Amazon seller fees can take a big chunk out of your profits. These fees include referral fees, fulfillment fees, and storage charges. But you can reduce these costs and improve your margins with the right strategies. Here's a quick overview of 10 actionable ways to lower your Amazon seller fees:
- Manage Inventory Efficiently: Avoid overstocking and long-term storage fees by tracking sell-through rates and seasonal trends.
- Track Seasonal Storage Fees: Plan inventory around Amazon’s peak and off-peak storage rates.
- Pick High-Margin Products: Focus on lighter, compact items with steady demand to reduce fulfillment and storage costs.
- Use the FBA Small and Light Program: Enroll eligible items to cut fulfillment fees for lightweight products.
- Choose the Right Seller Plan: Switch between Individual and Professional plans based on your sales volume.
- Reduce Package Dimensions: Optimize packaging to lower fees tied to size and weight.
- Create Product Bundles: Combine items into bundles to reduce per-item fees and increase order value.
- Register Your Brand: Protect your products and reduce costs from returns or counterfeit issues through Amazon’s Brand Registry.
- Minimize Returns: Improve listings and product quality to lower return-related fees.
- Review Account Settings Monthly: Check reports and settings to catch hidden fees and optimize costs.
Amazon FBA Fees: How to Handle and Reduce Amazon ...
1. Manage Inventory Efficiently
Stay on top of your inventory to avoid unnecessary storage fees and improve your profits. Here's how to keep things organized:
Make use of a tracking system to monitor key metrics like:
- Sell-through rate: Compare how many units are sold versus what’s in stock.
- Seasonal trends: Understand how demand changes across different quarters.
- Storage duration: Track how long items sit in the warehouse.
Practical Tips:
- Check your inventory every 90 days. Remove or liquidate items that aren’t performing well.
- Set reorder points to maintain about 30–45 days of safety stock on hand.
- For items approaching the 365-day storage mark, create removal orders to avoid long-term storage fees.
To keep your cash flow healthy, consider financing options like Onramp Funds. They offer quick, equity-free funding, repaid as a percentage of your sales, so you can manage stock and shipping without financial strain.
Also, align your restocking schedule with Amazon’s seasonal storage fee increases. This will help you dodge extra costs during peak seasons (more on that in the next section).
2. Track Storage Fee Changes by Season
Keep an eye on how Amazon's storage fees shift with the seasons to avoid unnecessary costs. During off-peak months, storage rates are lower, but they rise during peak periods. By planning ahead, you can adjust your inventory and save money.
Here are three strategies to help you manage these seasonal changes:
- Restock Before Peak Periods: Use the sell-through data and reorder points discussed in Section 1 to plan restocks before peak months hit. This ensures you're prepared without overstocking when fees are higher.
- Clear Out Slow-Moving Inventory: Move slow sellers out of your warehouse before peak fees kick in. Consider running promotions or using removal orders to free up space.
- Send Smaller, More Frequent Shipments: During peak months, ship smaller quantities more often. This helps you keep inventory levels lean and avoid paying steep storage fees.
If you need financial support to make these adjustments, Onramp Funds offers sales-based financing to help you time your inventory moves effectively.
3. Pick Products with Higher Margins
Choose products with margins that can comfortably cover Amazon's referral and fulfillment fees. To calculate your margin, add up costs like sourcing, inbound shipping, FBA fees, and storage fees. Then, subtract these from your selling price to ensure your net margin aligns with your goals.
Here are some tips for smart product selection:
- Focus on lightweight, compact items that are in steady demand throughout the year.
- Use tools like Onramp Funds' sales-based financing to buy in bulk and take advantage of discounts without straining your cash flow.
Smaller, lighter products often have lower shipping and storage costs, making them easier to price competitively. Regularly review cost and margin reports to identify top performers and phase out underperforming items. Also, consider using FBA Small and Light to reduce fulfillment fees on these profitable products.
4. Use the FBA Small and Light Program
Once you've chosen high-margin, compact products (as discussed in Section 3), consider enrolling them in the FBA Small and Light Program to cut down on fulfillment costs.
This program reduces fees for lightweight, compact items. Here's how to make the most of it:
- Find eligible SKUs in Seller Central.
- Enroll your items using the Small and Light tool.
- Use slim, protective packaging (like poly bags) to ensure your products meet the program's size requirements.
Keep in mind, Small and Light uses standard delivery only. Regularly review your enrolled SKUs, restock popular items, and promote your best sellers to maintain strong profit margins.
5. Pick the Right Seller Plan
Choosing the right Amazon seller plan can help manage costs and improve your process.
Amazon offers two main plans: Individual and Professional. The Individual plan charges $0.99 per sale, making it a better choice if you sell fewer than 40 units per month. On the other hand, the Professional plan has a flat fee of $39.99 per month. If your sales exceed 40 units monthly, the Professional plan becomes more cost-effective. Plus, it offers extra features like bulk listing uploads, inventory management tools, promotional options, and detailed sales reports.
You can also adjust your plan based on demand. For slower seasons, consider downgrading to the Individual plan to save money. When sales pick up, upgrading to the Professional plan ensures you take full advantage of its tools.
6. Reduce Package Dimensions
Amazon's FBA fees are partly based on package size, so using appropriately sized packaging can lower both fulfillment and storage costs.
- Opt for poly mailers or padded envelopes for smaller, lightweight items to minimize unused space.
- Consider using packaging calculators or software to determine the smallest box that meets requirements for each product.
- Combine multi-item orders into one custom-sized box to avoid extra charges for dimensional weight.
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7. Create Product Bundles
Product bundles can help you save on fees by combining multiple items into a single SKU. With this approach, you pay just one referral and fulfillment fee for the bundle, which cuts per-item costs and boosts your average order value.
