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Fulfilment and fees

What is FBA?

Also known as Fulfilment by Amazon

FBA is Amazon's fulfilment service: you ship inventory to Amazon's warehouses, and Amazon picks, packs, ships and handles customer service for each order in exchange for a per-unit fee.

Why it matters

FBA products are Prime-eligible, which materially affects conversion. That eligibility is usually the reason to use FBA rather than the fee structure being favourable.

The fulfilment fee depends on size tier and weight, not on your selling price. This is the opposite of the referral fee, and it is why cheap bulky products often fail on FBA while small expensive ones do well.

Costs FBA sellers routinely forget: monthly storage, long-term storage on aged inventory, returns processing, and removal fees. A margin calculation that only counts referral plus fulfilment is optimistic.

Related

Terms that come up alongside this one

FBM
FBM means the seller stores, packs and ships their own orders rather than using Amazon's warehouses. Amazon still handles the transaction and charges a referral fee, but no fulfilment fee.
Referral fee
A referral fee is the percentage of the total sale price a marketplace takes as commission. On Amazon it is typically 15%, though it varies by category from 8% to 45% and is subject to a minimum per item.
Size tier
Size tier is the category Amazon assigns a product based on its packaged dimensions and weight, and it determines the FBA fulfilment fee. Dimensions are checked before weight.

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