Fulfilment fees are going to eat away into my potential profit, how can I utilise and work around this? (New Seller)
Hi All,
I'm new to selling on Amazon.
A business associate of mine started closing their clothing and cosmetics business down a few months ago and gave me all of their stock. I've had it sat in storage for months and now this week have signed up to sell on Amazon.
I've sent 120 small cosmetic bottles of a popular brand to FBA today, pricing them between £5 - £6. Amazon's Fulfilment fees are £2.
As these products were given to me for free, I'm not too concerned about the price, but more just wanting to trial the convenience of Amazon and try and find ways of making it work. But I've been looking at cosmetic wholesalers, where I can buy these products on average for about £3. I've been working out the maths of if I was to continue selling this product and ordering more in. I would essentially pay £3, sell on Amazon for, let's say, £6. - £2 fulfilment fees, -£1 VAT = Me breaking even.
Though we've said now we just want to clear the cosmetics for now and look at selling different products instead, potentially children's toys and games. I've just been trialling these in my inventory this evening, where I've seen a board game at a wholesalers for £22. Amazon recommend selling this at £37 but would take a £9 fee. I've just used the overall calculator and it's actually come up once VAT is deducted from that total, I would actually earn -£0.31.
Whilst I appreciate these running costs are paramount and Amazon would essentially be doing the work for my business, how on Earth do we actually make money from this? I read a lot of success stories about Amazon being the best for their business, and I really want it to be the best for mine too. But genuinely how?
3 replies
Seller_d8YGbIjNqwFxn
You price your products to make a profit. If you feel you can't sell a price a product at a profit then the obvious decision is not to list them.
One thing to note is that FBA products typically sell for more than FBM products. FBA products get more visibility to Amazon prime customers and mostly have next day delivery so you can charge more for them.
Also with cosmetics most of these are not returnable products on FBA. Therefore if a customer raises a return request then you will have to refund them but you won't get reimbursed from Amazon. You would need to factor returns into your pricing.
Search around for the best prices for items, prices can vary between wholesalers. If you can buy direct from the manufacturer you can get the item cheaper as well.
Seller_fqZ8Xc6HyEu7W
We sell goods to make a profit. If you don't get enough profit, then you need to consider increasing your selling price or reducing your costs.
In the case of increasing the selling price, you should consider whether your product is still attractive enough to attract buyers.
Reducing costs can be done in many ways. Pick a more suitable wholesaler, each one has different wholesale prices and you can look for them from more than one platform. By purchasing more items at once, wholesalers can offer cheaper prices. If the product is consumable, it can be sold in sets of several pieces, which also reduces fba's transport costs.
Winston_Amazon
You got some great advice here @Seller_64ANFRIFr4ruq💪💪, I hope it helped you plan out on a pricing strategy!
