If you’ve been researching how to make money online or sell products through the internet, then you may have heard of Fulfilled by Amazon, also commonly called Amazon FBA. This service has grown in popularity in recent years, with many touting it as an alternative to traditional e-commerce.
But what exactly is Amazon FBA, and how can you take advantage of it?
How Does Amazon Fulfillment Work?
FBA is a service Amazon provides to those who would like to sell products on the Amazon website but not have to handle the logistics. Sellers list their products on Amazon and then send their whole inventory to an Amazon warehouse. From there, the company takes care of shipping and distribution.
Amazon FBA can make the e-commerce space accessible to more people by eliminating many of the logistical difficulties involved with running an online store.
In the traditional model, e-commerce businesses need to find or even rent space to keep inventory. Every order has to be individually packaged and sent out. Online store owners have to carefully catalog their product inventory to ensure that they never list something as in stock when it has sold out. All of this adds up to significant time and effort.
Through Amazon FBA, business owners can sell their products online without all the hassle. Amazon will even provide customer service to customers for most issues. Instead of getting bogged down in the details, business owners can focus on growing their business, marketing and creating new and exciting products. There are even options through Amazon’s multi-channel fulfillment program for those who still want to use their own website through Amazon.
So, what’s the catch? If you choose to use Fulfilled by Amazon, the company will take a percentage cut of all of your sales and charge fees based on factors such as product size and number of returns. The cost may or may not be worth it, depending on your profits and how much time an expense goes into shipping your own products.
How To Start Selling on Amazon FBA
Getting started with Fulfillment by Amazon takes a few steps:
- Decide what to sell: Some Amazon sellers are resellers — they sell products that already exist on other platforms or in physical stores. Other sellers create their own brands and sell products they make themselves.
- Set up your account: Choose your plan and create your Amazon FBA account. You can use your existing Amazon login or create a new one.
- Create your product listings: Fill out all the required information to let Amazon know what you’re selling.
- Ship your products to Amazon: Follow the instructions to package and send your products to one of Amazon’s fulfillment centers.
- Make sure you provide Amazon with all the information it requests, including item barcodes and Merchant SKUs. Boxes you send to Amazon cannot exceed 50 lbs and must be smaller than 25 inches per side.
Is Fulfillment by Amazon Expensive?
Amazon offers sellers two plans — Individual and Professional — which it says may be better fits for different types of sellers.
Amazon FBA Individual Plan
The Individual plan does not have a subscription. Instead, sellers are charged $0.99 for every product they sell. The plan gives you access to Amazon’s FBA service but does not allow you access to any of Amazon’s advanced features.
The Individual plan is also more limited — for example, you cannot apply to sell your product in any categories other than the original one.
Amazon FBA Professional Plan
In comparison, the Professional plan has a monthly subscription cost of $39.99. It gives sellers access to advanced features, such as:
- Brand owner tools — virtual storefronts, A+ Content
- Creating listings in bulk
- Managing inventory with feeds, spreadsheets and reports
- Top placement on product detail pages
- API integration
- Setting your own shipping fees for non-media products
- On-site advertising tools
- Running promotions, such as free shipping
- Multiple users on your account
Which Plan Is Better?
The Professional plan is better for sellers who sell enough products to justify paying for a subscription — Amazon recommends the Professional plan to those who sell more than 40 products a month, since once you cross that threshold, the $0.99 per sale in the Individual plan gets more expensive than a subscription.
Aside from the cost of the plan, Amazon also charges sellers various fees based on product category and size. Amazon will charge higher fulfillment fees for larger and heavier packages.
It also charges a referral fee percentage, generally between 8% and 20%, on any products sold. The specific percentage is determined based on the product category.
Before you invest money into purchasing any inventory to sell, make sure you understand Amazon’s fee structure for your specific product and category. Make sure that after the cost of the product and Amazon’s fees, you will still make a profit.
If you already have a functioning e-commerce store but would like to take advantage of Amazon FBA, you can integrate Amazon’s multi-channel fulfillment feature.
Multi-channel fulfillment gives business owners the option to use Amazon FBA not only for orders from Amazon.com but also from social media or their own websites. Amazon has pre-built software integrations available for many e-commerce platforms, including Shopify and WooCommerce, to make this process easier.
If you’re looking for a way to sell products online without the hassle of managing inventory and shipping orders, then Fulfilled by Amazon may be a good option for you. Consider whether the costs of Amazon FBA will fit your business strategy. If they do, then creating an Amazon FBA Individual or Professional plan can be a great way to leverage Amazon’s wide user base to get more customers.
For more information on how to utilize Amazon, take a look at these best ways to make money on the site.
- How much does it cost to start an Amazon FBA account?
- The Individual plan costs $0.99 per item sold, while the Professional plan is $39.99 per month and offers considerably more features.
- Beyond the plan costs, how much it will cost you to start an Amazon FBA will depend on your sales strategy. Your main initial costs will be manufacturing or purchasing your products and then preparing and shipping them to an Amazon fulfillment center.
- You may also want to invest in professional photography or video for your product listing, marketing content to share on social media, and paid ads on search and social media platforms to drive more traffic to your Amazon listing.
- What is meant by fulfillment by Amazon?
- If a listing on Amazon is marked “fulfillment by Amazon,” it means that the individual seller of that product has opted to store their products in an Amazon fulfillment center so that Amazon can handle the shipping and other logistics. Often these products are eligible for Prime benefits – like free shipping and returns – even though they're from other sellers.
Information is accurate as of June 5, 2023.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.