Many e-commerce brands choose Fulfillment by Amazon (FBA) for the convenience, but rising fees and limited flexibility can quietly cut into margins. As businesses grow, these hidden costs create operational constraints, making a third-party FBA alternative a smarter long-term strategy.
Understanding where FBA becomes expensive or restrictive helps companies evaluate more cost-efficient and scalable fulfillment options.
Why FBA Seems Attractive at First
Fulfillment by Amazon (FBA) offers a simple way to outsource logistics. Amazon manages storage, picking, packing, shipping, returns, and customer delivery expectations for brands that want a quick path to market. The Prime badge boosts conversion rates, and Amazon’s network handles large order volumes without requiring additional infrastructure.
However, while the upfront appeal is strong, many brands discover that the ease of FBA comes with fees and limitations that expand significantly as the business scales and may require assistance when considering an FBA alternative.
What FBA Covers, and Why It Appears Attractive
FBA bundles several logistics functions into one service: warehousing, picking, packing, shipping, returns, and Amazon Prime eligibility. For new or rapidly growing sellers, that convenience is appealing because it removes the burden of managing core fulfillment operations.
Many sellers begin with FBA because they gain:
- Access to the Prime badge and Amazon’s shipping network
- Faster customer delivery times
- Reduced internal labor requirements
- A simplified operational workflow
But once businesses reach higher order volumes or add additional sales channels, the limitations of FBA, and its true costs, start to surface.
The Hidden Costs of FBA Sellers Often Overlook
FBA’s fee structure is more complex than it appears. As inventory grows or SKUs become more varied, associated costs can multiply quickly and unpredictably.
Before choosing FBA long-term, sellers should understand the most common cost drivers:
- Storage fees & aged inventory surcharges – Slow-moving products trigger monthly and long-term storage fees that escalate over time, shrinking profit margins.
- Inbound placement fees & shipment-splitting charges – Amazon’s inventory placement program may require sending shipments to multiple warehouses, increasing transportation costs.
- Returns processing & disposal fees – Returned items often incur inspection, processing, and disposal charges, especially for apparel, health/beauty, and fragile categories.
- Packaging and branding limitations – FBA restricts custom packaging, branded inserts, and unique unboxing experiences, limiting differentiation.
- Multi-channel fulfillment penalties – Using FBA to fulfill non-Amazon orders triggers additional fees and slower processing times, making it harder to manage Shopify, retail, or wholesale channels.
- Inventory management inefficiencies – Strict FBA storage policies can lead to overstocking, out-of-stock situations, or SKU restrictions that complicate forecasting.
These hidden expenses often make FBA significantly more costly than expected, especially for subscription-based brands, seasonal businesses, or sellers with large/fragile products.
When FBA Still Works and When a Hybrid Approach Is Best
For some sellers, FBA remains efficient for small, fast-moving products that rely heavily on Prime visibility. But a hybrid model, splitting SKUs between FBA and a fulfillment partner, can deliver the best of both worlds. High-velocity products stay in FBA for Prime access, while oversized, seasonal, fragile, or multi-channel SKUs shift to an FBA alternative for better control, lower fees, and improved flexibility.
This model allows brands to keep FBA where it performs best while avoiding unnecessary penalties on products that don’t align with Amazon’s fulfillment structure.
Finding the Right FBA Alternative Through a Fulfillment Partner
As more brands face the rising fees and limitations of FBA, a flexible third-party fulfillment partner offers a practical path to regain control of costs, inventory flow, and the customer experience. The right partner can support multi-channel fulfillment, configure custom packaging, improve inventory accuracy, and scale operations without the unpredictable surcharges that are common in Amazon’s system. Exploring an FBA alternative gives e-commerce sellers a more stable, cost-efficient way to manage growth.
Peoria Production Solutions (PPS) helps e-commerce brands simplify fulfillment and reduce FBA-related challenges through scalable pick-and-pack solutions, subscription box fulfillment, custom kitting, packaging, and logistics solutions. Our ISO 9001:2015 certified quality system supports accurate order assembly and efficient multi-channel operations.
PPS offers fulfillment solutions, including for e-commerce suppliers using Fulfillment by Amazon (FBA). Our strict ISO9001:2015 certified quality systems, combined with an experienced, trained staff, make us a trusted partner and valuable addition to any supply chain. Learn more about our multi-faceted production solutions, including kitting, assembly, packaging, and FBA alternative fulfillment services.