11 May‘22
Today we would like to touch on the exciting theme of selling on multi-channel marketplaces. Is even selling on the global marketplaces profitable for small businesses?
In our Salestio — Amazon & Ebay Integration, we see sellers starting with dropshipping business, expanding their business to online marketplaces, like Amazon and eBay, and then seeing that all profit is consumed by commission.
So let’s take a look today at how Amazon marketplace calculates commission for services for merchants that would like to do fulfillment on their own (Fulfilled by Merchant’s orders in amazon glossary).
Structure on Amazon Fee
Amazon Seller Fee is contained in the following parts:
- Monthly subscription charges for Professional sellers, for the North American region, are $39/per month. For other region price is similar
- Percent fee on sales, also known as “Referral fees”
Usually, there are no questions from sellers, for a monthly subscription charge. You pay the monthly costs and have the possibility to:
- Export more than 40 items in a month
- Allow using third party integration and tools (like our Amazon integration)
But with “Referral fees” nothing is so clear. And for new sellers is usually a big surprise when they ended up paying high fees for amazon orders.
Amazon Referral fees
First and most important we need to know, that amazon referral are calculated based on the product category and can’t be less than the minimum fee for a specific category.
So to summarize:
- Referral Fee — percent of the sale price. Depends on the product category. Range from 6% to 20%. On average percent ~15%
- Minimum Fee — usually it’s a fixed fee between $0 and $1 if the referral fee is below the minim fee size
A merchant could pull data from all amazon fees, directly from the Seller Central account. It’s located at Seller Central > Reports > Payments > All Statements View.
Amazon Referral fee in marketplaces
As we mentioned above, the amazon referral fee is very much dependent on the category and marketplace where you sell your product.
Please notice that the fee is applied to a listing price together with the cost for shipping.
Detailed information for fees for every marketplace you can find used the following links.
North America Region
US marketplace — https://sellercentral.amazon.com/help/hub/reference/GTG4BAWSY39Z98Z3
Canada — https://sellercentral.amazon.ca/gp/help/external/200336920
Mexico — https://sellercentral.amazon.com.mx/gp/help/external/200336920
Europe Region
United Kindom — https://sellercentral.amazon.co.uk/help/hub/reference/GH78LW99F4XF3Z38
Germany — https://sellercentral.amazon.de/help/hub/reference/GGYND54PM5WB84UM
Italy — https://sellercentral.amazon.it/help/hub/reference/GTM7BFLLKEA8T7C4
Spain — https://sellercentral.amazon.es/help/hub/reference/GCZC4GX2L32EKP6F
France — https://sellercentral.amazon.fr/help/hub/reference/GF9K4BWLZXRPC62U
Netherland — https://sellercentral.amazon.nl/help/hub/reference/GUMBCNJPHD3UV47Q
Poland — https://sellercentral.amazon.pl/help/hub/reference/G8DGDDVY6WEJ522N
Sweden — https://sellercentral.amazon.se/help/hub/reference/GMQ6PTDCN6ZAVA55
Far East Region
Singapore — https://sellercentral.amazon.sg/help/hub/reference/200336920
Australia — https://sellercentral.amazon.com.au/help/hub/reference/G200336920
Japan — https://sellercentral.amazon.co.jp/help/hub/reference/G200336920
Example of Fee calculation for Merchant Fulfilled orders in Amazon Germany
Let’s take a look at one example of a calculation fee for sales in the Clothing category for Amazon Germany.
According to the Amazon Referral fee help article, the percentage of the fee will be 15%, but not less than €0.30
In our example, we are going to sell drop shipped T-Shirts with prints. Our supplier’s cost for T-Shirts is 14€ plus a 3€ shipping fee.
Let’s say we would like to receive a 30% income from every t-shirt sold on our website.
So finally the price of the item should be 22.10€.
Let’s calculate how much we need to pay to amazon as commission.
Amazon referall fee: 22.10€ *15% = 3.32€
Remain profit of 18.78€ — 17€ (cost of the product with shipping) gives us remain profit of 1.78€ from a single sale.
No surprise that due to amazon’s commission, in our initial calculation profit is not so existing.
Increasing Margin, as expected increases profit you as a seller
However, it’s important not to forget about returned goods. Normally all Amazon buyers will expect that return of items is easily managed and they could easily receive a refund for items they don’t like.
Conclusion
Amazon commission is pretty high for low-margin business owners. So you should be very careful when trying to sell items with a lot of profit to you. Considering the number of returns instead of revenue you can count losses.
How to solve this? Either increasing margin for your items, by taking a risk having risk with dropping sales. Or finding a good and popular product that could drive you a lot of sales.
In any case, multi-channel sales are not so easy. And our app “Salestio — Amazon & Ebay Integration” could help you with automatizing daily routine tasks.
If you have questions or would like to learn more, please contact us or even schedule a demo
