What is FBA?

Fulfillment by Amazon (FBA) can help you optimize and streamline your operations and reach a wider audience. Whether you’re new to selling online or an experienced seller, in this guide, we’ll walk you through how FBA works and how you can use it to grow sales.

Fulfillment by Amazon is a service that enables Amazon sellers to delegate their fulfillment operations to Amazon. You can enroll inventory in FBA to store products in Amazon fulfillment centers. When customers make orders, Amazon handles packing, shipping, and provides customer service for items enrolled in the FBA program. When you list products with FBA, eligible listings can showcase the Prime badge, indicating to customers that they qualify for free, two-day shipping. Here are some more perks:

• Using FBA for shipment costs 32% less per unit on average compared to alternatives
• FBA offers flexibility, allowing you to enroll as many or as few products as you desire, and you can even begin with just a single product.
• Amazon’s customer service team can handle customer inquiries and process returns at no additional charge

FBA also has tools and sub-programs to optimize your operations and meet specific business goals, such as Remote Fulfillment with FBA, which lets you fulfill orders in other countries with inventory in the United States. Another illustration is Amazon Global Logistics, which enables you to transport inventory directly from China to fulfillment centers in the United States and Europe at competitive rates.

How Amazon FBA works

Let’s cover how to use FBA to meet your business goals from enrolling products to sending in your first shipment.

Step 1: Decide on a fulfillment strategy

FBA offers the flexibility to fulfill either all or a selection of the products you sell, depending on your specific requirements. Additionally, you have the option to utilize FBA for fulfilling orders from your alternative sales channels, such as your own website. You can explore Multi-Channel Fulfillment and establish connections to your various channels using pre-built applications or by directly interfacing through APIs to automate your order management processes.

Step 2: Add products to FBA

Once you’ve decided what you want to send to Amazon fulfillment centers, enroll products in FBA from your Seller Central account

You have two options for utilizing FBA:

Option 1: When adding new inventory, simply navigate to the "Offer" tab and select "Amazon will ship and provide customer service (FBA)."

Option 2: If you've already added products and wish to convert them to FBA, go to the Seller Central main menu, hover over "Inventory," and select "Manage Inventory." Next, click the "Edit" drop-down menu beside the product you want to fulfill through Amazon and choose "Change to Fulfilled by Amazon."

It's essential to verify that you've accurately entered product dimensions whenever you add or convert products to FBA to prevent potential inventory-related issues in the future.

Step 3: Prep and pack products

For a hassle-free check-in process at Amazon fulfillment centers, it's crucial to adhere to FBA packaging, preparation, and labeling guidelines. Make sure to have the following items readily available when they are relevant:

(Note: The specific items and guidelines may vary, so it's essential to consult Amazon's official FBA documentation for the most up-to-date and detailed instructions.)

• Ship-from address
• Product measurements
• Case sizes
• Boxes to ship the items in
• Poly bags and bubble wrap
• Shipping scale
• Printer for labels
• Avery 5160 or 8160 paper to print Amazon barcodes’

Step 4: Shipping Products to an Amazon Fulfillment Center

When you're ready to send your inventory to Amazon fulfillment centers, you can follow the "Send to Amazon" workflow in Seller Central. This process will outline the next steps and offer best practices to guide you through the shipping process.

For cost savings and further streamlining of your shipping operations, consider utilizing Amazon Partnered Carriers to transport your inventory to Amazon fulfillment centers. Eligible carriers offer significantly discounted rates, with costs billed directly to your seller account as an inbound transportation charge. You can find your Partnered Carrier options in the "Select Shipping Carrier" section during step two of the "Send to Amazon" workflow. When using Partnered Carriers, Amazon provides printable shipping labels and automatically uploads shipment tracking information, simplifying the shipping process.

Step 5: Track inventory and manage stock levels

While you’ll be notified of orders that FBA is taking care of for you, keep an eye on inventory levels as you plan your shipping strategy. You can manage and review inventory from the FBA dashboard. Find the dashboard in Seller Central by opening the main menu, hover over “Inventory,” and select “Dashboard” under Fulfillment by Amazon.

