Every product you sell on Amazon ships through one of two paths. Either Amazon stores, packs, and ships it for you through Fulfillment by Amazon (FBA), or you handle the entire order yourself through Fulfillment by Merchant (FBM). This single decision shapes your profit margins, Buy Box eligibility, daily workload, and how customers experience your brand.
FBA sellers send inventory to Amazon’s fulfillment centers. Amazon then picks, packs, ships, and manages customer returns for every order. FBM sellers keep their own inventory at home, in a warehouse, or with a third-party logistics provider and ship each order directly to the buyer. Both models sell on the same Amazon marketplace, but the economics, operations, and performance expectations are entirely different.
The table below captures the fundamental distinctions between FBA and FBM across the areas that matter most to sellers.
| Feature | FBA (Fulfillment by Amazon) | FBM (Fulfillment by Merchant) |
|---|---|---|
| Who ships orders | Amazon | You (or your 3PL) |
| Inventory storage | Amazon’s fulfillment centers | Your warehouse, home, or 3PL |
| Prime eligibility | Automatic | Only through Seller Fulfilled Prime (SFP) |
| Customer service | Amazon handles it | You handle it |
| Returns processing | Amazon handles it | You handle it |
| Fulfillment fees | Per-unit fee based on size and weight | Your own shipping, packaging, and labor costs |
| Storage fees | Monthly per-cubic-foot fee | Your own rent or warehouse costs |
| Buy Box advantage | Strong preference | Can win, but harder |
| Startup complexity | Lower (Amazon does the heavy lifting) | Higher (you build the operation) |
| Control over packaging | None (Amazon branding) | Full control |
How Amazon FBA Works
FBA shifts nearly all post-sale logistics to Amazon. You focus on sourcing products, creating listings, and running advertising. Amazon handles everything from the moment your inventory arrives at their warehouse.
The FBA Process from Start to Sale
Here is what the FBA fulfillment cycle looks like in practice.
- Create your product listing in Seller Central and select “Fulfilled by Amazon” as the fulfillment channel
- Prepare your inventory according to Amazon’s packaging and labeling requirements (or pay Amazon to prep it for you)
- Create a shipping plan in Seller Central, which tells you which fulfillment center(s) to send your products to
- Ship your inventory to Amazon’s designated warehouse(s) using your own carrier or Amazon’s partnered carrier rates
- Amazon receives and shelves your products, making them available for purchase (typically 2-7 business days after arrival)
- Customer places an order, and Amazon picks the item from the shelf, packs it in an Amazon-branded box, and ships it
- Amazon handles delivery, customer inquiries, and any returns for that order
The entire post-purchase experience belongs to Amazon. You never touch the product after it enters the fulfillment center, unless you request a removal or disposal.
What Amazon Manages for FBA Sellers
When you use FBA, Amazon takes responsibility for a significant portion of your operations. Here is what you are handing over.
- Warehousing and inventory storage across Amazon’s network
- Order picking, packing, and shipping (including Prime two-day and same-day delivery)
- Customer service for fulfillment-related questions
- Return processing and refund execution
- A/B testing of shipping speed for conversion optimization
- Multi-channel fulfillment if you also sell on your own website or other platforms
This operational handoff is the core value proposition of FBA. You trade per-unit and storage fees for freedom from daily logistics work. For sellers with high-velocity, small-to-midsize products, the trade usually pays off. For low-velocity, oversized, or low-margin products, the fees can quickly outweigh the convenience.
How Amazon FBM Works
FBM keeps fulfillment entirely in your hands. You list products on Amazon the same way an FBA seller does, but when a customer clicks “Buy Now,” the order comes to you. You pack it, ship it, and handle any problems that arise.
The FBM Process from Listing to Delivery
Running FBM looks like this in daily practice.
- Create your product listing in Seller Central and select “Fulfilled by Merchant” as the fulfillment channel
- Set your shipping templates with the regions you serve, shipping speeds you offer, and rates you charge (or offer free shipping)
- Store your inventory at your own location, whether that is a spare bedroom, garage, rented warehouse, or third-party logistics facility
- Receive order notifications from Amazon when a customer buys your product
- Pick, pack, and ship the order within your stated handling time (usually 1-2 business days)
- Upload tracking information to Seller Central so Amazon and the customer can follow the shipment
- Handle any customer questions about shipping, delivery, or product issues
- Process returns according to Amazon’s return policies
Every step from storage to delivery is your responsibility. That means more work, but it also means more control over costs, packaging, branding, and the customer experience.
