Fulfillment Center: Complete Guide for Amazon Sellers (2025)
You ship 500 orders a month. Amazon just hit you with another storage limit reduction. Your best-selling SKU is sitting at your supplier because there is nowhere to put it.
This is the reality for thousands of Amazon sellers who outgrow their fulfillment center capacity. The solution is not always "send more to FBA." Sometimes it is finding the right external partner to handle the overflow, the oversized products, or your entire multi-channel operation.
In this guide, you will learn exactly how fulfillment centers work, when FBA makes sense versus third-party alternatives, and how to build a fulfillment strategy that scales with your business.
What Is a Fulfillment Center?
A fulfillment center is a specialized warehouse designed to receive, store, process, and ship customer orders. Unlike traditional warehouses that simply hold inventory, fulfillment centers are built for speed and accuracy in getting products to customers.
Every time you send inventory to Amazon FBA, you are using one of their fulfillment centers. Amazon operates over 175 fulfillment centers in North America alone. But Amazon is not the only option.
Third-party logistics providers (3PLs) run independent fulfillment centers that can handle orders for Amazon, Shopify, Walmart, eBay, and any other sales channel. These facilities offer an alternative to FBA with different trade-offs in cost, control, and flexibility.
The core services of any fulfillment center include:
Receiving: Checking inbound inventory against purchase orders, inspecting for damage, and logging products into the warehouse management system.
Storage: Organizing products by SKU in bins, shelves, or pallet racks. Storage methods vary based on product size, velocity, and temperature requirements.
Picking: Retrieving the correct items from storage locations when an order comes in. This is where efficiency matters most for fast shipping.
Packing: Selecting the right box size, adding dunnage for protection, including packing slips or marketing materials, and sealing packages for shipment.
Shipping: Generating labels, selecting carriers, and handing off packages for last-mile delivery. Most fulfillment centers have negotiated rates with major carriers.
Returns Processing: Receiving returned items, inspecting condition, and restocking or disposing based on policies.
If you are selling on Amazon, you already understand this process. Every unit you send to FBA goes through these exact steps. The question is whether FBA is the right fulfillment center for all your products and sales channels.
For sellers just getting started, our guide to Amazon FBA fundamentals covers the basics of how the program works.
How Do Fulfillment Centers Work?
The fulfillment process follows a predictable workflow regardless of whether you use Amazon FBA or a third-party provider. Understanding each step helps you evaluate what you are paying for and where problems can occur.
Step 1: Inventory Inbound
You ship products from your supplier or home to the fulfillment center. This involves creating an inbound shipment in the provider's system, printing labels, and coordinating freight.
With FBA, this means creating a shipment in Seller Central and following Amazon's prep requirements. With 3PLs, the process varies but typically involves advance ship notices (ASNs) and appointment scheduling.
Step 2: Receiving and Check-In
Warehouse staff unload your shipment, count units, and verify against the ASN. Discrepancies get flagged. Products are then labeled with internal barcodes if needed and moved to storage locations.
FBA uses its proprietary barcode system (FNSKU). Third-party fulfillment centers may use your manufacturer barcodes or their own internal system.
Step 3: Storage and Slotting
Products are placed in optimized locations based on velocity and size. Fast-moving items go in easy-to-reach spots. Slow movers go higher or further from packing stations.
This is where fulfillment centers differ from warehouses. Warehouses optimize for storage density. Fulfillment centers optimize for pick speed.
Step 4: Order Processing
When a customer places an order, the warehouse management system (WMS) creates a pick list. Workers or robots retrieve items from storage and bring them to packing stations.
FBA processes orders placed on Amazon automatically. Third-party fulfillment centers integrate with your sales channels via API connections to receive orders in real-time.
Step 5: Pack and Ship
Orders are packed in appropriately sized boxes with protective materials. Shipping labels are generated based on service level (standard, expedited, overnight). Packages are sorted by carrier and staged for pickup.
FBA handles carrier selection automatically. With 3PLs, you often have more control over carrier preferences and service levels.
Step 6: Delivery and Tracking
Carriers pick up packages and handle last-mile delivery. Tracking information flows back through the system to update order status for customers.
Step 7: Returns
Returned items come back to the fulfillment center for inspection. Based on condition, they are restocked, disposed, or returned to you. FBA has specific policies about what gets restocked versus disposed.
