Understanding the Compensation Structure
Fulfillment by Amazon (FBA) is a popular program offered by Amazon that allows merchants to store their products in Amazon's fulfillment centers. Amazon handles the shipping, handling, and customer service for the merchant's products. Additionally, FBA products are eligible for Amazon Prime, which can increase sales by giving customers free two-day shipping and other benefits. FBA is an attractive option for many merchants, but it's essential to understand the compensation structure to determine if it is a good fit for your business.
Compensation Structure
The compensation structure for Amazon FBA varies depending on several factors, including the size and weight of the product, storage fees, and shipping fees. When a product is sold, Amazon takes a referral fee, a percentage of the sales price, and any additional fees for storage and shipping. The referral fee ranges from 6% to 45%, depending on the product category.
Storage Fees
Amazon charges storage fees for products stored in their fulfillment centers. Fees are based on the product volume and the time of year, with higher fees charged during peak storage months (October to December).
Shipping Fees
Shipping fees are also an important part of the compensation structure for Amazon FBA. These fees cover the cost of shipping the product to the customer, and they vary based on the size and weight of the product.