Business Budget: What Are the Fees for Selling on Amazon Saudi Arabia?

The e-commerce sector in Saudi Arabia is set for unprecedented growth. According to recent market research, a young, tech-savvy consumer population, digital payments, and AI innovations are fueling the surge, valued at $708.7 billion by 2033. Whether you plan to or already sell online in SA, you’ve chosen a lucrative venture.

The profitability of your business, however, depends on how well you’ve prepared a budget.

Why Your Business Budget Matters

A business budget gives you an overview of how your future finances should look, from your income to your expenses. It helps you allocate your hard-earned cash effectively and meet long-term financial goals. Every business budget typically includes day-to-day expenses, investments, and future income.

One of the more crucial aspects of the business budget is setting recurring expenses. When handling your Amazon KSA seller registration, make sure you’re aware of the upfront fees and monthly expenses. Overlooking them will affect your cash flow, potentially limiting your business’s ability to meet financial obligations and invest in expansion plans.

When setting your budget for your online business, include Amazon fees.

The Fees for Selling on Amazon.SA

Knowing the fees Amazon collects will help you estimate the cost to start an online store in Saudi Arabia.

Amazon collects the following fees when you sell on their platform:

• Monthly subscription fee: This fee applies only to the Professional Selling Plan. Under this plan, you get access to tools and benefits, including bulk listings, automated pricing, customizable shipping rates, Amazon Marketplace Web Services (Amazon MWS), and eligibility for top placement on detail pages, among others. For a limited time, sa is offering a zero subscription fee for the Professional Plan. After this offer, the amount will vary depending on whether your Amazon accounts are merged.
• Selling fees: Amazon collects selling fees, which vary according to the category and fulfillment channel you’re using.
• Easy Ship Fees: The referral fee starts at 5% or a minimum of SAR 1.0, depending on the category. The shipping fee starts at 19.0 SAR per shipment and varies by shipment size.
• Self-Ship Fees: The referral fee starts at 5% or a minimum of SAR 1.0 and varies by category. The shipping cost is determined by the third-party courier you’ve chosen.
• FBA: Fulfillment by Amazon fees include the referral fee (from 5% or min SAR 1.0), fulfillment fee (starts at 5 SAR per unit, varies by size of unit), monthly storage fee (based on your average daily storage volume per month), and long-term storage fee (for inventory that has been in storage for more than 365 days).

Amazon may also collect a refund administration fee. When you refund a customer, Amazon returns the referral fee you paid, minus the administration fee, which is the lesser of SAR 15 or 20% of the applicable referral fee.

Optional fees include advertising costs. Amazon Advertising uses a cost-per-click, auction-based pricing model. It’s a cost-efficient way to manage your budget because you have control over what you pay when a shopper clicks your ad; you set the maximum amount.

In addition to fixed costs like Amazon’s monthly fees, factor in variable costs. These are your online store’s recurring costs that fluctuate per month. Variable costs can include materials, utilities (if you have any), travel expenses (if business-related), freelancers (if you’ve hired social media influencers), and other marketing expenses.

Mistakes to Avoid When Budgeting

Budget creation can be daunting, but it doesn’t have to be. You can turn to user-friendly budgeting apps for small businesses or spreadsheet tools. And be aware of common mistakes to stay on top of your budget.

Here are some budgeting mistakes to avoid.

Underestimating Costs

Inaccurate cost projections can lead to overspending and insufficient funds to meet your financial obligations. Whether you’re just starting an online business in Saudi Arabia or have been selling online for some time, unrealistic cost projections can lead to financial strain.

Failing to Track Expenses

To avoid overspending, you need to track your actual expenses against your budget amount. This important step allows you to spot opportunities for savings and helps you re-allocate the money toward something more cost-efficient.

Not Revisiting Your Budget

Business budgets vary month to month, so it’s important to continually review and update your budget. The cost of materials, for example, may have increased from the previous month, or your shipping fees may have changed. Such changes must be reflected in your budget to give you a clearer picture of your finances.

Not Preparing a Contingency Fund

Unexpected costs will arise. Some of these expenses may include warehousing costs, increased returns and refunds due to damaged items, and new supplier fees. Whatever costs are relevant to your Amazon.sa online store, make sure to budget for them. This way, you alleviate the financial burden on your business when the time comes.

A business budget is crucial to the longevity of your online store. With it, you can make better-informed financial decisions to drive sales and growth.