Use the “Shipments” tab to monitor shipments to fulfillment centers, or start the process of creating new shipments. Additionally, the “Inventory” tab lets you monitor, plan, and restock inventory. Managing your inventory remotely with FBA can help you start and scale your business quickly and efficiently.

Once your business is up and running with FBA, you can use the FBA Restock Inventory tool to take the guesswork out of inventory operations. It helps you plan shipment amounts and timeframes, and gives you custom recommendations based on sales history, demand forecast, seasonality, and replenishment settings. Customizing your replenishment settings can help you further streamline your business by optimizing factors like lead time, replenishment frequency, and supply chain settings.

Step 6: Look for ways to grow sales

adding the Prime badge to listings with FBA can be a powerful sales booster due to the appeal of free shipping and the efficient delivery associated with FBA. According to a study, a significant 84% of shoppers have made purchases solely because they were offered free shipping.

How to become an Amazon FBA Seller

To become an Amazon FBA seller, start by signing up for an Amazon Seller Central account and selecting a suitable selling plan. Once your account is established, proceed to set up FBA within your account. From there, you have the choice to either generate new product listings or transform existing ones to be fulfilled by Amazon.

To ensure eligibility as an Amazon FBA seller, it's essential to carefully review and adhere to the terms and conditions laid out by Amazon for sellers. Additionally, it's crucial to understand and meet the prerequisites for adding inventory to FBA. This includes following Amazon's guidelines for product eligibility, packaging and preparation, labeling, and inventory management.

For a comprehensive assessment of the cost-effectiveness of the FBA program for your business, consider utilizing the FBA revenue calculator provided by Amazon. This tool can help you estimate fees and costs associated with FBA, assisting you in making informed decisions about your fulfillment strategy.

"Send to Amazon" Shipping Workflow

The “Send to Amazon” workflow is a simplified shipping experience which aims to reduce the number of steps required to create your shipment. Before you start to create the shipment to Amazon Seller Central, here are a few things to keep in mind.

Ensure that you have an exact count of your inventory in hand and ensure you have all the packing materials necessary to safely pack your items. On your Seller Central, type Shipment Packaging Requirements to learn what Amazon recommends for shipment packing.

Now that we are prepared to send the units to Amazon, let's move forward. Send to Amazon shipping workflow contains three steps. Choose Inventory to Send, Confirm Shipping and Appointment and Print Labels.

Step 1: Choose Inventory to Send

• On Seller Central, click on Inventory, then select Manage FBA Shipments. Click on Shipping Queue. On the top of the shipping queue, click on Send to Amazon button to enter the workflow. You can also go to your Manage All Inventory page; choose the listing you would like to replenish and click on Send or Replenish Inventory button to start your Send to Amazon workflow.
• Choose Inventory to Send First. Always ensure the Ship From address is correct. If you are shipping your inventory from the location other than the one shown, click on Ship from another address and select the right address. Ensure the right address and phone number is present. In case you have multiple ship from locations, then you can change addresses for each shipment when you reach
• With Send to Amazon, you have the option to either create shipment through a list of SKUs or through the File Upload option.
• The File Upload option is recommended when you wish to add multiple SKUs to a shipment. To add SKUs using the File Upload option, please follow the steps mentioned on the Send to Amazon page. We will go ahead and select from the list option and move forward.
• Choose Inventory to Send has two tabs, All FBA SKUs and SKUs Ready to Send. Under All FBA SKUs tab, you will see the list of all your FBA product listings currently added in your account.
• You can search any SKU that you would like to add to your shipping plan by searching by title ASIN SKU or FNSKU. Send to Amazon will provide you with a quantity and fulfillment center recommendations for your SKUs.
• Please follow restock recommendations before creating a shipment. For more information, please visit Restock Inventory dashboard by clicking Inventory, Inventory Planning, Restock Inventory.
• You can add the recommended SKUs to your shipping plan with a single click or click on View or Modify button to add or remove fulfillment centers or quantities. You can also add a SKU without recommendations by clicking on Click Here to add fulfillment centers.
• Once you have confirmed the quantity and FCs to send, add your SKUs to your shipping plan by clicking on Ready to Send button. Click on Declared Value button to enter the compliance information. These details will be used to generate delivery chalan or e-way bill.
• Once you have chosen all the SKUs you would like to add to your shipping plan, click on SKUs Ready to Send tab. Here you may choose No Prep Required if the product is prepped well and there is no requirement of additional prep.
• If you select a prep type and seller as the option for Prep By, then it is your responsibility to prep the items based on the recommendation under Prep Guidance Help page. You can select whether you would be prepping the inventory yourself or have Amazon prep it for you.
• Please note that Prep By Amazon is chargeable. To print FN SKU labels, click on Print SKU labels option next to each SKU or print all the labels at once by clicking on Download all SKU labels button.
• Avoid using third party sites to print FN SKU labels as they mostly do not comply with GS1 standard. Amazon scanners are not the regular USB scanners and can only scan GS1 compliant FN SKU labels.
• Every defect will impact the seller performance leading to punitive actions. If you wish to have Amazon based the FN SKU labels for a fee, you can select Label by Amazon. The label service is chargeable. Once you have selected the prep and labelling for your SKUs, you would be shown an estimated fee for the Amazon services under Fee and Charges Summary and click on Confirm and Continue.

