees
Since the Amazon FBA program requires sellers to deposit their products in the Amazon warehouse, Amazon charges sellers for the storage fee. If you are a new seller, you should know that the fees are based on two product size tiers, namely the standard-size and oversize. For the schedule of payment charge, it is between the 7th and 15th.
As mentioned, storage fees are based on product size tiers and are charged by the cubic foot. Apart from the product size, storage fees also vary depending on the month of the year, as seen in the image underneath.
Amazon Seller Central: A screenshot (cropped) of monthly inventory fees, Retrieved Aug. 28, 2020, from https://amzn.to/31C4vb7
Long-Term Storage Fees
Concerning the Monthly Inventory Storage Fee, Amazon also charges a Long-Term Storage Fee for items stored in the warehouse for more than 365 days. The storage fee is $6.90 per cubic foot or $0.15 per unit, whichever is greater.
To check which listing in Amazon inventory is about to be subjected to the long-term storage fee, sellers may simply check their Inventory Age or Inventory Health reports. Seller Snap seller analytics also includes these data points within the platform, which you can read more about here
Removal Order Fees
The FBA removal order fee is charged to sellers for the removal of inventory from the Amazon fulfillment center. Similar to the storage fee, removal fees also have their corresponding charges, depending on the size tier, shipping weight, or per unit fee.
You may refer to the image below for guidance.
Amazon Seller Central: A screenshot (cropped) of removal fees, Retrieved Aug. 28, 2020, from https://amzn.to/34FGge8
Returns Processing Fees
If a customer returns a product that was bought under one of Amazon’s categories that offers free returns shipping, the returns processing fee is charged to the seller. The usual categories that Amazon offers free returns shipping include; Apparel, Watches, Jewelry, Shoes, Handbags & Sunglasses, Luggage.
The calculation for the returns processing fee is based on the total fulfillment fee for the given product. To be more specific, below is a clear illustration of how the fee is applied.
Amazon Seller Central: A screenshot (cropped) of the application of returns processing fee charges, Retrieved Aug. 28, 2020, from https://amzn.to/2EFapiD
Unplanned Service Fees
An unplanned service fee is a type of fee that Amazon charges for any unplanned services in response to any compliance issue with an inventory’s packaging and preparation, shipping, and routing requirement. Simply stated, if your product arrives at the warehouse without proper labeling or preparation, Amazon provides those services on your behalf, while applying a per-item fee.
In charging sellers for the unplanned services, Amazon created a table showing particular issues and their associated fees. Please check the image below for guidance.
Amazon Seller Central: A screenshot (cropped) of unplanned service fee charges, Retrieved Aug. 28, 2020, from https://amzn.to/3jleRSH
Amazon FBA Preview Tools
To assist sellers with their fee calculations and to give them a refined overview of the potential fee expenses, Amazon provides preview tools that sellers may utilize. Refer to the table below for details.
|Product Size Tiers:||To determine applicable fulfillment fees, this tool will help determine the size tier of the product.|
|Fee Preview:||For items on current FBA inventory, this tool will help estimate fulfillment fees.|
|FBA Revenue Calculator:||With the help of active Amazon listings, this tool will assist sellers in estimating FBA fees and potential revenue. For the FBA Calculator usage guide, CLICK HERE.|
Miscellaneous Service Fees
Apart from the Amazon referral fees and other Amazon FBA fees, other important miscellaneous service fees should be taken into consideration when calculating potential expenses in running an Amazon business.
Although only a few sellers will have to pay for the succeeding fees, it is applicable to both Amazon FBA and FBM sellers.
If you are a seller whose niche items fall under media categories such as books, DVDs, music, software & video games, video, video game consoles, and video game accessories, Amazon charges a flat fee of $1.80 fee per item sold. Similar to Amazon referral fees, closing fees are deducted from sales proceeds. There is no need for sellers to make advance or scheduled payments.
High-Volume Listing Fee
This listing fee should only concern Amazon sellers with more than 100,000 products listed. However, if you are interested in increasing your Amazon inventory and product listing, you will have to prepare a monthly flat fee of $0.005 per eligible ASIN.
Unlike the Amazon referral fee which will be deducted during the purchase transaction, the high-volume listing fees are paid at the same time as the FBA storage fees. This particular fee is deducted either from the Amazon account balance of the seller or from the seller’s credit card.
Refund Administration Fee
This fee only applies when a shopper requests a refund for an item that you have already paid for. It is Amazon who will be issuing a refund to the buyer, and sellers will have to pay the refund processing fee of either $5.00 or 20% of the refunded charge, whichever is less.
Knowing the Real Value
If you are really serious about your Amazon business, you should know each detail of the business including fees. One way of staying in touch with your Amazon FBA venture is to understand the fees involved in every transaction you make.
To supplement your understanding of the Amazon referral fees and other Amazon selling fees, you should also take advantage of Amazon seller tools for efficient business operations.
Amazon seller tools like Amazon repricers, the Amazon FBA calculator and inventory management tools will help you understand the real value of your business.