A while back I saw a super scary video. It was truly horrifying. I still have nightmares when I think about it for too long.
I showed a short clip of this video to my wife. She actually screamed at the TV: “Nooooooo!!!!!!!!” She was just as terrified as I was.
In this video people were walking the aisles of a big box retail store, scanning toys with the Amazon app. Not the Amazon Seller app. The Amazon app. The one you use to buy merchandise from Amazon. These people were looking up toys on Amazon, comparing the price on the retail store shelf, and loading up a shopping cart if the price was even the slightest bit higher on Amazon. They intended to buy this shopping cart full of toys and sell them on Amazon.
As if this scenario weren’t gruesome enough, these people were actually encouraging their viewers to go out and do the same thing. They exuberantly proclaimed that anyone can sell on Amazon, see, look, there’s merchandise everywhere that sells higher on Amazon than in stores. You, too, should go out and buy toys by the shopping cart load, and just send them in to Amazon and wait for your paycheck.
At this point you might be ready to ask me a few questions. “How is this scene any different than what you do in your Amazon FBA business every day? Don’t you use retail arbitrage as one of your strategies for finding FBA inventory? Isn’t that what these folks are doing – and showing others how to do?”
The key difference boils down to one simple factor: I never buy an item for resale without knowing the Amazon FBA fees for that item first. If someone were to actually follow the methods these people were using in this Amazon FBA horror movie, they would be hit with fees they hadn’t calculated beforehand and suffer financial loss.
For anyone who wants to make a profit running an FBA business, you have to know your numbers. You have to know all of your expenses, including inbound shipping, taxes where applicable, prep fees, materials, and the cost of any subscriptions or services you buy. You also have to have a good handle on the FBA fees that apply to any items you intend to have Amazon fulfill for you.
If you aren’t aware, the name of this blog is Full-Time FBA. About 99% of our Amazon business is through the FBA (Fulfillment By Amazon) program. We do choose to Merchant Fulfill items on occasion (check out our YouTube video where we discuss those occasions), but overall we prefer to stick with having Amazon fulfill our inventory when a customer buys it (see also our blog post “Overcoming Your Fear of Selling via FBA versus Merchant Fulfilled or eBay”).
There are 4 easy ways you can calculate the potential Amazon FBA fees before you buy an inventory item. We’ve listed below two options for calculating fees on your smart phone and two for calculating fees on a web browser:
- Amazon Seller app – FREE
The Amazon Seller app is free and allows you to scan items either by barcode or using Amazon Flow (the camera of your phone recognizes an item’s image and matches it with the product in the Amazon catalog). The Amazon Seller app allows you to see the fees for an item if you sell it Merchant Fulfilled or through FBA. It allows you to adjust your selling price, your inbound shipping cost, and the cost of purchase. It then subtracts the fees and your cost of purchases, giving you your estimated net proceeds. (See this blog post for more pros and cons on the Amazon Seller app.)
Similar to the Amazon Seller app, third party scanning apps allow you to scan items by barcode or enter a text search for the item. Third party apps also allow you to adjust selling price, inbound shipping, and cost of purchase before you subtract out the FBA fees and see your estimated net proceeds. We personally use Scoutify most often when sourcing, with Profit Bandit being our back-up on occasion. (For more info on third party scanning apps, check out our blog post about why we use Scoutify.)
- The FBA Calculator website – FREE
If you are doing product research on a web browser, Amazon Seller Central has an FBA revenue calculator where you can enter the ASIN, UPC, or product name of an item and do the same calculations as above to find out your potential fees and potential profit. We highly recommend creating a bookmark for the revenue calculator so you can easily reference it when making online purchases, determining prices for your inventory during the listing process, or repricing your inventory after it’s at the warehouse. We’ve also created a quick link for the calculator: www.fulltimefba.com/calculator
To see the FBA revenue calculator in action, I’ve created a screen capture video explaining how it works.
- Google Chrome extensions, like Scanalyze – PAID
Another easy way to see FBA fees when doing online arbitrage or product research is by using Google Chrome extensions that show the fees right on the Amazon product page. We use Scanalyze (available through the Cyber Monkey Deals website) and love it. You simply click the “Scanalyze” button and the fee calculator pops up at the bottom of your screen.
Hopefully you’re equipped now to calculate your fees and know up front what your profit potential is before you buy inventory to send to Amazon. Please don’t become another victim in a scary movie! You can make good choices. You can build a profitable Amazon FBA business because you know your numbers.