When is FBA cost effective

#1

I am trying to work out if this is worth the hassle on smaller cheaper items - say a pair of scissors.

for example I sell a pair of scissors for £1.99 and charge £1 P&P = total sale £2.99

amazon take their cut - say 17% which gives me £2.48 in my hand

from that I take off 7p for the jiffy, 1p for the franking label and 58p for the franking

that now leaves me with £1.82.

if i had gone FBA

pick and pack = 80p
standard envelope under 100g = 41p
size is small so monthly storage is going to be around 1p (based on 20cm x 10cm x 2cm = 0.0004m2 x £14.12)

that gives an fba fee of £1.22
add on the amazon selling fee of 51p (based on 17% fee) and i am left with a total deduction of £1.73

if i charge the original £2.99 i get left with £1.26

thats 56p worse off per sale

can someone confirm my sums are correct - if they are then FBA doesnt work for the lower priced items.

#2

Thats my understanding too.
The fixed price elements of FBA make it more cost effective on higher price items. Your pick & pack of 80p and 41p weight price applied to a £10+ item is more efficient.
We send out stuff valued under £5 ourselves and most higher priced stuff we use FBA on - usually with the FBA costs being lower than our postage costs would be.

#3

Don’t forget too that customers now have to spend over £10 to get free delivery on FBA too.

I recently had a phone call from an Amazon marketing agent trying to get me to take up FBA. Most of my products are under £10 and she very cleverly avoided any mention of the £10 limit for free delivery. FBA is designed to make Amazon more money. If you make more money in the process then that is a bonus but it really isn’t designed for your benefit.

#4

We do a fair bit under £10 on FBA, haven’t noticed any drop in sales of those as a result of the changes.

And yes amazon’s actions will be to make them money. Whether we make money is incidental, never do something simply because you can.
FBA fees tend to be below (in some cases a lot below) what it would cost us to post the item, never mind the box and packing. Very handy too at times like now when we have holiday settings on, still stock for sale.

Edited by: Martin on Sep 25, 2013 2:18 PM

#5

Starting to see that FBA fees are getting higher than the amount you get, sold a cd 8,99 fee’s were 5,30 which left 2,60 euro’s.
Plus on UK sales starting to notice that too fee’s higher than the amount you get.
One seller was banging out dvd’s for 74p so they lose selling at that price seems crazy to me.
Could be time to start pulling back items and selling them myself.

#6

Total of fees out of one 8,99 order were 5,30.

#7

FBA fees were that high? Or total fees?
Our EU prices on the other sites are set to take both exchange rate and any fees into account.

#8

For FBA its usual to look at the FBA fees seperate from amazon fees, so you see what extra is payable rather than the total. Sending yourself you’d have some fees regardless.
Sales on the other EU sites tend to have higher fees because of shipping from the UK fulfilment centre, can keep them down by having in a local fulfilment centre. We don’t bother, not big enough to stock in multiple countries. Instead setting price to cover the costs including exchange rate.

#9

Another point to remember is they do not always cubicscan all products on receipt and if the original seller which has set up the listing has put 0.5kg in the product shipment details rather than 0.05kg, you will be charged on the 0.5kg

Advise to always check these product details as we learn our lessons from all the stock sales through their fulfilment.

#10

You can ask Amazon to have any items measured if you think the size or weight they’ve previously calculated is incorrect.

#11

Don’t recall finding one wrong, only checked a few thousand so far.

closed #12