What is FBA (Fulfillment by Amazon)?

What is FBA (Fulfillment by Amazon)?

Amazon FBA

If you're considering selling products on the Amazon platform, you'll inevitably have to decide between using the FBA service or handling orders yourself (FBM). FBA gives you a unique opportunity to focus on growing your business while Amazon takes responsibility for the main order processing work. With FBA, you gain access to a huge international market as well as qualified personnel who take care of your products and customers.

However, it's worth noting that using FBA isn't free, and you'll have to pay for the services provided to you. Additionally, you may need extra time and effort to learn all the terms of service and selling rules on Amazon. Nevertheless, if you're willing to invest the time and money into learning FBA and acquiring new skills, the service can be a beneficial tool for growing your business.

How does FBA (Fulfillment by Amazon) work?

FBA (Fulfillment by Amazon) is a service that allows sellers to outsource the storage, packaging, and shipping of their products. When selling a product on Amazon, sellers have two order fulfillment options: self-packaging and shipping (FBM), or choosing FBA services. Sellers can choose their fulfillment method depending on the situation.

The process of working with FBA is simple - sellers send products to an Amazon warehouse, where they are stored until ordered by a buyer. Amazon handles order processing, product packaging, and delivery, as well as returns and customer service. Sellers can monitor inventory and sales revenue through their Amazon account. However, sellers must ensure that their shipments comply with Amazon's packaging rules. It's also worth noting that sellers are responsible for product selection, inventory maintenance, and marketing.

Amazon FBA is an excellent solution for many sellers to expand and scale their online businesses, as Amazon provides key logistical services. Before choosing Amazon FBA services, sellers need to familiarize themselves with all the program's terms to understand how well it suits their specific business needs.

Advantages of Amazon FBA for online businesses?

  • Amazon FBA (Fulfillment by Amazon) is one of the most popular and effective tools for online sales. It's a convenient service that provides logistical support and scalability for your business. Sellers using Amazon FBA can significantly save on storage costs and easily expand their business without the need to rent warehouses in advance.

  • With Amazon FBA, you get fast and free delivery through the Amazon Prime program, which has become a cornerstone for many customers when buying online. Your business automatically qualifies for Prime, allowing sellers to deliver goods within one or several days, increasing customer satisfaction.

  • Amazon FBA sellers can participate in the Buy Box program, which helps increase product sales. Typically, over 80% of Amazon sales are made through the Buy Box, and using FBA increases the chances of winning it.

  • Amazon has contracts with major transportation companies, allowing sellers to use shipping discounts and spend less on logistics.

  • Using FBA also provides 24/7 customer support for your customers. Amazon will be the point of contact for your buyers, handling returns and customer inquiries. While returns can be costly, the commission for processing them is usually offset by improved service quality and customer satisfaction.

Disadvantages of Amazon FBA for online businesses?

  • One of the main drawbacks of Amazon FBA is the need to pay for its usage. If you have low sales volume and your product stays in the warehouse for a long time, you can lose a lot of money. If your product incurs long-term storage fees, this problem worsens. You can remove your product from Amazon's warehouse, but it will also cost you extra money.

  • It should be noted that if you are not directly involved in the sales process, it can be difficult to track your inventory and which products you have in stock. If your product is out of stock, your product's ranking and visibility on Amazon will decrease, leading to lower sales. To stay on top of rankings, you'll need to constantly monitor inventory levels.

  • A drawback of Amazon FBA is the limitation on branding opportunities. Since Amazon packages and ships your product from its centers, your branding opportunities are limited. While you can control your product's packaging, Amazon's logo and brand will always be on the shipping boxes. If you want to create your own brand and personalize customer service, your options will be limited by using FBA.

Is it worth working with FBA?

Before deciding to use Amazon FBA, sellers should consider other factors such as the cost of FBA compared to other fulfillment methods, sales volume, product size and weight, geographic location of FBA warehouses, and so on. Some sellers may also opt for FBM (fulfillment by merchant), which allows them to have full control over order fulfillment, but with the downside of being responsible for storage and product delivery, leading to additional costs. Therefore, before using this service, carefully study all its advantages and disadvantages and make a decision based on the specific needs of your business.


Amazon FBA is a platform that has made online business accessible to anyone. With its help, third-party sellers can integrate into the Amazon ecosystem and start their business with minimal costs. However, to succeed, it's not enough to just sign up for FBA; you also need to choose the most effective selling strategy. It's important to consider factors such as demand, product size, competition, and profitability.

If you're unsure which strategy to choose, you can use the FBA calculator from SellerApp to make the right decision. It's also worth visiting forums like Reddit and Seller Central to stay updated on the latest updates and tips from other sellers.

To be continued...

31 October 2023