Amazon Fulfillment

FBA Prep: The Complete Guide

Amazon Fulfillment
March 27, 2023
10 min read

Follow this simple guide when prepping your inventory to send to Amazon FBA.

In This Guide:

What Is Amazon FBA?

How Does Amazon FBA Work?

How Amazon Measures IPI

Is Amazon FBA Worth It?

How to Prep Items for Amazon FBA

Amazon FBA FAQs

This post was contributed by Amazon consultant, Tanner Rankin. For 10+ years as an author, speaker, Fractional CMO & CEO at The Source Approach – eCommerce Consultancy & Referazon – Amazon Influencer Search & CRM, Tanner has helped brands thrive at eCommerce quicker & easier.

Although buying on Amazon is easy, selling on Amazon is certainly not. As an Amazon Consultant, I can tell you that one of the most challenging aspects of selling on Amazon is FBA prep. That said, it doesn’t have to be. This comprehensive guide will make FBA prep not only easy to understand but to do.

What is Amazon FBA?

Amazon FBA (Fulfillment By Amazon) is Amazon’s warehouse & logistics solution for Amazon sellers of all sizes.

Through Amazon FBA, Amazon sellers can send their inventory to Amazon fulfillment centers nationwide, allowing them to offer 1 and 2-day shipping to Amazon shoppers and get the coveted “Prime” badge on their listings. Amazon FBA eliminates the need to think about order fulfillment strategies because they handle warehousing and logistics end to end, save for FBA Prep.

That means Amazon will pick, pack and ship your products to customers who order from you on Amazon.

To clarify, here’s how Amazon FBA works.

How does Amazon FBA work?

Amazon FBA works like this:

1. Create a shipment plan

You create a shipment plan in Amazon Seller Central telling Amazon how much inventory you will send in based on the storage limits your Seller Account has and selecting a shipping carrier.  You can use Amazon’s UPS account for reduced rates or your own account with another carrier if you choose. 

2. Prep inventory

Your warehouse, manufacturer or supplier preps the inventory to be sent to Amazon FBA based on their FBA Prep Guidelines. (more on this later.)

3. Label inventory

Your warehouse, manufacturer or supplier then labels the inventory with the labels provided by creating the Shipment Plan in Amazon Seller Central and ships the inventory to Amazon warehouses around the country.  Amazon will predict where the demand is and inform you which fulfillment centers to ship to.

4. Amazon receives inventory

As Amazon receives your shipments, they will begin scanning it and making it available for sale on the Amazon marketplace.

5. Amazon fulfills orders

From there, when a customer orders, Amazon will ship the order from the closest fulfillment center

6. Customer service

If a customer has an issue, like a customer service question or a return, Amazon’s customer service will handle this, not the seller.

With that in mind, you’ll want to consider how success is measured in Amazon FBA. Amazon FBA measures an efficient and successful Amazon FBA business through its Inventory Performance Index (IPI).  Your IPI impacts how much space you’re allotted in Amazon fulfillment centers.

Your IPI is represented in a number from 0 – 1,000.

The higher the number the better.

Scores lower than 400 can result in increased storage fees, limited restocking units and limited space in Amazon fulfillment centers.

How Amazon Measures IPI

Your IPI consists of the following metrics:]

  • Excess Inventory Percentage: Excess inventory is inventory that has more than 90 days of supply based on the forecasted demand and is carried over every time you’re charged for storage.
  • Sell-Through: Sell-through represents the units sold compared to the initial inventory. This metric is calculated by counting the total items and units shipped in the last 90 days and dividing it by the average number of items in stock at FBA during that same period.  
  • Stranded Inventory Percentage:  Stranded inventory percentage is the percentage of unsellable inventory at Amazon fulfillment centers.
  • In-Stock Rate:  In-stock rate indicates how well you keep your popular inventory in stock and shows how much inventory you have of a current listing. In-stock rate percentage is the percentage of the time, during the previous 30 days, your replenishable FBA ASINs have been in stock and weighted by the total number of units sold for the last 60 days.  

In short, Amazon wants you to send in only enough inventory to sell through in 14 days.

So, is Amazon FBA worth it?

Is Amazon FBA worth it?

Yes, Amazon FBA is worth it if:

1. You’re able to send in small amounts of inventory and sell through them frequently.

Amazon is not in the warehousing business, they do not want to keep your inventory.

2. You want the coveted “Prime” badge letting customers know you can get them their product in 2 days if they’re a prime customer.

This will boost click-through rates and conversion rates. (Unit Session Percentage)

3. You are not currently handling this yourself in the Seller Fulfilled Prime program.

That said, you still need to be able to prep the products before you send them to Amazon. So how do you handle Amazon FBA prep?

How To Prep Items For Amazon FBA

Amazon Sellers are required to prepare the inventory before sending it to Amazon FBA.

If you do not have a UPC printed on your product, Amazon can print and sticker your products with FNSKU’s (the ASIN) for a fee of $0.55, but you still have to prepare the products in advance of that.

Each product category has different FBA prep requirements. For a complete list of categories and precise FBA prep requirements for each, you will want to click here to view Amazon’s PDF.

With that in mind, there are general guidelines you can follow for FBA prep.

  • Boxes must not exceed the standard weight limit of 50.00 lb, unless they contain one single oversized item that exceeds 50.00 lb.
  • For a single oversized item that exceeds 50.00 lb, attach a label that clearly indicates Team Lift on the top and sides of the box.
  • For a single oversized item that exceeds 100.00 lb, attach a label that clearly indicates Mechanical Lift on the top and sides of the box.
  • If shipping pallets, boxes must not overhang by greater than 1 inch.
  • Pallets should be shrink-wrapped.
  • Make sure pallets do not exceed 72” in height or 1,500 lbs. 
  • Remove all other shipping markings and stickers to avoid conflicts with Amazon scanners.
  • Expiration dates must be visible on the packaging.
  • Avoid using packaging peanuts, crinkle paper or shredded paper.

Amazon FBA FAQ

Do I get unlimited space in Amazon FBA?

No, the space you are allotted in Amazon fulfillment centers is based on your Inventory Performance Index score.

How are returns handled in Amazon FBA?

Returns with Amazon FBA work like this:

When customers request a return, Amazon instantly accepts the return and takes the money from your upcoming disbursement, then provides the customer with a return shipping label to return the item to the closest warehouse.

Amazon uses the honor system with customers to return the product within 45 days.

After Amazon receives the return, the warehouse will inspect the item and the customer’s return reason, then make a decision if the item is still sellable or not.

How much does Amazon FBA cost?

Amazon charges fulfillment fees based on size tiers. These consist of product category types, shipping weights and shipping dimensions.

The size tiers are:

  • Small standard:  $3.22 – $3.77
  • Large standard:  $3.86 – $7.17 + $0.16/half-lb above first 3 lb
  • Small oversize:  $9.73 + $0.42/lb above first lb
  • Medium oversize:  $19.05 + $0.42/lb above first lb
  • Large oversize:  $89.98 + $0.83/lb above first 90 lbs
  • Special oversize:  $158.49 + $0.83/lb above first 90 lbs

For a full list of Amazon FBA fees, click here.

While Amazon FBA Prep isn’t complicated, you’ll want to get it right to avoid fees and suspensions from Amazon. If you’re looking for a qualified outsourced fulfillment partner to manage your end-to-end Amazon fulfillment, including FBA Prep, take a look at Ware2Go’s full suite of fulfillment solutions.

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