What You Manage as an FBM Seller
FBM sellers carry the full operational weight. Here is what falls on your plate.
- Inventory storage (space, climate control if needed, organization)
- Packaging materials (boxes, poly mailers, tape, void fill, inserts)
- Shipping carrier relationships and rate negotiations
- Daily order processing and label printing
- Tracking uploads and delivery confirmation
- Customer service for shipping delays, missing packages, and product questions
- Return receiving, inspection, and restocking or disposal
- Meeting Amazon’s strict FBM performance requirements
The upside is lower per-unit costs if your shipping operation is efficient. The downside is that every missed shipment, late delivery, or unanswered customer message puts your seller account at risk. Amazon holds FBM sellers to tight performance standards, and falling short can result in account suspension.
FBA Fee Structure
FBA fees stack up across several categories. Understanding each one is critical to calculating your true per-unit profit. Amazon updates these fees annually, typically in January.
FBA Fulfillment Fees
This is the core FBA charge. It covers picking, packing, shipping, and handling for each unit sold. The fee varies based on product size tier and shipping weight.
Below is a breakdown of FBA fulfillment fees for standard-size items, based on Amazon’s published 2025 fee schedule (effective January 15, 2025). Amazon did not increase these rates from 2024 and removed the holiday peak fulfillment surcharge for 2025.
| Size Tier | Weight Range | Fulfillment Fee Per Unit |
|---|---|---|
| Small Standard | 2 oz or less | $3.06 |
| Small Standard | 2+ to 4 oz | $3.15 |
| Small Standard | 4+ to 6 oz | $3.24 |
| Small Standard | 6+ to 8 oz | $3.33 |
| Small Standard | 8+ to 10 oz | $3.43 |
| Small Standard | 10+ to 12 oz | $3.53 |
| Small Standard | 12+ to 16 oz | $3.64 |
| Large Standard | 4 oz or less | $3.68 |
| Large Standard | 4+ to 8 oz | $3.88 |
| Large Standard | 8+ to 12 oz | $4.15 |
| Large Standard | 12 oz to 1 lb | $4.46 |
| Large Standard | 1+ to 1.5 lb | $5.04 |
| Large Standard | 1.5+ to 2 lb | $5.37 |
| Large Standard | 2+ to 2.5 lb | $5.67 |
| Large Standard | 2.5+ to 3 lb | $5.92 |
| Large Standard | 3+ lb | $6.16 + $0.16 per half-lb above 3 lb |
Monthly Inventory Storage Fees
Amazon charges a monthly fee based on the volume (cubic feet) your inventory occupies in their warehouses. Rates increase significantly during Q4 (October through December) because of peak holiday season demand for warehouse space.
The table below shows Amazon’s 2025 monthly storage fee rates by size tier and season.
| Time Period | Standard-Size | Oversize |
|---|---|---|
| January through September | $0.87 per cubic foot | $0.56 per cubic foot |
| October through December | $2.40 per cubic foot | $1.40 per cubic foot |
A product that takes up 0.5 cubic feet of space costs roughly $0.44 per month in off-peak storage. That same product costs $1.20 per month during Q4. This seems small per unit, but for sellers with hundreds or thousands of slow-moving units, storage fees can add up to thousands of dollars per month.
Additional FBA Fees to Watch
Beyond the core fulfillment and storage fees, Amazon has introduced several additional charges in recent years. These fees catch many sellers off guard.
- Inbound placement service fee: Charged when you send inventory to a single fulfillment center instead of distributing across multiple locations. Amazon reduced this fee by an average of $0.04 per unit for 2025. The fee varies by product size and typically ranges from $0.21 to $1.58 per unit, depending on whether you choose Amazon’s minimal or partial shipment splits.
- Low-inventory-level fee: Introduced in April 2024, this fee applies to standard-size products when your historical days of supply (based on a 28-day rolling average) drops below a set threshold. It ranges from approximately $0.32 to $0.63 per unit, though Amazon reduced these rates by an average of $0.09 per unit in 2025. Keeping at least 28 days of supply in stock avoids this fee entirely.
- Aged inventory surcharge: Applies to inventory stored in Amazon’s warehouses for more than 181 days. The surcharge ranges from $0.50 to $6.90 per cubic foot per month, depending on how long the inventory has been sitting. Items over 365 days incur the steepest charges.