Step 2: Confirm Shipping

• Based on your selection in step one, you will see your inventory split into individual shipments for each UMI fulfillment centers chosen. You can view these individual shipments here.
• First, you need to select the shipping mode between small parcel delivery for shipping individual cartons or less than truckload for shipping using pallets.
• Then select your shipping carrier between FBA pickup service by ATS, Amazon and Paneled carrier or Own carrier for shipping your units. You can choose the same carrier for your multiple shipments by checking the checkbox. Carrier will be same for all shipments.
• Finally, you can click on enter the box information to confirm the number of boxes, weight and dimensions for each box. You are allowed to add up to 150 boxes for FBA pickup service and up to 500 boxes for Own carrier shipments.
• Please ensure that the information provided is accurate as this is used to reconcile your shipment. We request you to review your selection and make any change on your SKUs, quantities and FCs before moving to step three. Finally, click accept charges and continue to complete step two confirm shipping.

Step 3: Book Appointment & Print Labels

• First, let's look at the steps to be taken for shipments where you have selected FBA pickup service as your carrier. You will need to provide the contact information for pickup by either selecting from previously added information or by entering new contact information.
• Then, book a cargo pickup slot by selecting an available date and time slot in the calendar. Upon selecting a slot, you will be provided with an estimated carrier charge for the FBA pickup service. You can confirm your appointment by clicking on accept charges and continue.
• Finally, print the FBA box labels, paste them on the boxes and put the copy of the delivery chalan in each of the boxes. Important note, you have an option to reschedule or cancel your cargo pickup by clicking on the reschedule or cancel button which will appear once you have confirmed your appointments.
• However, the carrier charges will be updated based on the new date and if you would like to cancel your shipment, you need to cancel the appointment at least 12 hours prior to the pickup to be eligible for a full refund.
• In case you had chosen to ship your inventory through the carrier of your choice, you would need to click on book FC appointment and select a date for delivery based on the available date and time slot and click on confirm.
• Then, print the box labels and paste it on each of the boxes. Please communicate with your carrier to report to the FC as per the appointment. Do note that you have an option to reschedule your delivery to another available date or cancel your delivery appointment.
• For Amazon Empaneled Carrier option, you would only need to print the box labels and paste the same on the boxes. The appointment is taken by the Amazon Empaneled Carrier partner and they would deliver your inventory based on the appointment assigned to them. Once you have completed packing, labelling and handing over your shipment, click on mark a ship to inform us that your inventory is on its way.
• Then, you can monitor your shipments through the track shipment button. In case you are using your own carrier, enter the tracking IDs here. That brings us to the end of the Send to Amazon Shipping Workflow.

