The Amazon market is like a world of martial arts, with people coming in and people going out, just like a besieged city. The new sellers are all full of hope, hoping that they can gain a foothold in this market. Some want to become rich, while others just want to support their families.
But how much money does it cost to do business on Amazon? This is a question that many new sellers ask when they are standing at the door and waiting.
Below we take the Amazon US site (only for professional sellers, using FBA delivery) as an example to explain the specific cost investment issues.
1. Company registration fees
If you register by yourself, the cost is basically just the round-trip transportation fee and the subsequent stamp fee. If you entrust it to an agency and register it in Shenzhen, the fee will be around 1,500.
2. Office space costs
If you choose to work from home, you save on office rent. But as your business grows, you may need enough space to store goods or hire new employees, then you will have to pay office rent every month.
3. Office equipment expenses
If you have a clean computer (one that has not been used to register or log in to other Amazon seller backends), you can use it directly. If not, you'll need to buy a new computer. In addition, there are purchase costs for routers, networks, printers, printing paper, etc.
4. Company bookkeeping fees
After the company is registered, if you do not have a dedicated financial staff, you will need a professional agency to assist with the accounting. The specific fees will also vary depending on whether you register a small or micro company or a general taxpayer company, and this fee must be paid every year.
5. Employee costs
If you are working on your own, it is best to pay yourself a certain salary every month. If you need to hire other employees, then employee costs are also part of the investment.
6. Product procurement costs
From the time you start purchasing samples to the time you finally select a few of them to start selling, purchasing costs will be incurred in between. The investment depends on the quantity of products you purchase and the unit price.
7. FBA first-leg freight
The first-leg freight refers to the cost of sending goods from China to the Amazon FBA warehouse in the United States. This is related to the weight or volume of the goods you send, as well as the shipping method you use (express delivery, air delivery or sea delivery). Of course, it also depends on the quotation given by the freight forwarding company you choose.
8. Amazon store monthly rental fee
The monthly rental fee for the US site is US$39.99 per month. This fee needs to be paid from the moment you register as a professional seller. It is a fixed expense regardless of your operating performance.
9. Amazon Sales Commission
Sellers sell products on the platform, and Amazon charges a certain percentage of commission for each product sold. The proportion also depends on the product category, generally ranging from 8% to 15%.
10. Amazon FBA processing fees
After your goods are sold, Amazon warehouse staff will sort, pack and transport them for you. This process also requires payment, which depends on the weight and size of your products. There is also a detailed help page in the Amazon backend where you can query specific algorithms.
11. Amazon Returns Management Fee
When buyers are dissatisfied with a product, some of them will choose to return it. Then there will be return fees in the middle, and Amazon will charge them according to specific rules. For example, in the case of returns of clothing products, the seller will have to bear the round-trip shipping costs, in addition to a 20% commission fee (Amazon will return 80% of the commission to the seller).
12. Amazon FBA storage fees
The seller's goods are piled up in Amazon warehouses, and Amazon will also charge a certain storage fee based on the weight, size and length of time the goods are piled up. Sellers should speed up warehouse turnover, which can save a lot of costs.
13. Advertising expenses
You can choose to place off-site ads or on-site ads on Amazon. The fees incurred in the process are considered marketing and promotion fees. The greater the competition for a product, the higher the advertising costs will be, but you can control the amount of your budget.
14. Collection Fees
This fee refers to the fee for transferring money back to domestic bank cards after receiving payment from Amazon in the United States. Because domestic bank accounts cannot directly receive U.S. dollars, they need to be converted through a third party (LianLian Pay, Payoneer, etc.). During the conversion process, the third party will charge a certain percentage of handling fees, and the rates of different platforms will also be different.
15. Trademark registration fees
As the platform becomes more and more standardized, more sellers will choose to register their own brands. If you register through a third-party service agency, corresponding registration service fees will be incurred. The current cost of registering a U.S. trademark is more than 3,000 yuan.
16. Other expenses
In addition to those listed above, there are many other miscellaneous expenses, such as purchasing cartons, tape, utility knives, trailers, etc., which will also be a variable cost.
Note: Operating an Amazon store is actually equivalent to opening a company, which requires sellers to calculate the input and output in detail. After all, this is a business, and our ultimate goal is to make money.
The fees listed above are not comprehensive. Other expenses may occur during the operation process, such as VAT fees for European sites. But sellers should not be intimidated by so many input items. Remember a simple formula: Revenue - Cost = Profit. We can control the specific costs that need to be invested, so all we have to do is find ways to increase our income.
