Chris Green

“companies. When a company received an order for a product, that company would send the order to the fulfillment company who would then ship the company’s product to the customer. The fulfillment company would charge the company for this service, while leveraging their large shipping volume to get good shipping rates. The fulfillment company does what they are good at which is storing inventory, picking, packing, and shipping orders while each company that uses the fulfillment company continues to do what they are good at which is selling their products. The companies also benefit by not having to have their own warehouse and shipping department to process all of their own orders themselves. It was a win-win relationship. The difference between a traditional fulfillment center and Amazon’s FBA program is that Amazon is not just the fulfillment company, they are also the marketplace. They have an active interest in seeing the products sell. Amazon makes money by charging a commission on the products sold on Amazon.com as well as the fees that they charge to use FBA (fees explained a little later). So you are not just sending your products to a traditional fulfillment center and then left on your own to find customers and make sales. Amazon.com is the website that you are selling on and they are the ones doing the fulfillment for you. They WANT your items to sell just as much as you do; maybe even more so since they get paid whether you are making a profit or not. More on this later to make sure”
― Chris Green, Arbitrage: The authoritative guide on how it works, why it works and how it can work for you.