Sometimes people get so excited about a new endeavor they don’t stop to think and they just jump into that pool head first. Sadly they fail to notice that their is no water in the pool and break their neck. It is so important to be as informed as possible before tackling something new. Especially when you are messing with the livelihood of yourself and your family. For a reseller, a part of this base of knowledge that you must acquire is knowing how much it is going to cost you to sell your items. On eBay it is fairly simple, you will pay 10 percent of the final payment amount (sale price + shipping) and you will pay 3% to Paypal. So you basically expect to pay 13% every time you sell an item. Yes you really pay 2.9% and 30 cents to Paypal and you may get final value fees discounts on eBay but KISS (Keep it simple stupid), 13%.
I came from the world of eBay so I will be the first to admit that Amazon is a completely different beast. It is a different platform with different nuances. The fee structure and rules are completely different. But this is not an excuse you have to know what you are getting yourself into or you are poised to lose everything you put into your business. The idea for this post came about when I was listing books to send into Amazon FBA. I was looking at prices to determine the price of my own book and I came across this seller.
Do you see what I see? First you can tell by having 0 feedback that this is a new seller. Also they are the cheapest seller. The next lowest FBA price at the time of me posting this is about $8. Now one of 2 things probably happened. Either this is just a typo and the person did not mean to list the item for $3. Or the more likely scenario is that this listing was created as merchant fulfilled for 3.00 with a 3.99 shipping fee, netting the seller $6.99. When they changed to FBA they left the original price but now Amazon is assuming free shipping. You now have an item selling for $3 plus it is FBA so you have a bunch of other fees. Lets look at how this item plays out with a $3 price point.
The FBA breakdown is the column to the right. The calculation is assuming a sale price of $3. When this item sells the seller will lose $0.37. But they actually have lost even more because they probably had to pay for the item and they definitely had to pay to ship the item to FBA. They may of paid Amazon to sticker the item or they paid to purchase stickers and do it themselves. Besides the obvious loss of money this seller also lost valuable time they could of spent doing something more profitable.
The point is you have to know what you are getting into. You have to know the rules of the game you are trying to play.
You can find the Amazon FBA calculator used in this post HERE.