Fulfillment By Amazon — FBA Fees, Benefits & How it Works

Amazon streamlined its Fulfillment by Amazon fees in 2018, and the new structure is easier for sellers to understand and manage. New FBA fees combine picking, packing, and shipping into one fulfillment fee and simplify inventory storage fees. Plus, you can forecast costs using the updated FBA calculator. We’ll explore new FBA fees and more in this guide.

If you don’t yet sell enough packages to use FBA or need to fulfill your orders across multiple sales channels, try using a fulfillment company like ShipBob. It has low startup costs, low shipping rates, and warehouses across the country so that you can offer fast delivery to your customers no matter where they are. ShipBob also seamlessly integrates with top sales channels like eBay, BigCommerce, Shopify, and Amazon (of course). Get a free quote today.

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An Overview of Amazon’s FBA Fees

Fulfillment by Amazon fees are based on the size and weight of products you sell, and where you sell them. For example, small items weighing under 1-lb. cost just $2.41 to fill and ship when sold on Amazon. Or, sell the same item on your website and pay just $5.95 for Amazon to ship it out for you.

As you can see, Amazon’s FBA fulfillment fees are extremely competitive and are particularly low for any products you sell on Amazon. In fact, you’d be hard-pressed to ship items yourself at such low rates. 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 marketplace, such as eBay.

Wherever you sell your products, if you use Fulfillment by Amazon to stock inventory and fill and ship your orders, you’ll pay 2 primary FBA fees. These include:

1. Fulfillment Fees – This is 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.
2. Monthly Storage Fees – This is 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.

To assign 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.

1. Standard-size products – Standard-size products are items that 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.
2. Oversize products – Oversize products include items that 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, next let’s look at a sampling of FBA fees for the 2 different ways you can use the service. We’ll start with FBA fees for products sold on Amazon, and then examine fulfillment fees for goods sold through other websites or marketplaces.

1. Amazon FBA Fees for Products Sold on Amazon

Low fees and other perks, which we cover below, make FBA a top fulfillment choice for Amazon sellers. Here’s a sampling of FBA fees to ship various items sold on Amazon, and pay particular attention to the October-December holiday season storage rates listed below. Storage fees increase dramatically during these three months.

Amazon’s Updated 2018 FBA Fees — Fulfillment & Storage

Amazon FBA rolls pick, pack, and shipping costs up under its Fulfillment Fee. This also covers the basic customer service that Amazon provides in dealing with questions about shipping, payments, and so on. The fulfillment fee also covers return processing for certain categories. Although, for categories that offer free returns, you’ll pay a return processing fee that matches your fulfillment fee when customers return an item.

As you can see above, FBA storage fees increase dramatically in October-December. This is something to watch closely if you use FBA, and is a major reason that volume sellers rarely use FBA as their sole storage option. Instead, power sellers often store the bulk of their inventory themselves in cheap storage units or a company warehouse. Then they periodically ship just enough stock to FBA to cover a range of forecasted sales.

We’ve mentioned several times that your product’s size also impacts your FBA fulfillment fees. Here are some examples of how fees are applied based on product size. You can accurately estimate the FBA fees for your own products’ size and weight using Amazon’s FBA fee calculator.

Source: Amazon

Amazon Sellers! Don’t Forget the Seller Fee

Amazon sellers also have a separate fee to factor in, that’s the Seller Fee. This fee isn’t part of your FBA fees. Amazon seller fees are charged whether you use FBA to store and ship your products or not. On average, this fee runs 15% of a product’s selling price, which can seem like a lot to pay to be on Amazon. But, many Amazon sellers find that FBA’s ultra-low fulfillment fees help to offset their seller fees, and makes selling on Amazon viable.

“Look at the big picture when selling on Amazon and using FBA. Don’t get hung up on the fact that you’re not going to see your normal retail margins on Amazon sales. FBA gets you the Prime listings and that means more sales for your brand. As long as you’re still seeing profits, that’s what matters.”

— Russ & Danielle, Founders, Outlaw Soaps

Next let’s look at fulfillment fees for products not sold on Amazon, but shipped using Amazon’s fulfillment services.

