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What is FBA?

May 20, 2022 by Keith Jaco
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FBA is an acronym for “Fulfillment By Amazon“. FBA is a great solution for e-commerce professionals whose business has grown to the point that they need help fulfilling orders, and they need more space for inventory. FBA is a 3rd Party Logistics service provided by Amazon. Having an FBA account means that you can send your inventory in bulk, to one central location and have it Picked, Packed, and Shipped by Amazon.

When you set up an Amazon Seller Account, you have the choice of selecting seller fulfillment or FBA (Fulfillment By Amazon). When you use FBA, Amazon will manage your inventory in their warehouses, and fulfill your orders for you as they come in. Once in their warehouses, they’ll pick, pack & ship them using the Amazon delivery infrastructure. You only pay for the actual act of fulfilling your individual orders. If no orders some in for that day, you don’t pay any fees. If you get 20 orders in for the day, you only pay for the

FBA dominates
Get a quote to ship your inventory to FBA

Convenience of FBA

Ecommerce professionals across the planet use FBA services to pick, pack and ship their items every day. FBA fulfillment centers handle all of the details of inventory management and order fulfillment, saving you time to work on your business. FBA has specialized services that can help you grow your business, without having to invest in infrastructure or staffing. Some services to help you are:

  • FBA Small and Light: Reduce the cost of fulfilling orders for low-cost, small, and lightweight FBA inventory.
  • FBA Subscribe & Save: Offer discounts on eligible FBA products for repeat customers.
  • FBA Pan-EU: Offer fast delivery in Prime-eligible European countries.
  • FBA Export: At no extra charge, expand your FBA business to more than 100 countries—minus the complexities of international selling.
  • Multi-Channel Fulfillment: Sell from your own or third-party ecommerce sites, with Amazon picking, packing, and shipping to your customers.

Amazon FBA’s pay-as-you-go model ensures that you only pay for storage space and the orders that FBA fulfills. The cost of shipping is included in your fees, with no extra charge for Prime FREE Two-Day Shipping and free shipping on eligible orders. Fees for Selling on Amazon and optional services may apply.

Using FBA to fulfill your orders has the benefit of Amazon’s 24/7 customer service team.

Warehouse Loading

Shipping to an FBA Warehouse w/ FreightCenter

When shipping to the FBA warehouse, there are some rules to follow to ensure that you don’t incur unnecessary fees from Amazon.

The first step in the packaging process is to ensure that all individual packages are labeled correctly. Each item heading to an FBA warehouse will need its own SKU sticker. Once prepped for delivery, all boxes appropriate FBA shipment ID labels to tell the receiver what is in the boxes, on the pallet. You will also need separate labels for each pallet, as well as your bill of lading for the carrier transporting your items.

  • You should ensure all items being picked up by your carrier are centered on and bound to a shipping pallet, with no overhang.
    • Place your heaviest items in the middle and at the bottom of your pallet.
  • Shippers should wrap their shipments in plastic to help keep their items from shifting during transit.
Get a quote to ship your inventory to FBA

Seller Plans

Having your orders fulfilled by Amazon will cost you, just as if you had hired an individual to fulfill orders in your own warehouse. The benefit is that you can pay as you go and avoid employee issues. You have two choices of how to set up your Amazon Seller account: Individual Seller or Professional Seller.

Individual Sellers can avoid a standard monthly fee, but will pay more for individually fulfilled orders. They also cannot advertise on the platform or see certain metrics. Pro Seller accounts are charged a monthly fee but can advertise on the platform, get customized reports, and pay less per fulfilled order.

Fees

Fulfillment fees arise according to the shipment’s needs for packaging and handling. Fees will also vary depending on size and weight. Storage fees are similar, taking into account the shipment’s volume and size. The shorter the stay, the lower the fee. The longer the stay, the higher the fee. Other standard seller fees will include the customary 15%-18% of the product price that Amazon absorbs for providing its services.

There are a variety of other fees that come along with having your orders fulfilled by Amazon, too. In addition to the fulfillment costs, there are possible storage fees, and disposal fees.

Here are the most common FBA fees:

  • Inventory storage fees: Charged for all items stored in an Amazon fulfillment center, and based on your daily average volume of inventory measured in cubic feet. See how to determine the product size tier for your items.
  • Long-term storage fees: Assessed monthly for all items stored in a fulfillment center for more than 365 days. Maintaining sound inventory health can help you avoid long-term storage fees.
  • Fulfillment fees: Charged per unit for picking and packing your orders, shipping and handling, customer service, and product returns. Use the FBA revenue calculator to estimate fees and see how to preview your fees.
  • Unplanned services fees: Charged when inventory arrives at a fulfillment center without proper preparation or labeling, making unplanned services required.
  • Removal order fees: You can have Amazon return or dispose of your inventory in a fulfillment center for a per-item fee.
  • Returns processing fees: Charged on orders when Amazon provides a customer with free return shipping.

Which Amazon seller plan is right for you? That really comes down to the number of products you sell on average each month.

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