Fulfillment by Amazon, abbreviated FBA, is a paid service under which independent merchants selling on Amazon's marketplace send inventory to Amazon's warehouses and hand over everything that happens after a sale: storage, picking, packing, delivery, customer service and returns. The merchant keeps ownership of the goods and sets the price. Amazon attaches its own delivery promise to the listing, making the product eligible for the Prime badge shown to paying members. That badge, more than the warehouse space, is why most sellers sign up.

Third-party sellers accounted for 60% of paid units sold on Amazon in the first quarter of 2026, according to Marketplace Pulse, the first back-to-back quarterly decline since Amazon began reporting the figure in 2004. A large share of those units pass through FBA, making it a major variable cost and, less visibly, a gate to Amazon's advertising products.

How a unit moves through the network

The process starts in Seller Central, Amazon's seller interface. A merchant switches a listing's fulfilment channel from merchant-fulfilled to Amazon and builds an inbound shipment plan. Every unit needs a scannable barcode. Since March 31, 2026, only brand owners holding the Brand Representative role in Amazon Brand Registry may use manufacturer codes such as UPC or EAN; resellers must apply an Amazon-issued FNSKU (Fulfillment Network Stock Keeping Unit) label, a rule that ended commingling, the pooling of identical units from different sellers. Amazon itself stopped offering prep and item labelling for US FBA inventory on January 1, 2026, according to its developer changelog, so cartons must arrive ready.

Placement follows. Amazon wants stock spread across regional fulfilment centres close to buyers. A seller choosing Amazon-optimised shipment splits sends cartons to several sites and pays no placement charge; one choosing minimal splits ships to a single location and pays a fee. A middle option, partial splits, was withdrawn for standard-size products on February 20, 2025.

Receipt is the trigger. Prime eligibility attaches only after units are received, scanned and registered, not when a truck leaves the seller's facility, which is why Amazon's seasonal calendars carry commercial weight. For its autumn 2026 sale, sellers using optimised splits faced a September 16 inbound cutoff before Amazon had even named the event dates. Once an order arrives, the nearest centre holding stock picks, packs and ships it.

The fee stack

FBA charges sit on top of the referral fee, the commission Amazon takes on every marketplace sale regardless of who ships it, typically between 8% and 15% depending on category, according to logistics firm Jay Group.

The core charge is the per-unit fulfilment fee, set by size tier and shipping weight. US rates rose by an average of $0.08 per unit from January 15, 2026, which Amazon put at under 0.5% of an average item's selling price, following a year with no increase, according to its announcement. Storage is billed monthly per cubic foot, with higher rates from October to December, and stock held too long attracts aged-inventory surcharges.

Two charges introduced in 2024 changed the model's logic. The inbound placement service fee, effective March 1, 2024, averaged $0.27 per unit for standard-size products and $1.58 for large bulky items, while standard-size fulfilment fees were cut by an average of $0.20 from April 15, 2024, according to Amazon. The low-inventory-level fee penalises sellers whose stock runs thin relative to sales, on the reasoning that sparse inventory forces longer shipping distances. After complaints, Amazon credited back every such charge for April 2024 as a transition period, according to Fortune.

Surcharges now layer above the base rates. Holiday peak fees add an average of $0.32 per unit between October 15, 2026 and January 14, 2027, the same increment as a year earlier. A 3.5% fuel and logistics surcharge took effect on April 17, 2026, calculated on fulfilment fees only and averaging $0.17 per US FBA unit. Those two published figures imply an average pre-surcharge fulfilment fee of roughly $4.86 per unit. Removal and disposal of unsold stock moved to per-unit billing on February 15, 2026, altering cash-flow timing without changing rates.

Incentives run in the other direction. The New Selection Program (2026), covering branded listings created from July 30, 2026, waives storage and low-inventory-level fees on a seller's first 200 units for 120 days after a first inbound shipment.