FBA inventory requirements

In general, the majority of products that are eligible for sale on the Amazon store can also be fulfilled through FBA. However, it's important to note that there are exceptions and specific requirements for certain products:

• Ineligible Products: Some products are not eligible for FBA. Examples include alcoholic beverages and vehicle tires.
• Dangerous Goods (Hazmat): Hazardous materials, often referred to as hazmat, are typically not processed by FBA due to safety concerns.
• Products with Expiration Dates: If you sell products with expiration dates, it's crucial to carefully review and adhere to product-specific requirements related to shelf life before enrolling them in FBA. Proper labeling and handling of such items are essential.

It's essential for sellers to consult Amazon's official guidelines and policies to understand the specific eligibility criteria and requirements for different product categories. Compliance with these guidelines is necessary to ensure a smooth and successful FBA experience while adhering to safety and regulatory standards.

Requirements for listing, preparing, and sending your FBA inventory to Amazon fulfillment centers.

FBA product title requirements	Learn about the requirements for creating appropriate product titles for your FBA listings.
Requirements for FBA products sold as new	Learn about the requirements for products sold and fulfilled by Amazon as new products and the conditions in which these products should not be received at the fulfillment center.
FBA product barcode requirements	Learn about the requirements for manufacturer barcode, Amazon barcode, and the FBA Label Service.
Product packaging requirements	Learn about the general prep requirements for sending FBA inventory to Amazon fulfillment centers, as well as the specific product categories that require specialized prep.
Shipment label requirements	Learn about the requirements for printing and applying shipment labels to your shipping boxes.
Shipping and routing requirements	Learn about the basic shipping requirements for small parcel deliveries and less-than-truckload and full-truckload shipments to Amazon fulfillment centers.
FBA capacity limits	Learn how much inventory you can send to and store at Amazon and how capacity limits apply to you.
Provide box content information	Learn how to provide box content information for your shipments to Amazon fulfillment centers.

 

FBA inventory management

Maintaining your FBA inventory is crucial. If you run out of inventory for a given product, the listing for that product will automatically be inactivated. This will negatively impact your sales and sales velocity and may also impact your search ranking. You also may incur long-term storage fees, which are costlier than standard storage fees, if your inventory is poorly managed or if you store excess inventory for too long. To help you ensure that your FBA inventory is current, let's explore how to use the FBA inventory management page in seller central.

First, click the menu icon in the top left corner of the seller central homepage. Hover over inventory and click manage FBA inventory. You will be taken to your FBA inventory management page. On this page, you can add a product to your FBA inventory, view your current FBA products and check the number of products that are either inbound, available, unfulfillable or reserved.

(Note that the page will reflect when your products actually arrive at a fulfillment center. Before you ship your products, make sure to consider how long they'll take to arrive at the fulfillment center. We recommend that you have about 2 months of inventory on hand at fulfillment centers at any given time.)

Remember to check your inventory frequently. If your unit level is 0, your listing will become inactive. Also, if you set inventory replenishment alerts, you'll see a red bell next to the number in the available column representing the stock that's low at the fulfillment center. To set replenishment alerts or view more features, click the edit button. Here are two other things to consider when maintaining your FBA inventory.

First, you might benefit from high stock limits. These limits reduce the number of times you have to send your products to fulfillment centers. The higher your sell-through rate, the more these limits will increase. Strategies such as running ads and deals can help you promote your products and may increase both your sales and your stock limits. Also ensure that you don't have inventory sitting in fulfillment centers for long periods of time as this may negatively impact your sell-through rate.

Second, make sure to always check that your inventory is kept at an adequate level and that you're aware of any low stock alerts. Let's review the best practices for maintaining FBA inventory.

• Check your inventory frequently on the FBA inventory management page.
• Set replenishment alerts.
• Have approximately two months of inventory at fulfillment centers.
• Increase your stock limits using marketing and promotions.
• Send products you know will sell.

 

FBA Fees Overview

We will discuss fulfillment fees, monthly inventory storage fees, long-term storage fees, removal and disposal order fees, and FBA liquidation fees.

FBA is a great way to grow your business, reach more customers, and provide one and two-day delivery options on eligible orders with Amazon Prime. To make the most of this service, it's important to understand the fees associated with FBA.

