Key Takeaways
- How Does Amazon FBA Work? Amazon FBA, Fulfillment By Amazon, is a program where Amazon Sellers can make their products Prime Eligible by sending their inventory to Amazon Fulfillment Centers across the country and when a customer places an order, the order ships from the closest Fulfillment Center and Amazon handles the customer service.
- The biggest benefits of FBA on Amazon for the seller are Prime Eligibility, handing off customer service to Amazon and not having to fulfill orders, rather fulfillment by Amazon.
- Amazon FBA Fees: How much does Amazon FBA Cost? The fees associated with fulfillment by Amazon FBA are your Selling Plan which is $49.99, Referral Fees which are category dependent and between 10 – 17%, Stickering & Labeling ($0.30 per label), Fulfillment Fees & Storage fees (see Amazon FBA Fees section for details).
In over 10 years as an eCommerce Fractional CMO, Amazon Consultant, and eCommerce Consultant, not to mention CEO, I’ve seen just about every mistake and the lessons from them. That means you get all the learnings without the scars.
Selling on Amazon with fulfillment by Amazon can drive a ton of revenue but also be incredibly complex. If you’re an Amazon Seller Central Seller or selling Amazon B2B, knowing what FBA is and if FBA on Amazon is right for your business sits right on top of the priority list.
You are going to get in-depth and actionable insight into how Amazon FBA works and if FBA on Amazon is right for your business as well as how to drive sales on FBA for Amazon.
What is Amazon FBA?
If you’ve ever wanted to sell on Amazon, but not have to fulfill every order and handle customer service, take it from someone who does Amazon FBA Consulting, Amazon FBA with fulfillment by Amazon is for you.
So, what is Amazon FBA?
Amazon FBA, Fulfillment By Amazon, is a program where Amazon Sellers can make their products Prime Eligible by sending their inventory to Amazon Fulfillment Centers across the country and when a customer places an order, the order ships from the closest Fulfillment Center and Amazon handles the customer service.
If you have a Pro Amazon Seller Account through Seller Central, then you can use the Amazon FBA program to sell on Amazon.
Here is how Amazon FBA works…
How Does Amazon FBA Work?
How Does FBA Work?: Amazon FBA works as your fulfillment channel for Amazon Seller Central Sellers. You send your inventory into FBA fulfillment centers around the country and when a customer places an order from your Amazon store, the order is sent to the customer directly by Amazon instead of the merchant (you). The most notable benefit of Amazon FBA is it makes your products Prime eligible.
The other way to fulfill orders on Amazon is Merchant fulfillment.
What’s the difference between Amazon FBA and Merchant Fulfillment?
| Amazon FBA | Merchant Fulfillment (FBM) |
|---|---|
| You send inventory to Amazon warehouses. | You keep inventory in your own warehouse. |
| Amazon picks, packs, and ships orders. | You pick, pack, and ship orders yourself. |
| Orders are Prime Eligible (2-Day Shipping). | Orders are NOT Prime Eligible (unless Seller Fulfilled Prime). |
| Amazon handles customer service. | You handle customer service. |
Your Amazon FBA performance is reflected by your Inventory Performance Index Score (IPI Score). Your goal is to be above 550. If you want to learn more, I recommend my How To Increase Amazon IPI Score article.
Amazon FBA FAQ:
Simply by using Amazon FBA, does this make my products available for Amazon Prime?
Yes it does! It’s that simple. Amazon is very serious about delivery times to customers and can only ensure the 2-day shipping window is met when they control every aspect of fulfillment.
What if Amazon Loses My Inventory Before It Gets Into Fulfillment Centers?
- You will need to deal with Amazon Seller Support ASAP.
What is Amazon Prime (1 and 2-day shipping) and why is it so important?
By being a paid subscriber to Amazon Prime, you receive free 2-day shipping on every order that is Prime eligible.
Does Seller Fulfilled Prime Eligible 2 Day Shipping Exist (Merchant Fulfilled Prime)?
It does! Learn about eligibility, how it works and how to sign up here: Amazon Seller Fulfilled Prime: Everything You Need To Know
Can’t I Just Skip the FBA Amazon Fees and Use That Then?
No as you need to meet the Amazon Seller Fulfilled Prime requirements and go through a qualification period.
While Amazon doesn’t come out and say what metrics they track and for how long to determine if an Amazon Seller Central partner is eligible for Merchant Fulfilled Prime 2 Day Shipping, I have had clients achieve this, but definitely not overnight and definitely not at low volume.
Amazon FBA Fees
What does Amazon FBA Cost?
Amazon FBA Fees for fulfillment by Amazon break down like this:
- Professional Seller Central Account: $39.99 / mo.
- Shipment To Amazon: Vary by weights & dimensions (Partnered carrier rates available).
- Stickering & Labeling: $0.30 per product if you choose to have Amazon label the products.