Origins and evolution

Prime came first, in 2005. FBA followed on September 19, 2006, launched alongside WebStore by Amazon so that shoppers could receive Amazon.com shipping offers when buying from third-party sellers, according to the company's announcement. Joe Walowski, the product manager at launch, said Amazon built it "because it is good for Amazon.com customers," according to Marketplace Pulse.

Jeff Bezos's 2006 shareholder letter described FBA as a set of web services APIs that turned a 12 million square foot fulfilment network into a computer peripheral, priced at 45 cents per cubic foot per month, according to the letter filed with the SEC. The published rate card mattered as much as the warehouse: it replaced negotiated storage quotes with a number a seller could model in advance.

The product widened over two decades. Multi-Channel Fulfillment let the same stock serve orders placed elsewhere. Seller Fulfilled Prime, launched in 2015, allowed merchants to carry the badge while shipping from their own warehouses; enrolment closed in 2019, the programme was suspended in 2020 and its return was announced in 2023, according to Stratechery. Amazon Warehousing and Distribution added bulk upstream storage in 2022, Buy with Prime carried the Prime checkout onto merchants' own websites, and Supply Chain by Amazon bundled freight, bulk storage and FBA into one managed service.

Why it matters for advertisers

The connection to advertising runs through the Featured Offer, the listing Amazon places in the buy box. Sponsored Products ads depend on holding it, and Amazon's guidance lists enrolling products in FBA to obtain the Prime badgeamong its recommendations alongside titles and reviews. Losing the badge typically pushes an offer below the Featured Offer threshold, taking the ad down with it. Inbound deadlines therefore double as media deadlines.

Amazon's advertising services revenue reached $19.8 billion in the second quarter of 2026, up 26% year over year, with Sponsored Products named the largest contributor. Ad spend and FBA fees draw on the same seller margin. When the fuel surcharge arrived, Million Dollar Sellers, a group of more than 700 merchants, organised a 24-hour advertising boycott, turning a logistics dispute into an ad-budget protest.

FBA inventory also feeds delivery promises beyond Amazon. Buy with Prime added partnerships with Google Shopping ads and TikTok ads in September 2024, and Multi-Channel Fulfillment now reaches TikTok Shop through nine integration apps.

The central charge is tying. On September 26, 2023, the Federal Trade Commission and 17 state attorneys general sued Amazon, alleging it conditioned Prime eligibility, "a virtual necessity for doing business on Amazon", on sellers using its fulfilment service, according to the FTC. Amazon has called the suit wrong on the facts and the law, according to NPR. The trial date itself is disputed across sources: a scheduling order signed by Judge John Chun in December 2025 set it for March 29, 2027, according to MLex, while other published accounts still cite February 2027.

Europe settled first. The European Commission found that Amazon's Buy Box and Prime rules favoured its own retail arm and sellers using its logistics, and on December 20, 2022 made Amazon's commitments legally binding: non-discriminatory Prime qualification, free choice of independent carriers for Prime sellers and a second competing Buy Box offer, according to a Willkie Farr summary.

Fee inflation is the second complaint. Amazon's cut of seller revenue rose from around 40% in 2017 to around 50% in 2022, according to Marketplace Pulse figures reported by Fortune. Sellers told Fortune the 2024 placement fee appeared designed to push them into Amazon's own bulk storage service. Albert Grazi, a seller of water filtration products, described merchants as squeezed from every side. Mira Dix, an Amazon spokesperson, said the changes would more closely align seller fees with underlying costs. Amazon argues its 2026 increase trailed the 3.9% to 5.9% annual rises at other major US carriers.

Liability has moved as well: a damaged-inventory ownership policy effective March 31, 2025 transferred more responsibility to sellers for units damaged by Amazon.

Not the same as

Fulfilled by Merchant (FBM) is the alternative in which the seller ships its own orders from its own premises or a contracted warehouse. No Prime badge attaches by default.

Seller Fulfilled Prime grants the badge without FBA, provided the merchant meets performance thresholds, including an on-time delivery rate above 93.5%; Amazon tightened its speed rules from July 6, 2026.