- Removal and disposal fees: If you need to pull inventory out of Amazon’s warehouses, removal fees range from approximately $0.97 to $13.05 per unit depending on size and weight. Disposal fees are slightly lower.
- Returns processing fee: For most product categories, Amazon does not charge an additional fee to process customer returns. However, categories with above-average return rates (apparel, shoes, watches, jewelry, luggage) do incur a returns processing fee that mirrors the outbound fulfillment fee.
Sellers who do not actively manage their inventory levels, sell-through rates, and restock timing often find these “extra” fees eating into margins they thought were safe.
FBM Cost Structure
FBM does not have a neat fee schedule like FBA. Your costs depend on your shipping carriers, packaging choices, storage situation, and labor setup. That makes FBM harder to estimate but potentially cheaper if you run a tight operation.
Shipping Costs
Shipping is typically the largest FBM expense. Your rates depend on the carrier, package weight and dimensions, destination zone, and volume discounts you may have negotiated.
Below are approximate 2025 shipping rates from major carriers for a 1-lb package shipping within the continental US. Actual rates vary by account, volume, and zone.
| Carrier and Service | Approximate Cost (1 lb package) |
|---|---|
| USPS Ground Advantage | $4.50 to $6.50 |
| USPS Priority Mail | $8.00 to $12.00 |
| UPS Ground | $8.50 to $13.00 |
| FedEx Ground | $8.50 to $13.00 |
| Amazon Buy Shipping (discounted rates through Seller Central) | Varies, typically 5-15% below retail carrier rates |
High-volume FBM sellers who ship 500+ packages per month can often negotiate rates 20-40% below published carrier prices. Amazon’s Buy Shipping service also offers discounted rates directly through Seller Central, which narrows the cost gap for lower-volume sellers.
Packaging Materials
Every FBM order requires packaging you source and pay for yourself. These costs add up across hundreds or thousands of orders.
- Poly mailers (lightweight items): $0.15 to $0.40 each
- Corrugated shipping boxes: $0.50 to $2.50 each depending on size
- Bubble wrap or void fill: $0.10 to $0.50 per order
- Packing tape: ~$0.05 per package
- Branded inserts or thank-you cards (optional): $0.05 to $0.20 each
Total packaging cost per FBM order typically lands between $0.50 and $3.00, depending on product size and your branding choices.
Storage and Warehousing
FBM sellers store inventory themselves. Your storage cost depends entirely on your setup.
- Home-based storage: Effectively free if you have spare space, though you lose that space for personal use
- Rented warehouse or storage unit: $4 to $12 per square foot per month in most US markets
- Third-party logistics (3PL) provider: $15 to $45 per pallet per month, plus per-order pick/pack fees of $2 to $5 per order
Sellers with fewer than 200 orders per month often ship from home, keeping storage costs near zero. Once you exceed that volume, dedicated warehouse space or a 3PL becomes necessary.
Labor and Time
Your time has a cost, even if you are not paying employees. A single FBM order typically takes 5 to 15 minutes to pick, pack, label, and prepare for carrier pickup. At 50 orders per day, that is 4 to 12 hours of fulfillment work.
- Solo sellers often handle fulfillment themselves until they reach 30-50 orders per day
- Hiring part-time help costs $12 to $18 per hour in most US markets
- Per-order labor cost (paid help) typically falls between $1.00 and $3.00
Amazon Seller Fees That Apply to Both FBA and FBM
Certain Amazon fees apply regardless of your fulfillment method. These are not specific to FBA or FBM, but they affect your total cost calculation.
- Referral fee: Amazon takes a percentage of each sale, usually 15% for most categories. Some categories like personal computers (6%) and Amazon device accessories (45%) are exceptions.
- Monthly subscription fee: Professional seller accounts cost $39.99/month. Individual seller accounts have no monthly fee but pay $0.99 per item sold.
- Closing fee: A $1.80 per-unit fee applies to media items (books, DVDs, video games) regardless of fulfillment method.
These costs are identical for FBA and FBM sellers, so they do not change the fulfillment comparison directly. However, they do affect your overall margin calculation.
Real Product Cost Comparison
Abstract fee tables only tell part of the story. The math changes dramatically depending on what you actually sell. Below are three realistic product scenarios showing how FBA and FBM costs compare in practice.
