What is Amazon FBA? Definition, fees & is it worth it (2025)

Imagine handing off all your shipping headaches to someone else. No more late-night packing sessions. No more post office runs. No more customer service emails asking “Where’s my package?” That’s the basic premise of Fulfillment by Amazon (FBA).

But here’s the million-dollar question: Does paying Amazon to handle your logistics actually boost your bottom line? Or does it just drain your margins? Let’s dig into the nuts and bolts of FBA in 2025, including the fees that might make or break your business case.

How FBA works, step by step

Inventory sent to Amazon

You kick things off by shipping your products to Amazon’s fulfillment centers. The process is straightforward: prep and label your inventory (following Amazon’s sometimes picky guidelines), then ship it off using Amazon’s “Send to Amazon” workflow. Many sellers save money using Amazon’s Partner Carrier Program, which offers discounted shipping rates to their warehouses.

Amazon stores & ships to customers

Once your products arrive, Amazon distributes them across its massive fulfillment network. When a customer clicks “Buy Now,” Amazon springs into action. They pick your product up, pack it, and ship it out with that coveted Prime shipping badge. Your customers get their stuff in two days (sometimes even same-day), and you didn’t lift a finger.

Amazon handles returns and support

Here’s where FBA really shines for many sellers. Customer asking 20 questions about shipping? Amazon handles it. Buyer wants to return something? Amazon processes it. If the returned item is still sellable, it goes right back into your available inventory. No customer service team required on your end.

Pros and cons of using Amazon FBA

FBA makes things convenient, no question. But there are still some pros and cons to consider. The table below lists a few.

Pros

Cons

– Prime badge boosts sales (dramatically for many sellers) – Fast shipping without you handling logistics – No warehouse space or staff needed – Amazon handles all shipping questions and returns – Use Buy with Prime to extend to your own website – You can scale up easily during busy periods – Expanding internationally becomes simpler – Frees up your time for product development – Can fulfill orders from Shopify, eBay, etc.

– Fees can eat 30%+ of your revenue on low-margin items – You’re stuck with Amazon’s plain brown boxes – Your inventory gets scattered across fulfillment centers – Amazon’s prep requirements can be strict – Storage costs triple during holiday season (Oct-Dec) – Slow sellers rack up painful storage fees after 22 weeks – Items occasionally go missing in Amazon’s warehouses – You only get paid every two weeks – Amazon sometimes makes questionable return decisions

A complete breakdown of FBA costs in 2025

Fulfillment fees by size tier

Amazon’s fulfillment fees pay for the picking, packing, shipping, and customer service. Amazon charges these fees when a customer orders your product.

• Small Standard items (2 oz to 16 oz): $3.06 to $3.65, depending on weight
• Large Standard items (4 oz to 20 lb): $3.68 to $6.92 with $0.08 added per 4 oz above 3 lb

• Large bulky: $9.61 plus $0.38/lb after the first pound
• Extra Large: Starting at $26.33 and climbing based on weight tiers

But take note. These are just for non-apparel goods. If you’re selling clothing or dangerous goods (think batteries or aerosols), you should add about 10-15% to these fees.

Monthly storage fees & aged inventory surcharges

Here’s where Amazon can get sneaky if you’re not paying attention. While basic fulfillment fees are straightforward, storage costs operate on a “the longer it sits, the more you pay” principle.

Base storage rates

• January-September: $0.78 per cubic foot
• October-December: $2.40 per cubic foot

And Amazon tacks on escalating surcharges the longer your stuff sits around:

• Items aged 181 to 210 days: Plus $0.50 per cubic foot
• 211 to 240 days: Plus $1 per cubic foot
• 241 to 270 days: Plus $1.50 per cubic foot
• 271 to 300 days: Plus $3.80 to $5.45 per cubic foot
• 301 to 330 days: Plus $4 to $5.70 per cubic foot
• 331 to 365 days: $4.20 to $5.90 per cubic foot
• Over a year: $6.90 per cubic foot or $0.15 per unit (whichever is greater)

Do the math, and you’ll see that during holiday season, inventory sitting for over a year will cost you a fortune monthly. That small box of fidget spinners that hasn’t sold since 2023? It’s becoming a very expensive paperweight.