Multi-Channel Fulfillment (MCF) uses the same Amazon warehouses to fill orders placed on other channels, and is open to businesses with no Seller Central account.

Amazon Warehousing and Distribution (AWD) stores bulk pallets upstream and replenishes FBA. It does not ship to consumers.

Recent developments

Amazon launched Multi-Channel Fulfillment Preferred Pricing on January 15, with a 50,000-unit ceiling limiting its value for high-volume sellers. On May 4, it opened its full logistics network to businesses without any marketplace presence through Amazon Supply Chain Services, selling FBA's infrastructure as a product in its own right. The Prime Big Deal Days sale was set for October 6 and 7 across 22 countries. Separately, on August 31, 2026 the FTC and 22 states sued Amazon over an undisclosed soft reserve in its sponsored ads auction. Regulators are now testing both of the largest lines on a seller's Amazon invoice.

Timeline

  • February 2005: Amazon launches Prime
  • September 19, 2006: Amazon launches Fulfillment by Amazon alongside WebStore by Amazon
  • April 2007: Jeff Bezos's 2006 shareholder letter prices FBA storage at 45 cents per cubic foot per month
  • 2015: Seller Fulfilled Prime launches
  • 2019: Amazon closes Seller Fulfilled Prime enrolment; the programme is suspended in 2020
  • November 10, 2020: The European Commission opens its Buy Box and Prime investigation
  • September 1, 2022: Amazon introduces Amazon Warehousing and Distribution
  • December 20, 2022: The European Commission makes Amazon's Prime and Buy Box commitments binding
  • 2023: Amazon announces the return of Seller Fulfilled Prime
  • September 26, 2023: The FTC and 17 states file their antitrust complaint against Amazon
  • March 1, 2024: The inbound placement service fee takes effect in the US
  • April 2024: The low-inventory-level fee is introduced, with April charges credited back
  • April 15, 2024: US standard-size fulfilment fees fall by an average of $0.20 per unit
  • February 20, 2025: Partial shipment splits end for standard-size products
  • March 31, 2025: The damaged-inventory ownership policy takes effect
  • July 28, 2025: Amazon announces the end of US FBA prep and labelling services
  • January 1, 2026: US prep and labelling services end
  • January 15, 2026: US fulfilment fees rise by an average of $0.08 per unit
  • February 15, 2026: Removal and disposal fees move to per-unit billing
  • March 31, 2026: Commingling ends; resellers must use FNSKU labels
  • April 17, 2026: The 3.5% fuel and logistics surcharge takes effect for FBA
  • May 4, 2026: Amazon Supply Chain Services launches
  • July 30, 2026: The New Selection Program (2026) takes effect
  • September 16, 2026: Inbound cutoff for optimised shipments ahead of the October event
  • October 15, 2026: Holiday peak fulfilment fees begin, running to January 14, 2027
  • March 29, 2027: Scheduled start of the FTC antitrust trial, per the December 2025 order

Summary

Who. Amazon operates the service. Third-party sellers, both brand owners and resellers, buy it; their agencies manage the advertising that depends on it. Regulators including the FTC, 17 state attorneys general and the European Commission have challenged how it links to Prime.

What. An outsourced storage, fulfilment, customer service and returns operation run inside Amazon's own network, priced as a per-unit fulfilment fee plus storage, placement, inventory-level and seasonal charges, and conferring Prime eligibility on received stock.

When. Launched on September 19, 2006, restructured through the 2024 fee overhaul, and reshaped again across 2026 by the end of prep services and commingling, a fuel surcharge and the opening of the network to outside businesses.

Where. Amazon's marketplaces worldwide, with the US rules most documented, and increasingly beyond them through Multi-Channel Fulfillment, Buy with Prime and Amazon Supply Chain Services.

Why. It gives small sellers access to a delivery network they could not build, and gives Amazon a consistent Prime promise across millions of listings. For marketers, it decides whether an offer carries the badge and wins the Featured Offer, and so whether Sponsored Products spend can run at all.