# What is FBA – Fulfillment by Amazon?

What is FBA – Fulfillment by Amazon? Amazon stores, packs, and ships for you. Includes the Prime badge and higher ranking. Fees: referral + FBA + storage.

## How it works in practice

FBA is Amazon's version of a 3PL. Prime raises sales by 30-40%. The catch: fees usually run 27-30% of the sale.

## Related metrics

- Amazon Marketplace — FBA is a service within it
- Fulfillment — FBA is fulfillment outsourcing
- FBM — the alternative
- Storage Fees — a storage fee during peak seasons

## Common misconception

'FBA is easy money.' Fees can reach 30-40%. On products under $15, it's usually not profitable.

## How to fix it

FBA not profitable? (1) use the FBA fee calculator, (2) watch long-term storage fees, (3) set a reorder point.

## Real-world example

An Amazon seller: a $25 product with $12.50 in fees and $6 COGS left $6.50 (25%). After ads at $2, net profit was $4.50.

## Where to start

Sale price should be at least 3x COGS for FBA profitability.

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Category: Logistics · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/fba-fulfillment-by-amazon