2. Amazon Fulfillment Fees for Non-Amazon Products

If you sell on several channels other than Amazon, such as your own website and other marketplaces like eBay, you can use FBA to fill those orders, too. Amazon calls this service Multi-Channel Fulfillment, or MCF. Your inventory storage fees are the same, but the MCF fulfillment fees are higher.

With MCF, you can select different shipping methods: Standard, Expedited 2-Day, and Priority 1-Day. This is helpful if you offer a range of shipping options on your own website. If you compare the MCF fees to the shipping rates you’d pay shipping products yourself, you’ll likely find MCF is quite a deal in many cases. Even top fulfillment centers that receive deep shipping discounts might be hard-pressed to beat Amazon’s new MCF fees.

Here’s a look at Amazon’s 2018 MCF fulfillment fees across a wide range of product sizes and shipping methods. Remember, the product sizes breakdown is the same as FBA, as are storage fees. Fulfillment fees are the only cost differences between FBA and MCF.

Amazon’s Updated 2018 MCF Fees – Sorted by Product Size & Delivery Method:

Standard-Size Products (per-unit)

Oversize Products (per-unit)

Here are the 3 noteworthy differences between FBA fees and MCF fees:

1. MCF fees only apply to products that you sell on your own website or other marketplaces
2. You don’t pay an added Amazon seller fee since these products weren’t sold on Amazon
3. Storage costs are the same as FBA, so storage costs increase in October-December

FBA Fees vs MCF Fees – A Quick Comparison

Let’s look at a comparison of the overall fees you’ll pay on a product you sell on both Amazon and your own website, and fulfill using FBA or MCF, depending on where it’s sold. This gives you an idea of the fees related to each fulfillment method, plus shows how the costs impact your profit margins.

Our Sample Item

FBA Fees vs. MCF Fees – How They Stack Up

As you can see, Amazon’s Seller Fees make our set of mixing bowls less profitable when sold on Amazon compared to on our own website. However, in both cases, we’re more than doubling our $7 cost, which is considered a decent return, especially on Amazon sales where the seller fees heavily impact profits.

When running your own profit calculations, be sure to figure estimates using multi-unit orders and include other factors, such as any shipping fees you charge for orders placed on your website. Every penny counts in FBA and MCF fee and profit calculations.

“Our Amazon sales are typically single-unit purchases, whereas purchases made directly from our website are typically multi-unit purchases. Looking closer, our average order value on Amazon is less than $25.00, but over $55.00 on our website. With FBA, we can let Amazon orders tick through at high volume and with minimal effort, while we concentrate on the higher-value orders ourselves. It’s a great benefit to our operations.”

— Craig Boyd, President of Furniture Clinic

3. Other Costs that Factor Into the FBA & MCF Equation

As we covered above, FBA and MCF fees include standard fulfillment services such as picking, packing, and shipping orders, and inventory storage fees. These mirror the types of fees that any fulfillment company would charge for these services. However, these may not be the only fees you end up paying to Amazon. Other fees you may encounter include:

• Labeling Fee — Amazon has strict barcode label specifications for all stock you ship to FBA. If not labeled properly, you can be assessed a labeling fee.
• FBA Prep Service & FBA Unplanned Prep Service — FBA has strict product packaging and prep guidelines. You can opt to have Amazon package and prep products for a fee, or if you send improperly prepped products, you’ll be assessed an unplanned prep fee
• Returns Processing – Basic returns processing is free for many categories, but not for categories with free customer returns. In these, FBA bills a return processing fee equal to your original fulfillment fee.  Plus, if returned products need repackaging for resale, Amazon charges a repackaging fee
• Long-term storage – if your stock sits unsold for longer than 6 months, Amazon charges a long-term storage fee
• Stock Removal Fee – FBA charges a removal fee if you want to pull inventory from Amazon or dispose of unsold stock.

If you’re considering FBA, you need to be aware of these fees to ensure they don’t unknowingly creep into your bill. If you don’t stay on top of these, your profits can slip away. So be sure to understand the FBA fulfillment and storage fees, and how they apply to your products, before taking the plunge.

Now that we’ve covered FBA pricing let’s explore other factors that make FBA a top fulfillment choice among Amazon sellers.