Scenario: Small, Lightweight Product
Product: Phone case selling for $19.99, weighing 3 oz, product cost $3.00
The table below compares total per-unit costs and profit for this product under FBA and FBM fulfillment.
| Cost Component | FBA | FBM |
|---|---|---|
| Product cost | $3.00 | $3.00 |
| Amazon referral fee (15%) | $3.00 | $3.00 |
| Fulfillment fee | $3.15 (small standard, 2-4 oz) | N/A |
| Shipping cost | N/A | $4.75 (USPS Ground Advantage) |
| Packaging materials | N/A | $0.40 (poly mailer) |
| Labor (pick/pack) | N/A | $1.00 |
| Storage (monthly, prorated per unit at 60 units/month sell-through) | ~$0.08 | ~$0.00 (home storage) |
| Total cost per unit | $9.23 | $12.15 |
| Profit per unit | $10.76 | $7.84 |
| Profit margin | 53.8% | 39.2% |
For small, lightweight items like phone cases, FBA almost always wins. The per-unit fulfillment fee is lower than what most individual sellers pay to ship a package themselves, and the automatic Prime badge drives higher conversion rates.
The Buy Box: How Your Fulfillment Method Affects Sales
The Buy Box (Amazon now officially calls it the “Featured Offer”) is the white box on the right side of a product listing page where customers click “Add to Cart” or “Buy Now.” Winning the Buy Box is not optional if you want serious sales volume. Approximately 82% of Amazon purchases happen through it, according to multiple industry analyses.
Why FBA Sellers Win the Buy Box More Often
Amazon’s algorithm considers several factors when awarding the Buy Box, and fulfillment method is one of the most heavily weighted.
- FBA sellers receive a direct boost in the Buy Box algorithm because Amazon trusts its own fulfillment network to deliver fast, reliable service
- Price competitiveness still matters, and an FBM seller with a significantly lower price can win over an FBA seller
- Seller performance metrics factor in, but FBA sellers automatically inherit Amazon’s near-perfect shipping and delivery record
- Shipping speed is a major variable, and FBA products ship Prime (1-2 day delivery) by default
- FBM sellers can win the Buy Box, but they need excellent metrics, competitive pricing, and fast shipping options to compete with FBA offers
One of the most common reasons sellers switch from FBM to FBA is Buy Box suppression. If you are consistently losing the Buy Box to FBA competitors selling the same product at a similar price, your fulfillment method is likely the cause.
Buy Box and Multi-Seller Listings
On product listings where multiple sellers compete for the same ASIN, fulfillment method becomes even more important. Amazon rotates the Buy Box among eligible sellers, but FBA offers generally receive a larger share of that rotation.
If you are the only seller on your private label listing, the Buy Box competition is less relevant. But if you sell wholesale, arbitrage, or compete on shared ASINs, FBA gives you a measurable edge.
Prime Eligibility
Amazon Prime members are the platform’s highest-value customers. They shop more frequently, spend more per year, and actively filter search results to show only Prime-eligible products. Your fulfillment method determines whether your products carry the Prime badge.
FBA and Automatic Prime
Every product fulfilled through FBA is automatically Prime-eligible. There are no additional applications, no performance thresholds to maintain, and no extra fees specifically for Prime status. This is one of the most straightforward advantages of FBA.
Prime eligibility does more than just display a badge. It directly affects how your products perform.
- Prime products appear in search results when customers use the Prime filter (and millions do)
- Prime listings typically see higher click-through rates because shoppers trust the delivery speed guarantee
- Conversion rates for Prime-eligible products are consistently higher than non-Prime listings, often by 25% or more according to seller reports
Seller Fulfilled Prime (SFP) for FBM Sellers
FBM sellers are not permanently locked out of Prime. Amazon’s Seller Fulfilled Prime (SFP) program lets qualifying FBM sellers display the Prime badge while fulfilling orders from their own facilities.
However, SFP comes with demanding requirements.
- You must offer one-day and two-day delivery to a significant portion of US orders
- Weekend pickup and delivery capabilities are required
- You must use Amazon-approved carriers with trackable shipping methods
- A trial period evaluates your performance before you receive full SFP status
- Order cancellation rate must stay below 0.5%
- Valid tracking rate must exceed 99%
- On-time delivery rate must exceed 93.5%
Amazon paused SFP enrollment for several years and reopened it in 2023 with these stricter requirements. Meeting them requires a sophisticated fulfillment operation, often with multiple warehouse locations or a nationwide 3PL partner. Most small to mid-size FBM sellers cannot realistically qualify.