Understanding this workflow helps when evaluating FBA fees and costs. Every step has associated labor, technology, and space costs built into the pricing.
Amazon FBA vs 3PL Fulfillment Centers
This is the core decision for Amazon sellers: stick with FBA or diversify to third-party fulfillment centers. Each option has distinct advantages.
Amazon FBA Strengths
Prime Eligibility: FBA inventory automatically qualifies for Prime shipping. This is the biggest advantage and the primary reason most sellers use FBA. Prime members convert at higher rates and pay premium prices.
Seamless Integration: No API setup, no sync issues, no duplicate data entry. FBA is built into Seller Central. List a product, send inventory, and Amazon handles the rest.
Economies of Scale: Amazon's massive shipping volume means competitive carrier rates. For standard-sized products at moderate volumes, FBA fees are often lower than equivalent 3PL pricing.
Customer Trust: "Fulfilled by Amazon" signals reliability to buyers. Amazon handles customer service and returns, reducing your support burden.
Multi-Warehouse Distribution: Amazon automatically distributes inventory across its network for faster delivery. You do not need to manage multiple fulfillment locations.
Amazon FBA Limitations
Storage Limits: Amazon restricts how much inventory you can send based on IPI score, sales velocity, and available capacity. During peak seasons, limits tighten further.
Fee Escalation: Aged inventory fees, storage fees, and oversized surcharges add up. Products that sit too long become unprofitable.
No Customization: Generic brown boxes with Amazon branding. No custom inserts, thank you cards, or premium unboxing experiences.
Amazon-Only Fulfillment: FBA inventory serves Amazon orders only. For other channels, you need Multi-Channel Fulfillment (more on that later) or a separate solution.
Product Restrictions: Hazmat, fragile items, and certain categories face restrictions or additional requirements in FBA.
3PL Fulfillment Center Strengths
No Storage Limits: 3PLs charge for space but do not artificially restrict how much you can send. Scale inventory as needed without worrying about capacity allocations.
Multi-Channel Native: Ship orders from Amazon, Shopify, Walmart, eBay, and your own website from a single inventory pool. One stock count, multiple sales channels.
Custom Branding: Custom boxes, tissue paper, inserts, stickers, and premium packaging. Build a brand experience that generic FBA boxes cannot deliver.
Flexible Pricing: Many 3PLs offer better rates for oversized or heavy items where FBA surcharges become excessive. Long-term storage is often cheaper outside FBA.
More Control: You own the customer relationship, control the packaging, and can set specific fulfillment rules for different order types.
3PL Fulfillment Center Limitations
No Automatic Prime: Seller Fulfilled Prime is possible but difficult to qualify for and maintain. Most 3PL-fulfilled orders do not get the Prime badge.
Integration Complexity: You need to connect your sales channels to the 3PL via API or integration platform. Sync issues can cause overselling or shipping delays.
Geographic Limitations: Unless you use a 3PL with multiple locations, you may face longer shipping times to certain regions compared to Amazon's distributed network.
Variable Quality: 3PLs range from excellent to terrible. Vetting and monitoring partners requires effort.
Comparing costs between FBA and 3PL requires running actual numbers for your products. Launch Fast's Profit Calculator helps model both scenarios with real fees to see which option maximizes margins.
When Should You Use External Fulfillment?
Not every seller needs to leave FBA. But certain signals indicate when exploring 3PL options makes strategic sense.
Signal 1: Hitting Storage Limits
If you consistently bump against FBA storage limits and lose sales because of it, external fulfillment becomes a necessity rather than an option.
Calculate the cost of missed sales versus the cost of 3PL storage and fulfillment. For high-velocity SKUs, paying for external storage often delivers positive ROI.
Signal 2: Oversized or Heavy Products
FBA surcharges for oversized and heavy items can destroy margins. A product that costs $8 to fulfill through a 3PL might cost $15 through FBA due to dimensional weight fees.
Run a fee comparison for every SKU over 18 inches on any side or over 20 pounds. These are prime candidates for external fulfillment.
Signal 3: Multi-Channel Sales
Selling on Shopify, Walmart, eBay, or your own website? You need inventory available for non-Amazon orders.
Options include keeping separate inventory pools (expensive and complex), using Multi-Channel Fulfillment (Amazon ships for you), or consolidating with a 3PL that handles all channels.
