Amazon FBA

What is Amazon FBA?

Fulfillment by Amazon (sometimes referred to as “Amazon FBA” or just “FBA”) is an innovative program that allows independent sellers to leverage Amazon’s fulfillment and delivery network. Participation in FBA can unlock multiple opportunities for sellers, including streamlined logistics and the ability to offer Amazon Prime shipping. FBA is part of Supply Chain by Amazon, Amazon’s fully automated set of supply chain services.

How FBA Works

Launched in 2006, FBA has become a popular solution for sellers looking to simplify their inventory and order management workflows. After enrolling products in the program, sellers are guided through a process for preparing, packing, and labeling their items for shipment to Amazon’s fulfillment centers. As shipments arrive, Amazon will store the seller’s items and begin fulfilling orders on the seller’s behalf. If a shopper experiences a customer service issue or initiates a return, Amazon handles that for the seller, too.

Amazon charges FBA fees, which are outlined on the Fulfillment by Amazon overview page. FBA fulfillment and storage costs, which vary depending on item size and other factors, are charged in addition to standard fees paid by all Amazon merchants.

Potential Benefits of Using FBA

Sellers participate in Amazon FBA to access a variety of benefits, including:

Increased visibility with Amazon Prime shoppers: Items sold through FBA are eligible for Amazon Prime (two-day) shipping, which helps increase awareness with millions of shoppers looking for the Prime check mark.

Streamlined inventory management: For a monthly fee, Amazon will store the seller’s items in its fulfillment centers. Inventory storage fees are based on a cubic-foot calculation, which can be more cost-effective than building in-house infrastructure or leasing locally.

Outsourced order fulfillment and support: Growing an eCommerce operation typically involves increasing order volume. Using FBA offers a scalable approach for driving growth without exponentially expanding in-house administrative efforts.

Standardized business processes: Preparing one inbound shipment for FBA could result in dozens of downstream orders that are individually picked, packed, shipped, and supported by Amazon. Leveraging this model can help standardize the seller’s processes and free up time for higher-value tasks, such as product sourcing.

Discounted shipping fees: According to Amazon, FBA shipping costs are 30% lower per unit compared to standard shipping options from major carriers in the United States.

Learn More about FBA

eComEngine’s Amazon FBA guide offers an in-depth summary of what sellers should know to increase success with FBA. Learn tips for getting started, knowing what to sell, packaging and shipping, and maintaining compliance. RestockPro, our inventory software for FBA sellers, can help you make decisions about what to restock (and when).