When FBA is the Better Choice
FBA is not universally superior, but certain situations make it the clear winner. If your selling scenario matches several of the conditions below, FBA is likely your best path.
FBA tends to deliver stronger results when your business fits these profiles.
- Your products are small to standard-size and weigh under 3 pounds. FBA fulfillment fees for these items are competitive with or cheaper than self-shipping costs.
- Your products sell consistently and turn over quickly. High sell-through rates minimize storage fees and avoid aged inventory surcharges.
- You sell on competitive, multi-seller ASINs. The FBA Buy Box advantage is significant when competing against FBM offers at similar prices.
- You want Prime eligibility without building a logistics operation. FBA gives you the Prime badge automatically.
- You value time over maximum per-unit control. FBA frees you from daily packing and shipping so you can focus on product sourcing, advertising, and growth.
- You sell across multiple Amazon marketplaces. Amazon’s Pan-European FBA and North America Remote Fulfillment programs make international expansion easier.
- You are a new seller building credibility. FBA removes fulfillment as a variable, letting you focus on the product and marketing side of the business.
Products That Perform Best Under FBA
Certain product categories and characteristics align naturally with FBA fulfillment.
- Products priced between $15 and $70 (enough margin to absorb FBA fees while staying competitive)
- Items with low return rates (you avoid returns processing fees in most categories)
- Products with year-round demand (consistent sales prevent long storage durations)
- Small, lightweight goods like phone accessories, beauty products, supplements, kitchen gadgets, and toys
- Private label products where you control pricing and do not compete with other sellers for the Buy Box
When FBM Makes More Financial Sense
FBM is not just a backup plan for sellers who cannot afford FBA. It is the strategically superior choice in several common selling scenarios.
FBM tends to outperform FBA when your situation matches these conditions.
- Your products are oversized, heavy, or bulky. FBA fulfillment and storage fees for oversize items are steep, and FBM sellers with negotiated carrier rates can ship these for less.
- Your products are slow-moving or have unpredictable demand. Avoiding Amazon’s monthly storage fees and aged inventory surcharges keeps your costs predictable.
- You sell custom, handmade, or made-to-order products. These items cannot sit in Amazon’s warehouse pre-made, so FBM is the only practical option.
- Your margins are thin and every dollar matters. FBM lets you optimize each cost component (packaging, shipping, storage) independently rather than paying Amazon’s bundled fees.
- You already have warehouse infrastructure or a 3PL relationship. If your fulfillment operation is already built and efficient, adding FBA fees on top does not make sense.
- You sell fragile or high-value products that need careful handling. FBA warehouse workers process thousands of items daily, and some sellers report higher damage rates compared to careful self-packing.
- You want control over the unboxing experience and branding. FBA ships everything in Amazon-branded packaging. FBM lets you use branded boxes, tissue paper, inserts, and custom packaging.
Products That Perform Best Under FBM
Certain product types are natural fits for merchant fulfillment.
- Large furniture, outdoor equipment, and home improvement products
- Custom or personalized items (engraved jewelry, custom prints, made-to-order goods)
- Products with a very long shelf life but slow, steady sales (low storage cost advantage)
- Media products (books, vinyl records) with thin margins and low shipping weight
- Locally sourced or perishable goods that need controlled shipping timelines
- Products that require special handling, assembly, or inspection before shipping
Running FBA and FBM Together
Experienced Amazon sellers rarely use just one fulfillment model. A hybrid approach, using FBA for some products and FBM for others, lets you capture the strengths of both while minimizing the weaknesses.
How Hybrid Fulfillment Works in Practice
Amazon allows you to create separate FBA and FBM offers for the same product, or assign different products in your catalog to different fulfillment methods. Here is how most hybrid sellers structure their approach.
- Use FBA for your top-selling, standard-size products. These items benefit most from the Prime badge, Buy Box boost, and Amazon’s fulfillment speed.
- Use FBM for slow-moving, oversized, or custom products. Keeping these out of Amazon’s warehouse avoids expensive storage fees and oversize fulfillment charges.
- Create FBM backup listings for your FBA products. If your FBA inventory runs out or Amazon loses/damages your stock, the FBM listing keeps you selling while you restock.
