Amazon FBA or Fulfillment by Amazon is a service provided by Amazon that makes it easier for third-party sellers to list and sell their products on the platform.
With FBA, you ship your products to the Amazon fulfillment center, where they are stored in warehouses.
Sellers list their items on Amazon Marketplace, specifying FBA as the fulfillment method.
When a customer buys an FBA product, Amazon staff pack it and ship it. They also handle returns, refunds, and other customer service requests.
All items sold through FBA are also eligible for Amazon Prime and free Super Saver shipping. To the customer, the process is exactly the same as buying products directly from Amazon.
How FBA Works
Before you can start selling with Amazon, you’ll need products. There are no real restrictions for sourcing inventory. You can buy from a wholesaler, order from other marketplaces like AliExpress, or buy products from brick-and-mortar retailers like Walmart (this method is called retail arbitrage).
Some sellers on Amazon create their own products or brand generic products sourced with their own labels and packaging. This process is known as white labeling and can help your products to stand out from similar alternatives on Amazon if you can build a strong brand.
To get started with FBA, you first need to sign up for an Amazon Selling account. Once you’ve registered, you can list your products for sale on Amazon, specifying FBA as the fulfillment method.
You then need to pack your products and send them to an Amazon fulfillment center. Amazon has specific packing, preparation, and shipping guidelines for different types of products so it’s important to follow these or your inventory may be refused. You can also pay extra to have Amazon prep your items for you.
Once your products have been received and processed by the fulfillment center, there’s nothing more for you to do. You’ll be notified and paid directly when a customer orders your products.
Amazon will keep your inventory for up to a year without fees if it doesn’t sell. You’ll then be charged an additional long-term storage fee based on the size and type of product.
Amazon FBA Fees
There are two Amazon FBA seller plans. The Individual plan is limited to 40 units a month and costs $0.99 per unit sold, plus selling fees. The professional plan costs $39.99 a month plus selling fees.
Selling fees include:
- Referral fees of between 8% and 15%, depending on the type of product
- Fulfillment fees starting from $1.97 per unit, depending on size and weight. This fee includes picking, packing, shipping, handling, and dealing with returns.
- Additional fees for long-term storage of inventory, refund administration, advertising, and premium services.