If you sell products through Amazon as a third-party seller, understanding how shipping works is one of the most important decisions you will make for your business. The fulfillment model you choose directly affects your costs, your customer experience, and your visibility on the platform. Whether you are just getting started or looking to optimize an existing setup, this guide walks you through everything you need to know about Amazon FBA and the broader shipping landscape for third-party sellers.
What is Amazon’s shipping model for third-party sellers?
Amazon offers third-party sellers two primary shipping models: Fulfillment by Amazon (FBA), where Amazon stores and ships products on your behalf, and Fulfillment by Merchant (FBM), where you handle storage and delivery yourself. A third option, Seller Fulfilled Prime (SFP), allows sellers to offer Prime delivery while managing their own logistics.
These models give sellers flexibility depending on their product type, volume, and operational capabilities. Most sellers choose between FBA and FBM based on factors like product size, margin structure, and how much control they want over the fulfillment process. Each model comes with a different cost structure, set of responsibilities, and impact on how your listings perform in Amazon’s search algorithm.
What is the difference between FBA and FBM on Amazon?
The core difference between FBA and FBM is who handles fulfillment. With FBA, Amazon takes over storage, packing, shipping, returns, and customer service. With FBM, the seller is responsible for all of those steps, either in-house or through a third-party logistics provider.
Here is how the two models compare across key dimensions:
- Storage: FBA uses Amazon’s fulfillment centers; FBM uses your own warehouse or a third-party facility
- Shipping speed: FBA automatically qualifies for Prime delivery; FBM requires SFP enrollment to offer Prime
- Customer service: FBA handles returns and inquiries on your behalf; FBM sellers manage this independently
- Cost structure: FBA charges fulfillment and storage fees; FBM involves your own logistics costs but no Amazon fulfillment fees
- Control: FBM gives you more control over packaging, branding, and the unboxing experience
For high-volume sellers with standard-sized products, FBA often makes financial and operational sense. For sellers with oversized items, slow-moving inventory, or specific packaging requirements, FBM can be the more practical choice.
How does Amazon FBA handle storage and delivery?
With Amazon FBA, sellers send their inventory to one or more of Amazon’s fulfillment centers. Amazon then stores the products, picks and packs orders when a sale is made, ships them to customers, and handles any returns or customer service inquiries related to fulfillment.
The process works as follows:
- You prepare and label your products according to Amazon’s requirements
- You ship inventory to the designated Amazon fulfillment center
- Amazon receives and stores your products in its warehouse network
- When a customer places an order, Amazon picks, packs, and ships the item
- Amazon handles delivery tracking, returns, and related customer communication
One important consideration is that Amazon may distribute your inventory across multiple fulfillment centers to optimize delivery times. This means your products could be stored in several locations simultaneously. While this improves delivery speed for customers, it can complicate inventory tracking and increases the importance of accurate stock management on your end.
What are the shipping costs for Amazon third-party sellers?
Shipping costs for third-party sellers vary significantly depending on whether you use FBA or FBM. FBA sellers pay fulfillment fees based on product size and weight, plus monthly storage fees. FBM sellers cover their own shipping and handling costs directly, which can be higher or lower depending on their logistics setup.
For FBA, the main cost categories include:
- Fulfillment fees: Charged per unit shipped, based on size tier and weight
- Monthly storage fees: Charged per cubic foot of space used in Amazon’s fulfillment centers
- Long-term storage fees: Applied to inventory that has been stored for more than 365 days
- Removal and disposal fees: Charged if you want unsold inventory returned or destroyed
For FBM sellers, costs depend on your carrier agreements, packaging materials, and labor. Some FBM sellers find that for bulky, heavy, or slow-moving products, handling their own fulfillment is more cost-effective than paying FBA fees. The key is to calculate your total landed cost per unit under each model before committing to one approach.
Should third-party sellers choose FBA or handle shipping themselves?
The right choice depends on your product type, sales volume, margin structure, and operational resources. FBA is generally the better option for fast-moving, standard-sized products where Prime eligibility drives conversion. FBM is often more suitable for large, heavy, or low-margin products where FBA fees would erode profitability.
Consider FBA if:
- Your products are small and lightweight with healthy margins
- You want to qualify for Prime without building your own logistics infrastructure
- You prefer to outsource customer service and returns handling
- You are scaling volume and need a fulfillment solution that grows with you
Consider FBM if:
- Your products are oversized, fragile, or require special handling
- You already have a reliable warehouse and shipping operation in place
- Your inventory turns slowly and long-term storage fees would add up
- You want full control over packaging and the customer experience
Many experienced sellers use a hybrid approach, using FBA for their best-selling SKUs and FBM for slower-moving or oversized items. This gives you the best of both models without being locked into a single fulfillment strategy.
How does Amazon shipping affect seller performance metrics?
Your fulfillment method has a direct impact on your seller performance metrics, which in turn affects your visibility in Amazon’s search results and your eligibility for the Buy Box. Late shipments, high cancellation rates, and poor customer service scores can all hurt your account standing.