Inbound placement

Amazon also prefers to distribute your inventory across multiple fulfillment centers. Depending on what option you choose, you can pay the following FBA inbound placement service fees:

• Small items: $0.16 to $0.30 per unit
• Standard items: $0.18 to $0.68 per unit
• Oversized items: $1.10 to $5.95 per unit

Fortunately, there are ways to save money. First, let Amazon decide where everything goes (Amazon-Optimized distribution). In this option, placement is free.

You can also use Amazon Warehousing & Distribution (AWD) for 70 %+ of replenishment. When you opt for this, you won’t get aged inventory surcharges.

Lastly, you can ship in your own branded packaging (SIPP). This will let you save around $1.32 per item.

With all that said, is FBA right for your business?

Yes, if your products are small, light, and have healthy margins.

FBA loves small, light, expensive items. 

A 2 oz product that sells for $24.99 and costs you $5 to make? Perfect for FBA. Its $3.06 fulfillment fee leaves you plenty of profit margin. 

A bulky, 8-pound item selling for $29.99 with a $15 cost? Probably not. You’re looking at a $7.84+ fulfillment fee.

In short, the FBA sweet spot: items under 1 pound with at least 40% gross margin.

Yes, if your products sell quickly.

Amazon rewards fast sellers and punishes slow movers. If your inventory typically sells within 8 weeks, FBA makes financial sense. If your products take 6+ months to sell through, those storage fees will eat you alive.

A solid rule: If you can’t sell at least 4 units per month of an item, think twice about FBA.

Yes, if your brand doesn’t need fancy packaging.

FBA means standard Amazon boxes with zero personality. If your brand depends on gorgeous packaging, custom inserts, and a premium unboxing experience, FBA limits your options. Yes, the SIPP program lets you use your own packaging, but you’re still surrendering control of the final presentation.

Yes, if you can handle getting paid every two weeks.

Amazon pays FBA sellers around every two weeks. If your business runs lean on cash or has high ongoing expenses, this payment schedule could create cash flow challenges. You’ll have faster access to funds with self-fulfillment.

Yes, if you’re planning to sell internationally.

Programs like Remote Fulfillment with FBA let you sell in Canada, Mexico, and Brazil using your US inventory. You don’t have to deal with customs, international shipping, or foreign return addresses. So, for sellers who plan on going global, FBA removes major logistical barriers.

Tips for using FBA to scale

But don’t worry. It’s not impossible to thrive in FBA. 

1. Invest in efficient sourcing.

You have to have the right products. Use tools like Tactical Arbitrage, ScoutIQ, ScoutX, and Scoutify to pick items with enough margins. You have to be able to still price competitively even with FBA fees.

2. Optimize your inventory.

Storage fees eat away at your earnings, too. So, try software like InventoryLab to track stock levels and calculate true costs. Include all FBA fees and think about your restock quantities. Your goal is to avoid both stockouts and aging fees.

3. Automate feedback and review requests.

More reviews give you a higher chance of getting positive feedback. And when people see those, they’ll be more likely to buy from you. Get a tool like FeedbackWhiz Emails so you can automatically request reviews while also staying compliant with Amazon’s communication rules.

4. Set up monitoring and alerts.

They might be at the back of your mind right now, but hijackers and listing changes are big headaches too. Fortunately, there are tools like FeedbackWhiz Alerts that can notify you about these shifts. It can be new pricing, competitors, or alterations. As long as it could hurt your Buy Box percentage, you have to know about it.

5. Track your numbers and profits.

With FBA’s multi-layered fee structure, manual profit tracking becomes nearly impossible. That’s why you need analytics software like FeedbackWhiz Profits and InventoryLab Accounting to deliver accurate profitability reporting across your entire catalog. These will show you which items truly make money under the FBA model.

Bottom line

FBA offers a compelling trade-off: higher fees for a simpler operation. So, our recommendation? Start with your best-selling products in FBA and then expand from there. 

After all, you don’t need to do it alone. All the tools mentioned above can help you out. And the best part is they’re all included in one bundle, Seller 365, for just $69 per month.

Want a complete seller toolkit to genuinely make money via FBA? Try Seller 365 free for up to 14 days now.

FAQs about Amazon FBA