Detailed analysis of Amazon store operating costs and product selection costs

Under the profound changes in global trade, more and more traditional foreign trade companies and factories are beginning to consider entering the online retail industry through transformation to cross-border e-commerce. When choosing a cross-border e-commerce platform, Amazon has become the first choice for most sellers. Successfully operating an Amazon store is inseparable from accurate calculation of operating costs.

Detailed explanation of Amazon store operating costs

Accurate calculation of operating costs is crucial for comprehensively assessing operating conditions and formulating reasonable strategies. In the operation of Amazon stores, operating costs include many aspects, such as product procurement, warehousing, platform fees, transportation, marketing, customer service, etc.

Product purchase cost

This is the cost of purchasing the item, including the price of the item from the supplier, shipping charges, and possible duties and taxes. Make sure all relevant costs are fully considered to arrive at an accurate procurement cost.

Warehouse charges

If you choose to use Amazon’s FBA service, you will need to pay storage fees. These fees are calculated based on factors such as the item’s size, weight, and storage time.

Platform fees

The Amazon platform charges sales fees, which include a processing fee for each order, a monthly subscription fee (if applicable), and other possible fees such as advertising or promotional fees.

Transportation costs

If you choose to use Fulfillment by Merchant (FBM) to ship, you will need to pay for the transportation of the goods, including packaging materials, transportation costs, transportation insurance, etc.

Marketing expenses

In order to increase product exposure and sales, marketing activities may be needed, such as Amazon advertising, social media advertising, etc. These expenses should also be factored into operating costs.

Taken together, operating costs cover product procurement, warehousing, platform, transportation, marketing, manpower and other related expenses. In order to calculate accurate operating costs, all relevant expenses need to be carefully recorded and tracked, and calculated based on actual circumstances. This will help businesses evaluate the profitability of their products and manage their Amazon stores effectively. In an ever-changing market environment, accurate cost calculations will become the cornerstone of strategy development and sustainable growth.

Amazon product selection cost calculation method

The cost calculation of Amazon product selection refers to the market prediction of product selection based on product selection standards, so that the profitability of the product can be evaluated. Costs mainly include four types: category cost, absolute cost, relative cost and promotion cost.

Relative cost

The relative cost of Amazon product selection generally refers to the cost of product sales lower than target sales. If the relative cost of the merchant is too high or too low, it means that the profit margin of the product is relatively low, and this type of product is not easy to make a profit, so it needs to be chosen carefully. Under normal circumstances, Amazon’s product selection cost is a dynamic calculation of the product’s target profit. If the inventory cost of a merchant’s product is less than 25 yuan, then this type of product belongs to the relative cost category.

Sales cost and production cost

The product costs on the Amazon platform can be mainly divided into two types: sales cost and production cost. Sales cost mainly refers to the cost of products in the sales and circulation process, which generally includes platform commissions, advertising fees, product packaging, labeling fees, sales discounts, etc. The production cost mainly refers to the raw materials, energy use, manpower and infrastructure of the product. Therefore, merchants need to dynamically analyze the entire product selection process, predict various costs in the product selection process, and then accurately calculate the actual total cost and total profit.

In addition, the product cost in the Amazon platform product selection cost is the cost of the product, which is generally calculated based on the percentage of each item, while the sales cost is equal to the combination of the purchase cost and the cost of goods sold. The general market cost refers to the average sales cost. . The price of goods on the Amazon platform is generally calculated based on the cost of sales. Therefore, when merchants calculate the cost of goods, they generally need to calculate the cost of sales and sales-related costs separately.

The above content has provided a detailed introduction to the cost calculation of Amazon product selection. If Amazon merchants want to sell profitable products, they need to carefully calculate the product costs, so that they can better price products and achieve high profitability. , Merchants also need to be clear about the principles for setting product prices.