Amazon describes it best “You sell it, we ship it.”
Essentially, sellers store their products in gigantic fulfillment centres and Amazon staff pick, pack, ship, and provide customer service for those products.
Amazon FBA allows sellers to leverage one of the most advanced fulfilment networks in the world. Which in turn, helps them to rapidly scale their business’s and reach customers across the globe.
FBA provides numerous benefits to sellers such as free shipping for customers, increased product exposure and premier customer service.
How It Works
The FBA process is fairly simple and can be broken down into the following steps:
- Set up an FBA account with Amazon.
- Prepare and ship products to Amazon Fulfilment Centre.
- Amazon receives and stores the product
- Customers order the products online
- Amazon picks, packs, and ships them to the customer
- Amazon provides ongoing customer support including returns
When using Fulfilment by Amazon, sellers only pay for the services they require. There are no subscription fees, contracts or minimum inventory requirements. Sellers also only pay for the storage space they occupy in the fulfilment centre.
Generally, FBA fees are made up of both fulfilment and storage fees.
The Fulfilment fee is a flat fee that sellers pay per unit, based on the product type, its dimensions and its weight.
The Storage fee is a variable fee that sellers pay per cubic meter, based on the space required to store the items in an Amazon Fulfilment Centre. Storage fees are calculated based on the daily average volume in cubic metres per month.
Below is a summary of both these fees. They can also be viewed here.
Other FBA Related Fees
- Long term storage fees. Applies to units that have been stored in an Amazon fulfilment centre for over 180 days. See long term storage fees here.
- Returns. Sellers can ask to have inventory returned at any time at a cost of $0.65 per unit. The removal rate also includes return shipment to an AU address.
- Disposal. Sellers can request to have inventory disposed of by Amazon at a cost of $0.15 per unit.