FBA (Fulfillment by Amazon)
Amazon's fulfillment service. Sellers ship inventory to Amazon warehouses; Amazon handles storage, packing, shipping, and customer service.
Definition
Fulfillment by Amazon (FBA) is Amazon's logistics service. Sellers send inventory to Amazon fulfillment centers; Amazon stores the inventory, picks and packs orders, ships to customers, and handles returns and customer service. Per-unit FBA fees apply based on size, weight, and storage duration.
Context
FBA is the standard fulfillment method for serious Amazon sellers. Alternative: Fulfilled by Merchant (FBM), where seller handles fulfillment.
Example
A Pakistani seller's Delaware LLC ships 1,000 units of a product to Amazon FBA in California. Amazon handles all post-sale logistics. Per-unit FBA fee around $3-$8 depending on size.
Common pitfalls
- FBA storage fees compound; long-storage fees add up for slow-moving inventory.
- Sales tax nexus: Amazon FBA inventory in a state can trigger nexus in some interpretations.
- Returns absorbed by Amazon but reflected in seller margin.