Selling Fees Across Marketplaces
When you set up a traditional retail business you sell out of one of your locations. With e-commerce, you can choose which marketplace you’d like to sell through. This offers you more freedom and exposure, but it also comes with fees.
Some marketplaces offer great exposure but take large cuts out of your profit while others let you sell for free or cheap will less “eyes” on your product. Choosing the right one is all about examining your needs and finding the right balance.
Amazon is easily one of the biggest online marketplaces in the United States. You’ll have the option of paying a monthly subscription or on a per-item basis. The costs will also depend on whether you’re a professional seller or an individual seller.
Professional sellers will have to commit to a monthly subscription that runs $39.99 per month. You’ll also be responsible for referral fees for each item you sell as well as closing fees. These fees vary depending on the category in which they land.
Individual sellers are held to different rules. They get to waive the subscription fee and instead pay $0.99 for every item they sell. As is the case with professional sellers, though, individual sellers are still responsible for variable closing fees.
The monthly subscription can actually pay off handsomely if you sell a significant amount of products every month. If you only sell a few items each month, the $0.99 fee is a much more reasonable burden to bear.
Sell to Amazon or Sell on Amazon?
Many people don’t realize that selling through Amazon isn’t the only way to make money via the e-commerce powerhouse: You can also sell to the company. There are a couple of pros and cons to be aware of, however.
If you’re looking to move as much inventory as possible, it’s easier to do so when you sell to Amazon directly. They allow you to sell in bulk, so you don’t have to rely on individual customers to purchase your goods. On the other hand, you won’t be able to control the marketing campaign or the price point. You might also take a price cut to sell in bulk to Amazon.
The two types of fees eBay charges are insertion and final value.
Insertion fees are also referred to as listing fees. These are the fees you’ll pay in order to list your products on eBay, and you get 50 free each month. After you use up your freebies, you pay a small fee based on the category. In most cases, this comes out to about $0.35.
Final value fees are the selling fees, and they determine the cut that eBay will take out of each of your sales. This fee only applies when your item sells so if it doesn’t you don’t owe any money. Final value fees consist of 9% of the price the product sold for.
You can also pay extra for listing upgrades, like international site visibility and multi-category listing. There are plenty of other types of upgrades as well, so use them to get your listings in the spotlight and make more sales.
Like other marketplaces, Jet charges sellers a commission based on the category of the product. This ranges anywhere from 5% base commission for most baby products and pet supplies to 15% for appliances, electronic accessories, groceries, and certain other baby products. Know what categories your products fall into and how much base commission will be applied when you decide on your price points.
Pro tip: The cheaper your products are priced, the less money you’ll lose on the commission when they sell.
If you’re looking to sell your products through an established and trusted e-commerce retailer without having to pay to set up your account, Walmart may be the right choice. Unlike other marketplaces, Walmart will allow you to set up an account for free.
Walmart will, however, charge referral fees based on the category of the product. The range of fees by category is a bit larger than it is for other marketplaces however and typically fall between 6% and 20% of your product’s selling price.
People are attracted to Groupon for two reasons:
The deals change every day.
Every deal offers substantial savings.
Any site that offers amazing deals (or at least any legitimate site) will bring in a whole lot of traffic. As an e-commerce seller, you’ll want to take advantage of the platform and get your products in front of people who might otherwise never hear about your brand.
Here’s where many sellers decide not to use Groupon and never consider the possibility again: They take 50% of your revenue.
Let’s break that down a bit. Revenue isn’t the amount you would typically list your product for, it’s the amount of money you make. Since Groupon gets so much traffic because of its insane deals, you’re not going to be selling your product at its typical price point. It’s the huge deals that offer 50% off that draw customers in, so right off the bat, you’re cutting your price point by a significant amount. Then Groupon will take 50% of the revenue you made from that sale. In this case, you end up making a quarter of the money that your product is actually worth.
This kind of cut is about as steep as it gets so consider this when determining whether or not Groupon is right for you. If your main goal is to gain exposure and your products are already on the cheaper side, then it could be worth the risk.
The listing and selling fees on Etsy are more straightforward than most. You’ll pay $0.20 to list your items, then a 5% transaction fee once the item is sold, and the listing will stay active for four months. There’s another 3% and $0.25 charge for payment processing as well. There are no monthly fees, and if you work the system properly you can have great success selling through Etsy.
Factors to Consider When Choosing Your Platform
The money you spend selling your products might be at the top of your list of concerns, especially if you don’t have a huge budget to work with. There are also other factors that you need to consider when you pick a platform to work through. Here’s a quick look at two of the other important factors to look at.
Exposure — If the fees are steep and you’re on the fence, think about how much exposure you’ll be getting. Are you going to shine the light on your brand in front of tons of new people? Balance cost and exposure, and make sure to stay within your budget.
- Trustworthiness — You never want to sell through a marketplace that people don’t trust. Not only do customers stay away from these shady platforms, but they might also mess up your transaction. Look into any marketplace you consider selling with and make sure it’s legitimate.