Does anybody on here sell on Amazon Fulfilment? And if so, how do you actually make a profit after fees and tax?

Navigating Amazon Fulfillment: Insights for Aspiring Sellers

Are you delving into the world of Amazon Fulfillment and wondering how to keep your ventures profitable amidst numerous fees and taxes? You’re not alone in this perplexing pursuit.

I run a logistics business and have been keen on expanding its horizons over the past year. Recently, an old friend had the fortuitous timing of moving abroad, and with his departure came the closure of his clothing and cosmetics enterprise. Generously, he handed over a substantial inventory, which I’ve had in storage until I decided to explore the possibilities of selling on Amazon.

After conducting extensive research on one particular product, priced typically at £5 to £6 per piece, I found that restocking from a wholesaler would set me back around £3 per item. I’ve shipped 120 units to Amazon Fulfillment, and when priced at £6, Amazon deducts over £2 as a fulfillment fee. Considering these items came at no cost to me, pocketing £3 to £4 per sale feels satisfactory. However, when factoring in purchasing costs and VAT, the equation barely breaks even if others were sourced at £3.

In tandem with this venture, my partner and I have been nurturing an idea of branching into children’s toys and games. In our search, we discovered a board game available at wholesale for £22. With Amazon advising a selling price of £37, they would take off a £9 fee and another £6 for VAT, leaving us potentially losing £0.41 per sale.

This naturally raises the question: is it really feasible to turn a profit through Amazon’s platform? While I’m not chasing overnight millionaire status, it’s clear that understanding and accepting the essential fulfillment fees is vital, as Amazon handles the logistics on our behalf.

Still, I find myself double-checking my calculations and pricing strategies, pondering if there’s a fundamental oversight in my approach. Could there be seasoned experts out there, willing to share wisdom on mastering profitability on Amazon? Your insights would be greatly appreciated on this unfolding business journey.

1 Comment

  1. bdadmin

    Reply

    Selling on Amazon can be a gateway to a vast customer base, but as you’ve discovered, it requires navigating complexities like fees, VAT, and competitive pricing strategies. Given your current scenario and aspirations in the e-commerce landscape, here are some strategies and insights that may help improve your profit margins and make selling on Amazon more viable:

    1. Comprehensive Cost Analysis:

    2. Before settling on a sales price, ensure a thorough understanding of all associated costs. Beyond Amazon’s fulfillment fees, include inbound shipping costs, storage fees (especially during peak periods when costs might increase), and any potential overheads from running your business.

    3. Pricing Strategy:

    4. Pricing isn’t just about covering costs—consider its role in positioning your product in the market. Conduct competitor analysis to understand what others are charging and the value propositions they offer. Tools like Helium 10 or Jungle Scout can provide insights into competitors’ pricing strategies.

    5. Bundling Products:

    6. Create bundles of complementary items (especially applicable to toys and games) to increase the average order value. Bundling can differentiate your offerings and allow you to price products in a way that better absorbs fees and taxes.

    7. Leveraging Amazon Advertising:

    8. Properly channel your efforts into Amazon’s advertising platform. Sponsored Products and Sponsored Brands can increase visibility. Invest in testing various ad campaigns to see what yields the best return on investment.

    9. Opting for Professional Account:

    10. Consider upgrading to an Amazon Professional Seller account if you’re selling more than 40 items per month. It eliminates the $0.99 per-item fee in exchange for a monthly subscription fee, potentially reducing overall costs.

    11. Exploring Amazon’s Brand Registry:

    12. Register your brand with Amazon to unlock powerful marketing tools and enhanced content options, which can help improve conversion rates and allow you to engage customers more effectively, highlighting unique selling points.

    13. Direct Relationships with Manufacturers:

    14. Instead of working through wholesalers, consider establishing direct relationships with manufacturers. Direct sourcing might reduce costs and increase margins.

    15. Diverse Sales Channels:

    16. While Amazon is a formidable platform, explore additional channels like eBay, Etsy (for handmade or unique items), or your own website with a focus on niche products. This multi-channel approach could reduce reliance on one platform and enhance overall profitability.

    17. VAT and Tax Efficiency:

    18. Consult with a tax professional who specializes in

Leave a Comment