One of the most popular ways of earning money nowadays is to become an Amazon seller. The platform offers a lot of features that sellers can use to boost their sales. From advertising to listing, all of which are available to make selling easier. However, like any business, you need to have a working capital, and this will depend on the following costs you need to consider:
1. Subscription Fee: USD$39.99
Being an Amazon seller requires paying subscription fees. If you want to have a professional account, then you’ll be paying USD$39.99 each month.
You also have the option to have a free account. Although you’ll not pay a monthly subscription fee, you’ll be paying 99 cents each time you make a sale. This may be advantageous at first, but imagine if you’ll be gaining thousands of dollars. You may even be paying more than USD$39.99.
On the other hand, a professional account only requires you to pay the subscription fee. Even if you sell more than 50 products a month, no more deductions on each sale you make.
2. Inventory Costs: More Or Less USD$2,000
Another is to pay for your inventory. Here, you may want to go for bulk or wholesale orders instead of buying in retail. While you may have to buy more products, you can buy them at a discounted price. For instance, purchasing 500 pieces of coffee cups may only cost USD$4 each. But, if you buy it at retail price, it may be around USD$5 each.
This means you can save more when you buy in bulk. Moreover, the inventory cost will also depend on what items you prefer to buy. Some may cost below USD$4, which means you may only need around USD$500-USD$1000. However, the minimum quantity for most wholesale products is 500 pieces.
Although you can buy less than that, like 200-300 pieces, each item may cost higher. Or, you can find financial assistance that loans out your working capital for Amazon sellers. This way, you won’t have to exhaust your savings.
3. Shipping Costs
You may also need to think about the shipping costs of the products. The most affordable suppliers you can find are overseas, particularly in China. Moreover, the shipping costs will also be higher or lower, depending on how fast you want your products to get to Amazon. Suppliers offer faster delivery time, but you may have to pay an additional charge.
In addition, items’ weight will also be a factor in your shipping cost. This means the heavier the products are, the more expensive the shipping fee is.
With such, the shipping cost will vary depending on the products.
4. Packing Costs
Aside from shipping, next on the list of costs is the packing. Your packaging matters because customers are more likely to appreciate orders that are well-packed. If not, you may receive negative feedback. That being said, here are the packing items you may have to purchase:
- Address Labels: Like wholesale products, you can get a lower price per sheet for these labels. Amazon will need these as they’ll scan the labels into their system through a barcode system.
- Shipping Labels: You may want to buy shipping label papers that have adhesive backs. That way, it’d be more convenient. And, again, you can save more when buying in large quantities.
- Packing Tape: Depending on the quality and brand of the tape, you may need to spend USD$2-USD$5 on each roll. You’ll use these to secure when shipping items.
- Boxes: You may need different sizes of boxes when you’re fulfilling orders. Since customers will order varying quantities, you also need boxes where they can fit. While you can use packages from retail stores, you may need to buy more if you have many orders to ship. They cost around USD$0.50-USD$2.
5. FBA Fees
If you want to free yourself from the hustle and bustle of shipping orders, you can choose Fulfillment By Amazon (FBA). This concept lets you sell and take orders, but Amazon will pack and ship them to your customers. And, this convenience comes with a price.
One is to pay a monthly storage fee since Amazon’s warehouses are managing your orders. Generally, its fee is around USD$2.40 per cubic foot from October to December. From January to September, it’ll only be USD0.75 per cubic foot. These are for standard products. However, if your products are in the ‘Dangerous Products’ category or are oversized, expect to pay much higher fees.
Moreover, you may incur additional charges if your products stay in the warehouse for more than a year.
Conclusion
With all the costs above, you can have an idea or estimate on how much you’ll need as a working capital to become an Amazon seller. And, those are only the tip of the iceberg since there are other costs related to this business, including paid ads, tools, and designing your online store. Thus, you may have to start with a minimum of USD$2,500.