In-depth analysis of the composition and management of Amazon platform operating expenses

On Amazon, the world’s largest e-commerce platform, sellers need to pay attention to a variety of fees to ensure the sustainable development and profitability of their online business. The following is a detailed analysis of the main expenses of operating the Amazon platform.

1. Store opening costs

Opening an online store on Amazon is the first step to selling. You first need to pay the store opening fee. Amazon offers two merchant account types:

• Individual Merchant Account: This account is free, but there is a commission fee for each transaction.
• Business Merchant Account: There is a monthly subscription fee of $39.99, but commissions are waived on each transaction.

2. Commission fees

No matter which merchant account you choose, sellers will pay commission fees when they sell items. These fees vary based on the category and price of the product being sold, and typically range from 10% to 15% of the total transaction value.

3. Platform usage fees

Amazon also charges sellers a series of platform usage fees, including:

• Monthly Service Fee: Typically $39.99.
• Commission fee: It varies according to different products and sites. For example, on the US site, the commission for some mobile phone equipment products can be as high as 17%.
• Withdrawal fee: There is a fee when withdrawing money, usually 0.3% to 1.2%, depending on the payment company.

4. Warehousing and logistics costs

In Amazon’s operations, warehousing costs are an expense that cannot be ignored. Storage fees are calculated based on the seller’s average daily inventory volume, which depends on the size and weight of the goods. In addition, logistics costs are also a key factor that sellers need to consider, mainly including domestic transportation fees and cross-border transportation fees. There are two main methods of Amazon logistics:

• Amazon FBA (Fulfillment by Amazon): Sellers store products in Amazon warehouses, and Amazon is responsible for logistics and distribution, and the cost is relatively high.
• FBM (Fulfillment by Merchant): Sellers handle logistics themselves, which usually costs less and is more flexible.

5. Advertising expenses

Amazon also provides an advertising promotion platform where sellers can increase product exposure and sales through different types of advertising. Advertising costs usually include cost per click, cost per display, etc. Therefore, in order to reduce costs, sellers need to continuously optimize advertising strategies during operations.

6. Other expenses

In addition to the above main expenses, sellers also need to bear other various expenses, such as the cost of pictures, videos, copywriting production required for product display, as well as the cost of services such as brand registration and intellectual property protection. These are also important factors affecting sales performance.

To sum up, the fee structure of the Amazon platform is diversified. Sellers need to carefully consider various fees when planning and budgeting, and formulate effective business plans to optimize operating costs and improve profitability.