5 Reasons why FBA is the Best Fulfillment Service for Amazon Sellers

Amazon wants its marketplace sellers to use Fulfillment by Amazon for inventory storage and fulfillment. Their reasoning is twofold. First, they make more money, and second, FBA helps all sellers uphold Amazon’s high delivery standards. So, along with the highly competitive FBA fees and versatile MCF options covered above, Amazon throws in many sales-driving perks for FBA users. These include:

1. Prime Free Shipping Eligibility

As shown below, FBA product listings prominently feature the Amazon Prime logo, signaling to Prime members that your product can be purchased with free Prime 2-day Shipping or other Prime shipping offers. Prime boasts nearly 85 million subscribers who look for the Prime logo while shopping. So, FBA products can attract far more buyers than non-Prime products.

Source: Amazon

2. Amazon Free Shipping & Coupon Offers

Amazon offers free shipping on orders over $25 to all buyers, Prime or not. But, the caveat is that these must be eligible products, and that list of eligible products includes FBA items. The same applies to Amazon coupon deals or buyer events like Prime Day and Cyber days; FBA products qualify for these offers, too.

Here’s Amazon’s description of its $25 Free Shipping offer. Notice how it mentions eligible items? These include FBA products as well as the products that Amazon sells direct.

Source: Amazon

3. Higher Search Rankings

FBA products get the edge over non-FBA items on Amazon’s product search algorithm. This leads to higher rankings for FBA products in Amazon’s product search results and thus, more sales. Below, you’ll see our search for kabob skewers brings up row after row of options. In fact, the entire first and second page is filled with Prime listings. The first non-Prime listing appears on page three, which isn’t very likely to get many sales.

Source: Amazon

4. Increased Buy-Box Placement

The coveted Buy Box (A) is the spot every Amazon seller wants their listing to occupy. The top listing is what automatically sells when the Add to Cart button is clicked. FBA Prime-eligible products take preference if there’s a price tie, and can even win the Buy Box over lower-priced non-FBA products (B), as shown below.

Source: Amazon

And, finally…

5. The Amazon Trust Factor

FBA product listings prominently display “Fulfilled by Amazon,” which is a badge of trust for Amazon shoppers familiar with Amazon’s stellar delivery reputation. When they see this, they know they can order your product with confidence. Sorry! But buyers know and trust the Amazon brand more than yours.

”If you’re not FBA, you’re simply not relevant on Amazon. You get more traction and boost your product up the Amazon search algorithm by making your product FBA.”

— Chad Rubin, Amazon & Multichannel Seller, Founder, Crucial Vacuum, Think Crucial & Co-founder, Skubana

Clearly, Amazon gives FBA products preferential treatment in its marketplace, but does that make it the best choice for your particular products? Let’s looks at scenarios where FBA tops other options, and where another fulfillment solution might be better for you.

When FBA is the Best Option to Fill & Ship Your Products

In every selling situation, you need to run the numbers to decide if Fulfillment by Amazon is the right choice for your particular products. However, if you fall into one these 2 categories, FBA usually comes out on top.

1. You primarily sell on Amazon

If Amazon is your main selling outlet, then FBA’s many sales-driving benefits can kick your sales up a notch. Plus, handing all of your fulfillment tasks off to Amazon frees up your time. This lets you concentrate on sourcing new products to sell on Amazon, improving the quality of your listings, and managing other sales-building tasks.

2. You sell products on both Amazon and other websites

If FBA is the best fulfillment solution for your Amazon sales, then there’s a good chance that MCF’s competitive fulfillment fees are a cost-effective option for your off-Amazon sales, too. This way, you only have to manage one fulfillment partner for all of your ecommerce sales on Amazon, your own website, and other marketplaces like Walmart, eBay, and Etsy.

When Another Fulfillment Option is Better than FBA

There are few situations where Fulfillment by Amazon isn’t the best choice for Amazon-focused sellers. But if you sell via many sales channels, using FBA for all orders can be costly and sometimes more trouble than it’s worth. Here are 5 scenarios where other fulfillment options can beat FBA & MCF.

1. You sell very little on Amazon

If you don’t sell a sizable portion of your collection on Amazon, then FBA may not be worth the work of shipping products into Amazon and managing inventory. You may be better off handing these tasks over to a fulfillment partner who has fewer restrictions and stock prep requirements than FBA.