Let's look at a few different types, starting with fulfillment fees. Fulfillment fees are a per-unit fee for picking, packing, and shipping items to customers.Fulfillment fees are charged when a customer order is shipped and vary depending on an item's size and weight. Another FBA fee to consider is monthly inventory storage fees.

Monthly inventory storage fees are based on the amount of space your inventory occupies in fulfillment centers. This is an important factor to consider when determining how much inventory to send to Amazon. Monthly inventory storage fees will vary based on the daily average volume of space your inventory occupies in fulfillment centers, product size tier, and time of year. Monthly inventory storage fees are charged monthly, typically between the 7th and 15th day of the month. If your inventory is stored for more than 150 days, you'll also be charged a monthly long-term storage fee in addition to monthly inventory storage fees.

Inventory age is calculated on a first-in-first-out basis across the entire fulfillment network. When your items are sold or removed, they are deducted from the inventory that has been in FBA the longest, regardless of which unit was shipped or removed. For example, if a FBA associate picks and ships a unit that arrived to the FBA recently, that unit will still be deducted from the oldest inventory you have in stock. Long-term storage fees are assessed with a monthly inventory snapshot, and typically charged between the 18th and 22nd of each month. To avoid long-term storage fees on slow-selling inventory, you have the option of creating a removal order. You can also create a disposal order to have items returned to you, your warehouse, your supplier, or your distributor. You also have the option of creating a disposal order to request that Amazon dispose of items in your FBA inventory that may be expired, defective, or unsellable.

When a removal or disposal order is created, you'll be charged a poor item fee based on an item's shipping weight. These fees are charged once an order is complete. They typically take about 14 business days to process. Depending on the time of the year, like holiday seasons or peak removal periods, processing may take up to 30 business days. Alternatively, instead of paying to remove or dispose of excess or customer-returned FBA inventory, you can choose to use FBA liquidations to have eligible items liquidated through a wholesale liquidator. By liquidating inventory, you'll recover a portion of your costs while avoiding monthly and long-term storage fees. For every item liquidated, you'll be charged a poor item processing fee based on the item's size and weight, plus a referral fee of 15% calculated on DROS recovery value.

DROS recovery value is 5% to 10% of an item's average selling price. Average selling price is determined by several factors including your sales history, the average FBA selling price on Amazon, and the sales history of the specific ASIN. Once these fees are deducted, you'll be paid the net recovery value of your liquidated inventory no later than 90 days after your liquidation order is submitted. For more information on FBA fees, search for Selling on Amazon Fees Guide in Seller Central.

FBA costs

Fulfillment by Amazon (FBA) operates on a flexible pay-as-you-go pricing model, meaning there are no upfront flat fees for using or enrolling products in the program. Instead, sellers are charged based on various factors related to inventory fulfillment and operations:

• Fulfillment Cost: This cost is determined by the specific product's type, size, shipping weight, or dimensional weight. It varies depending on the characteristics of each individual item.
• Monthly Storage Fees: Monthly storage fees are influenced by factors such as the product's size, volume, the average number of daily units stored, whether the product is classified as dangerous goods, and the month of the year. Rates for monthly inventory storage fees differ between the periods of January through September and October through December.
• Aged Inventory Surcharges: Surcharges may apply to products stored in Amazon fulfillment centers for an extended period, typically over 271 days. These surcharges are calculated based on the total number of units, the duration of storage, relevant cubic-foot fees, and any applicable per-unit fees.
• Unplanned Service Fees: These fees are incurred for items that haven't been adequately prepared or packaged and require additional preparation before they can be accepted at the fulfillment center.

It's important for sellers to be aware of these costs and plan their inventory and operations accordingly to optimize their use of FBA while managing expenses effectively. Amazon's official FBA fee structure should be consulted for the most up-to-date pricing details.

FBA Removal Process

Make removal decisions on your FBA inventory by exploring relevant reports Track removal orders and shipments by exploring relevant reports Create removal orders using different methods

You would be required to create removal orders to remove unhealthy inventory from the fulfillment centers A removal order is a request for inventory to be returned to you or picked up by you.

You can create removal orders to manage slow-moving inventory that is not suitable for resale or is unsellable. The removals are categorized based on pickup and speed of return. Through pickup, you can create a removal order and request for the consignment to be picked up and packed.