Here’s how to make bundles work for you:
- Find complementary products: Use sales data to group items that customers often buy together.
- Set up unique bundle SKUs: Create distinct listings with clear titles and detailed images to showcase the bundle.
- Price your bundles carefully: Combine wholesale costs and Amazon fees to ensure you maintain a healthy profit margin.
- Streamline packaging: Use custom-sized boxes for bundles to lower dimensional weight charges.
- Monitor performance regularly: Check bundle sales data every 60 days and adjust combinations if needed.
If you're launching new bundles, consider using Onramp Funds' sales-based financing. This option can help you cover upfront inventory and packaging costs, giving you the flexibility to test different bundle ideas without putting a strain on your cash flow.
8. Register Your Brand on Amazon
Joining Amazon's Brand Registry can help you cut costs by reducing issues like counterfeit products, unauthorized sellers, and customer disputes. Registered sellers report 99% fewer intellectual property violations and lower return-processing expenses, making it a smart move to protect your profits.
Here’s how to get started: First, secure a registered U.S. trademark through the USPTO, which usually takes 4–6 months. Once you have it, log into Seller Central, go to the Brand Registry section, and submit your application. You’ll need your trademark registration number, brand logo, and product images. Amazon typically processes valid applications within 2–3 business days.
After approval, take advantage of the tools available to keep fees down. Use Brand Analytics to monitor and remove unauthorized listings before they lead to costly returns. Add A+ Content to your product pages to improve conversions and minimize returns. Finally, apply Transparency codes to your products to prevent counterfeit chargebacks. These features work together to help you manage costs and maintain healthier profit margins.
9. Minimize Returns and Refunds
Reducing returns and refunds is key to protecting your profit margins.
Returns can eat into profits through processing, restocking, and FBA disposal fees. To avoid this, focus on setting clear customer expectations. Include detailed product specifications, multi-angle images, exact measurements (like clothing size charts in inches), material details, and clear usage instructions in your listings. These steps help customers make informed decisions and reduce the likelihood of returns.
Perform quality checks before shipping. Inspect for defects, ensure packaging is intact, and verify labeling accuracy to prevent returns due to damage or errors. Use customer Q&A data and FAQs to refine your descriptions and address common concerns. For items prone to high return rates, consider adding A+ Content or including inserts with setup guides and tips. Regularly update product documentation based on common return reasons.
Leverage the Returns Report in Seller Central to identify why items are being returned. Use this data to adjust your product features, improve listings, or even add warnings if needed. If a return does happen, act quickly to resolve issues. Offering partial refunds for minor problems can help avoid the cost of full returns.
10. Review Account Settings Monthly
Take some time each month to review your account settings and spot any hidden fees. Start by checking key metrics in Seller Central, like the Inventory Performance Index (IPI), to help manage storage costs and restock limits. It's also a good idea to audit your fulfillment settings and alerts to keep fees under control.
Look at stranded inventory reports and fulfillment settings to identify slow-moving SKUs. Consider switching those items to FBM (Fulfilled by Merchant) and resolving any listing issues. Set up inventory alerts that match your sales patterns to prevent overstocking or running out of stock. These monthly reviews will complement your quarterly inventory checks (see Section 1) and help keep your costs in check.
Don’t forget to review the Fee Preview report each month for unexpected charges. Pay attention to:
- Referral fees
- FBA fee updates
- Storage types
- Your seller plan
To stay on top of fee-related metrics, create a checklist that includes:
- Storage utilization
- Return rates
- Inventory age
- Fulfillment method mix
- Dimension accuracy
If you notice an increase in storage fees, check your inventory aging report. Running promotions or clearance sales can help you move older inventory before long-term storage fees kick in.
FBA vs. FBM Cost Breakdown
When deciding between FBA and FBM, it's important to break down the costs to determine which method will maximize your profits.
FBA costs include fees for picking, packing, carrier shipping, per-cubic-foot storage (which increases during peak seasons), referral fees, Amazon-managed customer service, and handling returns. On the other hand, FBM sellers handle their own storage, packaging, shipping (at carrier rates), referral fees, customer service, and return processing.
To make the right choice, calculate the total cost per unit. Factor in fees, storage time, and return rates. Generally, FBA works well for fast-moving, Prime-eligible items, while FBM is better suited for seasonal, bulky, or slower-selling products. Be prepared to switch methods as storage fees change to maintain your profit margins.
Money Management for Amazon Fees
In addition to regular monthly fee audits, securing financing can help you manage inventory, cover Amazon fees, and maintain steady cash flow.
Smart Cash Flow Planning
Revenue-based financing adjusts repayments based on your sales, making it easier to manage cash flow during slower periods or when building up inventory.
"Onramp offered the perfect solution with revenue-based financing to secure the capital we needed to invest in inventory and pay it back at a reasonable time frame once we made sales. The process was quick, easy, and the support was great."
- Jeremy, Founder and Owner of Kindfolk Yoga
Fast Access to Working Capital
If your monthly sales exceed $3,000, Onramp Funds can provide financing within 24 hours:
- Handle unexpected increases in Amazon fees
- Purchase inventory in bulk to reduce costs per unit
- Prevent stockouts with timely inventory restocking
- Invest in marketing to drive higher sales
Smart Fund Allocation
Here are some effective ways to use your funds:
- Inventory: Make bulk purchases to lower costs
- Storage: Improve warehouse efficiency
- Marketing: Run promotions to boost sales
- Operations: Cover FBA, shipping, and handling expenses
Combine these funding strategies with your monthly Fee Preview report (Section 10) to address financial gaps quickly and effectively.
Summary
Bringing together the detailed cost breakdown and funding strategies, this section shows how all ten tactics connect and work as a whole.