- Shift to FBM during Q4 if you have limited FBA inventory space. Amazon’s storage limits tighten during peak season, and storage fees nearly triple. FBM lets you continue selling without paying premium storage rates.
- Test new products through FBM before committing to FBA. Ship a few units yourself to validate demand before sending a large shipment to Amazon’s warehouse.
Setting Up Hybrid Fulfillment in Seller Central
You do not need a separate account to run both FBA and FBM. Within Seller Central, you can assign the fulfillment channel on a per-SKU basis. Some sellers create duplicate SKUs for the same product, with one set to FBA and another set to FBM, though you need to manage pricing and inventory carefully to avoid overselling.
The main risk of hybrid fulfillment is operational complexity. You need to manage two separate inventory pools, monitor FBA restock levels, and maintain FBM shipping performance simultaneously. For sellers who can handle that complexity, the hybrid approach often produces the highest overall profitability.
Returns and Customer Service
How returns and customer service are handled differs significantly between the two models. This affects both your workload and your costs.
The table below summarizes the key differences in returns and customer service between FBA and FBM.
| Aspect | FBA | FBM |
|---|---|---|
| Who handles returns | Amazon receives, inspects, and processes returns | You receive and process returns yourself |
| Customer communication | Amazon handles most buyer inquiries about shipping and delivery | You must respond to all buyer messages within 24 hours |
| Return shipping label | Amazon provides a prepaid return label automatically | You must provide a return shipping label or instructions |
| Restocking returned items | Amazon determines if the item is sellable and restocks it automatically (or disposes of it) | You inspect the return and decide whether to restock, refurbish, or discard |
| Returns processing fee | Free for most categories; charged for high-return categories (apparel, shoes, watches) | No Amazon fee, but you pay return shipping and labor costs |
| Refund administration | Amazon processes the refund; you receive a referral fee credit for qualifying returns | Amazon processes the refund; same referral fee credit applies |
| Return window | Amazon’s standard 30-day return policy applies | Amazon’s standard 30-day return policy applies (seller must honor it) |
The Hidden Cost of FBM Returns
FBM sellers sometimes underestimate the true cost of processing returns. Each return involves multiple expenses and time costs.
- Return shipping label (often $4-8 for standard items)
- Labor to receive, inspect, and restock the item (10-20 minutes per return)
- Potential loss of the product entirely if the item is damaged or used
- Customer service time handling the return request and any disputes
For FBA sellers, Amazon absorbs most of this work. The trade-off is less control. Amazon sometimes restocks returned items that you might consider unsellable, which can lead to negative customer experiences if a used item gets shipped to a new buyer. You can mitigate this by enrolling in FBA Grade and Resell or setting up removal orders for returned inventory.
Seller Performance Metrics: What Amazon Expects
Amazon holds FBA and FBM sellers to different performance standards because the responsibility for fulfillment differs. FBM sellers carry more risk because they control the shipping process, so Amazon watches their metrics more closely.
FBM Performance Requirements
FBM sellers must meet strict service level targets, or risk account warnings, listing suppression, or suspension.
Below is a summary of Amazon’s key FBM seller performance metrics and their required thresholds.
| Metric | Required Threshold | What It Measures |
|---|---|---|
| Order Defect Rate (ODR) | Below 1% | Negative feedback, A-to-Z claims, and chargebacks as a percentage of orders |
| Late Shipment Rate | Below 4% | Orders shipped after the expected ship date |
| Pre-Fulfillment Cancellation Rate | Below 2.5% | Orders you cancel before shipping |
| Valid Tracking Rate | 95% or above | Orders with a valid, scannable tracking number uploaded to Amazon |
| On-Time Delivery Rate | Target above 97% | Orders delivered by the estimated delivery date |
| Buyer Message Response Time | Within 24 hours | Time to respond to customer messages |
Failing any of these metrics, even temporarily, can trigger account health warnings. Repeated violations lead to listing deactivation or full account suspension, which can take weeks to resolve.
FBA Performance Advantages
FBA sellers benefit from Amazon’s own logistics performance. Since Amazon controls shipping and delivery, most fulfillment-related metrics are automatically handled.
