Increase the profit of your online shop with the Amazon FBA service
Learn how to register with Amazon FBA step by step in this guide
Listing of the fees that arise when using Amazon FBA
Do you already have a website with an online shop or do you plan to start your own e-commerce business? Do you want to sell more products, and make those products more visible? Then use Amazon as an additional sales platform and, so you don’t have to worry about logistics, use Amazon FBA.
What is Amazon FBA? How does Amazon FBA Work?
The abbreviation FBA stands for Fulfillment by Amazon, which means that the entire logistical processing of your sales is handled by Amazon: FBA takes care of warehousing, picking your goods, packaging and shipping.
Here are some of the advantages Amazon FBA offers you as an e-commerce merchant:
- The manufacturer sends your goods directly to Amazon’s warehouse.
- You do not have to rent additional storage space.
- You do not have to worry about picking and packing the ordered items from your warehouse.
- You do not have to take the goods to the parcel service or have them picked up.
- Customers can return the goods to Amazon free of charge. You have nothing to do with the returns.
And even more important: If you are listed at Amazon FBA, Amazon sells your items under the label „Prime.” For Prime customers, this means that the goods are shipped free of charge and they usually receive them the next working day – a big plus for driving sales. Prime items are also more visible on Amazon and customers have more confidence in goods that are Prime. So you have the opportunity to make significantly more sales.
Costs of Amazon FBA
There is one catch with Amazon FBA, of course: the service costs money. But the costs usually pay for themselves very quickly because you don’t have to hire someone to pack the goods for you and you save working time that you can use profitably elsewhere. For example, for the screening of possible new goods that expand your product range.
How much are the Amazon FBA fees per Month?
Amazon offers e-commerce merchants two fee models:
(a) the professional seller account and
(b) the basic account.
If you sell a lot, the professional seller account is definitely worthwhile for you. With this fee model, 39,- Euro (plus sales tax) are due monthly, but you can sell unlimited items. With the basic account, Amazon charges 0.99 Euro per sale (plus VAT). A professional seller account pays off from 40 sales. In addition to these fees, there are shipping costs, which depend on the size and weight of the items, and a percentage sales fee, which Amazon charges from the total price (item price and shipping fee). The percentage sales charge depends on the product category under which the item is listed at Amazon. Storage fees are also incurred depending on the volume of the stored goods.
How do I start an Amazon FBA Business?
Registering with Amazon FBA as a retailer and using the Amazon platform Seller Central is easy. You need to have an Amazon account, enter a credit card number, provide your email address, bank account number and phone number. In addition, you have to enter whether you are a sole trader or your company has a different legal form (e.g. GbR or GmbH). You should also provide your identity card when you register. Amazon would also like to know whether your shop is entered in the commercial register. In any case, you need a sales tax identification number. Then you have to decide whether Amazon should store your goods only in Germany or also in other European countries. If you start selling through Amazon FBA, it is recommended to choose storage in Germany only. The reason: In the other countries, you must first register for sales tax, which can take some time. Please also note: As a commercial seller, you will of course need a trade licence.
Amazon FBA – Step-by-Step
After registering on Seller Central, you can start posting products on the Amazon Marketplace: you can send them yourself to the Amazon Logistics Center or have the manufacturer send them there (which is often easier and saves storage space). Usually you will have your items imported (often from Asia), and the fastest transport mode is air freight. Remember that import sales tax is payable on import. You should set your product price so that your profit (less all costs) is not too low — the margin should be no less than 10%.
- For the success of your product, a good listing is necessary. Even if your item is already included in the Amazon catalog, you should take the trouble and create your own description, your own listing.
- The most important thing is of course the name (title) of your product. Here you should give the name of your product, also – if available – the most important technical data and of course what makes your product special (e.g. water resistance or similar). The bullet points at Amazon highlight what makes your product special, what advantages it offers your customers, what special technical features it has, etc. These Bulletpoints are usually „scanned“ by customers first. Only when you have sparked their interest do they look at the rest of the product description.
- The description of your product is especially important for customers if there are several similar items on Amazon. Make sure that it is easy to understand and answers any further questions. It will make you stand out from many other sellers. The most important keywords that have not yet been mentioned in the bullet points and title should also appear in the description.
- Good product photos should be a matter of course – show your product from several angles and have important details photographed.
Then you need an EAN number that identifies your product and assigns it to your company. You must also enter this number on Amazon Seller Central. You also need to enter your stock of items. Amazon shows you every sold item in the Seller Central Dashboard and transfers the sum for your sold items regularly, of course minus all fees.
The EAN Code for Amazon FBA
The EAN (European Article Number) is a number required by law for all articles that are on sale. Each article has its own EAN, which identifies the product, the product characteristics and the manufacturer. EAN codes must be purchased, usually from GS1 Germany. All identical products that you offer receive the same EAN code. However, if you sell the same product once in white and once in black, you need two EAN codes. If the products also differ in size, you will need a different EAN code for each size.
From this EAN code you have to generate a barcode, e.g. with the Online Barcode Generator, which you can send as a PDF to the manufacturer of your goods so that he can print it on the packaging. Amazon needs this barcode on the packaging to scan your goods in the warehouse and ensure that the right product is sent.
Amazon FBA and Packaging Goods
If you have your goods shipped from the Fulfilment Center via Amazon FBA, make sure that they are packaged according to Amazon’s guidelines. For example, all of your item’s components must be in a single package, the package must have the EAN code on it, and the product name must be printed on the box if it is a neutral package that does not reveal what it contains. For certain items (e.g. hard drives, sharp-edged goods, etc.) Amazon requires special packaging that protects the product.
It is also important for you to register with the Stiftung Zentrale Stelle Verpackungsregister if you send your goods in packaging to the Amazon warehouse. You are obliged to do this under the packaging law. You must also be licensed with the Dual System. By the way, if you have your articles sent directly from the Amazon warehouse via Amazon FBA, you have one disadvantage: they arrive at the customer in Amazon outer packaging. So you have no possibility to send packages with your own logo.
Shipping Costs for Amazon FBA
For sending parcels, Amazon also charges fees that vary according to size and weight, but also depending on the storage location of the item being sent. The most expensive is when Amazon FBA customers have made the decision to ship their goods exclusively from a logistics centre in Germany when registering with Seller Central. It gets cheaper if you add shipping from Poland and the Czech Republic, but then there are the above-mentioned problems with the VAT registration (which of course have to be solved, but maybe not at the beginning of an e-commerce career). For example, shipping a parcel weighing between 250 and 499 grams from Germany costs 3.03 €, if you add the Czech Republic and Poland, it costs only 2.53 € (as of June 2020).
Experience with Amazon FBA
Many e-commerce merchants were able to significantly increase their sales with the help of Amazon FBA, not least because of its Prime status. Also, items sold through Amazon FBA are often better listed at Amazon, which means that customers become aware of them more quickly. But there are also retailers who do without Amazon FBA and rely on Amazon FBM. With this model, retailers sell their articles through Amazon, but they take care of the logistics themselves. If you want to focus more on your core business (selling and screening new goods) and less on logistics, Amazon FBA is probably the better option for you. If you have an online shop and are a frequent shipper, Amazon FBM is a good option.
Do you want to learn more about the possibilities of Amazon FBA? Get in contact with us here.