The fees to use (FBA) Fulfillment by Amazon are high. Given these high fees, you may be wondering if FBA is worth it or if you’d be better off fulfilling your own Amazon orders – or even using a different marketplace altogether.
When considering if FBA is worth using, the number one thing to remember is to focus on your profits, not the fees you are paying.
Your goal as a seller is to maximize profits, not minimize fees. Minimizing fees is useful when it contributes to profit, but this is not always the case.
Consider this – selling everything on Facebook Marketplace and Craigslist is the most straightforward way to minimize fees. On these platforms, you’ll almost never pay any fees at all. The flip side to this is that your sales will be significantly limited, and you’ll have to invest a lot more time in fulfillment for every item.
This guide will help you decide if FBA is worth it for your business and will also point you to resources that will help you minimize the fees you pay.
Is Selling On Amazon FBA Worth It?
Whether or not it is worth using FBA depends on what you are selling and who you are selling it to.
In my business, we’ve found that using FBA more than justifies the costs because it leads to a direct increase of both sales and profits.
Put simply, we make more money when we use FBA.
Plus it saves us time over doing all the fulfillment ourselves.
That doesn’t mean we exclusively use FBA. There are times when we choose to “merchant fulfill” instead of using Amazon’s fulfillment services – especially in Q4. There are also situations where we choose to sell on other marketplaces like eBay instead of Amazon.
But we sell the majority of our products using FBA.
To recap, we believe that selling on FBA is worth it because:
- FBA gets us more sales, which usually means more profits at the end of the day even if we pay more in fees.
- FBA saves us a lot of time.
Another thing to consider is that saving time can also lead to more profits. Time not spent fulfilling orders can be time spent acquiring more inventory to sell.
Should you use FBA?
The key number that we pay attention to in my business is how much we get paid for an item when we sell it, compared to how much the item costs us. If we can make our desired profit and return on investment, then we have no issue with the Amazon fees.
The number of customers on Amazon is unmatched, so paying a fee to get access to them is a good idea as long as you run the numbers in advance and know you will earn a profit even after paying the fees.
If you aren’t familiar with the fees or need help learning how to calculate them, start with this overview of all the fees associated with selling on Amazon.
How to Minimize FBA Fees
There are ways to minimize the amount you pay to use Fulfillment by Amazon.
The three main ones are:
- Make sure you are on the Professional seller plan if you sell more than 40 items a month.
- Minimize your storage fees.
- Optimize your shipments to FBA warehouses.
A Professional seller account costs $39.99 a month but removes that $0.99 per item fee that comes with the free Individual account.
If you want to sign up for a free account, make sure you follow these instructions for signing up for a free Individual Amazon seller account. It is very easy to get billed for a Professional account if you don’t follow those steps exactly.
For most people, the Professional account is more than worth the investment though because it saves you money if you sell more than 40 items a month and it unlocks the buy box. Here is a complete comparison of Professional and Individual accounts.
Here is a guide on 5 proven ways to limit your FBA storage fees.
What should you sell on FBA?
If you are brand new to selling on Amazon and haven’t figured out how you will source products to sell, you should start with reading this guide on what to sell on Amazon.
It goes over all the major sourcing techniques, including which ones make sense for beginners and how to work your way up to ones that cost more or involve more risk.
In general, our recommendation is to try selling anything you find that:
- You are able to purchase.
- You are allowed to sell.
- Offers a good profit margin.
- Sells regularly.