- Late shipment rate is essentially a non-issue (Amazon ships the orders)
- Valid tracking rate is always 100% (Amazon provides tracking)
- On-time delivery rate is Amazon’s responsibility
- Order defect rate still applies, but fulfillment-related defects are typically attributed to Amazon, not the seller
The one FBA-specific performance measure sellers need to watch is the Inventory Performance Index (IPI). This score (ranging from 0 to 1000) reflects how efficiently you manage your FBA inventory. Amazon evaluates your excess inventory, sell-through rate, stranded inventory, and in-stock rate. An IPI score below 400 can result in FBA storage limits, restricting how much inventory you can send to Amazon’s warehouses.
How to Switch Between FBA and FBM
Switching fulfillment methods is straightforward in Seller Central. You can move individual products or your entire catalog from one model to the other.
Switching from FBM to FBA
Here is the process for converting an FBM listing to FBA.
- In Seller Central, go to your inventory and select the product you want to convert
- Choose “Change to Fulfilled by Amazon”
- Create a shipping plan for the inventory you want to send to Amazon’s warehouses
- Prepare your products according to Amazon’s FBA packaging and labeling requirements
- Ship inventory to the designated fulfillment center(s)
- Once Amazon receives and processes your inventory (typically 2-7 business days), your listing goes live as FBA
Your listing may temporarily go inactive during the transition. To avoid lost sales, some sellers create a new FBA SKU for the same product before deactivating the FBM listing.
Switching from FBA to FBM
Moving from FBA to FBM involves these steps.
- Create a removal order in Seller Central to have Amazon ship your FBA inventory back to you (removal fees apply)
- Change your listing’s fulfillment channel to “Fulfilled by Merchant”
- Set up your shipping templates with the regions, speeds, and rates you will offer
- Prepare your fulfillment workspace (packing supplies, shipping labels, carrier accounts)
- Begin fulfilling orders yourself as they come in
Keep in mind that switching from FBA to FBM means losing the Prime badge (unless you qualify for Seller Fulfilled Prime). Monitor your sales velocity and Buy Box share after the switch to assess the impact.
Frequently Asked Questions
Can I use both FBA and FBM at the same time?
Yes. Amazon allows you to fulfill some products through FBA and others through FBM within the same seller account. You can even create both an FBA and an FBM offer for the same product. Many successful sellers use a hybrid approach, sending their best-selling standard-size products to FBA while fulfilling oversized or slow-moving items through FBM.
Do FBM sellers get the Prime badge?
FBM sellers do not get the Prime badge by default. The only way an FBM seller can display the Prime badge is by qualifying for Amazon’s Seller Fulfilled Prime (SFP) program. SFP has strict requirements, including one-day and two-day delivery capabilities, weekend shipping, and high performance metrics. Amazon reopened SFP enrollment in 2023, but meeting the requirements demands a well-built logistics operation with broad geographic coverage.
Are FBA fees increasing in 2026?
Amazon announces fee changes annually, typically in December for the following year. For 2025, Amazon held most FBA fulfillment fees steady and even reduced some charges (inbound placement fees and low-inventory-level fees). Whether 2026 brings increases depends on Amazon’s announcements later in 2025. Historically, FBA fees have trended upward year over year, though Amazon sometimes offsets increases in one area with reductions in another.
Can FBM sellers compete with FBA sellers on the same listing?
Yes, FBM sellers can compete on the same product listing as FBA sellers. However, the FBM seller typically needs to offer a lower price to offset the FBA seller’s Buy Box advantage. In some categories, particularly where products are unique or there is only one seller on the listing (private label), the FBA vs FBM competition is less relevant because there is no Buy Box rotation with other sellers.
What is the Inventory Performance Index (IPI) and why does it matter?
The IPI is a score Amazon assigns to FBA sellers (ranging from 0 to 1000) based on how well they manage their FBA inventory. It evaluates excess inventory percentage, sell-through rate, stranded inventory rate, and in-stock rate. If your IPI drops below 400, Amazon restricts your storage capacity, limiting how much inventory you can send to fulfillment centers. Maintaining a healthy IPI (above 500 is considered good) requires regular inventory management, timely restocking, and removing slow-moving or stranded products.
Should a new Amazon seller start with FBA or FBM?
Most new sellers benefit from starting with FBA for their first products, assuming those products are standard-size and have healthy margins. FBA removes the complexity of shipping and customer service while you learn the platform. It also gives you immediate Prime eligibility, which helps new listings gain traction. Once you understand your products’ sales patterns and have more experience, you can evaluate whether adding FBM for certain products would improve your overall profitability.
