If there's one reason why Amazon is so popular today, it's because the company was the first to build a customer service infrastructure that other e-commerce platforms can only dream of. Amazon implemented a customer-first philosophy to ensure that shoppers get the best possible experience, and it worked.
Canada is no different than the rest of the world. Canadians hear the word "Amazon," and they automatically think of online shopping. In 2018 alone, more than 30,000 small and medium-sized businesses registered with Amazon Canada generated $900 million in sales and increased profits by 30% during the November/December holiday season. These statistics show that the Amazon brand we know today won't be leaving the Great White North anytime soon.
While the Amazon Marketplace is dedicated to shoppers who are keen on buying products online, some features help Canadian entrepreneurs reach more customers and ultimately maximize their profits. One such feature is Amazon Canada Fulfillment Services, where businesses can enjoy the FBA Program's benefits. This article is a quick guide for new Canadian firms to know about all costs related to Amazon FBA so that they can make the best possible financial decisions.
What is the Amazon FBA Program?
The Fulfillment by Amazon (FBA) Program is a feature introduced on the Marketplace in 2006 to help sellers streamline their fulfillment processes. Every time an entrepreneur successfully sells a product on the platform, Amazon ships it to the customer for a certain fee.
If you're an Amazon entrepreneur, you only have to ship your products to your nearest Amazon fulfillment center and let them do the rest. Besides shipping services, you can also allow Amazon to store your products and handle customer service/returns management concerns.
Sellers who wish to integrate their businesses into the program can follow this step-by-step registration process:
- Register to the FBA Program on the Amazon Canada website, and prepare your products for shipping.
- Ship your products to an Amazon fulfillment center nearest to your business location (fulfillment centers are available within the Alberta, British Columbia, and Ontario regions).
- Allow Amazon to store your products in its warehouses until a customer purchases the Marketplace (shipping fees are either waived or given at a discount for FBA products.) You can freely track product movements through Amazon's monitoring systems.
- In case of any customer service and returns management concerns, Amazon handles them on your behalf.
Fulfilled by Amazon international shipping can also be provided for businesses with operations outside Canada. While Amazon's international shipping does cost a bit more, it is undoubtedly worth the investment. After all, Amazon has a reputation for providing top-quality customer service to its customers, so any FBA business will be able to ride the bandwagon and absorb the positive feedback from customers.
How much does Amazon FBA Cost in Canada?
Amazon FBA shipping rates in Canada can be expensive and can turn into quite a hefty business cost very quickly. Any entrepreneur with an FBA business needs to take a systematic approach and plan for these fees ahead of time. This article breaks down all costs that you should know about.
Amazon Canada Fulfillment Services is calculated either in envelope, standard, or oversized fulfillment fees. You can see the differences between these three shipping rates below:
- Envelope fulfillment fees are for small parcels that mostly contain documents or tiny products, and they cost CAD 3.37 for the first 100 grams shipped. Every additional 100 grams costs CAD 0.31 per package.
- Standard fulfillment fees are for small and medium-sized retail products. They cost between CAD 5.44 and $6.40 depending on your product's size and weight requirements.
- Oversized fulfillment fees are for extra-large shipments that require special handling. They cost CAD 9.71 for every 1,000 grams, and every additional 500 grams will have another CAD 0.44 surcharge.
Amazon also charges a separate fee if you decide to pull out an unsold product from a fulfillment center. After all, Amazon FBA doesn't exist simply to store your products in a warehouse-- it's meant to be sold and shipped to customers. Removal fees are something that any business dread to pay for, so you should try your best not to let this happen.
Like fulfillment fees, removal fees are also charged for each shipment. It can be calculated as follows:
- Removal fees for standard shipments cost between CAD 0.30 and CAD 1.00. All products that exceed these weight requirements will be charged an additional CAD 0.40 for every kilogram.
- Removal fees for oversized shipments cost between CAD 0.50 and $1.50. All products that exceed these weight requirements will be charged an additional CAD 0.20 for every kilogram past the five kg-threshold.
A disposal fee is another unwanted penalty that FBA businesses try to avoid. If you spend your valuable time, effort, and resources on a product and you end up throwing it away, it's always a bad look on your brand.
FBA disposal fees can be calculated as follows:
- Disposal fees for standard shipments fall between CAD 0.30 and CAD 1.00. Each kilogram added to a product will have a surcharge of CAD 0.40.
- Disposal fees for oversized shipments fall between CAD 0.50 and $1.50. Each kilogram added to a product will have a surcharge of CAD 0.20.
Long-term Storage Fees
If you choose not to remove or dispose of your products from Amazon's warehouses, you can choose to let them stay there. For an additional cost, of course.
The main difference in calculating long-term storage fees is that it is not charged for every product. Instead, Amazon analyzes the space that your goods take up and subsequently proceeds to make a quote. The more space you take up, the more you have to pay.
Amazon charges CAD 150 in long-term storage fees for every cubic meter. For media-related products, however, Amazon charges per product under a special rate of CAD 0.15.
Amazon Canada Fulfillment Services can be overwhelming for any new Canadian business, especially when they have to factor this on top of other business expenses. Therefore, you need to have a go-to cost breakdown that you can review if you forget about Amazon FBA costs. You can attempt to minimize FBA expenses by creating high-quality products, launching effective campaigns, and building a solid customer base.
Suppose you are interested in hiring a team of shipping professionals to assist you with your shipping needs. In that case, we at Stallion Express can surely help you ship directly to Amazon FBA warehouses. Book an appointment today!