Fulfillment by Amazon: Definition, Cost, Features & Providers

Fulfillment by Amazon (FBA) is a way for sellers to ship their products directly to an Amazon warehouse. Amazon will handle the sale, picking the product from inventory, shipping, customer service, and returns. Amazon FBA fees range from 45 cents to $1.35 per unit, and $39.99 per month for a Professional account.

ShipBob allows you to transfer inventory from any ShipBob fulfillment center to any FBA facility. They’ll prep the orders with FBA item labels and box labels, acting as your central logistics hub so you can focus on doing what you do best. Get started with ShipBob today.

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How Fulfillment by Amazon Works

FBA is different from a merchant-fulfilled network (MFN) where an Amazon seller handles the order fulfillment and shipment process. When a customer places an order, Amazon FBA picks and ships the order for you. The customer receives tracking information from Amazon and receives their orders within two business days thanks to Prime shipping.

With FBA, you’ll ship your products to an Amazon warehouse for storage known as an Amazon fulfillment center. You’ll send these shipments to a fulfillment center on a shipping pallet or through a freight forwarding company directly from your supplier. Alternately, a service like ShipBob also works as a fulfillment center.

To store your products in an Amazon fulfillment center, you’ll pay an inventory storage fee. These fees depend on the season your items are at the warehouse. Amazon FBA Fees start at 48 cents per cubic foot and go up to $2.40 per cubic foot during the busier seasons, such as Thanksgiving and Christmas.

In addition to inventory storage fees, you’ll pay a fee for Amazon to pick, pack, ship, and provide customer service to your buyers. These FBA fees start at $2.41 per unit for small items less than 10 ounces and go up to $137.32 per unit for special, oversized products like whirlpools and deep freezers.

Should there be any customer inquiries with your products, Amazon will handle all communication. This includes inquiries, refunds, and returns.

The Amazon FBA lifecycle

The Amazon FBA lifecycle

The Amazon FBA lifecycle

Who Fulfillment by Amazon is Right For

If you’re an Amazon seller who doesn’t have the room for storage, inventory management, and customer service, you may find that you enjoy using FBA. However, there are certain types of businesses that tend to do better with FBA than others. These businesses include brick and mortar stores, and ecommerce stores.

Selling using Fulfillment by Amazon works best for:

  • Brick & mortar stores: A brick-and-mortar business that has ample profit margins and a unique product may find quicker success than a brand-new business.
  • Ecommerce stores: Seasoned ecommerce sellers may attract more buyers when selling their products on Amazon.
  • Entrepreneurs: It will take time to fine-tune your product offering and profit spreads. Rules for selling on Amazon change quickly and you will need time to change your processes and procedures accordingly. Entrepreneurs need to commit for the long-haul.

Using Fulfillment by Amazon can be a great way to make money and learn best practices for navigating a fast-changing ecommerce marketplace. Pay close attention to profit margins to determine if using FBA is a smart move or not for a particular group of products.

Fulfillment by Amazon Costs

Costs for selling using FBA include monthly fees, shipping, product costs, and third-party tools. Sellers will also have monthly, fulfillment, and storage fees when using FBA. Do research to make sure your products are turning a profit because FBA costs can add up.

Fulfillment by Amazon costs include:

  • Monthly fees: A Professional seller account is $39.99 per month. Individual sellers do not pay a monthly fee and instead pay 99 cents per item sold plus selling fees of 45 cents to $1.35 per unit.
  • Fulfillment fees: FBA costs to locate the product on the shelf, pack it, ship it, handle customer service, and returns start at $2.41 per unit and go up to $137.32 for special, oversized items.
  • Stock removal fee: FBA charges a removal fee of 50 cents to 60 cents per unit if you want to pull inventory from Amazon or dispose of unsold stock.
  • Labeling fee: Amazon has strict barcode label specifications for all stock you ship to FBA. If not labeled properly, you may get assessed a labeling fee of 20 cents per unit.
  • FBA prep service & FBA unplanned prep service: FBA has strict product packaging and prep guidelines. You can opt to have Amazon package and prep products for a fee, or if you send improperly prepared products, you’ll incur an unplanned prep fee. Each fee varies by the type of product, and starts at $1.00 and goes up to $2.20 per unit.
  • Returns processing: Basic returns processing is free for many categories, but not for categories with free customer returns. In these, FBA bills a return processing fee equal to your original fulfillment fee. If returned products need repackaging for resale, Amazon charges a repackaging fee but doesn’t disclose what this is.
  • Storage fees: The cost of storing your products at an Amazon Fulfillment Center start at 48 cents per cubic foot of space and go up to $2.40 per cubic foot. The cost per cubic foot varies by season and whether products are standard or oversized.
  • Long-term storage fees: For inventory held at an Amazon Fulfillment Center longer than 365 days, sellers incur long-term storage fees. These fees are $6.90 per cubic foot or 15 cents per unit, whichever is greater.
  • Shipping: FBA fees include the cost to ship your product to a customer. You have to pay to ship it to Amazon, which varies by carrier. Amazon has negotiated shipping discounts through its partnered carriers.

These fees may be more expensive compared to fulfilling the orders yourself using MFN as you’re primarily paying for convenience. By using FBA, your customers can get their orders within two days using Amazon Prime shipping. Buyers also have an idea of what to expect when it comes to customer service because they’re…

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