Profit Margin for FBA Items Vs. Merchant Fulfilled Items

Profit Margin for FBA Items Vs. Merchant Fulfilled Items


Hi, this is Nathan holmquist, and for this
video I’ll show you the difference in profit margin in selling an fba item versus selling
a merchant fulfilled item on Amazon. So just a quick recap, fba means you ship all your
stuff to Amazon, and they will ship it to the customer when it sells, it’ll store it,
they’ll offer customer service, merchant fulfilled is when you keep an item at home and when
it sells, you ship it directly to the customer. So in front of me I have a spreadsheet of
the last 1200 books that I sold going to book sales, and I have the order number, the title,
the Amazon asin number, the date it sold and my sku number, and the last two columns is
what I’m gonna focus on for this video and that’s the fba sale price, what I sold it
at, and the current merchant fulfilled price. It’s currently selling for on Amazon. And
as you can see, I have this sorted from lowest to highest under merchant fulfilled, and so
as you can see I’ve sold a lot of penny books on fba for fairly decent price around 8 or
9 dollars, and I’m going to keep scrolling down. And I sold one for 14 there. Sold a
penny book for 15.63, and I sold about 200 penny books or so. And here’s a book that’s
selling for 61 cents on Amazon, and I sold it on fba for 20 dollars. A couple books worth 80 cents and I sold those
for over 25 dollars on Amazon. So I think you kind of get the point here that on fba
you can sell quite higher than the merchant fulfilled price. I did make a few mistakes,
I sold a book that’s worth 38 dollars and only sold it for 7.95 and I made a few more
up here, so either I made the mistake or my pricer made the mistake, but when it comes
down to 1200 books, it’s all about averages, and so the average sell price on fba for me
is 11 dollars and 11 cents. And the average merchant fulfilled price for those items is
4 dollars and 45 cents. So I’m able to price 6 dollars and 50 cents higher than the merchant
fulfilled price, so that’s a pretty big advantage in my opinion. And now of course they all
have their own separate fees and they all have their advantages and disadvantages, so
for the second part of the video I’m gonna head over the fba calculator and plug in these
numbers to see what the exact profits will be after all the fees. So on fba calculator
I just put in an average pound and a half book, and for the merchant fulfilled I put
in the four dollars and 45 cents, that’s the average going rate of the books that I sold.
And for the fulfillment I put in my average sale price so we can see what the profits
will be comparing it to. So let’s look at the first column first under your fulfillment. Fulfilled by merchant. So one of the advantages
from selling from home or merchant fulfilled is that you do get a 3 dollar 99 cent shipping
reimbursement. So that brings up the subtotal to 8 dollars and 44 cents. Another advantage
from selling at home is for the 15 percent fee, the Amazon referral fee, the 15 percent
is applied to just the price, it’s not applied to the price plus shipping. So I’m only paying
67 cents. Whereas the 15 percent fee on fba the 15 percent is on the price 11 dollars
and 11 cents. The variable closing fee is the same. I do need to ship it directly to
the customer. A book that weighs between 1 and 2 pounds is about 2 dollars and 98 cents
for media mail, so that’s gonna be a cost there. And let’s go to the prep service, I
do need to buy a bubble mailer and buy a label to put in that bubble mailer, and that’s 40
cents or so, although it has been a while since I shipped merchant fulfilled. So that
comes to about 3 dollars. Once the fees are taken out. Now let’s go ahead and go to the
fba price, my average sale price is 11 dollars and 11 cents. The 15 percent fee would be
1.67, variable closing fee, 1.35, there is an fba pick and pack fee of a dollar. The
weight handling fee for a book between 1 and 2 pounds is 76 cents. The 30 day storage fee
is 2 cents. It does cost money to get it to Amazon, with the Amazon ups rates, it costs
me on average 35 cents a book to get it there. So when it’s all said and done, that leaves
me with about close to six dollars in profit. So when you compare the two, 5.96 for fba,
3.04 for merchant fulfilled, I’m making a little less than 3 dollars in profit more
by using fba. So that in itself is a huge advantage, at
least for my personal style of buying these lower priced books than just buying books
in general. For my business model, I’m making 3dollars more for fba, and that doesn’t even
take into account the time I’m saving for not having to store these in my home and to
ship them to customers myself. And if you want to look at the spreadsheet yourself,
or look at any other book sales that I document, please go to my blog, booktothefuture.com,
click on the link under this video. If you like this video, please click the subscribe
button or the like button, and thanks for watching, and I’ll see you next time.

Only registered users can comment.

  1. Hi do you know how ship multipacks to FBA.  For example if you found 6 bottles of shampoo for $12 total but they sell in packs of 6 for $30 on Amazon how you manage this.  Would you put all 6 in a plain box and put the FBA label on?

  2. Hi great video but im struggling to understand how you identify books to sell at $15 when someone else is selling them for a penny. Do you look at the new price? Sometimes I found books which are $150 new but a penny used.

  3. Hi Nathan, I was wondering whether you could give me some advice.  I emailed a number of local house clearance companies and some replied telling me that they some times come across plenty of books.  This sounds like quote an exciting opportunity to acquire lots of books however I dont want to acquire lots of junk fiction but I dont want house clearance company to realise how valuable some books can be.  Do you have any advice on how I can handle it.  It could turn out to be quite lucrative.

  4. Great video thanks for sharing useful information for us!  I'm not seeing the column for the price you paid for the book in the above calculations…  How much would you say is your average price that you will pay for a book?

  5. Nathan. Great video.

    Question: how do you set your prices? eg. the book which
    was Merchant Fulfilled, selling for $0.61, you priced at
    $20.33…. how did you determine your FBA sell price?

  6. Great video Nathan. Question, do you wrap your books, new or used to protect from damage while at the warehouse? Thank you.

  7. Nathan, or anyone in the know – I am starting out selling Children's Books -Amazon FBA – and would appreciate knowing how long one can expect (I know it's ballpark) to make a sale. Nathan mentioned a year! Or was that just an estimate!

  8. Hi, just wondering how to set up prices for items [ not necessarily books] that I source elsewhere and sell on FBA.  For example if I bought about 10 items for about $10.00 each, who determines/sets price per item for me and how do I know whats best price to sell in order to make a good margin/net profit selling on FBA, is it myself or Amazon? Also, how long will Amazon display my items for before all is sold?? 

  9. What happens if your Selling Items on Amazon and want to switch to FBA and send in your stuff? Are you stuck not making sales on that item until the Item Arrives at Amazon?? Or can you still make sales in mean time by filling them yourself until they get there??

  10. I thought the profit margin for FBA was less than merchant fulfilled because amazon takes out 30%-50%? At least that's what I've heard in the past

  11. Hi! Thanks for your video 🙂 Did you factor in the FBA account monthly fee that you must pay? Thanks so much!

  12. I noticed some of your penny books sold for over 15 dollars. we're those put in your file for books that are repriced by you? do you let those funnel scanlister for the sake of speed and then take them out of the repriced later? I'd be interested in hearing about that or seeing a video of that process.
    thanks!
    also, in general I've been living your content. I've got scanlister, right now I'm just about to switch to a 30 up printer before I dive in.

  13. Hello Nathan, would you recommend using FBA as a new seller? I don't have experience at all but I want to start selling some products on Amazon. I saw that you make more profit using FBA than shipping them yourself. How can I know if FBA will be worth for me? Or is it always worth using? Thanks!

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