Ecommerce is often touted as an effortless way to start a business with minimal startup costs and potential for exploration.
However, seller fees can quickly eat into your profits when you factor in marketplace fees, advertising costs, delivery charges, and ecommerce platforms into the equation—especially during the holidays.
The most innovative online retailers use various processes, techniques, and tools to maximize profits while reducing online selling costs. The more informed you are about online seller fees, the more you can lower them.
Keep reading to learn more about online selling costs and how to reduce your holiday seller fees before the peak shopping season.
Online Seller Fees Explained
Before you can identify and lower high or unnecessary costs, you must know precisely how much you’re paying to sell online.
Most ecommerce platforms and online marketplaces charge similar fees for listing items for sale. You’re paying for the platform, tools, and services they provide—plus their captive audience.
No matter the platform, third-party sellers will have expenses that fit into the following categories:
- Account fees
- Sales fees
- Fulfillment costs
- Additional expenses (such as advertising costs)
Your first cost is the account fee. This cost will vary according to the platform, but let’s use Amazon as an example.
Amazon’s account fee is a monthly cost for selling on Amazon. Amazon has two different seller accounts with two fee structures:
|Amazon Account Fee||Individual||Professional|
|Monthly fee||$0.99/item sold||$39.99/month|
|Listings||40 per month||Unlimited|
|Categories supported||20+||20 (with access to an additional 10)|
As you can see from the table above, Amazon’s Individual plan comes with no monthly fee. Still, you are limited to only 40 listings per month and 20 categories.
The Professional plan is $39.99 a month, but you get unlimited listings and can list items in more categories (including applying to list in restricted categories).
Next up is the sales fee. Most platforms have a per-item fee with the option to upgrade to a monthly plan that includes more (or unlimited) sales.
Using Amazon again as an example, you are charged per item sold—in addition to a referral percentage and a high-volume listing fee (if applicable). Amazon also charges a closing fee for media items.
|Amazon Sales Fee||Individual Plan||Professional Plan|
|Per-item fee||$0.99/item sold||N/A|
|Referral fee||6-45% of the selling price||6-45% of the selling price|
|High-volume listing fee||$0.005/item when listing over 100,000 items||$0.005/item when listing over 100,000 items|
|Closing fee (media items only)||$1.80/item||$1.80/item|
The next considerable expense to consider is your fulfillment costs.
Most retailers fulfill ecommerce orders in one of three ways: self-fulfillment, outsourced fulfillment, or—if selling on Amazon—Fulfillment by Amazon.
Self-fulfillment means that you fulfill orders yourself. This includes picking, packing, and shipping items to your customers. Associated self-fulfillment costs include:
When budgeting for self-fulfillment, don’t forget about the additional costs associated with operating a warehouse, such as receiving freight and insurance. Investing in warehouse management software can ease many of the headaches associated with in-house fulfillment.
You can use a third-party fulfillment (3PL) partner if you’re not ready to take on fulfillment in-house. There are several fees to consider with outsourced fulfillment, including initial setup fees, intake fees, storage fees, fulfillment fees, and shipping fees.
Fortunately, you only need to pay a setup fee one time. Your fulfillment partner will use this fee to set up your account. The higher your sales volume, the higher this initial fee will be.
When the 3PL receives goods from your suppliers, they will add them to your inventory and organize them appropriately. That’s why you will be charged an intake fee every time new stock arrives at the warehouse.
Next, you’ll pay storage fees for your fulfillment partner to hold all your inventory before it ships to your customer. Often, these fees are based on how much space your stock takes up in your partner’s warehouse.
Other outsourced fulfillment fees include pick and pack fees, which cover the costs associated with staff browsing the warehouse, picking out specific products, and packaging them for shipment. Fulfillment fees are typically a flat per-item fee or a percentage of the product’s retail value.
You’ll also have to budget for shipping the products to your customers. If you’re shipping many products, your 3PL may offer a shipping volume discount.
Finally, there are fees associated with returns—which are inevitable in ecommerce. When your customers return products, your 3PL partner much re-process the inventory or figure out how to dispose of it. Most logistics companies will charge an hourly rate for processing returns.
Fulfillment by Amazon
Another fulfillment option is Fulfillment by Amazon (FBA).
FBA is a service offered that allows you to outsource order fulfillment to Amazon. When you sign up, you send your products to Amazon’s fulfillment centers. Amazon employees pick, pack, and ship your order when you receive an order. They’ll also handle customer service needs and process returns.
Costs associated with FBA include:
- Shipping products to Amazon’s warehouse
- Per-item fulfillment fee determined by item size
- Monthly storage fee (varies by season)
You can ship all products to Amazon’s warehouse, including items listed on other marketplaces, but you’ll pay an additional multi-channel fee to ship non-Amazon orders.
Other costs for online sellers include cost-per-click advertising, competing for buy boxes, selling via other services like Amazon Prime, and external marketing spending.
How to Reduce Holiday Seller Fees
Despite high seller fees, being on certain platforms can bring you more exposure, leading to more customers and sales. By reducing your seller fees as much as you can, it’s possible to increase your ecommerce profits.
Opt for Premium Seller Accounts
Many platforms and marketplaces offer free plans, but if you’re listing hundreds or thousands—or hundreds of thousands—of items, you can save money by upgrading your plan.
Switch to a premium account to tap into benefits like zero per-item fees and unlimited listings. Not only will you save money, but you’ll be able to access additional perks to increase conversions, such as the ability to run promotions and access the buy box.
Reduce Referral Fees
You can’t reduce your referral fees specifically, but you can be more strategic about your listings. On Amazon, for example, you can list products with a lower referral fee and save items with higher referral fees for other marketplaces (such as eBay or Walmart).
Lower Shipping Costs
Shipping can be expensive, especially if you’re fulfilling in-house or through FBA. You can reduce shipping costs by:
- Using unbranded packing materials
- Partnering with an outsourced fulfillment provider to decrease shipping carrier and extra handling costs (and also benefit from their inventory management technology)
- Using a fulfillment calculator to determine whether outsourced fulfillment is cheaper than in-house fulfillment
Optimize Your Inventory
To plan holiday inventory this year, consider potential sales volumes, where your products come from, and their current quality.
By carefully considering the inventory you buy, you end up with less inventory waste. This equates to lower costs associated with dead stock. If you’re more efficient with inventory, you can buy fewer items overall to fulfill holiday demands and reduce waste simultaneously.
Increase Your Visibility
When competing with millions of merchants, it’s vital to be seen. You can improve the visibility of your ecommerce listings by:
- Optimizing your product listings, including product titles, descriptions, and photos
- Offering fast and free shipping options to appear in filtered search results
- Providing excellent service, including providing accurate tracking information and responding to issues quickly to get five-star customer ratings
Increase Your ROI
The truth is that, in many cases, seller fees are out of your control. However, you can combat the cost by increasing your ROI, so the fees make less of a dent in your profits.
You can increase your ecommerce ROI by:
- Offering premium customer service to outperform your competitors (and win loyal customers)
- Selling on Amazon Prime to improve your conversion rates (targeted to online shoppers who prioritize speed)
- Listing on other sales channels to reach a broader audience, then utilizing multi-channel listing software and fulfillment partners
- Using an all-in-one enterprise ecommerce platform that combines multi-channel listing with inventory sync, order management, accounting integration, and reporting
Reduce Your Holiday Seller Fees This Season
When selling online during this upcoming holiday season, you can get your products in front of millions of holiday buyers — potentially taking your ecommerce business to the next level.
To further your success and maximize your profits year-round, be savvy about holiday seller fees and how you can lower costs through visibility, conversions, and smarter fulfillment.