Fulfillment By Amazon (FBA): Fees, Benefits & Logistics
For those online sellers who choose Fulfillment By Amazon, a streamlined fees structure in 2018 may have made things easier to understand. This change may have even aided eCommerce businesses to better manage their budgets.
The latest fees structure for FBA combines picking, packing, and shipping into one fulfillment fee. It also simplifies inventory storage fees. The hope is that it’s easier to navigate the structure so you can balance your budget more efficiently.
You can also forecast future costs using Amazon’s updated native FBA calculator.
What do Amazon’s FBA fees look like?
Amazon bases its fees for FBA on factors like the size and weight of products you sell, as well as where you sell them.
For instance, smaller items weighing under 1-lb. cost just $2.41 to fill and ship when sold on Amazon. Conversely, if you sell the same item on your website you’ll pay $5.95 for Amazon to ship it out for you.
In this example, Fulfillment By Amazon fees are competitive for any products you sell on Amazon. You may even find it difficult to ship items yourself for less. You’re leveraging the Amazon giant, after all.
These low fees make FBA a popular fulfillment option for businesses that sell primarily on Amazon, or on Amazon and elsewhere, like a company website or another eCommerce site like eBay.
However you decide to sell your wares, using FBA to stock inventory and fill and ship your orders means you’ll pay 2 primary FBA fees.
- Fulfillment Fees – Your entire pick-through-shipment fee and includes order picking and packing, shipping cost, packing boxes, and inner packaging. It even covers returns processing, though not for items in categories with free customer returns.
- Monthly Storage Fees – The cost of storing your products in Amazon’s warehouse. Inventory storage fees are based on the space occupied by your products in Amazon’s warehouses, measured in cubic feet.
When assigning fulfillment and storage fees, FBA breaks products into 2 overall size categories, and sizing includes packaging such as shoe boxes, blister packs, or retail packaging.
- Standard-size products – These items weigh less than 20 lbs. and measure less 18″x 14″x 8″ or less, fully packaged. Within the standard-size category, there are also 4 size subcategories that affect fees.
- Oversize products – These items weigh over 20 pounds or are larger than 18″x 14″x 8” including packaging. Within the oversize category, there are also 4 size subcategories that affect fees.
Now you know the factors that affect Fulfillment by Amazon fees. We’re also exploring a sampling of FBA fees for the 2 different ways you can use the service. First up is FBA, with fees for products sold on Amazon, then fulfillment fees for goods sold through other websites or marketplaces.
How FBA or Fulfillment by Amazon Works
Whether you sell only on Amazon and use FBA for all orders, or sell on Amazon and other channels with a combination of FBA and MCF, the process begins the same way: getting your inventory to an Amazon fulfillment center. After that, your major fulfillment task is done, aside from checking stock levels and replenishing when necessary.
1. Ship your products to Amazon
You can choose to follow Amazon’s FBA stock prep guidelines and label, prep, and pack the stock that’s headed to FBA. From there, you’ll set up a shipping plan in your Seller Central dashboard. Many sellers use one of Amazon’s Partnered Carriers for inbound stock. Amazon’s inbound shipping fees are difficult to beat.
2. Amazon handles storage and tracking in its warehouse
When they get your inventory, Amazon will handle the sorting and storage of your inventory. It’s possible they may shift your stock from one warehouse location to another if they see a geographical need. Like if a large chunk of your orders come from the east coast, they may shift the bulk of your stock to their eastern warehouses to deliver orders faster. This is internal and doesn’t involve you in the process.
3. You list products for sale on Amazon, your website, or other marketplaces
Now you get to add your products to Amazon, your own ecommerce website or other seller marketplaces. Once listed, it’s up to you to do the marketing. Email marketing, social media, paid ads and other marketing channels are at your fingertips. You can read more on How to Sell More Online Without Spending a Fortune on Advertising here.
Then as customers place an order on Amazon, it’s automatically processed within their system and immediately sent for fulfillment. When orders are placed on your website or other marketplaces, you’ll either route these to Amazon for MCF fulfillment via your connected system or manually create an MCF fulfillment order.
4. Amazon fulfills the order
Since it’s Fulfillment By Amazon, all orders get routed to Amazon’s warehouses for fulfillment. Products get picked, boxes get packed, shipping labels get printed, and your orders head out the door to your buyers. For Amazon orders, Amazon emails tracking information and handles any shipment-related customer service issues for you, too. There are even third-party Amazon seller tools that help streamline FBA management tasks as you grow.
Comparing FBA to SFP
If you’re debating the difference between Fulfillment By Amazon and Seller Fulfilled Prime, read our article FBA vs SFP for more information. The bottom line is that you need to decide which fits your model for eCommerce.
Warehouse photo by Samuel Zeller on Unsplash
