Update: This post is now a few years old and some information here may be outdated. For more information about Fulfillment by Amazon, check out our more recent blog posts introducing our extended FBA support and a webinar recap about FBA benefits, tips, and taxes.

Fulfillment by Amazon – How It Works

I recently had the pleasure of partnering with Multichannel Merchant on a webinar to help online merchants understand the benefits of using Fulfillment by Amazon (FBA).  Given the benefits FBA offers merchants—including access to one of the most advanced global fulfillment networks available—it is becoming an increasingly important element of many multi-channel e-commerce strategies.  The webinar featured Jeff Moore, Senior Product Manager for Fulfillment by Amazon and Chip Heuisler, Co-Owner of Tunes and an FBA merchant.  The webinar was moderated by Tim Parry, Senior Content Manager for Multichannel Merchant.

We had a great turnout for the webinar and received many questions from attendees, some of which we could not answer given time constraints.  As a follow up to the webinar, I have pulled together some of the more pertinent questions and the corresponding answers.

Q: What exactly is FBA?

A: From the Amazon Services website, FBA is described as, “You sell it, we ship it.  Amazon has created one of the most advanced fulfillment networks in the world, and your business can now benefit from our expertise.  With Fulfillment by Amazon (FBA) you store your products in Amazon’s fulfillment centers, and we directly pack, ship, and provide customer service for these products.” So, FBA is basically a third-party logistics/fulfillment service.

Q: Is it only for merchants who sell on the Amazon.com?

A: While FBA offers tremendous benefits to merchants who sell on Amazon, it can be used for “Multi-Channel Fulfillment” as well.  This includes fulfilling orders from webstores, other marketplaces such as eBay and Buy.com, or a catalog call-center.

Q: As an online merchant, what are the major benefits to using FBA?

A: Some key benefits include:

  • Lower operational costs: Amazon handles all aspects of fulfillment (including picking, packing, and shipping)
  • Reduction in staffing needs: In addition to fulfillment, Amazon deals with all aspects of customer service
  • Instant credibility: Buyers trust that FBA inventory will be delivered on time.
  • Listing advantage: FBA listings stand out with special logos and text on the Amazon.com
  • Leverage Amazon Prime: Inventory in FBA can use the Prime on Your Site to provide your shoppers who are also Amazon Prime members free 2-day shipping.
  • International exposure: FBA sellers can leverage Amazon’s advanced global fulfillment network to easily reach international customers 

Q: How do I know if FBA is right for me, what is the cost structure and associated fees?

A: One way to determine if FBA is right for you is to model your products with Amazon’s FBA Calculator.  The calculator allows you to compare costs between fulfilling on your own versus FBA.  You can also check out the FBA Pricing for specifics on the associated costs.

Q: What does Amazon Prime have to do with FBA?

A: All FBA inventory is eligible for the benefits of the Amazon Prime program.  This program offers buyers incentives and benefits, including FREE Super Saver Shipping and Prime shipping eligibility, gift wrapping, and 24/7 Amazon customer service.  Inventory in the FBA program is eligible for all of these benefits.

Q: Does Amazon handle all service-related aspects of the orders, including shipping and returns?

A: Yes, Amazon handles all service-related details. You simply ship your inventory to Amazon, and they take care of the rest.

Q: Is FBA inventory slated for the EU market stored in EU fulfillment centers?

A: FBA is available in the United States, the United Kingdom, Germany, France, and Japan. To use these services, a seller must create a seller account under separate terms in these countries and manage the account separately.  Amazon’s FBA export help page further explores this topic.

Q: FBA Europe seems complex. Where do you start?

A: Check out Amazon’s help page to get started.

Q: Should the FBA orders be entered into an inventory management system to keep track of Amazon inventory? Or do sellers need to create POs for FBA inventory?

A:  This depends on your system.  For instance, Monsoon Pro, Edge, and Connect automatically manage your inventory, re-order points, and PO generation.  If you are not using an order management system, you may want to create POs for FBA inventory.

Q: Do sellers need to manually enter inventory data (images, descriptions, etc.) or is this done by Amazon?

