Finances

Selling on Amazon

Photo by: Caleb Woods

I have struggled with amazon’s calculations since beginning to sell books on Amazon. At first, I thought “Wow how cool is this”. Then I started to dig deeper into the way they charge what they charge
Amazon fees FBA Pick & Pack Fee ($1.06)
Amazon fees FBA Weight Handling Fee ($0.85)
Amazon fees Referral Fee on Item Price ($1.21)
Amazon fees Variable Closing Fee ($1.35)
Product charges $8.09

In this example above: the cost to sell a book for $8.09 is $4.47 leaving a profit of $3.62. This is amazons cost just for selling the book. If the book cost is $1.00 you are now at $2.62 but you’re not done yet you still have to get it to Amazon. If you’re like me, you will most likely get an average of 28 books into a box with a discounted shipping rate by courtesy of Amazon of nearly 35% to 40%. I pay around $9.00 to $11.00 per shipment which is an average of $0.36 per book and if you subtract that from the $3.62 it leaves you with $2.26. You’re not done yet, though. If you factor in tape, boxes, and labels you will need to subtract that cost as well. For me, I average about $0.08 per book leaving me with $2.18 for a book that was sold for $8.09.
Not bad right? Well, you can do better, much better by fulfilling your own orders it’s not as hard as you may think. Packaging mailers, you can get for free and you can eliminate most of the Amazon fees here is an example using the same example for the book above.
1 LB or less

Sale price for the book under 1 LB.
$ 8.09
$ 3.99 POSTAGE
_______
$ 12.08 Total sale

$ (1.35) Variable Closing Fee
$ (1.21) Commission on sale
$ (2.56) Total cost
$ (2.72) mail postage (actual)
___________
$ (5.28) Total cost to sell

$ 6.80 Net

If your selling Fulfilled By Merchant this is your cost and what you will net from Amazon. Here is where you will start to gain profit filling your own orders. By getting creative you can pick up cardboard boxes for free when your sourcing your books. It may be obvious but I feel I need to point out “Don’t use pizza boxes of ratty looking stained cardboard”. After a little practice, you should be able to knock out about 40 mailers in an hour so if you spend a day doing just mailers maybe get a friend or family member to help you can have about 4 or 5 hundred done and they may last you a month. You can’t get away from using tape so there is one cost you will have to absorb. I get around 50 books done with a roll so around $0.06 per book which leaves you $6.74 which comes in at about $3.50 – $4.56 more in your pocket. If you’re doing 100 books a week, then yeah it’s worth it but if all your books sell over $25.00 each, then you may not want to spend your time doing an extra three or so hours a week work mailing books. And did I mention you’re not paying storage fees at Amazon’s warehouses?
There is another advantage to fulfilling your own orders that you may not have noticed and that is if you’ll recall we are getting $3.99 for shipping but it only cost $2.72 to mail a book, even less if your mailing out over one hundred a week. The last benefit is you have control over your inventory. I can’t tell you how many shipments amazon has lost on me, or how many books are lost or damaged in receiving or being transferred to another facility. Sure they pay you for them but do you catch them all? I developed a system to see just how good their logistics are and I can safely say I’m not impressed. Two out of the last three shipments I sent in were “LOST” 51 books total were missing but not just missing. Some were being sold out in Amazon land but showed inactive or just plain not in my inventory. Some were in my inventory but showed “inactive” but never sold. If I did not take the trouble to look through every book and yes it took a few days, I never would have noticed because I was still selling and still feeding the machine. Don’t get me wrong I am not bashing Amazon and I am most likely the exception but as the saying goes “Stuff Happens”. It’s been about three weeks now and the last thing they said was “don’t send us more than five SKU’s at a time so we can serve you better” my thoughts are there goes about $500.00 net.

Tools I Use
I am now filling my own orders and I will be relying on Accelerlist to scan and list my books, at least, five to ten times faster than I have done in the past. This software is cloud based so you don’t need to load it on your computer. Because I am not selling Prime I have to rely on increasing the number of listings I have to keep my sales going strong.
Thanks, Guys.

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