Signal 4: Seasonal Inventory Prep
Sending massive quantities to FBA before Q4 is stressful when storage limits exist. 3PLs can hold excess inventory and drip-feed to FBA as space opens.
This "overflow" strategy keeps FBA topped up without hitting limits.
Signal 5: Custom Packaging Requirements
Building a premium brand? Generic Amazon boxes undermine that positioning. 3PLs let you create unboxing experiences that differentiate your brand.
Decision Framework
Ask yourself these questions:
- Are storage limits costing me sales?
- Do I have SKUs where FBA fees exceed 25% of the selling price?
- Am I selling (or planning to sell) on multiple channels?
- Is brand presentation a priority for my products?
- Do I have products that FBA restricts or handles poorly?
If you answered yes to two or more, evaluating 3PL options is worthwhile. One "yes" might justify a hybrid approach.
For accurate decision-making, understanding your true profit margins is essential. Learn how to start Amazon FBA the right way to establish your baseline before comparing alternatives.
What Is Multi-Channel Fulfillment?
Amazon Multi-Channel Fulfillment (MCF) is a middle-ground option that many sellers overlook. It uses your FBA inventory to fulfill orders from non-Amazon channels.
How MCF Works
You list products on Shopify, Walmart, or any platform. When an order comes in, you send it to Amazon via MCF. Amazon picks, packs, and ships from your FBA inventory using a non-Amazon tracking number.
The package arrives in plain or Amazon-branded packaging (you can request unbranded boxes in some cases). The customer does not necessarily know Amazon fulfilled it.
MCF Pricing
MCF costs more than standard FBA fulfillment. You pay a premium for using the network for non-Amazon orders. But the pricing is often competitive with standalone 3PLs, especially for standard-sized products.
MCF Advantages
Single Inventory Pool: No splitting stock between FBA and a 3PL. One inventory count serves all channels.
Fast Shipping: Amazon's network delivers quickly. MCF offers Standard (3-5 days), Expedited (2 days), and Priority (1 day) options.
No New Partner: If you already use FBA, MCF requires no new integrations or relationships.
MCF Limitations
Amazon Branding: Packages may show Amazon branding, which confuses customers and undermines your brand identity. Unbranded options exist but are not always available.
Higher Costs: MCF is pricier than FBA for the same products. The economics work best for smaller sellers testing multi-channel before committing to a 3PL.
Inventory Competes: FBA and MCF draw from the same pool. High non-Amazon demand can cannibalize inventory needed for Prime orders.
When MCF Makes Sense
Testing Multi-Channel: Before investing in 3PL setup, MCF lets you validate demand on other platforms using existing FBA inventory.
Low Volume Non-Amazon: If non-Amazon channels represent less than 20% of orders, MCF overhead may be lower than maintaining a 3PL relationship.
Simplicity Priority: Sellers who value operational simplicity over cost optimization may prefer MCF's single-inventory approach.
How Do You Choose a Fulfillment Partner?
If you decide to explore 3PL fulfillment centers, vetting partners properly prevents expensive mistakes.
Location and Coverage
Where are your customers? A 3PL in California means slow ground shipping to the East Coast. Multi-location 3PLs can reduce transit times but add complexity.
For most sellers, one strategically placed location works. Central US (Texas, Missouri, Kentucky) offers reasonable reach to both coasts.
Technology and Integrations
The 3PL must integrate with your sales channels. Ask specifically about:
- Amazon Seller Central integration (for Seller Fulfilled or hybrid)
- Shopify, WooCommerce, or your platform of choice
- Real-time inventory sync
- Order status and tracking updates
No API integration means manual order entry. That does not scale.
Pricing Transparency
Get a complete fee breakdown before committing:
Receiving Fees: Per-unit or per-pallet charge for checking in inventory.
Storage Fees: Per cubic foot, per pallet, or per bin monthly charge.
Pick and Pack Fees: Per-order base fee plus per-item picking charge.
Shipping Fees: Passed through from carriers with or without markup.
Special Handling: Fragile, kitting, returns processing, custom packaging.
Watch for minimum monthly charges, account fees, or hidden surcharges.
Performance Metrics
Ask potential partners about their:
- Order accuracy rate (99.5%+ is the standard)
- Same-day shipping cutoff time
- Average shipping time by zone
- Return processing turnaround
Request references from current customers in your product category.
Scalability
Can the 3PL handle your peak volume? If you do 500 orders in a typical month but 3,000 in November, verify they have capacity.
