Is Amazon Inventory Placement Service the Right Choice for Sellers?

When you become an ecommerce seller, you quickly discover that there are many questions that you never thought about, but still must answer. For instance: What is the most efficient way to ship your inventory to a warehouse or fulfilment centre? 

For Amazon sellers leveraging the Fulfilment by Amazon (FBA) service, the default method of distributing and shipping inventory requires the merchant to ship portions of their inventory to different fulfilment centres so that it’s spread out across different regions. 

For some merchants, this can be expensive and time-consuming. Fortunately, there is an alternative: Amazon inventory placement. 

In this article, we’ll cover how Amazon inventory placement works, its pros and cons, and how ShipBob can provide ecommerce merchants with an alternative. 

What is Amazon inventory placement?

As of March 1st, 2024, Amazon’s Inventory Placement Service has been deprecated (see note here). Now, any inventory placement is encompassed and billed through Amazon’s FBA inbounding program.

Amazon’s FBA inbound placement service is an inventory distribution service available to Amazon FBA sellers. It allows Amazon sellers to send their inventory to a single Amazon receiving or fulfilment centre, instead of having to send split shipments separately to multiple Amazon fulfilment centres in different locations. 

For example, imagine you’re an Amazon seller with a new product line of eco-friendly water bottles. Without the Inventory Placement Service, you’d need to divide your inventory and send parts of it to several Amazon centres across the country. 

This can be time-consuming, complex, and expensive. 

Using the FBA inbound placement service, you can instead send your entire inventory to one central location. From there, Amazon handles distributing it to various fulfilment centres for you for a per-item fee.  

This can simplify your logistics, reduce the chances of errors and delays, and ultimately allow you to focus more on growing your business. 

How does Amazon’s FBA inbound placement service work?

When you use Amazon’s FBA service, you can select one of three inbounding options: Partial shipment splits, Amazon-optimised shipment splits, or minimal shipment splits. 

Partial and Amazon-optimised shipment splits require you divide your inventory into multiple portions and ship these portions to multiple different receiving hubs and/or fulfilment centres for a reduced fee or no fee. 

The idea behind this default is to distribute your inventory across different regions, so that your orders are shipped out from the fulfilment centre nearest to their destinations, which allows your customers to receive their orders faster.

However, this default can sometimes force a merchant to ship inventory to Amazon facilities that are extremely far away, which greatly increases their inventory shipping costs.

Alternatively, you can opt for minimal shipment splits. Using the minimal shipment splits option, you send your entire Amazon inventory to (typically) a single Amazon receiving hub, which may be a receiving centre or a fulfilment centre. From there, Amazon will decide how to strategically divide and distribute your inventory between different fulfilment centres, and do so on your behalf.  

This lets you enjoy the benefits of distributed inventory, without having to distribute it across various locations yourself. 

However, this option is not free. Amazon will charge you a per-unit fee based on each SKU’s Amazon sizing tier and weight.

Every merchant will have to calculate whether or not Amazon’s FBA inbound placement service is cost-effective for their unique business.

For example, say you want to ship 1,000 units of inventory, each of which is large standard-sized and weighs less than 12 oz, through using the minimal shipment splits option to a distant West region inbound location. Amazon will change a $0.34 fee per item, which adds up to $340 in service fees. 

As long as the cost savings you reap from shipping to a single location (rather than multiple locations) offset the extra $340 fee, using the the minimal shipment split FBA inbound placement service is a good idea — but only you could determine that for your business.   

“Most other companies like Amazon are structured in such a way that you don’t have flexibility — you’re just a small part of their business, so there’s no patience for you. The amazing thing about ShipBob has not just been its flexibility and ability to customise, but also the support it’s given us whenever we’ve faced problems. Having support through ShipBob has really allowed us to capture growth well.”

Aaron Patterson, COO of The Adventure Challenge

Minimal vs. partial vs. Amazon-optimised shipment splits 

To help you determine which FBA inbounding option is best for your brand, here is a breakdown of the key differences between the three options. 

Shipping

Using the minimal shipment split, a seller ships all of their inventory to a single Amazon receiving hub or fulfilment centre. 

Using the partial shipment split, a seller ships their inventory to 2 or 3 Amazon receiving hubs or fulfilment centres.  

