Amazon FBA (Fulfillment by Amazon) lets you store your products in Amazon’s warehouses and have Amazon handle picking, packing, shipping, customer service, and returns on your behalf. You sell it, Amazon ships it. Your products also become eligible for Prime two-day shipping, which can significantly boost sales. Here’s how the entire process works, from setting up your account to what happens after a customer clicks “Buy.”
How the Process Works Step by Step
The FBA workflow follows a straightforward path. You source or manufacture products, then send them to Amazon’s fulfillment centers. Once your inventory arrives and is checked in, those products go live for customers to purchase. When an order comes in, Amazon’s warehouse staff picks the item from the shelf, packs it, and ships it to the customer. You never touch the product after it leaves your hands.
In more detail, the steps look like this:
- Create your seller account. You’ll need an Amazon Seller Central account. The Professional plan costs $39.99 per month and is the practical choice for FBA sellers, since the Individual plan charges $0.99 per item sold on top of other fees.
- List your products. You create product listings (or match existing ones) in Seller Central, then select FBA as the fulfillment method.
- Prepare and label inventory. Amazon has specific packaging and labeling requirements. Each unit needs a scannable barcode, and items must be properly packaged to survive warehouse handling. Fragile items need extra protection, liquids need poly bags, and so on.
- Ship to Amazon. You create a shipping plan in Seller Central, print Amazon’s shipment ID labels, and send your boxes to the designated fulfillment centers. Amazon may split your shipment across multiple warehouses.
- Amazon receives and stores your inventory. Once your products arrive and are checked in, they become available for customers to buy.
- Amazon fulfills orders. When a customer places an order, Amazon picks, packs, and ships the product. Delivery speed depends on the customer’s shipping selection and proximity to the fulfillment center.
- Amazon handles customer service and returns. Post-sale inquiries, refund processing, and return logistics are all managed by Amazon for FBA orders.
What FBA Costs
FBA isn’t free. Amazon charges several categories of fees, and understanding them is essential to knowing whether your margins work.
Fulfillment Fees
Every unit Amazon ships incurs a per-unit fulfillment fee based on the product’s size and weight. As of early 2026, standard-size products priced under $10 pay roughly $0.05 more per unit on average than the previous year, while products priced between $10 and $50 saw increases of about $0.08 per unit on average. Products priced above $50 saw larger increases, around $0.31 per unit on average. Starting April 17, 2026, Amazon also applies a 3.5% fuel and logistics surcharge on top of fulfillment fees.
For larger or heavier items, fees are calculated using the greater of the actual unit weight or a “dimensional weight” (the item’s volume divided by 139). This means a lightweight but bulky product can cost more to fulfill than you might expect based on its weight alone.
Monthly Storage Fees
Amazon charges monthly fees for every cubic foot of warehouse space your inventory occupies. Rates are higher during the fourth quarter (October through December) when warehouse space is at a premium. The longer your products sit unsold, the more storage eats into your profits. Items stored for over a year face additional aged inventory surcharges.
Inbound Placement Fees
When you send inventory to Amazon, you can either let Amazon distribute your stock across multiple fulfillment centers (and pay an inbound placement service fee) or ship to multiple locations yourself to reduce or avoid that fee. For most sellers, paying the placement fee is simpler than coordinating shipments to several warehouses.
Low-Inventory-Level Fee
If your standard-size or bulky products drop below 28 days of supply relative to customer demand, Amazon charges a low-inventory-level fee on shipped units. The logic: when your stock is too thin, Amazon can’t distribute it efficiently across its network, which raises their shipping costs. Keeping at least four weeks of inventory on hand helps you avoid this charge.
Managing Inventory Performance
Amazon tracks how well you manage your FBA inventory through a metric called the Inventory Performance Index, or IPI. This score ranges from 0 to 1,000 and directly affects how much warehouse space you’re allowed to use.
Four factors drive your IPI score:
- Excess inventory percentage carries the most weight. Amazon flags units where the cost of storing them exceeds the benefit of keeping them. Too much excess inventory drags your score down fast.
- Sell-through rate measures how many units you’ve sold and shipped over the last 90 days relative to your average inventory during that same period. Higher turnover means a healthier score.
- Stranded inventory percentage counts products sitting in Amazon’s warehouse that aren’t actually listed for sale, often because of listing errors, pricing problems, or catalog issues.
- In-stock rate tracks what percentage of your replenishable products have been available over the last 30 days.
If your IPI drops below 400 during Amazon’s evaluation periods (the last six weeks of each quarter), Amazon caps your storage volume for the following quarter. That cap is measured in cubic feet and applies separately to standard-size and oversized items. Once you hit your limit, you can’t send more inventory in. Exceeding your allotted space costs $10 per cubic foot per month in overage fees. A score of 550 or above signals strong inventory management with no restrictions.
The timing matters more than sellers often realize. If your score falls below 400 during the second quarter evaluation, storage limits kick in for the third quarter, which means you enter the critical holiday season with restricted capacity.
How Returns and Reimbursements Work
When a customer returns an FBA product, Amazon processes it at the fulfillment center. If the returned item is still in sellable condition, Amazon adds it back to your inventory and you don’t receive a separate reimbursement (since the item is available to sell again). If the item comes back damaged and Amazon determines it was responsible for the damage, Amazon reimburses you and doesn’t return the item to your inventory.
Amazon won’t reimburse you for items that were damaged by the customer, are defective, are subject to recall, or violate Amazon’s policies. Those items can be returned to you or disposed of, but the loss is yours.
Sometimes a customer gets a refund but never actually sends the product back. If 60 days pass without the item being returned to the fulfillment center, Amazon typically charges the customer and reimburses you. If that doesn’t happen automatically, you can file a claim. The claim window opens 60 days after the customer’s refund date and closes at 120 days, giving you a two-month window to submit it.
What FBA Sellers Still Handle Themselves
FBA offloads the physical logistics, but you’re still responsible for everything that happens before your product reaches Amazon’s warehouse and the business strategy that drives sales. That includes sourcing products, negotiating with suppliers, creating and optimizing your product listings, managing advertising campaigns, setting prices, monitoring your margins after all fees, and ensuring your products comply with Amazon’s policies and any applicable regulations.
You also need to plan your inventory levels carefully. Sending too much inventory leads to high storage fees and a lower IPI score. Sending too little triggers low-inventory-level fees and risks going out of stock, which hurts your search ranking and sales momentum. Most successful FBA sellers use inventory planning tools (Amazon provides some within Seller Central) to forecast demand and time their replenishment shipments.
Who FBA Makes Sense For
FBA is strongest for sellers who want access to Prime customers and don’t want to manage their own warehouse, shipping, or customer service operations. It works particularly well for small, lightweight products with healthy margins, since fulfillment fees scale with size and weight. Products that sell consistently are easier to keep in the IPI sweet spot, avoiding both excess inventory charges and low-stock penalties.
It’s a harder fit for very low-margin products where the per-unit fulfillment fee eats most of the profit, extremely large or heavy items where fees escalate quickly, or slow-moving inventory that accumulates storage charges month after month. Running the numbers on your specific product, including fulfillment fees, storage fees, the referral fee Amazon charges on every sale (typically 8% to 15% depending on category), and any advertising costs, is the only way to know if FBA math works for your business.