How to sale on Amazon in India ?
How to Sell on Amazon: A Comprehensive Guide for E-commerce Success
Are you ready to simplify your online business and succeed as an e-commerce seller? Selling on Amazon can open doors to a nationwide customer base and provide substantial profits when done right. In this guide, we’ll walk you through everything you need to know about how to sell on Amazon, from calculating costs to comparing e-commerce with physical stores. By the end, you’ll have actionable insights to price your products for maximum profit.
Breaking Down the Cost of Selling on Amazon
Selling on Amazon involves various costs that directly impact your profit margins. Let’s break them down:
1. Referral Fee
Amazon charges a referral fee based on the product category. For instance:
- Balloons and soft toys: 11% flat referral fee.
- Video games: Referral fees vary by price range (≤500 = 9%, >500 and ≤1000 = 10%, >1000 = 12%).
2. Closing Fee
This fee depends on your product’s price and the shipping method. Using Amazon’s Easy Ship service, the closing fee for products priced between 251–500 INR is typically around 2%.
3. Shipping Fee
Shipping costs depend on the product’s weight, dimensions, and destination. For simplicity, assume shipping costs to be 15% of the product price in all of our examples here.
4. GST Costs
GST is calculated differently based on whether your price includes or excludes GST:
- Price includes GST: Divide the product price by (1 + GST rate) to find the base price and GST amount.
- Price excludes GST: Add GST to the base price.
Example: For a product priced at 500 INR (inclusive of 18% GST):
- Base price = 500 / 1.18 = 423.15 INR
- GST amount = 500 – 423.15 = 76.85 INR
Tools for Cost Calculation
To make your e-commerce journey easier, download our Excel sheet for just 39 INR (limited time offer for first 100 downloads). This sheet includes:
- A dropdown list for referral fees by category.
- Closing fee calculations based on Easy Ship rates.
- Shipping cost analysis.
- GST rate tables for effective scenario analysis.
Comparing Amazon with a Physical Store
Costs of an E-commerce Store
- Variable Costs: Procurement, referral fees, closing fees, shipping fees, and GST.
- Advantages: Costs scale with sales. No sales mean no additional costs.
Costs of a Physical Store
- Recurring Costs: Example Rent (60,000 INR/month), employee salary (10,000 INR/month), and electricity (10,000 INR/month).
- Disadvantage: These costs incur regardless of sales volume.
Profitability Analysis (Refer Excel or Youtube Video for more clarity)
Scenario 1: Selling 10 Products Daily
- E-commerce store profits are higher due to lower fixed costs.
Scenario 2: Selling 100 Products Daily
- Physical store profits surpass e-commerce as sales volume increases.
Scenario 3: Selling 1,000 Products Daily
- Physical store profits continue to grow with sales, while e-commerce profit percentages remain consistent.
Key Insight: Physical stores benefit from economies of scale, but e-commerce offers unlimited reach across the country.
Why Sell on Amazon?
- Wide Audience: Amazon allows you to sell nationwide, expanding your potential customer base.
- Scalable Costs: Variable costs ensure that you only pay when you sell.
- Ease of Entry: With Amazon’s tools and services like Easy Ship, starting an online store is straightforward.
Conclusion
Selling on Amazon is a lucrative opportunity for those ready to leverage its vast marketplace. By understanding the costs, setting the right prices, and using tools for analysis, you can maximize your profits and grow your e-commerce business.
Don’t forget to download the Excel sheet mentioned in this guide to streamline your calculations and comparisons. Ready to start selling on Amazon? Take the first step today and turn your e-commerce dream into reality.
FAQs
Q: What are the key fees for selling on Amazon? A: The main fees include referral fees, closing fees and shipping fees, along with other costs like procurement cost and GST costs.
Q: How does Amazon compare to a physical store? A: Amazon offers scalable costs and nationwide reach, while physical stores may benefit from economies of scale at higher sales volumes.
Q: Where can I find the tools to simplify my cost analysis? A: Download our Excel sheet for just 39 INR from the link below.
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