Selling as a Third Party via a Seller AccountĪs a third-party seller, the most common fees you’ll encounter are referral fees, fulfillment fees, and storage fees. We have other content that covers the operational and strategic differences of the above two options in depth, so for our purposes, we’ll just focus on the cost structure for these two methods. Selling via a wholesale model to Amazon Retail, which then turns around and sells that product as a first party (“1P”) on the marketplace.Selling as a third-party (“3P”) seller on the Amazon marketplace via Seller Central.While there are numerous small permutations on how you as a brand sell on Amazon, there are essentially two main formats: Best of all, we’ve packaged the three most common fees into a handy calculator that will spit out item-level margin analysis after you provide some minimal product information.īut first, let’s tackle an important question: “How do I sell on Amazon, and what will it run me?” In this post, we’ve aggregated some of the most common fees you’ll face by deciding to leverage Amazon’s services, focusing particularly on if you use their fulfillment network.
This is a key thing that we do at Bobsled: help our brands navigate the cost/benefit of the seemingly endless opportunities Amazon affords. Want someone to take six-sided photographs of your products? Yep, Amazon will do that too.Īnd while the appeal of this easily outsourced scale is immediate (just ask the 200,000+ sellers), the accompanying costs and fees are less apparent to the uninitiated seller.
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Lackluster user experience on your direct site? No problem all of your customers already know how to search on Amazon. Increasingly though, brands have a third option for growth: “Let Amazon handle it.”ĭon’t want to mess with reverse logistics? Amazon. To achieve differentiation, brands would need everything from owned warehouses, to robust SEO teams, to individualized loyalty programs. Thus, you had brands and retailers investing in every touch point, from the supply chain all the way to customer retention. Outsource it to specialized vendors in bilateral agreements.In days of yore, retail (and eventually by extension, e-commerce) had two options to grow their business: On the other-margin erosion at every turn.īut first, the easily accessible scale. Thus, there are two sides to all the conveniences and services Amazon provides brands-on the one hand, easily accessible scale. This alone suggests that Amazon as platform has allowed a proliferation of meaningfully sized businesses at a speed that even Bezos consigns is “ kicking our first-party butt.” The fact that grabs less headlines is that these businesses incur a real dollars-and-cents cost when sharecropping on Amazon’s channel.
A stat that better illustrates the longtail growth of Amazon is that there are over 25,000 individual sellers that have yearly revenues of over $1,000,000, and a total of 200,000 sellers at the $100,000 yearly mark or higher. Recent data places this number at roughly a 58% to 42% split between 3P and 1P sales.įor all the talk of Amazon’s massive scale in aggregate, it’s equally important to understand the breadth of sellers on the marketplace, spanning from the garage-based retail arbitrager to the enterprise-level brand. The oft-cited stat on Amazon is that more of the marketplace’s sales come from third-party (3P) sellers rather than Amazon’s first-party (1P) retail itself. The New And Updated 2022 FBA Fees Calculator Is Available HERE.
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