Once done, Amazon will inform you to schedule an appointment. You can then pick the packages yourself from Amazon's fulfillment center on the appointed date There are two types of returns based on the speed of return Standard return and Expedited return.

Standard removals take 10-14 business days to process Expedited removals take 5 working days to be delivered after Amazon receives the order.

The removal charge will appear as an FBA removal fee after the entire removal is completed. The fees for different types of removals are listed in the tables. Do note that 14.5% service tax inclusive of Swachh Bharat Cess is applicable to the fees listed here. Also, expedited shipping for removal orders is not available for heavy size and bulky items.

There are three types of reports to help you make inventory removal decisions and track removal orders and shipments.

• The recommended removals report
• The removal order detail report
• The removal shipment detail report

The recommended removals report enables you to identify which units in Amazon's fulfillment centers are at the risk of being charged long-term storage fee at the time of the next inventory cleanup. It helps create a removal order to have those units returned or disposed of.

The removal order detail report provides product information, order type and order status for removal orders including quantities by removal type. You can also find removal fees charged for completed removal orders.

The removal shipment detail report provides shipment details for removal orders including carrier and tracking ID information.

There are several places within your seller account from where you can create removal orders You can create removal orders for items one at a time or in bulk You can also sign up for automated removals of any unsellable items in your inventory. You can request to have Amazon's fulfillment center inventory to be returned or disposed of using one of the following methods

• Create a removal order using the online workflow method
• Create a removal order using the flat file method
• Create a removal order using automated unsellable removals

Remember, removal orders may not be used to fulfill customer orders The removal order ID you create will be used in the settlement report to help you identify return and disposal fees. Save and write down the removal order ID as it will be helpful for locating your removal orders.

Having reached the end of this module, you will be able to Understand the different types of removal orders and their corresponding fee, make removal decisions on your FBA inventory by exploring relevant reports, track removal orders and shipment by exploring relevant reports Create removal orders using different methods.

More FBA tools and programs to help you grow

FBA Revenue Calculator

You can get a better sense of product profitability with the FBA Revenue Calculator, a preview tool that lets you compare revenue estimates for products based on what fulfillment channel you use. The calculator includes FBA fulfillment fees for items sold in Amazon stores as well as:

• Referral fees
• Variable closing fees
• Monthly storage fees

Use the calculator to quickly find which fees apply to each fulfillment option, add sales volume estimates to calculate total proceeds and per-unit sold estimates, and more.

Buy with Prime

Brands selling products on a direct-to-consumer site can leverage FBA to offer customers fast shipping and a familiar, trusted experience through Buy with Prime. Add Buy with Prime to your direct-to-consumer (DTC) channel to offer customers Amazon Prime shopping benefits including free one-to-two-day shipping.

FBA Subscribe & Save

If you sell products customers buy regularly, like toiletries or other consumable goods, you can let them sign up to receive recurring, scheduled deliveries through FBA Subscribe & Save. The program lets you offer customers discounted pricing, free shipping, and automatic deliveries for convenience.

Get started and grow sales with FBA

Enrolling products in FBA can be a great way to grow your business, whether you’re getting started as an Amazon seller, or you’re established in ecommerce and looking for new opportunities to expand.

Conclusion

Fulfillment by Amazon (FBA) stands as a robust and versatile solution for e-commerce businesses aiming to streamline their operations and expand their market reach. With the ability to delegate order fulfillment, including storage, packing, and shipping, to Amazon's extensive network of fulfillment centers, FBA offers numerous advantages. These encompass cost savings, enhanced customer service, and the coveted Prime badge for expedited shipping. The six-step guide provided in the blog furnishes sellers with a clear path to leverage FBA effectively. Additionally, the importance of prudent inventory management, understanding FBA fees, and utilizing supplementary tools and programs like the FBA Revenue Calculator, Buy with Prime, and FBA Subscribe & Save are underscored. For both newcomers and seasoned sellers, embracing FBA can be a pivotal strategy in propelling their e-commerce businesses to new heights of success within the Amazon ecosystem.