The key metrics Amazon tracks include:
- Order Defect Rate (ODR): The percentage of orders that receive negative feedback, an A-to-Z claim, or a chargeback
- Late Shipment Rate: The percentage of orders shipped after the expected ship date
- Pre-fulfillment Cancel Rate: The percentage of orders you cancel before shipping
- Valid Tracking Rate: The percentage of shipments with valid tracking information
FBA sellers have an advantage here because Amazon manages fulfillment on their behalf, which typically results in consistently strong metrics. FBM sellers carry more responsibility and need reliable systems in place to maintain compliance with Amazon’s performance thresholds. Falling below Amazon’s minimum standards can result in listing suppression or account suspension.
How Distrilink helps you scale on Amazon
At Distrilink, we help brands grow quickly and in a controlled way on online marketplaces like Amazon. Instead of building your own marketplace team, IT infrastructure, or logistics operation from scratch, you can activate and scale immediately through us. We represent more than 25 brands and are connected to all major European marketplaces.
Here is what we take off your plate:
- Account activation and setup: We get your brand live on Amazon and other marketplaces fast
- Content and listing optimization: Product titles, descriptions, images, and A+ content built for conversion
- Fulfillment and logistics: Managed through our own warehouse and fulfillment infrastructure
- Performance monitoring: Data-driven insights through our own platform, giving you full visibility into your results
- Customer service: We handle buyer communication and returns on your behalf
With our standardized and data-driven approach, brands can expand their e-commerce presence without added complexity. You provide the products and the information; we handle the rest, from activation and optimization to logistics and customer service. Ready to scale without the operational burden? Get in touch with Distrilink and let us show you how we can grow your brand on Amazon and beyond.
Frequently Asked Questions
Can I switch from FBM to FBA (or vice versa) after I've already started selling on Amazon?
Yes, you can switch fulfillment methods at any time, and many sellers do so as their business evolves. To transition from FBM to FBA, you'll need to create an FBA shipment plan, prepare and label your inventory to Amazon's standards, and send stock to a designated fulfillment center. Keep in mind that switching mid-season or during peak periods can temporarily affect your inventory availability, so planning the transition during a slower sales period is generally advisable.
What are the most common mistakes new FBA sellers make when sending inventory to Amazon?
The most frequent mistakes include incorrect or missing product labels, not following Amazon's packaging requirements, and sending inventory to the wrong fulfillment center. Another common pitfall is over-sending slow-moving inventory, which can quickly rack up storage and long-term storage fees. Always review Amazon's FBA Prep Requirements in Seller Central before creating a shipment, and start with conservative stock quantities until you have a clearer picture of your sell-through rate.
How do I know if my product is profitable under the FBA fee structure?
Amazon provides a free FBA Revenue Calculator in Seller Central that lets you input your product details and compare estimated FBA fees against your selling price and cost of goods. As a general rule of thumb, FBA works best when your product's selling price is high enough that fulfillment fees represent no more than 15–25% of revenue. Be sure to factor in all cost layers — referral fees, fulfillment fees, storage fees, and inbound shipping costs — to get an accurate picture of your net margin before committing.
What happens to my FBA inventory if a product doesn't sell as expected?
If your inventory sits unsold in Amazon's fulfillment centers beyond 365 days, Amazon applies long-term storage fees, which can significantly erode your margins. To avoid this, you can create removal orders to have unsold stock returned to you or disposed of, though both options carry their own fees. Proactively monitoring your Inventory Age report in Seller Central and running promotions or price adjustments on slow-moving SKUs before they hit the long-term storage threshold is a smart way to manage this risk.
Does using FBA guarantee I'll win the Buy Box on Amazon?
FBA gives you a strong advantage in Buy Box eligibility because it signals reliable, fast delivery and strong fulfillment metrics — two factors Amazon weighs heavily in its algorithm. However, FBA alone does not guarantee Buy Box placement. Competitive pricing, positive seller feedback, and sufficient inventory levels all play a role as well. If multiple FBA sellers are competing for the same listing, Amazon will rotate Buy Box ownership based on a combination of these factors.
Is Seller Fulfilled Prime (SFP) a realistic option for most third-party sellers?
SFP can be a viable option, but it comes with strict requirements that make it challenging for many sellers to qualify and maintain. Amazon requires SFP sellers to meet a same-day or one-day handling time, maintain a very high on-time delivery rate (typically 99% or above), and use Amazon-approved carriers. It's best suited for sellers who already have a robust, fast logistics operation in place — such as an established 3PL partnership — and who sell products that are a poor fit for FBA, like oversized or high-value items.
How can a fulfillment partner like Distrilink help if I don't want to manage FBA logistics myself?
Working with a marketplace partner like Distrilink means you can access Amazon's fulfillment ecosystem without having to build or manage the operational infrastructure yourself. Distrilink handles everything from inventory preparation and inbound shipments to listing optimization, customer service, and performance monitoring — all through their own warehouse and fulfillment setup. This is particularly valuable for brands entering European marketplaces for the first time, where local logistics knowledge, language support, and marketplace compliance can make or break a successful launch.
