Amazon is changing their referral fees. Do you know how your store is affected?
We know that Amazon’s referral fees are here for a reason. They cover Amazon’s cost for benefits such as access to their marketplace, processing of credit cards, and use of the customer support.
Amazon does reassess their referral fees annually based on industry cost, seller feedback and, of course, their bottom line.
On February 19, 2019, there will be some significant changes in the Referral Fee Percentages that will affect how you should reprice certain items.
It is important to note that sellers pay either the per-item minimum referral fee OR the referral fee (as a percent), whichever is greater.
The First Major Change:
The first change is the drop of the Applicable Minimum Referral Fee from CDN$1 to $0.40 on most categories*. This change is beneficial for those who were selling items in these select categories under $6.67.
*does not include watches and jewelry where the original minimum referral fee was $2.
In the following categories, the percentage charges are now progressive in that there is a different fee on the portion of the price above a certain amount.
Furniture & Decor
Referral fee percentages were previously 15% and will change to 15% for the portion of the sales price up to CDN $250. For any portion of the sales price above CDN $250 (excluding mattresses which are charged just 15% on all sale prices) the fee will change to 10%.
For example: Take a $255 chair. You will pay 15% on the first $250 which is $37.50. Plus 10% on the $5 above 250 which is $0.50. Total Referral Fee= $38
Referral fee percentages were previously 20% and will change to 20% for the portion of the sales price up to CDN $325. For any portion of the sales price above CDN $325 it will be 5%.
For example: Take a $330 necklace. You will pay 20% on the first $325 which is $65. Plus 5% on the $5 above 330 which is $0.25. Total Referral Fee= $65.25
Pay Close Attention:
This next change is where things get a little more complicated. Because the new referral fees are using a tiered system, there are some price ranges where you will net less money due to increased fees after a certain price point.
Baby and Beauty and Health & Personal Care (including Personal Care Appliances) Categories
Referral fee percentages were previously 8% for products with a price up to CDN $15.00 and for products with a price above CDN $15.00 it will be 15%.
Example: a CDN $15 item with 8% fee the seller will net CDN $13.80, at CDN $15.01 with a 15% fee the seller will net $12.76.
The range where sellers should not sell is between CDN $15.01 and CDN $16.24.
Grocery & Gourmet Food
Referral fee percentages were previously 8% for products with a price up to CDN $20.00. For any portion for products with a price above CDN $20.00 it will be 15%
The range where sellers should not sell is between CDN $20.01 and CDN $21.65.
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