Ask about staffing during peak seasons and how they prioritize clients when volume spikes.
Contract Terms
Avoid long-term contracts until you have tested the relationship. Look for month-to-month or quarterly terms initially. Minimum commitments should match your actual volume.
Using Launch Fast's Market Research tools can help identify where your customers are concentrated, informing the optimal fulfillment location decision.
Frequently Asked Questions
What is the difference between a fulfillment center and a warehouse?
A warehouse stores inventory. A fulfillment center stores, processes, and ships orders. Warehouses optimize for storage density and long-term holding. Fulfillment centers optimize for speed, with layouts, technology, and staffing designed to get orders out quickly. Every fulfillment center is a warehouse, but not every warehouse can function as a fulfillment center.
How much does a fulfillment center cost?
Costs vary widely based on product size, volume, and services needed. Typical 3PL pricing includes storage ($10-$40 per pallet per month or $0.50-$1.50 per cubic foot), pick and pack ($2-$5 per order plus $0.25-$1 per item), and shipping (carrier rates with 10-30% discount). FBA fees are structured differently as all-in per-unit rates. For accurate comparison, use our Amazon keyword research guide to understand how product visibility affects fulfillment volume, then model your specific products in a profit calculator.
Can I use both FBA and a 3PL fulfillment center?
Yes. Many sellers run hybrid strategies. Common approaches include FBA for Prime-eligible standard products and 3PL for oversized items, using 3PL as overflow storage that feeds FBA, and keeping FBA for Amazon orders while 3PL handles other channels. The main challenge is inventory management across multiple locations.
What is Amazon Multi-Channel Fulfillment?
MCF lets you use FBA inventory to fulfill non-Amazon orders. When a Shopify customer orders, you route it to Amazon, and they ship from your FBA stock. MCF costs more than standard FBA but offers fast shipping without a separate 3PL. Packages may have Amazon branding.
How do I integrate a fulfillment center with my Amazon store?
FBA integrates directly through Seller Central. For 3PL fulfillment of Amazon orders (Seller Fulfilled), you need to connect the 3PL to Seller Central via API or integration platform. The 3PL receives order data, ships with your carrier account, and uploads tracking back to Amazon. Some 3PLs have native Amazon integrations. Others require middleware like ShipStation.
What is the minimum order volume for a 3PL?
Minimums vary by provider. Some 3PLs target high-volume sellers with 1,000+ monthly order minimums. Others welcome smaller accounts with 100-200 orders monthly. Many charge minimum monthly fees ($200-$500) that effectively set a floor. For very low volume (under 100 orders), self-fulfillment or FBA typically makes more sense.
How long does it take to switch from FBA to a 3PL?
The transition typically takes 2-4 weeks. This includes 3PL onboarding and integration setup (1-2 weeks), sending initial inventory to the new location (1 week transit), and testing orders before going live (3-5 days). Do not remove all FBA inventory immediately. Run parallel for 2-4 weeks to ensure the 3PL performs before fully transitioning.
Do fulfillment centers handle returns?
Most fulfillment centers process returns, but policies and fees vary. Services include receiving returned packages, inspecting product condition, restocking sellable items, and disposing or returning unsellable goods to you. Ask about returns processing fees (typically $2-$5 per return) and turnaround time. FBA has its own returns policies that automatically restock or dispose based on condition.
Build Your Fulfillment Strategy
A fulfillment center is not just a place to store products. It is the engine that powers customer experience, from order to doorstep. Whether you use Amazon FBA, a third-party provider, or a hybrid approach, the right fulfillment strategy directly impacts your margins and scalability.
For most sellers starting out, FBA remains the logical choice. Prime eligibility, seamless integration, and Amazon's logistics expertise are hard to match. But as you grow, evaluate whether FBA limitations are constraining your business.
Run the numbers. Model your actual products with real fees. Consider your sales channels, product characteristics, and growth trajectory.
The sellers who thrive long-term treat fulfillment as a strategic advantage, not just a cost center. They continuously optimize, test alternatives, and build redundancy into their operations.
Ready to analyze your fulfillment costs? Start with Launch Fast's free tools to model FBA versus 3PL scenarios and identify optimization opportunities across your catalog.
Alt: Inside a large fulfillment center showing organized shelving, workers picking orders, and conveyor belt systems moving packages