How Do Amazon Fulfillment Centers Work? Find Out Now!

Fulfillment is the key step for an order to reach its rightful recipient. Typically, this process involves the close interaction of supply chain and inventory management, customer support, and quality control. Amazon has done this many times over, and might even have done it differently from the rest.

In this blog post, we will discuss how the eCommerce and retail giant does fulfillment by taking a close look at what happens within the walls of an Amazon fulfillment center.

Key Takeaways

• Amazon fulfillment centers use advanced technology and automation to simplify order fulfillment and ensure fast, accurate, and reliable shipping. This includes the crucial "picking, packing, and shipping" strategy, which helps ensure timely order delivery.
  
  
• These centers are crucial in inventory management, from receiving and storing products to tracking inventory levels and managing returns. This comprehensive approach helps prevent stockouts, supports demand forecasting, and maintains efficient inventory control.
  
  
• While Amazon FBA offers benefits like Prime eligibility and simplified logistics, sellers must consider fulfillment center fees, including storage, fulfillment, and potential additional charges. Strategic inventory management is essential to maximizing profits and mitigating costs, especially for low-margin or slow-moving products.
  

What Does An Amazon Fulfillment Center Do?

Amazon fulfillment centers are large warehouses where Amazon does tasks on behalf of the sellers, including:

• Storing products
  
  
• Picking items on the list
  
  
• Packing the order
  
  
• Shipping the package to the customers
  

Aside from that, they also handle inventory, process returns, and manage logistics.

These centers enable fast and efficient delivery using advanced automation and large-scale operations. In return, they can support Amazon Prime and other shipping services across a wide range of products.

How Does Amazon Warehouse Work?

Here’s an inside look at how Amazon warehouses operate—from receiving inventory to packing and shipping. Discover the technology, processes, and efficiency that power Amazon’s fast and accurate order fulfillment.

1. Receive and Store Inventory

The sellers send the products to the Amazon fulfillment centers. Once the Amazon warehouse receives them, the staff inspects and organizes them for storage. The process continues as the staff scans, categorizes, and stores the items in specific locations. This makes it easy for them to access and retrieve the products during order processing.

2. Track Inventory Management

Each Amazon fulfillment center has advanced systems which continuously monitor the inventory, ensuring accurate stock levels.

This tracking helps them in multiple ways, including:

• Prevent stockouts
  
  
• Support demand forecasting
  
  
• Allow Amazon to replenish popular items
  

All of these elements help with the fulfillment process and meet customer demand.

3. Use the "Pick, Pack, and Ship" Strategy

Amazon fulfillment centers have a well-established fulfillment process. When a customer places an order, the Amazon staff will automatically do the "pick, pack, ship" strategy.

What is it? Here it is:

1. They quickly pick the items from the storage.
   
   
2. They carefully pack the products to ensure they are in excellent condition when the customer receives them.
   
   
3. They prepare the order for shipment. Add the shipping label and other needed information for shipping.
   

This streamlined strategy enables fast and accurate fulfillment, ensuring timely customer delivery.

4. Implement Returns Processing

Unfortunately, things can happen, and customers might not want the products they receive anymore. In this case, Amazon handles the returns, including;

• Inspecting returned items
  
  
• Restocking sellable goods
  
  
• Disposing of or recycling unsellable ones responsibly
  

This efficient returns process helps maintain customer satisfaction and inventory control.

5. Take Advantage of Technology and Automation

Amazon fulfillment centers use different technology and automation systems, such as:

• Robotics
  
  
• Artificial intelligence
  
  
• Conveyor systems
  

All of these tools enhance speed and accuracy in its warehouses. They reduce human error, boost efficiency, and allow Amazon to process high volumes of orders seamlessly.

How Do You Ship to Amazon's Fulfillment Centers?

Here are the essential steps for shipping to Amazon’s fulfillment centers. Learn how to accurately prepare, label, and ship inventory to streamline the process and meet Amazon’s requirements.

Also Read: Shipping to Amazon Fulfillment Center: Key To US Sales Growth

1. Prepare Your Products

Before anything else, every seller should ensure that their items pass Amazon's standards. Each product should have proper packaging and a label following Amazon's guidelines. Among the things they need to remember are:

• Using protective materials
  
  
• Labeling items with barcodes for smooth tracking and accurate order fulfillment
  

2. Create A Shipping Plan

Sellers can create a shipping plan through Amazon Seller Central. This plan outlines products, sets quantities, and specifies shipping methods. It helps Amazon track incoming inventory and optimize warehouse space.

3. Generate Shipping Labels

Generate Amazon-compliant shipping labels for each box. These labels contain tracking information needed for the receiving process at Amazon fulfillment centers. With the correct labels, both parties are at peace, knowing that everything will be processed efficiently upon arrival.