A: If the inventory data is already available on Amazon, and has been assigned an ASIN or UPC, sellers don’t need to create new listings. If the item is not already available for sale on Amazon, you must provide this content.

Q: What recourse does a company have for mis-shipments/mistakes Amazon makes during fulfillment?

A: Amazon reimburses sellers the Replacement Value should inventory be damaged or lost. See Amazon’s Lost and Damaged Inventory Reimbursement Policy for details.

Q: Where do we find more information on Multi-channel Fulfillment?  I am not interested in selling on Amazon but am interested in the fulfillment piece.

A: FBA can fulfill orders on your behalf, regardless of the channel. Check out the FBA page for more information.

Q: How can I avoid other vendors from using our product data and images on Amazon.com?

A: Although not a question specific to FBA, it is important for those selling on Amazon.  Amazon’s goal is to provide the best customer experience possible and one aspect of this is presenting like products in a consistent and complete manner.  Usually the creator of a product receives “ASIN authority” for that product and all other merchants selling that product must use the existing product information.

Q: We have been trying to add to our product mix as Monsoon Commerce has recommended and have been finding that some categories need special invitation to sell such as tablets.

A: To ensure customers are able to buy with confidence, Amazon does require prior approval of merchants for some categories.  This process helps minimize fraud, ensure product listing quality (UPC, images, descriptions), and overall customer satisfaction with the purchase.  According to Amazon policies, merchants in the following categories must be approved:

  • Automotive Parts / Motorcycle & ATV
  • Clothing, Accessories & Luggage
  • Collectible Books
  • Entertainment Collectibles
  • Industrial & Scientific
  • Jewelry
  • Shoes
  • Sports Collectibles
  • Toys & Games (holiday approval only)
  • Watches

In addition, merchants may be required to obtain approval to list certain products in certain categories.  Currently, only approved sellers can list certain products in the following categories:

  • Camera & Photo
  • Electronics
  • Software
  • Toys & Games (additional holiday approval may apply)
  • Video Games

Q: Dos FBA have the ability to ship unique products.  For instance if a product requires assembly before shipping?

A: Products requiring assembly, customization, or kitting are not currently supported by FBA.

Q: What are the requirements for inbound inventory prep and shipping?

A: You may send “Stickerless, Commingled Inventory” which enables you to list and ship stickerless products if they meet certain qualifications.  If any of your products do not qualify for stickerless commingling or if you do not want them comingled, you can still fulfill them through FBA if you print labels and affix them to each unit before sending them to our fulfillment centers.  The FBA Manual specifically outlines the Packing and Prep requirements for inbound shipments.

Q: Is FBA and/or prime available in Canada?  If not, when?

A: FBA is not currently available in Canada and to the best of my knowledge, Amazon has made no announcements about plans to do so.

Q: Can FBA take phone orders?

A: Currently FBA only supports orders placed on Amazon.com or those transmitted electronically.  One solution would be to hire a call-center for inbound orders and then transmit those orders to FBA as part of the Multi-Channel Fulfillment offering.

Q: Does FBA have cooler/freezer for perishable products?

Products requiring coolers/freezers are not allowed.  You can sell perishable, lot-controlled products with a shelf life greater than 90 days from the time they are listed on Amazon.com.  Please see Amazon’s Restricted Products pages for more information about prohibited and permitted products.

Q: I sell books CDs and DVDs.  Can you touch on the cost benefits of selling “penny items” on FBA?

A: Although every situation is different, my general experience is that the economics do not work for these types of items.  I would consult Amazon’s FBA Calculator to model your specific situation.

Q: Would FBA be able to support a seller trade in program where a customer submits older unit to get a discount on a new one?

A: FBA does not support these types of programs.

Q: What is the percentage of damaged shipments through FBA?

A: As far as I can tell, this information is not made publically available.  I would however say that the merchants I speak to are very satisfied with their FBA experience and, frankly, Amazon is a world-class company when it comes to fulfillment, logistics, and customer services.  I think most merchants would be hard-pressed to put a better infrastructure in place.

If you have had any specific experiences with FBA, I would love to hear your thoughts, ideas, and suggestions for other merchants.  You can also access a replay the Fulfillment by Amazon webinar for more information.