While Amazon itself empowers ecommerce sellers to launch their businesses, the company’s FBA program is especially attractive, and the pricing structure lets you opt in to additional services that can save you time and headaches as your business grows. And for the brands that have already scaled into thriving entities, Amazon is a one-stop shop for handling all the small operational tasks that seem to eat up your entire day.
If you operate a large ecommerce business, you’ve likely explored the possibility of using FBA (or even adopted it) to optimize your fulfillment process. However, its complex fee structure can be difficult to decipher and even harder to account for, so online retailers often struggle to reconcile these expenses in their accounting systems. The Amazon Settlement Statement doesn’t help either because it aggregates your fees and makes them almost impossible to decode.
Keeping track of the many transactions processed for each fee and service on a per-item basis is a tall task for even the most efficient accountants because there is a seemingly never-ending list of fees associated with FBA and no foolproof way to account for them manually. But by auto-syncing your spending with Amazon FBA accounting software, you ensure you don’t miss a single detail.
Ahead is a breakdown of all the major fees associated with using FBA and the ways you can benefit from an automated accounting software like QuickBooks.
FBA Fees: The Basics
Amazon divides FBA fees into two major categories:
- Fulfillment fees
- Monthly storage fees
Each item you sell has a different flat fee associated with fulfillment and storage based on its size and weight, so selling a large variety of products quickly becomes a painstaking accounting task.
Items are divided by size into standard or oversized and then by weight, which is a sliding scale of a base fee plus extra cost per pound over the category’s starting weight.
Fulfillment Fees Per Unit
|Small (10 oz or less)||$2.41|
Small oversize (71 lb or less)
+$0.38/lb above first 2 lb
|Small (10+ to 16 oz)||$2.48|
Medium oversize (151 lb or less)
+$0.39/lb above first 2 lb
|Large (10 oz or less)||$3.19|
Large oversize (151 lb or less)
+$0.79/lb above first 2 lb
|Large (10+ to 16 oz)||$3.28|
+$0.91/lb above first 2 lb
|Large (1 lb to 2 lb)||$4.76|
|Large (2 to 3 lb)||$5.26|
|Large (3 to 21 lb)|
Starting at $5.26
Hazardous items that qualify for the FBA Dangerous Goods (Hazmat) program fall under a different fee structure, and Amazon states that “apparel, sports apparel, and outdoor apparel products will incur an additional $0.40 per-unit fulfillment fee. The fee will not apply to apparel accessories such as wallets and belts.”
Not even clothing sellers have it easy.
Monthly storage fees break down into standard size and oversized, both for regular and dangerous goods, and you’re charged by the cubic foot. The fees nearly triple in peak times of year.
Amazon also conducts an inventory cleanup on the 15th of each month and assesses which items have been in storage for 365 days or longer. If your inventory hasn’t moved in more than a year, you’re charged $6.90 per cubic foot or a $0.15 per-unit long-term storage fee, whichever is greater.
Just to recap: At this point, you’re paying for an Amazon Seller account, and for every item you sell, you incur a 15% Seller fee; a size-based, weight-based fulfillment fee; and a size-based storage fee. That’s a lot to keep track of for just one item—let alone tracking these expenses across your entire product catalog.
Don’t forget, this isn’t the end of the fees. In a perfect world, Amazon’s FBA revenue calculator could tell you everything you need to know, but there are also contextual fees for when the process isn’t 100% smooth.
Contextual FBA Fees
Let’s say you have products that aren’t moving, and you want to avoid those pesky long-term storage fees. Amazon can remove your inventory and charge your account based on the size of each item and the way they remove it. If you want them to also process your returns, that’s another optional perk.
|Service||Standard-size (per item||Oversize (per item)|
|Liquidation||10% of liquidation proceeds||10% of liquidation proceeds|
There are more fees associated with unplanned services, such as when Amazon receives a Seller’s inventory that hasn’t been properly prepared or labeled. To avoid this, you can opt in to the service and ensure you’re meeting the standards—for a per-item fee.
FBA isn’t solely for Amazon-exclusive online retailers. If you’re selling on your own website or on another channel along with Amazon, you can fulfill orders with MCF, which is FBA under a different name with different fees.
MCF fees are higher than FBA fees, but they only apply to the products you sell on your website or other channels. In exchange, you avoid Amazon Seller fees.
There are six types of Amazon chargebacks ranging from vendor to operational errors. These are charges made to your Seller account to account for non-compliance, failed communication, or other violations that affect your profitability when using FBA.
Optional FBA Services
In addition to standard FBA fees, Amazon provides a variety of optional services that sellers can choose to opt in to. These are all the ways FBA can streamline your fulfillment even further:
- Amazon Partnered Carrier program: Amazon-partnered carriers offer deeply discounted rates for shipping your inventory to Amazon.
- Multi-Channel Fulfillment: Have Amazon fill orders for inventory that you sell on your own website and other channels.
- FBA Label Service: Amazon will apply barcode labels to your inventory for you.
- FBA Prep Service: Amazon will prepare your inventory so it meets FBA prep requirements.
- FBA Repackaging Service: Amazon will repackage your eligible FBA items that buyers have returned so the items can be resold.
- Inventory Placement Service: When you create a shipping plan, your shipment may be split into multiple shipments going to different fulfillment centers. With the Inventory Placement Service, you can send all of your inventory to a single fulfillment center, and Amazon will distribute it for you.
- Manual Processing Service: If you do not provide box content information when you ship inventory to FBA, Amazon will manually process your boxes at the fulfillment center.
Just Automate It
One more recap of the fees, per item, that you pay as an Amazon Seller on top of your monthly membership:
- Seller fee, 15% of the item’s total
- Size and weight-based fulfillment fee (FBA/MCF)
- Size-based storage fee, monthly and possibly long-term
- Inventory removal fee when you need to clear it out
- Unplanned service fee(s)
- Optional service fee(s)
- Chargebacks, price on a case-by-case basis
As a thriving ecommerce business, you’re likely moving hundreds of thousands of dollars in product every year, if not more. That’s a lot of line items in FBA fees alone, meaning a lot of data entry and opportunity for manual errors.
Navigating Amazon’s many FBA fees can feel like a maze, and there are dozens of factors that determine what you pay. Instead of paying an accountant to make sense of it all, why not automate the process with accounting automation software? You won’t miss a single transaction, and you’ll save an average of 50 hours every month that your accountant can spend giving you financial advice and helping boost your revenue. Automation will provide a better picture of your business’s financial health—with no surprise expenses.
Ready to take your ecommerce business to the next level? Webgility is a multichannel retail management solution that empowers businesses to thrive in ecommerce by integrating their systems, automating their operations, and delivering powerful insights—so they can move faster, make better decisions, and win. Schedule a demo to learn more.