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How Does Amazon FBA Work? An Inside Look

Published in Ecommerce Tools

Amazon FBA or Fulfillment by Amazon is a program that allows sellers to store their products in Amazon’s fulfillment centers. Amazon takes care of the picking, packing and shipping the products directly to customers, which allows the seller to focus on other aspects of their business. 

If you’re curious about how Amazon FBA works or whether it’s the best option for e-commerce order fulfillment, you’ve come to the right place. This article covers everything e-commerce businesses need to know about Amazon FBA fulfillment services

Amazon FBA: What Are You Responsible For?

When you want to sell your product on Amazon and take advantage of its fulfillment services, there are certain things you are responsible for doing. The seller is responsible for the activities listed below

Choosing the Products to Sell

You can sell pretty much anything on Amazon, but it’s best to make products that sell quickly to avoid storage fees. If you sell items that are in low demand or not well known, they may sit at an Amazon fulfillment center and accrue fees, which will eat away at potential profits. It is best to pick something that will have a short shelf life at Amazon, whatever it may be.

Keep Your Products in Stock

Amazon requires keeping a certain inventory level. Make sure you check your stock regularly. Amazon will send out reminder notices, but it is your responsibility to ensure that your stock is replenished adequately.

Marketing Your Products

Advertising is key if you do not have a high-ranked name-brand product. People may not be familiar with your product, so it’s best to write detailed descriptions so potential customers know what they’re ordering. It is the seller’s responsibility to market the product so that people can find it and want to buy it.

How Fulfillment by Amazon Works

Amazon FBA is fairly straightforward. You use your regular selling account and follow a few simple instructions to add products to your FBA section. This gives you access to tens of millions of Amazon Prime customers, which could help you expand your business. Below is how Fulfillment by Amazon works.

Send Products to Amazon

Send your products to be stored in Amazon’s fulfillment centers. You’ll have many options, as Amazon has approximately 175 fulfillment centers around the globe. You tell Amazon what products your business is sending, and Amazon tells you which warehouses to ship your products to.

Product Sorting and Storage at Amazon

Once you have shipped your products to Amazon, its team takes charge of sorting and adding the inventory to the company’s network of warehouses. Each of your products is assigned a unique identifier, which helps in tracking its movement across the fulfillment center network.

Customers Purchase Your Products

One of the biggest advantages of selling on Amazon is that it takes care of all the transactional aspects of the sale. Sellers don’t have to worry about setting up a secure online payment system, managing payments or dealing with fraud. Amazon handles it all, allowing you to focus on creating and promoting your products and providing good customer service — all critical elements of maintaining a successful online business.

Customer Service Handling by Amazon

Any issues with your product are handled through Amazon’s customer service. Amazon also handles returns and questions. It also will follow up to make sure customers are satisfied with shipments. This can be great for your e-commerce business as you’ll have more time to focus on business development areas rather than returns.

Getting Paid

Amazon handles your sales and deposits your profits directly into your bank account after deducting its fees, which include inventory storage, fulfillment and shipping. Many businesses find these costs worthwhile, as the benefits of partnering with a fulfillment service outweigh the drawbacks.  

What Are Fulfillment by Amazon’s Benefits?

Working with Amazon has direct and indirect advantages that are outlined below.

Boost Your Business’s Reputation

Amazon is recognized and trusted around the world. If you are affiliated with the company your business’s reputation likely gets boosted through your association with the company.

Logistics and Shipping Are Done for You

Managing your own fulfillment can be challenging if you are not experienced with it. FBA allows you to outsource the logistics, which lets you to focus on gaining more sales.

Great Shipping Rates

Amazon has contracts with all of the major shipping carriers, which provides the company with a reduced rate because of the volume of business it has. Some reduced shipping costs are passed along to sellers. Customers who are Prime members benefit from free two-day shipping, which leads to higher sales on FBA products. 

Manages Returns for You

Returns can be a nightmare for a small business. Amazon handles all aspects of the return process, including managing inquiries, creating return shipping labels and dealing with reverse logistics. The fee associated with the service could be well worth it.

Handles Customer Service

Phone, chat or email are available 24/7 with Amazon’s renowned customer service, which provides immediate assistance to customers having issues. 

Quick Delivery of Your Products

Amazon has hundreds of fulfillment centers around the world. No matter where your customers are located, Amazon can get your products delivered within days of the order being placed.

What Are Fulfillment by Amazon’s Disadvantages?

Not everything is sunshine and rainbows with Amazon. If you don’t move your product quickly, you may be saddled with extra fees you probably weren’t accounting for. Other possible disadvantages are listed below.

Long-Term Storage Fees

Amazon is not in the business of storing items. If they sit idly for the long term, you will be charged storage fees. It is best to try to get your product off the shelf as quickly as possible to avoid looming storage fees.

Packaging Is not Branded

Your company or brand logo will not be on the shipping boxes because Amazon uses its own boxes. If brand awareness matters, Amazon FBA may not be what you are looking for.

Potential Increase in Returns

While it is awesome that Amazon has great customer service, this may have an unexpected effect on your business. Its easy return process could increase the number of returns you get from what you would normally expect.

Is Amazon FBA Suitable for Your Business?

Using Amazon FBA can be rewarding for your business. FBA is a simple way to outsource the logistics tasks associated with selling your products. You will be able to focus on growing your brand, expanding your outreach and increasing profits.

But Amazon FBA isn’t the only option out there. Lesser-known alternatives to Amazon may offer similar benefits with potentially lower fees. Print Bind Ship, for example, is a third-party logistics ( 3PL) provider that offers fulfillment services similar to Amazon FBA while adding a more personalized touch.

For example, because Amazon doesn’t provide information about the people buying your products, it’s difficult to establish relationships with your customers. Print Bind Ship can help you build relationships with your clients. We also offer free storage for your products, depending on the quantity and length of storage time.


What is Amazon FBA?

Amazon FBA (Fulfillment by Amazon) is a service that allows sellers to have their products stored, packed and shipped to customers by Amazon. Sellers don’t have to worry about managing inventory or shipping their products themselves.

How do I get started with Amazon FBA?

To get started with Amazon FBA, create a seller account on Amazon and enroll in the FBA program. Once you’re enrolled, you can start sending your products to Amazon’s fulfillment centers.

How does Amazon handle customer returns with FBA?

Amazon handles all customer returns for FBA orders, including processing refunds and communicating with customers. Amazon may also inspect returned items to ensure they are in the condition advertised and handle disposal or liquidation of damaged or unsellable items.

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