Revealed: How much capital is required to sell on Amazon?
If you've ever wanted to put your product on the Amazon exchange, now is the golden time for you to do it. According to statistics, the world famous e-commerce platform: Amazon has reached an annual revenue of $ 386 billion in 2020, and it is expected that in the future the growth will still be radical. However, to start a successful business on Amazon, you need to be able to answer the question: "How much capital does selling on Amazon need" and plan a long-term operation for the business in a sustainable way - saving money. most economical.
So, AGlobal will help you solve this concern through the article below.
1. Factors that affect the cost of selling on Amazon
1.1 Monthly subscription fee
Amazon has a monthly subscription fee for users depending on the size of their business.
For example, the Personal plan costs $0.99 per sale and the Professional plan costs $39.99 per month regardless of the number of items you sell. Amazon charges a referral fee for each item sold. Referral fees will depend on the product type, most are between 8% and 15%.
1.2 FBA fee
If you are selling through Amazon FBA, all the prices you pay will depend on the type of your order. The larger the order, the more you have to pay Amazon to fulfill it.
Because FBA allows you to let Amazon warehouses manage your orders on their own, you'll also have to pay a monthly storage fee. You will pay $0.69 per cubic foot from January to September and $2.40 per cubic foot from October to December.
Note: If your product is in the FBA warehouse for longer than one year, you will be charged an additional fee.
1.3 Referral fee
Every time you sell a product on Amazon, you pay a 6% to 20% referral fee. All referral fees depend on the type of product you are selling in your Amazon store.
For example, the $0.30 minimum referral fee per line item does not apply to products that are Collectible Cards in the Toys & Games category.
1.4 FBM . Fee
Unlike FBA, Amazon's Fulfilled by Merchant (FBM) sellers are responsible for perfecting their own products.
With FBM, Amazon sellers on the Selling Pro plan can choose their own shipping rates. There is also the benefit of not having to worry about paying any warehouse or storage fees.
1.5 Customer returns fee
It is common for customers to return goods to a friend. As an Amazon seller, you'll be responsible for covering the cost of any orders the customer returns to stock.
2. How much capital is required to sell on Amazon?
Usually, it takes most sellers from $500 to over $3000 (~11 million-~70 million) to start selling on Amazon's marketplace. That amount will have to cover the following aspects of the business:
2.1 Cost of inventory
Your inventory costs will be the most significant upfront investment for your business on the Amazon platform.
If you're a beginner selling on Amazon, you may feel shy about spending a lot of money on inventory because you don't yet have a clear idea of what products are going to have the potential to make big purchases. To avoid running out of cash quickly, AGlobal recommends investing only about $500 - $1000 to test which items to sell.
2.2 Tools and supplies
In addition to marketing your Amazon business online, you'll also spend a lot of time packing, measuring, and managing your orders (unless you're using Amazon FBA). Therefore, you will have to invest in different tools and supplies: paper boxes, duct tape, single printers, etc.
2.3 Advertising Expenses
Just uploading beautiful product photos to the Amazon online store is not enough. To drive more sales, you need to invest more in advertising and increase your reach as much as possible.
The average cost-per-click on Amazon ranges from $0.35. However, advertising campaigns will need to be tested many times to see what is the best advertising option for their business and potential customers.
2.4 Product photography
Investing in equipping your online store on Amazon with quality photos is essential to capturing customer attention and driving sales.
Therefore, you should divide part of your budget to invest in professional photography sessions in a standard studio with a high-quality digital camera to be able to most objectively portray the quality of the product. On the contrary, low-quality images will not bring attraction value as well as trust value, so sales will not be able to go up.
AGlobal - A reliable partner of businesses when selling on Amazon e-commerce site
AGlobal - Amazon's official partner in Vietnam with the goal of supporting Vietnamese businesses to do business on the international Amazon e-commerce platform.
At the same time, AGlobal also provides completely free consulting and support services for all partners in Vietnam, helping businesses firmly overcome the difficult economic period and bring Vietnamese goods to the world. gender.
Please contact AGlobal via hotline 0888.608.007 or visit here to receive the most dedicated support from leading experts in the field of e-commerce!
Source: How Much Does it Cost to Sell on Amazon?|Kayla Utsch
