Although often used interchangeably, e-commerce and Amazon FBA differ in some key aspects. Amazon FBA (Fulfilled by Amazon) is a logistics and fulfillment service that allows vendors or brands to use Amazon’s vast fulfillment network to handle their orders. Selling on Amazon and using FBA are not exclusive; you can use Amazon FBA for order fulfillment without necessarily selling on the Amazon platform.
Amazon FBA is ideal for brands and companies that process a large number of orders, whether on Amazon directly or across multiple sales channels. When it comes to pricing and fees, Amazon FBA is highly competitive, allowing you to fulfill your orders at the same or often lower costs compared to other carriers.
For instance, let’s consider the brand Westfield, which sells products on Amazon, Walmart, eBay, and their own Shopify store. Westfield receives 450 orders per day on Amazon and another 700 across other channels. Fulfilling these orders independently would require approximately 10 full-time staff members for picking, packing, shipping, managing inbound and outbound carriers, packaging, and handling post-purchase customer service. By using Amazon FBA, Westfield can send all its inventory to an Amazon fulfillment center. When an order is placed on any of its channels, Amazon FBA can fulfill the order from the centralized inventory, ensuring that the order is shipped with Amazon’s Prime delivery speeds directly to the customer.
Amazon FBA is particularly cost-effective for brands with higher order volumes, as economies of scale reduce the per-unit shipping, preparation, and packing costs, as well as the per-pound shipping costs for sending inventory to Amazon’s fulfillment centers.