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How Much Does Amazon FBA Cost?

October 7, 2019


So Jeff Bezos is the richest man in the
world for a reason. It’s because Amazon takes a lot of money if you’re selling a
product through Amazon FBA. In this video, I’m going to be going over some of the
costs very specifically of selling products on Amazon FBA and what you can
expect to be paying. So I’ll detail everything. The 4 major costs in this
video. So check it out. Let’s go. So Amazon FBA, if you’re not familiar fulfillment
by Amazon. Amazon FBA is when you as a seller ship products to Amazon and have
Amazon sell them for you. Now there are a lot of costs involved in selling through
Amazon. There’s over 6 million people that are selling products through
Amazon’s marketplace and there’s a lot of people making a lot of money. But
before you believe all the hype and the gurus saying that it’s easy and all you
need is a few thousand dollars to get started. I’m going to detail the real costs
of getting started with an Amazon FBA based business. So you can have more
realistic expectations of what to expect. So the first thing that you need to do
when you sign up for Amazon FBA is it’s $39.99 per month, okay? To get started and
you can find this on Amazon’s website here. If we go over here, you’ll
see kind of in small print it says $39.99 per month and then it says plus
additional selling fees. So I’ll be going over those additional selling fees in
just a second here and this is all from Amazon’s
actual website that I’m taking all of these numbers from. Now the second cost
you should be aware of is the actual shipping costs. The picking and packing
order costs and that runs anywhere from $2 to $5 here as you can see. Let’s just
take this for example. For an average sized item, you’ll be
spending $2.48 cents to ship your product with Amazon. So that’s an
additional $2.48 per unit to use Amazon’s fulfillment
services in selling your product. So this is another cost that you just kind of
incur. The third cost you need to be aware of is when you’re shipping through
Amazon FBA, there’s a storage cost. So when you start an Amazon business, you’re
going to buy product well usually from like China or someplace like that and you’re
going to ship it from China all the way to Amazon’s warehouse. Now you pay the
shipping costs from China to Amazon’s warehouse in Tennessee or wherever that
is. But you’re also going to pay a storage fee by the square foot. So every square
foot that you use in Amazon’s warehouse, they’re going to charge you and if we see
that right here we see 69 cents per square foot. January through September.
And around Christmas season, you’re going to be paying more like $2.49
per square foot. But let’s use $0.69 per square foot as an example. So
you’re going to pay $0.69 per square foot, okay? Now if you’re starting
a business with any significant volume, you’re going to need a lot of square feet
in Amazon’s warehouse to ship the product and while you’re building your
store, while you’re trying to market the products that you’ve put on Amazon, it’s
going to take time. What’s likely going to happen is your products are going to be
sitting around in Amazon’s warehouse for a little while while you’re waiting for
those products to sell. So in all the while you will be paying money. For every
square foot that you were using in Amazon’s warehouse. So keep that in mind.
Now the fourth cost you need to be aware of is a pretty big one. And that’s
actually what fees does Amazon take for selling your product. And typically
that’s 6 to 20%. You know I just found this through Google. So the
fee range is typically 6 to 20% but the average is 15%. So we can safely factor that Amazon makes 15% of product,
okay? Just for selling your product on their platforms. So Amazon’s
making a lot of money. Again, they’re taking very little risk. They’re charging
a pretty small fee just to sell on Amazon. You’re going to pay a per unit cost
for every product that they actually have to pick and pack and then you’re
also paying for their their warehousing space and you’re paying Amazon 15%
off the top. So you have to factor all of these costs in before
starting an Amazon business. Now the upsides of Amazon are that you know
Amazon basically does all the marketing for you. You know you put your product on
Amazon, they handle the fulfillment, they handle a lot of things for you. But other
things you need to be aware of that are costs that are not in Amazon FBA is just
to sell on Amazon. You’re going to need a number of things. You’re going to need to
have customer service, you’re likely going to need to have a website, you’re
going to need to have some sort of support line or mail box or peel box or
something to receive customer feedback and inquiries from. All of this costs you
money. Now the gurus won’t tell you this information. The gurus will say, “You know
a man, just spend a few thousand bucks and you can be selling on Amazon and
it’ll be going in no time.” But the reality is, that it costs a lot of money
to get started on Amazon. Now if you want to start an Amazon FBA business, I would
suggest that you have anywhere from $25 to $50,000 to
really launch your store. And keep in mind that you’re going to have to test a
number of different products before you actually find one that sells well. Now
the other issue with Amazon FBA is that you have to come out of pocket a lot of
money. It’s considered a negative cash flow business. And what that means you
have to physically buy the products before you ever sell them. Now what that
means is that you might spend $20,000 on buying products
before you even see a dime of that back, okay? So you spend $20,000 to
hopefully make 30,000. Now in that case, you have made a profit. But
again, you’re coming out of pocket. A lot of money. The one person who makes money
no matter what is Amazon. Keep those numbers in mind
when you are starting an Amazon based business. Again, you’re coming out of
pocket a lot of money. It’s a longer-term business. You’re going to have to deal with
review fraud, you’re going to have to deal with getting marketing and getting
reviews for yourself in the beginning. And you’re going to have to go up against
competition with over six million other people who are doing the same thing and
selling products on Amazon. So and possibly more experienced than you. So
keep that in mind when you’re selling on Amazon. If you don’t have some sort of
advantage, it’s going to be very hard for you to get ahead on this platform. So I
hope this video was helpful and kind of explaining what the real costs of Amazon
FBA are. I’m an internet marketer. I’ve been running an internet business since
2012. I’ve been making millions of dollars. I’ve worked in numbers of
different fields but place where I’ve made most of my money is affiliate
marketing. If you do want to learn more about making money online and even
starting an affiliate marketing based business, which any products it doesn’t
require any customer support or fulfillment or any of that jazz. Now when
you subscribe to my YouTube channel, you’ll get a free course. You’ll get a
free affiliate marketing course right here. It’s 10 videos. If you want to
learn about affiliate marketing or just subscribe and say hey and you’ll get
other videos about different ways to make money online. I have some free
courses from some of my friends here who are also successful multi-million dollar
internet marketers and they can show you a various ways of making money online. So
subscribe to my channel like and if you have any comments on if this was helpful
in any way or if there’s any updates or questions you have, feel free to leave a
comment for me below in this video and I’d love to hear your feedback. Talk to
you soon.

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