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What is Amazon FBA?
VAT Ai Team

What is FBA?

Fulfillment by Amazon (FBA) is a program offered by Amazon that allows sellers to outsource their order fulfillment process. With FBA, sellers can send their products to Amazon's global network of fulfillment centers. When a customer places an order, Amazon's fulfillment specialists handle the picking, packing, and shipping of the products. Additionally, Amazon provides customer service and manages returns for FBA orders.

How Does FBA Work

To use FBA, sellers enroll products in their Amazon Seller Central account. They prepare, label and ship inventory to Amazon facilities. When an order is placed, Amazon pulls the item and ships it out. Sellers can monitor orders, inventory and shipments through the FBA Dashboard.

Step-by-Step Guide:

Step 1: Set up FBA

Create your Amazon selling account, and log in to Seller Central to set up FBA.

Step 2: Create your product listings

Once you add your products to the Amazon catalog, specify FBA inventory.

Step 3: Prepare your products

Prepare your products for safe and secure transportation to a fulfillment center, according to Amazon packing guidelines and shipping and routing requirements.

Step 4: Ship your products to Amazon

Create your shipping plan, print Amazon shipment ID labels, and send your shipments to Amazon fulfillment centers. Learn more about sending inventory to Amazon.

FBA Fees

Amazon charges monthly storage fees based on dimensions. Fulfillment fees depend on item weight/size and average $3-4 per order. Additional long-term storage and prep fees may apply. Amazon provides a fee calculator to estimate costs.

Benefits of FBA

  • Access to Prime shipping labels boosts visibility and sales
  • Automated fulfillment handles logistics drudgery
  • Sellers capitalize on Amazon's wide customer base
  • Shipping discounts and savings vs going it alone
  • 24/7 customer support is outsourced to Amazon

Drawbacks of FBA

  • Fees can add up significantly for some products
  • Branding visibility is reduced on outbound packaging
  • Sellers lose control over fulfillment operations
  • Increased return rates occur due to an open return policy

Is FBA Right For Your Business?

FBA greatly simplifies operations for high-volume sellers and those launching on Amazon. Startups and niche brands may struggle to break even with fees. Sellers must weigh infrastructure investment vs ongoing FBA costs.

Alternative Options

Sellers can use Seller-Fulfilled Prime to access Prime benefits while fulfilling orders independently. Multi-channel fulfillment enables using FBA inventory to reach other sales channels too.

Overall, FBA streamlines fulfillment and opens the door to increased Amazon sales. Sellers need to carefully evaluate fees versus the value of leveraging Amazon's expertise and marketplace position. With the right products, FBA can significantly boost Amazon's business.

If you are an Amazon FBA seller looking for a complete compliance solution (EORI, VAT, EPR, Authorised Representative, etc) in the EU&UK market, contact VAT Ai today for more information.