What is FBA, and how does it work?
Fulfillment by Amazon (FBA) is a service that offers fulfillment and shipping for third-party sellers. Sellers promote and sell goods, and Amazon handles the storage, packing, and shipping. It also takes on after-sales customer service and returns.
This allows businesses to grow by providing access to Amazon's logistics network.
What is an FBA seller?
An FBA seller is any third-party Amazon seller enrolled to use Amazon's fulfillment services. These sellers list, market, and sell their goods the same as any seller.
However, they do not have to store, pack, or ship their goods. These services, along with customer service and returns, are handled by Amazon.
Many Amazon sellers are using FBA. A 2021 Amazon report claims that half of all Amazon US sellers use FBA. The reasons to join them are compelling. On average, sellers see a 20–25% increase in sales after adopting FBA.¹
You won't be alone as an Amazon seller – third-party sellers make 58% of all sales on Amazon.²
What tasks is an FBA seller responsible for?
With FBA, the seller runs their business and sales, but not the logistics that follow. Amazon does not manage the whole business.
The seller chooses what items to sell, lists sales, tracks inventory, and markets items. They also have to arrange delivery of stock to Amazon warehouse locations.
Core business tasks are left to the seller. By outsourcing the after-sales and fulfillment functions, sellers can free up time and resources to focus on these vital parts of the business.
How can you start selling with FBA?
Enrolling with Amazon FBA is straightforward. First, you will need an Amazon seller account to sell as a third party.
You need to choose between two plans as a seller – Individual or Professional.
- The individual plan has a sales fee per item.
- The professional plan charges a fixed monthly subscription regardless of sales volume. In general, if you sell more than 40 items per month, the Professional plan makes sense.
You then list your items for sale on Amazon. In most cases, this is done using a Global Trade Item Number (GTIN), such as a UPC, an ISBN, or an EAN.³
This ensures uniformity across the Amazon platform. You then add your own titles, descriptions, images, and prices.
Once you have an account open and inventory listed, you can apply to make the switch to FBA. Your inventory items need to be packed, labeled, and shipped to Amazon. From there, Amazon takes over the delivery, fulfillment, and customer service.