Using the Amazon-optimised shipment split, a seller ships to four or more Amazon receiving hubs or fulfilment centres. 

Distribution

Under the minimal shipment split option, Amazon takes care of distribution for merchants; once your inventory reaches the designated receiving centre or fulfilment centre, Amazon’s team divides it and ships units to other fulfilment centres. 

Under partial and Amazon-optimised shipment split options, the seller is solely responsible for dividing up their inventory and shipping it to multiple fulfilment centres.    

In both cases, Amazon picks the location or locations to which a merchant will send their inventory. With minimal shipment split, Amazon chooses both the initial receiving hub or fulfilment centre, as well as the subsequent ones. 

Fees

When you opt for minimal shipment split, Amazon charges a per-item fee based on each item’s sizing tier and weight. If your business sells and ships heavy or bulky items, these add-on costs can easily add up.

When you opt for partial shipment split, you must still pay Amazon a per-item inbound placement service fee, but this fee is smaller than the minimal shipment split placement fee.  

There is no fee for the Amazon-optimised shipment split option. However, this is because merchants are responsible for the entire cost of shipping inventory to four or more Amazon locations.

Sizing Tier	Weight	Minimal	Partial
Small Standard	16 oz or less	$0.21 – $0.30	$0.12 – $0.21
Large Standard	12 oz or less	$0.23 – $0.34	$0.13 – $0.24
	12+ oz to 1.5 lb	$0.27 – $0.41	$0.15 – $0.28
	1.5+ lb to 3 lb	$0.32 – $0.49	$0.17 – $0.34
	3+ lb to 20 lb	$0.42 – $0.68	$0.23 – $0.48
Large Bulky	5 lb or less	$2.16 – $2.67	$0.55 – $1.48
	5+ lb to 12 lb	$2.55 – $3.15	$0.65 – $1.75
	12+ lb to 28 lb	$3.19 – $3.95	$0.81 – $2.19
	28+ lb to 42 lb	$4.13 – $5.11	$1.05 – $2.83
	42+ lb to 50 lb	$4.85 – $6.00	$1.23 – $3.32

“In the ShipBob dashboard we can view a breakdown of daily costs, which is also very different from other providers who just give you a big bill at the end of a month.”

Joe Coventry, Marketing & Partnerships Lead at Rugby Bricks

Exceptions

Make sure to create separate shipping plans for standard-sized products, non-standard-size products, and items in the following categories: 

• Apparel 
• Jewelry 
• Shoes 
• Watches 
• Dangerous goods  

Are Amazon’s inventory placement options right for you?

It’s much more convenient to send inventory to just one location, so using Amazon’s minimal shipment split FBA inbound placement option might seem like a no-brainer.

However, it’s not a one size fits all solution — in fact, depending on a business’s SKU types and inventory volume, the costs of using the service could easily outweigh the benefits. It’s usually only a good fit for inventories that meet the following criteria:

Smaller shipments and inventory volumes

Because FBA inbound placement service fees are per-item, the minimal shipment split service makes the most sense for sellers who deal with smaller inventory volumes (and subsequently smaller inventory shipments). 

In these cases, the merchant could save money by avoiding the expensive shipping costs associated with distributing inventory themselves — and with fewer items to ship, the service fee is manageable, and isn’t so high that it offsets their distribution cost-savings.  

Small-sized, lightweight goods

Amazon’s FBA inbound placement fees are based on the weight and size of each item, with larger items garnering higher fees. As a result, businesses that sell small, light goods that are easy to ship will incur the least fees. 

Products with a high profit margin

While avoiding the expense of distributing your own inventory may save you money, it may not save you very much. In these cases, businesses should consider the minimal shipment split option for products that have high profit margins, rather than products with low ones.

Products with a high profit margin provide merchants with a way to absorb some of the fee. 

For example, if you earn $1.00 of profit for a product you sell (including shipping savings), and Amazon charges a $0.30 fee for each item, you will still earn $0.70 of profit per sale. 

However, if you only get a $0.15 profit margin on a product, and that same $0.30 fee applies, that fee will eat into your profit margin. 