If you’re a smaller seller and not hitting the 40 items per month required to use FBA, consider using a fulfillment company. ShipBob fulfillment charges no specific pick-and-pack fees making them competitively priced for ecommerce sellers with low inventory counts and who ship multiple items per order. Click for a free quote.

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2. Your products have very low profit margins

Combined, Amazon seller fees and FBA fees quickly add up. If you’re not starting with at least a 250-percent markup on your products, you may not be profitable selling on Amazon, whether you use FBA or not.

3. You sell slow-moving large or heavy items

Storage costs quickly add up for oversized items, so if you stock large or heavy items with FBA in the long-term, you can rack up hefty monthly fees and face added long-term storage fees as well. Red Stag Fulfillment offers low rates from its shipping partners, allowing it to ship heavy and large items at significant discounts and passing the savings onto their customers.

4. You have an existing fulfillment setup

If you already pack and ship products in-house, or outsource these tasks to a fulfillment partner, then MCF may not be the best deal for your non-Amazon orders. Often, multichannel sellers find that combining FBA with their own shipping solutions can be the best option.

“What I really like about Fulfillment by Amazon is that now my products are eligible for Prime. That in and of itself has boosted sales tremendously. I still sell through other online channels, like Etsy and my website, and those orders I fulfill myself. Amazon and FBA are like an add-on. It’s new revenue I would certainly not have had, and new customers I would certainly not have gotten.”

— Erika Kerekes, CEO of Not Ketchup

Sellers like Erika use FBA for Amazon sales to garner the sales-driving perks of Prime free shipping and low fulfillment fees for Amazon sales. Then they use an in-house or outsourced fulfillment center for their off-Amazon sales.

5. Your existing ecommerce systems don’t integrate well with FBA and MCF

This is something to consider if you’re using older ecommerce or order management systems that don’t readily integrate with FBA. If your systems don’t connect, you’ll end up placing MCF orders manually which can be tedious and time-consuming if you have many to do. Amazon has a video that explains how to place a manual MCF order.

An ecommerce platform like BigCommerce easily integrates with Amazon and lets you quickly route your website orders to MCF for fulfillment. BigCommerce also makes it easy to synchronize products between your website and Amazon and streamline inventory management and orders from multiple sales channels, all from one dashboard. Start a free 15-day trial.

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How Fulfillment by Amazon Works

Whether you sell only on Amazon and use Fulfillment by Amazon for all orders, or sell on Amazon and other channels, thus combine 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. You ship products to Amazon

Following Amazon’s FBA stock prep guidelines, you’ll label, prep, and pack the stock that’s headed to FBA, then set up a shipping plan in your Seller Central dashboard. Most sellers use one of Amazon’s Partnered Carriers for inbound stock since Amazon’s inbound shipping fees are nearly impossible to beat.

2. Amazon stores and tracks your products in their warehouse

Once received, Amazon sorts and stores your inventory in their warehouses. They may shift your stock from one warehouse location to another if they see a geographical need. For example, if a great portion 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

You add your products to Amazon and/or add products to your online store or other seller marketplaces. Then market your products via email, social media, Amazon PPC ads, and other marketing avenues, and wait for orders to roll in.

4. Customers place orders

When a customer places 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.

5. Amazon picks products, packs boxes, and ships orders to customers

All orders are ultimately routed to Amazon’s warehouses for fulfillment. There, products are picked, boxes are securely packed, shipping labels are 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.

Bottom Line

Fulfillment by Amazon is not just about fulfillment. It’s about leveraging Amazon’s brand and the Amazon Prime loyalty program to boost your exposure and sales on the Amazon marketplace. FBA offers nearly unmatched fulfillment rates and seamless order processing for Amazon sales. Simply put, if you are selling on Amazon and not using FBA, you’re probably losing out on sales.

The only time it doesn’t make sense to use FBA is if you don’t meet Amazon’s selling threshold or if you need to fulfill orders from multiple channels. In that case, a fulfillment provider like ShipBob is a better option. It integrates seamlessly with Amazon and features low shipping rates and a nationwide network of warehouses allowing you to offer one- to three-day delivery to your customers. Get a free quote today.

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