4. Ready the Boxes

It's not enough to just pack the items in a box.

Sellers should organize the products in sturdy boxes. If possible, they should group similar items so that it's easy for Amazon to categorize them. Additionally, they should follow Amazon's weight and dimension guidelines.

Then, securely each box to protect items during transit.

These extra steps will ensure that all your products arrive safely at their destination and that there are no errors when Amazon receives them.

5. Ship to Amazon

Once the products are ready, sellers can send them to Amazon via partnered carriers or other approved shipping methods. After shipping, sellers should track their shipment to ensure it arrives at the designated fulfillment center.

6. Confirm Shipment Arrival

As mentioned earlier, Amazon checks in and stores the products once the shipment arrives. You will get a notification about your products in your account. If this happens, review your Seller Central account to confirm the inventory is ready for sale.

Note: By reviewing your account, you can also see if there are issues you need to address.

How Much Do Fulfillment Centers Cost?

Amazon fulfillment center fees vary based on storage, fulfillment, and seasonal rates.

Here's a quick breakdown:

• Storage Fees. Amazon charges per cubic foot, with higher fees in October–December (peak season). Standard-size items might cost around $0.87-$2.40 per cubic foot.
  
  
• Fulfillment Fees. The payments are based on product size and weight and cover pick, pack, and ship services. Depending on the item, fees range from $2.50 to $15+.
  
  
• Additional Fees. In some cases, long-term storage, removal, and returns processing fees apply.
  

Costs depend on product dimensions, season, and inventory turnover, so optimizing storage and fulfilment strategies is key to managing expenses effectively.

Here's an example:

Imagine you're an Amazon FBA seller selling lightweight but slightly bulky small fitness equipment, like resistance bands. You plan to send 1,000 units to Amazon's fulfillment center in October.

1. Monthly Storage Fees:
   • Each resistance band pack occupies about 0.1 cubic foot.
   • Amazon charges around $2.40 per cubic foot for standard-size items in October- December.
   • For 1,000 units, that's 100 cubic feet. So, the monthly storage fee would be 100 * $2.40 = $240.
     
     
2. Fulfilment Fees:
   • Each resistance band pack is about 1 lb, so the fulfilment fee per unit could be around $3.22.
   • If all 1,000 units are sold, the fulfilment fee will total 1,000 * $3.22 = $3,220.
     
     
3. Additional Fees:
   • Long-term storage fees will apply if some units don't sell within 180 days.
   • If you want to remove unsold units, removal fees (around $0.50–$1.50 per unit) will also increase the cost.
     

Outcome: Your total cost for storing and fulfilling 1,000 resistance bands in October would be:

• $240 (storage) + $3,220 (fulfilment) = $3,460, not including additional fees if inventory remains unsold long-term.

This example shows how understanding the fulfillment cost helps manage inventory more strategically, avoiding unnecessary storage fees and maximizing profit margins.

Is an Amazon Fulfillment Operations Worth It?

Amazon Fulfilment operations, particularly Amazon (FBA), can be worth it for many sellers due to the following:

• Prime Eligibility and Increased Sales. Products fulfilled by Amazon are eligible for Amazon Prime. This subscription service offers fast shipping, exclusive deals, streaming, and more benefits for an annual or monthly fee. Amazon FBA sellers can use this feature to attract more customers and increase their sales potential.
  
  
• Simplified Logistics. Amazon handles storage, packing, shipping, and customer service, freeing sellers to focus on scaling their business.
  
  
• Efficient Returns Management. Amazon’s return process is convenient for customers and takes the burden off sellers.
  
  
• Expanded Reach. Shipping orders to your target audience can be a lot easier. Access to Amazon’s fulfillment network makes it easier to reach international customers.
  

However, FBA fees for storage, fulfilment, and other services can add up, especially for low-margin or slow-moving products. Sellers with highly competitive pricing, efficient inventory turnover, and high-demand products typically benefit the most from FBA.

In contrast, sellers with low-demand or bulky items may find costs outweigh the benefits, making fulfilment by merchant (FBM) a better option.

Ultimately, FBA is worth it for sellers who can manage inventory strategically to maximize the advantages and minimize costs.

Final Thoughts

Amazon fulfillment centers are the backbone of fast, reliable shipping, leveraging advanced technology and efficient fulfillment processes to meet customer demands. Understanding how they operate reveals the complexity behind quick deliveries and sets insights for anyone curious about large-scale logistics. Explore Amazon’s model to see fulfillment at its finest!

Aman Chopra

Aman looks after the content marketing department at Stallion Express. He is passionate about helping businesses grow by providing informative and up-to-date trends in the eCommerce industry. Outside the office, you can find him on the soccer field cheering on Real Madrid.