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There are more and more false claims going around about how achieving success at an Amazon eCommerce business is easy. Take heed – do not dwell on such fantasies, until you lost touch of what building an Amazon eCommerce business is truly like! 

In this episode, Willy is going to cover:

  • The Top 3 Lies about building an Amazon business;

  • What it is like when you are create an eCommerce business;

  • The things you should do when you go about your business venture.

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TRANSCRIPTION

People always want to know what are the fees that will be incurred when selling on Amazon. They want to know if it is worth it to pay such fees. So, in this podcast, I shall tell you more about the various fees, what are the services you are paying for exactly, and give my two cents’ worth of opinions on whether such fees are worth paying for. 

Okay, first, let us talk about how and where you can go to calculate the fees – even before you start listing your products on Amazon. To do that, you must use the Amazon FBA calculator. Simply google for ‘Amazon FBA Calculator’, click on the webpage that comes out, and click on the option ‘Continue as guest’. After that, you need to enter the ASIN of the product to which you want to calculate the fees for. For those of you who have published your product listings on Amazon, simply get it from your own listings. But for those of you who have not, you can find someone selling the same product, and get the ASIN from their listings. It doesn’t matter – because you are now just trying to check what are the calculated fees as a REFERENCE only. You are not going to pay when you enter the ASIN into the Amazon FBA calculator, okay, so don’t worry.

Some of you may be curious – what is this ASIN that I am talking about? Basically, it is like a serial number of products on Amazon. This number is only provided by Amazon for published product listings, alright, so if you haven’t published your listings yet, you won’t get to see this ASIN. And after you entered the ASIN in the Amazon FBA calculator, they may or may not prompt you to key in the dimensions and weight of the chosen product. If they don’t, that means the calculator has already grabbed the information for you automatically, and you don’t need to do anything else. But if they do, just key in the figures as required – you can find them on the Amazon listing page, under ‘Product details’ section.

Now, why Amazon needs to know the dimensions and weight of the product is because their fees are highly dependent on these factors. For example, you can’t expect a small dumbbell of 1 kg to cost the same fees as another item of the same dimensions, but only weigh 50 grams, right? That will be really unfair!

In any case, the next step you need to do will be to enter the selling price of the product under ‘Item price’, then press ‘calculate’ – and that’s it! The fees you ought to pay will be shown. You will also get to know the gross profit you can get after these fees are deducted from the product’s selling price. 

Okay, so if you follow through these steps, you will see the calculated fees, but some of you may feel confused at what you see on the results page. For example, why is there so many different clauses? What do they mean? Don’t worry, here’s a breakdown of the clauses. Basically, you just need to be concerned about three items. These three items are the ‘Selling on Amazon’ fee, the ‘Fulfilment costs’ and the Storage fees’. I will explain to you clause by clause what each of these items mean now.

So, the first item – ‘Selling on Amazon’ fee. This is what I will call the ‘platform fee’ because this is the fee charged by Amazon for using their reputation and traffic. Now, some of you may see this fee as an unfair cost, but you need to understand – Amazon deserves this fee. You see, people buy your products because they believe in Amazon, not because they know your brand beforehand. So, shouldn’t it be fair that you pay Amazon some amount for allowing you to sell on their platform? Especially if you are just a new seller trying to create a name for your brand, then all the more there is no reason for you to complain about this fee. Because you are the one making use of Amazon’s fame to get your products to be seen, alright!

Next, we come to the ‘Fulfilment costs’. This fee is originally split under two different fees, the ‘Pick and Pack fee’ and the ‘Weight Handling fee’, but they are now combined under this name. By paying these fees, you are engaging Amazon to help you with the below services: customer service, packing, shipping, returns, refunds, replacement, etc. For every product you sell via Amazon, Amazon will help to pack your products based on their dimensions and weight into Amazon branded cartons, and they will use special carton/containers to help you ship out your products, if its size or weight is too big for the normal boxes. And all these comes under this fee, okay.

After which, we have the ‘Storage fees’. These are basically the fees Amazon charges you for storing your products at their warehouses. Fees will be calculated based on the number of units per product per month you stored at their warehouses. 

So, in conclusion, the Amazon FBA calculator will calculate a combined fee of the above three fees for you. You will only need to pay for these fees every time your products get sold. I repeat, you pay only when your products get sold. If your products are not sold, then you will only pay for the storage fees.

Finally, we have the last fee that is not listed on the Amazon FBA calculator, but it is a compulsory fee all Amazon sellers need to pay. That will be the ‘Amazon monthly seller fee’, which is around USD39.99 per month. This means that regardless of whether your products are sold or unsold, you must pay USD39.99 per month, once you register yourself as an Amazon seller.

After going through all these fees, if you are still hesitant about whether it is worth it to sell your products on Amazon, let me tell you – just scrape all those concerns, because all these fees are not really expensive!  

Now, you need to think: when operating an e-commerce business, if you decide to sell on your own website, you will have to hire people to help you with stuff like fulfilment, customer service, refunds, replacement, etc. You might spend about thousands of dollars to hire, say, around 10 employees to help you do all those things I mentioned just now. But if you sell on Amazon, you can just spend according to your sales volume per month to pay Amazon to get those things done. Tell me, which is more worth it?

Next, all these fees are charged only when your products get sold. When your products are not sold, you are only charged the storage fees which is, around 50 cents per unit per month for a shoeboxed sized product. This will help to save so much costs! New sellers will typically find this arrangement most beneficial, because they probably won’t have much capital to start off with. 

In any case, if you are still not convinced, let me go through this scenario with you. Imagine you are being hired by me to help me store my products for my e-commerce business. I need you to store my products in pristine conditions, and at the same time you need to do customer service, returns, refunds for me. However, I will pay you a minimum storage fee unless my products are sold. Tell me, will you want to work for me?

Most probably, the answer is ‘no’! But there’s someone who will do all this for me, at a minimal and affordable fee. And that is Amazon! So, why wouldn’t I – or in your case, YOU – choose to pay these fees?

With this, I shall end my episode. See you in the next episode, and do subscribe and follow me if you want to know more about selling on Amazon. Cheers.


Need Help? Book Your FREE
Strategy Session With Our Office Today!

We'll discuss to see if we are a good fit to work together to help you start or scale your ecommerce business.

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