Amazon Fulfillment by Amazon (FBA) allows sellers to leave the logistics of their products in the hands of Amazon. With FBA, you can store your products in one of their many storage options, and Amazon will pick, pack, and ship orders on behalf of your business.
What are the advantages of FBA?
There are various advantages to using FBA for your business: you don’t need a warehouse or fulfillment center, you don’t need an extra employee, and customers will receive products quickly, often with next-day or even same-day delivery options available for Prime members. This enhanced shipping speed is a significant draw, contributing to customer satisfaction and potentially higher sales. While some peak season surcharges may apply, these faster delivery times are generally a seamless part of the FBA experience for customers.
With FBA, you are effectively letting Amazon do all the work for you.
What does FBA cost?
However, FBA requires additional costs upfront. The fee structure has evolved to reflect the precision and scale of Amazon’s operations. Storage fees are no longer based on a flat unit rate but are charged monthly per cubic foot of space your inventory occupies in Amazon’s fulfillment centers. For standard-size items, this is approximately $0.78 per cubic foot from January to September and $2.40 per cubic foot from October to December, with slightly lower rates for oversize items. These fees encourage efficient inventory management.
You will also be charged fulfillment fees for picking, packing, and shipping; these fees depend on the size and weight of your product and are generally predictable, with no core increases planned for 2025. However, it’s crucial for sellers to account for peak season fulfillment surcharges, which typically apply from mid-October to mid-January, increasing fulfillment fees by around 7% per item due to increased demand.
Beyond these, Amazon has introduced additional surcharges to optimize inventory flow and storage efficiency. These include an Inventory Storage Utilization Surcharge for sellers with high inventory volume relative to sales, a Low-Inventory-Level Fee if inventory levels are consistently too low, and an Inbound Inventory Placement Service Fee, though some of these, like certain inbound fees for bulky products, have seen recent reductions. Removal fees for aged inventory and prep fees for unprepared inventory also apply.
Amazon takes an additional percentage from every sale made from your products, known as a Referral Fee or Commission. These fees generally range from 8% to 45% depending on the product category, with 15% being the most common. While the core referral fees are not increasing in 2025, sellers should consult Amazon’s detailed fee schedules. Amazon offers an overview of your provisions. Sellers often find that FBA allows them to keep a comparable or even higher margin than FBM (Fulfilled by Merchant) after accounting for their own fulfillment costs.
To accurately estimate profitability, it’s highly recommended to utilize tools like Amazon’s official Revenue Calculator or third-party FBA profit calculators (e.g., AMZ Prep Profit Calculator). These tools can factor in the complex fee structures, seasonal fluctuations, and various surcharges to provide a comprehensive financial outlook.
With FBA, you are effectively allowing Amazon to do all the work for you. This can be very beneficial for new sellers who may not have the capital to invest in warehouses or sorting centers and want to kickstart their business quickly. However, it may be difficult to get started with FBA without first having established your own e-commerce presence on Amazon.
What are your requirements for FBA?
You do need to meet certain criteria for your products for FBA. On top of that, your product must comply with all national and Amazon regulations. Amazon regulations are often even stricter than just the legal regulations.
Your product must also fit into one of Amazon’s categories and meet specific quality and packaging standards. For instance, while you can sell physical books on Amazon, the “Amazon Kindle store” refers specifically to digital eBooks, which operate under a separate system. Physical books are listed within the general book categories, and sellers should distinguish between these two formats. Be aware that certain product categories, such as electronics or appliances, may require special approval from Amazon before you can list items. If your inventory consists of diverse products, ensuring each meets its respective category requirements and obtaining necessary approvals is key to a smooth FBA operation.
