Amazon’s scale is staggering. In 2018, the company’s valuation surpassed $1 trillion. At the start of 2021, the company’s valuation hovered around $1.6 trillion and Amazon employs over 1.1 million workers.
One of the most important factors in Amazon’s astounding success is its operations. Specifically, its fulfillment network, which now enables customers to receive goods within hours of placing an order on Amazon. This fulfillment network is called Fulfillment by Amazon.
Fulfillment by Amazon (FBA) is a global network of warehouses owned and operated by Amazon. These warehouses are used to store products and fulfill orders made on the Amazon marketplace. FBA offloads the burden of shipping goods to end consumers from sellers on its platform. There are over 110 Amazon fulfillment centers throughout the continental United States, mostly in medium and large cities, and Amazon continues to announce new fulfillment centers regularly. In just December 2020, they announced 7 new fulfillment centers.
FBA enables sellers to offer rapid shipping, including same-day delivery in eligible cases, and it simplifies customer returns. Sellers get storage, fulfillment, and returns processing in one convenient package. Amazon sellers do not have to use FBA to sell in the Amazon ecosystem, but Amazon has certainly tried to make FBA the most appealing option for end consumers.
In practice, FBA looks something like this:
In many cases, brands partner with third-party sellers to retail their product on Amazon. In these cases, the third-party seller places a purchase order (PO) for a certain number of units. The manufacturer is responsible for shipping the products to the designated Amazon fulfillment center(s).
Amazon has strict product preparation requirements that continue to evolve, and Amazon refuses to accept shipments that fail to comply with these requirements. These include:
For most brands selling on Amazon, FBA is one of the best ways to grow. Here are a few benefits of FBA:
Like any service, there are drawbacks. Here are a few disadvantages of FBA:
Not all manufacturers have the time, personnel, or resources available to satisfy FBA product preparation requirements. If the manufacturer cannot prepare products themselves, they can send inventory to FBA product preparation facilities. These facilities are operated by third-parties who specialize in prepping products for Amazon.
Kaspien has FBA product preparation facilities across the United States. Having numerous locations means that we can reduce shipping time and costs to get inventory to these facilities and then to Amazon fulfillment centers.