The Most Frequent Challenges Faced by Merchants That Use Amazon FBA

Fulfillment by Amazon can be a great service for businesses that utilize the Amazon sales platform. Amazon is a high-quality fulfillment and shipping company, so you don’t have to worry about quality issues. Furthermore, with so many distribution centers, Amazon helps businesses minimize delivery times and transit costs.

However, there are some great challenges that merchants face with Fulfillment by FBA, leading to challenging FBA reviews. Below we discuss some of these in detail, as well as offer up some strategic workarounds to keep your business functioning on all cylinders.

Amazon FBA Storage Limitations

Let’s face it – storage space is at a premium right now because of the global pandemic and extreme growth in e-commerce sales. Fulfillment companies grew rapidly over the last few years, and quite frankly have run out of a lot of their idle warehouse space capacity. As a result, fulfillment companies are becoming a lot more particular about how to utilize their excess storage space. Most frequently, they are allocating customers to this space that ship a high volume of orders per month, because this results in more profit for their business. Amazon is no different – and they are employing the same strategy regarding their excess warehouse space.

As a result, Amazon now has implemented a 10 cubic foot limitation for storage space for individual seller accounts. Storage limits are also based upon product types: standard-size, oversize, apparel, footwear, flammable, aerosol, and extra-large. The full details of their storage limitations are listed on their website.

To minimize the impact of Amazon storage limitation, the company advises sellers to focus on improving sales volume and improving IPI scores (inventory performance index). In a nutshell, this means their advice is to sell more and keep inventory levels low! That’s quite a task to ask merchants in the ever-changing macroenvironment that exists today, which supply chain challenges.

Amazon FBA Aged Inventory Surcharges

In addition to storage limits, Amazon also passes on surcharges to sellers for inventory that stays in their warehouses for an extended period. As of May 15, 2022, sellers with inventory in their warehouses from 271 days to 365 days will pay a premium of $1.50 per cubic for all aged inventory. Furthermore, inventory held for longer than 365 days is assessed a surcharge of $6.90 per cubic foot or $.15 per unit.

Amazon FBA SKU Labeling

As if managing storage restrictions, limitations, and surcharges wasn’t enough, Amazon also forces sellers to send goods to their facilities with specific labels. In addition to any manufacturer’s SKU labeling, Amazon requires merchants to use a Fulfillment Network Stock Keeping Unit (FNSKU). This label uniquely identifies your product from other sellers of similar items – and it certainly makes sense to have this mechanism in place. However, it is yet another hoop to jump through to utilize the FBA service. And if you need Amazon to apply the FNSKU labels, it will cost a whopping $.55 per item to do so.

Overcoming Amazon Challenges with an FBA Prep Service

Most FBA sellers utilize Amazon, so they don’t have to manage their own warehouse, and therefore do not have the warehouse space themselves or the wherewithal to perform some of these preparatory and storage services themselves. That’s where FBA prep services come into play.

This newer bread of service businesses, referred to as Amazon Prep companies, specialize in providing support services for Amazon sellers. Oftentimes, they provide a wide array of services, including:

  • Receiving and inspection of product
  • FNSKU labeling
  • Kitting, bundling and multi-pack packaging
  • Poly bagging or shrink wrapping
  • Warning labeling
  • Sticker removal
  • Returns and removals
  • Long-term storage of goods
  • Freight shipment scheduling

Not only do Amazon Prep services performing an extensive list of services needed to support FBA sellers, but they also do it at a very affordable rate. According to our recent study, FNSKU labeling and other labeling services average around $.20-$.45 per label – a significant cost savings from Amazon’s $.55 per label fees. Furthermore, storage fees are generally very reasonable with prep services, running on average from $20-$25 per pallet, which equates to an affordable rate versus Amazon’s inflated fees.

Most importantly, prep services offer an option for long-term storage when Amazon limits and restrictions kick in. Most fulfillment and warehousing companies will not help with long-term storage only scenarios, because they aren’t earning any profit from the fulfillment, pick and ship of products themselves. For merchants, prep services are virtually the only option aside from renting out a warehouse themselves, which could be extremely challenging with the cost of warehouse leases being so high and available spaces being extremely low.

The Final Verdict on Overcoming Amazon’s Self-Imposed FBA Restrictions

As the e-commerce fulfillment industry has evolved, it has become increasingly clear that most players are becoming extremely particular about who they help and under what confines. For both Amazon and traditional fulfillment companies, FBA labeling and long-term storage doesn’t bring in enough revenue and profits to aggressively target the business. Therefore, merchants are left with two primary options – source space themselves and perform Amazon prep services in-house or utilize an Amazon prep service. Because of the ease of use and flexibility offered through prep services, many merchants are opting to pass the work and focus on other tasks.

Leave a Reply

Your email address will not be published. Required fields are marked *

What Our Customers Say About Us And Our Work

Jo-Ann Hill

I want to say thank you for your help in finding a warehouse so quickly. Your service was amazing. I received replies the same day and have selected a company that will work well for us. I definitely recommend your services.

Vee Zeniuk

I wanted to express my gratitude for your services and let you know that it was a very enjoyable experience! We have selected one of the companies and they are awesome!


You are doing such a great job and this service that you provide is a life saver for people especially startups like me....We cannot spend budgets on researching as much as the big firms can...and you provide us one stop solution which will answer all our questions.

Joyce Sloss

I just wanted to let you know that I selected one of your vendors as our fulfillment house. They can do what we need and we’re looking forward to working with them. They can handle our “special projects” fulfillment, which was key to our decision in bringing them onboard. I appreciate this service. It was great for our company.

Jeffrey Schmidt

I didn’t know there was so much difference in fulfillment companies — this was my first time in need of this sort of service. After a Google search I luckily stumbled upon They saved me an incredible amount of time and money. Within minutes I had a couple of emails from good companies that fit my situation. I am very appreciative of their help.

Eric Kolb

Warehousing and Fulfillment was the perfect matchmaker in finding us a fulfillment partner. They provided several great options, all of whom were very responsive and willing to take the time to talk through our needs. We ended up going with W&F’s top match and we couldn’t be happier. I highly recommend W&F, particularly to anyone whose business relies on a strong fulfillment partner.

Paul Sauer

We were having multiple issues with our 3PL fulfilling warranty replacement parts. Our company needed to make a change and make one fast. I reached out to to facilitate my search for a reputable, service oriented 3PL that can handle the demands of a highly seasonal business to pick, pack and ship parts quickly. I received several qualified 3PL leads that matched what we were looking for. After reviewing and speaking with many one stood out from the rest, and we found a great partner. We could not recommend enough.

Read More

Denis Mills

We found the perfect third-party fulfillment vendor through insightQuote. We never would have found them on our own. We can’t thank you enough and our customers thank you too.

Sarah De Munck

Thanks for all of your help. This was a huge undertaking for us and your guidance was extremely helpful!

Gwynne MacHattie

Thank you so much for your excellent service. We have chosen one to go forward with. This has saved us a great deal of time.

Ash Cook

They really listened to our requirements and then matched us with great vendors that could meet our specific challenges.

Corky Bless

I just wanted to say thank you so much for setting me up with these vendors. I have found pricing better than I ever expected to find.

Brian Chui

Legit, this was such a good experience ... I was shocked how fast the vendors contacted me and got the ball rolling. This was such a pleasant experience

Donald Willick

What an awesome service. A problem I fought with daily for over 3 weeks, solved in less than 24 hours.

warehousing and fulfillment arrow up