Welcome back to Book Flipper University. We’re almost through the nitty gritty of the setup section, and are so close to getting you out into the field looking for profitable books! Today’s session is will help you navigate the two main fulfillment options on Amazon.
To kick off today’s segment, let’s cover the three most common acronyms you’ll see in today’s segment, and throughout Book Flipper University:
MF: Merchant Fulfilled
FBA: Fulfilled by Amazon
LTSF: Long Term Storage Fees
There are two key fulfillment options, Merchant Fulfilled and Fulfilled by Amazon. You can already probably guess the key difference by reading the names, but we’re going to take you deeper into the pros and cons of each to help you decide which is best for your business.
Merchant Fulfilled (MF): You, the merchant, list, store, and ship the books. Whether you’re shipping out of your warehouse or your home office, you are responsible for shipping orders to your customers.
Fulfilled by Amazon (FBA): You list your books and then send them to Amazon, they process them, and then handle storing and shipping the items to customers. This is the system that powers Amazon Prime, making it possible for shoppers to receive their orders within two business days.
We mentioned Amazon fees and storage a few times in the section above, so now we’re going to dive into what those are to help you determine which fulfillment option is right for you. We’ll also get further into this when we progress to our sourcing segment, but for now here are the fundamentals to get you started.
Whether you choose MF or FBA, you’ll pay Amazon a $1.80 media category fee per book, as well as a final value fee of 15%. If you go with FBA, you’ll also pay $0.20 to $0.40 per pound to ship your items to Amazon (depending on where you live) and storage fees of around $0.02 per item, per month.
Now, let’s take a look at a few examples using an FBA calculator (you can find the one we’re using HERE, or Google FBA calculator)
First, let’s calculate MF versus FBA on a half-pound book, like a standard romance novel.
Revenue and Selling on Amazon fees: Amazon will calculate their fees based off of total revenue. If the item is Merchant Fulfilled, it includes your shipping price. You can also factor shipping costs into the item price, and offer free shipping (in this example, we’d just list the item for $10). For FBA, shipping is listed as zero because of Amazon Prime.
Fulfillment Cost: This factors in your shipping costs. For Merchant Fulfilled on items less than one pound, it will cost you $2.66 to ship this book via media mail. On FBA, the fulfillment fee includes the cost to have an Amazon warehouse employee handle that item, pulling and shipping it.
In this example, you’ll earn a 1% higher profit by selecting FBA.
Next, let’s look at a slightly heavier book at the same $10 price point.
While you’ll pay the same amount in Amazon seller fees, the heavier weight raised the FBA fees as well as the cost to ship to Amazon. In this scenario, you’d make a few dollars extra selling MF.
Initially you may be thinking that you shouldn’t sell heavier books on Amazon. But let’s take a closer look. Usually, you’ll earn a few extra dollars—sometimes more than just a few—by fulfilling FBA because of Amazon Prime. Because people are paying for Prime and its fast shipping, buyers are more likely to purchase your product if it’s available on Prime.
On the back end, there are fewer sellers using FBA which means less competition. Amazon also prioritizes Prime items in the buy box, so shoppers will see your item first, even if it’s priced higher than other MF items. Because of these factors, it’s not uncommon to raise the prices for Prime by a few dollars. Let’s put this into action:
As you can see, by raising the price of the Prime item by $2.50, you’ll earn a few more cents through FBA than by opting for the lower-priced MF option.
Now, let’s apply this little insider tip to an example with a heavy 4-pound book, such as a textbook. On MF, a book like this is typically priced around $15. If it’s FBA, it’ll be closer to $25. Now, let’s run the numbers:
By fulfilling with Amazon and charging an additional $10 for the book, you’d almost double the profits you would have received going MF.
Now that you understand more about the listing types, take some time to consider what’s best for you and your business. Some businesses, such as ourselves, prefer to sell strictly FBA. We personally enjoy the FBA system as it has alleviated a lot of the pressure of fulfilling orders, which gives us more time to source new books or invest in other areas of our business. Other businesses may prefer MF. Keep in mind, you can also do a hybrid of both! If you have certain books you’d prefer to list only MF or FBA, you can certainly do that.
We hope this segment helped you understand the basics of the two key fulfillment types, and we hope to have you back for the next lesson in Book Flipper University on sourcing books to sell on Amazon.
BOOK FLIPPER RESOURCES
This week’s video: https://www.youtube.com/watch?v=_PfmuoiUPgg
Book Flipper Blog: http://bit.ly/2qFe31w
Book Flipper Facebook Group: http://bit.ly/2IYSKiU
Free Listing Spreadsheet: http://bit.ly/2vfMcud
Tracking Spreadsheet: http://bit.ly/2Ho44rx
The Book Scouting App I Use: http://bit.ly/2voBstC
My Online Arbitrage Tool: http://bit.ly/2HuCnh3
The 100 Book Challenge: http://bit.ly/2H3mkY5
The Listing Software I Use: http://bit.ly/2qAxEjV
Box Level Contents Spreadsheet: http://bit.ly/2qxesCW
Scouting Tools I Use (scanner, printer, etc): http://bit.ly/2viDRpF