Amazon FBA Storage Fees:
| Dates | Standard Size | Oversize |
|---|---|---|
| January - September | $0.75 per cubic foot | $0.48 per cubic foot |
| September - January | $2.40 per cubic foot | $1.20 per cubic foot |
| Long Term Storage Fees | $6.90 per cubic foot | $6.90 per cubic foot |
Amazon FBA Fulfillment Fees:
| Size tier | Max dimension | Shipping weight ¹ | Packaging | Fulfillment fee per unit ² |
|---|---|---|---|---|
| FBA Small and Light | 16" x 9" x 4" | 4 oz. or less | 0.7 oz. | $1.97 |
| 4+ oz. to < 10 oz. | 0.7 oz. | $2.39 | ||
| Small standard | 15" x 12" x 0.75" | 10 oz. or less | 4 oz. | $2.50 |
| 10+ to 16 oz. | 4 oz. | $2.63 | ||
| Large standard | 18” x 14” x 8” | 10 oz. or less | 4 oz. | $3.31 |
| 10+ to 16 oz. | 4 oz. | $3.48 |
||
| 1 to 2 lb | 4 oz. | $4.90 |
||
| 2 to 3 lb | 4 oz. | $5.42 |
||
| 3 to 21 lb | 4 oz. | $5.42 + $0.38/lb above first 3 lb |
||
| Small oversize | 60" x 30" | 71 lb or less | 1 lb | $8.26 + $0.38/lb above first 2 lb |
| Medium oversize | 108” (longest side) | 151 lb or less | 1 lb | $11.37 + $0.39/lb above first 2 lb |
| Large oversize | 108” (longest side) | 151 lb or less | 1 lb | $75.78 + $0.79/lb above first 90 lb |
| Special oversize | >108” (longest side) | N/A | 1 lb | $137.32 + $0.91/lb above first 90 lb |
Amazon FBA Benefits
As a consultant for Amazon I can tell you there are certainly a lot of benefits of Amazon FBA in the way of sales, efficiency and reputation.
- 1) Order Fulfillment Is Handled For You: You don’t have to pick, pack and ship orders every day.
- 2) 24/7 Customer Service: Amazon handles all customer inquiries, refunds and returns.
- 3) Review Quantity & Quality: Customers get a better experience (2-day shipping) and are more likely to leave reviews.
- 4) Trust: Customers trust the Prime badge and Amazon’s return policy.
- 5) Improved Visibility In Product Searches (Amazon SEO): Sales velocity is a huge ranking factor, and Prime eligibility boosts sales velocity.
- 6) Can Help You Win The Buy Box (Featured Offer): Amazon FBA offers a superior shipping experience over FBM, giving you an edge.
What is Amazon FBA Small & Light?
The Amazon FBA Small and Light Program enables Amazon Sellers with small and lightweight products to still offer fast and free shipping, while also getting the Prime badge next to their listings.
Amazon FBA Small and Light Program FAQ:
Do products offered through Amazon FBA Small and Light still qualify for 2-day shipping?
- No, but they qualify for 3 – 5 business day shipping. Still pretty quick.
Do products offered through Amazon FBA Small and Light still get the Prime badge?
- Yep!
What are the requirements for the Amazon FBA Small and Light Program?
- Weight: 15oz or less
- Size: 16 x 9 x 4 inches or less
- Price: $15 or less
Who is a Good Fit For Amazon FBA?
You’ve worked out the Amazon FBA calculator and the costs for FBA for Amazon. Does FBA By Amazon fit your business model?
If your margins make sense and you have room for advertising, double down on Amazon FBA. If the margins are barely there with advertising, may still make sense to use FBA By Amazon as a marketing mechanism for visibility.
If you can make FBA By Amazon work, do it.
Trying to thrive on Amazon only through Amazon Merchant Fulfillment is too difficult. Granted, now there is Seller Fulfilled Prime, but if you’re also looking to reduce your ACoS on Amazon, FBA by Amazon with Prime eligibility is BY FAR the way to go.
How To Optimize Amazon FBA
Before you rush into FBA By Amazon, make sure you have a plan that will check off certain boxes:
- Get more Amazon reviews
- Get more seller feedback
- Drive external traffic to Amazon product listings
- Limit returns and negative feedback
- Leverage Amazon Product Listing Optimization to increase sales velocity
1) Product Inserts For Reviews & Customer Service
Before you send the inventory off to Amazon, make sure each unit contains a product insert that asks for an honest review, asks for social shares, and provides customer service contact info.
2) Email Follow Up Sequence
“The fortune is in the follow-up.” Use email follow up sequence software to tie into Amazon’s API’s and send follow up emails to your customers to get reviews and limit returns.
3) Increase Amazon SEO & Decrease ACoS With Amazon Influencers
Did you know that Amazon has had Amazon Influencers since 1996? It’s the world’s largest Affiliate Program. They earn a commission from Amazon directly that isn’t taken out of Amazon Sellers pockets.
How Do Amazon FBA Returns Work?
When a customer requests a return for a product they purchased via Amazon FBA, Amazon instantly accepts the return and takes the funds from your upcoming disbursement.
What if the item is unsellable?
You can choose to have Amazon FBA returns sent back to you or disposed of when considered unsellable condition. You may also use the FBA Liquidations Program to recover a portion of your inventory cost (net recovery value) while avoiding removal fees.
Amazon FBA INFOGRAPHIC
Frequently Asked Questions
Is Amazon FBA Worth It?
Yes, selling Merchant Fulfilled simply makes it too difficult to outrank Amazon FBA fulfilled by Amazon listings with Prime to get the visibility you need.
What Is the Minimum Quantity for Amazon FBA?
There is no minimum quantity for Amazon FBA. While Amazon imposes inventory limits, there is no minimum quantity shipment for Amazon FBA.
Is What Are The Packaging Requirements For Amazon FBA?
I cover Amazon FBA packaging requirements in-depth in this guide: Packaging Requirements For Amazon FBA.
Is My FBA Inventory In Reserved Status Available For Sale?
Your reserved FBA inventory is available for sale when the status is FC Transfer. Customer Orders and FC Processing is not available for sale.
Where Do I Ship My Products To Amazon For Amazon FBA?
Amazon has fulfillment centers around the country and based on demand, informs you while you are creating a shipment plan where your inventory will need to go.
Does Canada Have Amazon FBA?
Yes it does.
Do All Amazon FBA Returns Get Accepted?
Yes.
Does Amazon FBA Accept Returns on Grocery?
No, but you can still choose to offer the customer a courtesy refund via the Customer Reviews tool in Amazon Seller Central.
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