Pros and cons of Amazon’s FBA inbound placement service

Before you commit to any of Amazon’s FBA inbound placement services, it’s important to understand both the upsides and downsides. To help you assess whether this option makes sense for your business, here are some of the major pros and cons to consider.  

Minimal shipment split 

PROS	CONS
Saves labour: Amazon handles splitting up your inventory and then reshipping it to different fulfilment or distribution centres, saving you time and stress.	Can be expensive: The cost to use the service can easily add up, especially for  bulky and heavy items, as well as for large volumes of inventory.
Simplicity: Send all your inventory to a single receiving hub.	Longer lead times: Since Amazon has to reship your inventory to other fulfilment centres once it reaches the first transit hub, the entire process takes longer than shipping the inventory directly to the final fulfilment centres.

Partial shipment split 

Pros	Cons
Lower fees: Because merchants take on some of the burden of shipping to multiple inbound locations, the per-item inbound placement fee is anywhere from $0.09 to $0.20 lower.	More labour-intensive: Merchants are responsible for a lot of the logistics of shipping inbound inventory to multiple locations.
	More complex: Coordinating inbound shipments to two or three locations requires time, energy, and attention from merchants.

Amazon-optimised shipment split 

Pros	Cons
No fees: Because merchants take on all of the burden of shipping to multiple inbound locations, Amazon does not charge them a per-item inbound placement fee.	Very labour-intensive: Merchants are responsible for the entire inbound shipping process across multiple locations. Amazon does not assist with the logistics.
	Complex: Coordinating inbound shipments to 4+ locations requires significant time, energy, and attention from merchants.
	Can be expensive: Multiple bulk inventory shipments can quicky eat away at your profits, and end up costing your brand a lot of money.

Skip the Amazon Inventory Placement fees with ShipBob 

If you’re looking to enjoy the benefits of Amazon’s inbound inventory placement services, but it’s not the best fit for your business, ShipBob offers you an alternative.  

ShipBob’s fulfilment network enables merchants with Amazon listings to save money and time through distributed inventory, while also providing the convenience and simplicity you want in a fulfilment service.  

With our omnichannel fulfilment solution, you can seamlessly deliver orders coming from multiple sales channels — including Amazon and your ecommerce store. ShipBob’s software directly integrates with your store, which means that your FBM orders are automatically processed and forwarded to our fulfilment centres where they can be prepped for fulfilment. 

For your FBA orders, ShipBob will prepare the orders with FBA item and box labels, acting as your central logistics hub. From there, you can easily transfer inventory from any ShipBob fulfilment centre to any FBA facility to meet Amazon’s requirements.

Introducing ShipBob’s Inventory Placement Program (IPP) 

ShipBob also lets you choose which fulfilment centres you store your inventory in – and through our Inventory Placement Program, ShipBob will handle allocating, receiving, and  distributing your inventory across our network for you.  

To optimise inventory allocation, brands can use ShipBob’s Ideal Inventory Distribution Tool at no extra cost. This program utilises historical order data and real-time analytics to calculate the most strategic split of inventory across ShipBob’s network, so you can place stock closer to customers, reduce shipping costs, and minimise transit times.  

Brands can always can add or remove locations and edit inventory quantities directly in their dashboard, or upload distribution plans for easy bulk updates. 

From there, all you have to do is send your products to a single ShipBob receiving hub facility. ShipBob will take care of everything else for you – from receiving your inventory to physically distributing it and storing it in the regional fulfilment centres of your choice.  

Leveraging this program, brands can save money on inbound shipments, avoid the hassle of distributing inventory themselves, and still achieve the competitive edge that comes with placing inventory.  

“I ran the numbers to see what it would cost to ship pallets directly to different fulfilment centres, and it’s so much more expensive than sending it to one hub and letting ShipBob distribute it for us. The Inventory Placement Program’s model is much cheaper, and we don’t have to think about distribution. It’s saved us so many headaches, and now we just arrange one pickup from a manufacturer and one delivery. It’s so cheap, and so easy.”

Matt Crane, Co-Founder and Chief Science Officer at Semaine Health 

To learn more about how ShipBob can help your business distribute inventory, reduce costs, and save time, click below to request a fulfilment quote.

Inventory placement FAQs

Below are answers to common questions about inventory placement.