FBA (Fulfillment by Amazon) is the program in which you send your inventory to Amazon's fulfillment centers and Amazon handles storage, picking, packing, delivery, customer service and returns for each order. FBA offers carry the Prime badge and Amazon's delivery promise, and you pay a per-unit fulfillment fee based on size and weight plus monthly storage fees based on volume, with additional charges for aged inventory and, in some periods, for low inventory levels.
Why it matters
FBA is the default for most successful sellers because the Prime badge and fast delivery raise conversion, and because the Buy Box algorithm favors FBA offers. It also removes the operational load of shipping individual orders, which matters for a brand that would rather spend its time on product and marketing.
The trade-off is that Amazon's fee structure shapes your economics. Storage fees rise sharply in October through December, aged-inventory surcharges start after units have been in the network for 181 days, and Amazon's inventory limits and Inventory Performance Index decide how much you can send in. Running out of FBA stock stops sales and lets rank decay; sending too much invites storage and aged-inventory fees. FBA turns inventory planning into a marketing decision.
What moves it
- Inbound placement and prep. Amazon's placement fees and prep requirements vary by how you split shipments and how units are labeled and packaged.
- Size tier. A product that crosses into a larger size tier pays a step up in fulfillment fee; packaging changes can sometimes move it back.
- Days of cover. The gap between what is in stock, what is inbound and what is selling.
- Return rate, since FBA returns are processed and sometimes disposed of at your cost.
How we use it
We check stock and inbound before any decision that increases sales velocity, because scaling into a stock-out costs more than the sales it brings. Restock planning aims for 60 to 90 days of cover with a buffer before Prime Day and Q4, and FBA fees per unit sit in the profit model we use to set ACoS targets, so the advertising plan reflects the real margin after fulfillment.