Amazon stores, picks, packs, and ships your inventory. The fulfillment side of Amazon's seller economy.
ExampleA seller ships pallets of product to Amazon warehouses; Amazon handles every order's logistics, customer service, and returns.
FBA enables Prime eligibility, which directly impacts conversion. The trade-off is fees: fulfillment, storage, long-term storage penalties, inbound shipping. FBA fees alone can eat 10-15% of revenue on lower-priced items.
Modeling FBA fees correctly is critical for CM1 calculations. Off-by-one mistakes here compound through the whole TACoS analysis.