Amazon fulfillment works through two main paths: you either send your inventory to Amazon’s warehouses and let them pick, pack, and ship orders for you (Fulfillment by Amazon, or FBA), or you store and ship products yourself (Fulfilled by Merchant, or FBM). Most new sellers start with FBA because it qualifies products for Prime shipping and hands off the logistics, but FBM can be the smarter choice for certain product types. Here’s how to set up either approach and what it actually costs.
Setting Up a Seller Account
Before you fulfill anything, you need an Amazon seller account. You’ll choose between an Individual plan, which charges $0.99 per item sold, and a Professional plan at $39.99 per month with no per-item fee. If you plan to sell more than 40 units a month, the Professional plan pays for itself. You’ll also need the Professional plan to access certain tools like bulk listing and advertising.
During registration, Amazon will ask for a government-issued ID, a bank account for deposits, a credit card for charges, and tax information. Expect the verification process to take anywhere from a few days to a couple of weeks. Once approved, you can list products and choose your fulfillment method on a listing-by-listing basis.
How FBA Works
With FBA, you ship your products in bulk to Amazon’s fulfillment centers. When a customer places an order, Amazon picks the item from its shelves, packs it, ships it, and handles customer service and returns. Your products become eligible for Prime two-day shipping, which significantly boosts visibility and conversion rates in search results.
The basic workflow looks like this: you create your product listings in Seller Central, then create a shipping plan that tells Amazon what you’re sending and how many units. Amazon assigns a fulfillment center (or multiple centers) for your shipment. You prep and label your inventory, box it according to Amazon’s requirements, and ship it to the designated warehouse. Once the inventory is checked in, your listings go live and orders start fulfilling automatically.
Prepping and Labeling Inventory
Amazon is strict about how inventory arrives at its warehouses, and failing to meet prep requirements can result in refused shipments or extra fees.
Every unit needs an Amazon barcode, called an FNSKU, which ties the product to your specific seller account. Place the FNSKU label so it’s scannable after any prep materials like polybags or shrink wrap are applied. Cover all other visible barcodes on the product (except serial numbers or Transparency authentication codes) so scanners don’t pick up the wrong code. Don’t place labels on curves or corners, and leave at least a quarter inch of space between the label edge and the packaging edge.
Products that could be damaged in transit or that have loose parts need additional prep. Items with sharp edges require bubble wrap. Liquids need to be sealed in polybags to prevent leaks. Fragile items must be protected well enough to survive a three-foot drop onto concrete. If you’d rather not handle prep yourself, Amazon offers an FBA Prep Service for an additional per-unit fee, or you can hire a third-party prep center to do it before shipping.
For case-packed shipments (boxes containing identical items), every individual unit inside the case must have an FNSKU, and any barcodes on the outer case itself should be removed or covered.
Understanding FBA Fees
FBA charges hit your margin from several directions, and understanding each one is essential before you commit inventory.
Referral fees are a percentage of each sale price that Amazon takes as its marketplace commission. The rate varies by product category but typically falls between 8% and 15%, with most categories at 15%.
Fulfillment fees are charged per unit and cover picking, packing, and shipping. They vary based on the item’s size and weight tier. Products priced under $10 get a discounted fulfillment rate that’s $0.86 less per unit than items priced above $10, which helps keep low-cost products viable on the platform.
Monthly storage fees are based on the cubic feet your inventory occupies in Amazon’s warehouses. Rates are higher during the fourth quarter (October through December) when warehouse space is at a premium during the holiday season.
Aged inventory surcharges kick in once your products have been sitting in Amazon’s warehouses for 181 days or longer. These fees escalate sharply as inventory ages. For items stored 181 to 210 days, you’ll pay $0.50 per cubic foot per month. That climbs to $5.45 per cubic foot at 271 days, and $7.90 per cubic foot (or $0.35 per unit, whichever is greater) once inventory passes 456 days. These surcharges are assessed on the 15th of each month using an inventory snapshot.
Managing Slow-Moving Inventory
Aged inventory fees can quietly destroy your profit margins if you’re not monitoring sell-through rates. Amazon gives you several options to deal with products that aren’t moving.
You can submit a removal order to have unsold inventory shipped back to you or disposed of. The deadline to submit a removal order and avoid the next month’s surcharge is 11:59 p.m. Pacific on the 14th of the month. Even if Amazon hasn’t physically removed the inventory by the cleanup date, you won’t be charged the surcharge as long as the order was submitted on time.
Another option is marking down slow sellers through Amazon Outlet, which is a promotional program requiring a minimum 20% discount. This trades margin for velocity, which can be worth it when the alternative is paying escalating storage penalties. You can also set up automated removal rules in Seller Central so that inventory hitting a certain age threshold gets pulled from the warehouse automatically without you needing to remember each deadline.
When FBM Makes More Sense
FBA isn’t always the most profitable path. Fulfilling orders yourself, known as Fulfilled by Merchant, makes sense in several situations.
If you sell seasonal products with unpredictable demand, storing them in your own space avoids the risk of aged inventory surcharges during the off-season. If your products are oversized or heavy, FBA fulfillment fees can become disproportionately expensive. And if you need direct access to your inventory at all times, or your products require specialized packaging that doesn’t fit Amazon’s standard prep process, FBM gives you that control.
FBM sellers can still access discounted shipping through Amazon Buy Shipping, which offers pre-negotiated rates that average over 31% lower than retail ground rates with major carriers like UPS, FedEx, and USPS. Amazon also offers Veeqo, a free shipping software that provides up to 5% back on eligible shipments. These tools help close the cost gap between self-fulfillment and FBA.
The trade-off is that FBM listings don’t automatically qualify for the Prime badge, which means lower conversion rates on competitive listings. You’re also responsible for customer service, returns processing, and meeting Amazon’s shipping performance metrics. Late shipments or high defect rates can result in account suspensions.
Creating Your First Shipment
Once your products are prepped, labeled, and ready to go, the process of getting them into Amazon’s network is straightforward in Seller Central.
Start by selecting the products and quantities you want to send, then create a shipping plan. Amazon will tell you which fulfillment center (or centers) to ship to. You may be asked to split inventory across multiple locations, which increases your shipping costs but positions products closer to customers for faster delivery. Amazon sometimes offers discounted partnered carrier rates through its shipping workflow, which can be significantly cheaper than booking your own freight.
Print box labels from Seller Central and apply them to each carton. Ship using the carrier and method specified in your plan. After delivery, it typically takes a few days to a week for Amazon to receive and check in your inventory, though during peak seasons this can stretch to two weeks or more. Your listings won’t show as available until the check-in process is complete.
Tracking Performance and Profitability
Seller Central provides reports that break down your fees, sales, and net proceeds per unit. The FBA Revenue Calculator, available on Amazon’s website, lets you estimate your per-unit profit before you commit to sending inventory. Plug in your product’s dimensions, weight, selling price, and cost of goods, and it will show you the fulfillment fee, referral fee, and your estimated margin.
Pay close attention to your Inventory Performance Index (IPI), a score Amazon uses to measure how efficiently you’re using warehouse space. A low IPI score, driven by excess inventory, poor sell-through rates, or stranded listings, can result in storage limits that cap how many units you’re allowed to send in. Keeping your catalog lean, pricing competitively, and removing stale inventory are the most direct ways to keep your IPI healthy and your storage capacity unrestricted.