How Amazon's FBA changed the rules of e-commerce logistics
In 2006, Amazon introduced a service that promised to make life easier for online sellers: Fulfillment by Amazon (FBA). It wasn’t flashy at first, just a backend logistics solution that stored, packed, and shipped products on behalf of third-party sellers. But behind the scenes, it was quietly reshaping the entire e-commerce ecosystem.
At the time, fast delivery wasn’t yet an industry standard. Consumers were still adjusting to the idea of ordering products online and waiting days or even weeks for them to arrive. But with FBA, Amazon raised the bar. Suddenly, sellers could offer two-day (and later, same-day) shipping, tightly integrated with Amazon’s Prime experience. Convenience wasn’t just a competitive advantage, it became the expectation.
From value-add to market prerequisite
Fast forward nearly two decades, and FBA is no longer a value-add; it’s a necessity. The service processes billions of units each year, reaching customers in over 100 countries. In 2015 alone, Amazon celebrated its first billion shipments through the program, a milestone that now feels like a distant marker in a much larger logistics revolution. What started as a helpful service has matured into a $100+ billion logistics empire that doesn’t just meet consumer expectations, it dictates them.
The cost of convenience
But this convenience has come at a cost, and that cost is increasingly borne by the sellers. While FBA has helped countless businesses scale by tapping into Amazon’s logistical firepower, the financial toll is growing heavier. Fees have steadily climbed over the years, rising from around 24% of a product's sale price to 50% or more for many sellers today.
Sellers now face a stark tradeoff: participate and pay, or risk invisibility. For many sellers, opting out of FBA means surrendering the chance to compete meaningfully on the platform. What was once an optional convenience has become a strategic necessity, blurring the line between partnership and dependency.
The latest chapter in Amazon’s logistics playbook involves a shift toward regional fulfillment. Rather than routing products through a sprawling national network, Amazon is increasingly relying on smaller, more localized hubs. The result? Shorter routes, faster delivery times, and potentially lower costs at least for Amazon.
Strategic Lessons for Business Leaders
This evolution holds critical lessons for business leaders. First, it demonstrates how operational innovation, particularly in logistics, can redefine market expectations. Amazon didn’t just improve shipping; it rewired what consumers think is normal. And when consumer expectations shift, entire industries must respond or risk obsolescence.
Second, FBA’s trajectory reveals how power can quietly consolidate through infrastructure. Amazon didn’t force sellers to join FBA overnight. Instead, it built a system where the benefits were so substantial, and the penalties for abstaining so severe, that the choice became self-evident. For CEOs, this underscores the importance of vigilance in platform dependency. Convenience may accelerate growth in the short term, but long-term control over logistics, data, and customer experience remains crucial to sustainable strategy.
Finally, there’s a broader takeaway about adaptability. Companies that recognized Amazon’s rising influence early, those that invested in their own logistics, diversified sales channels, or built niche communities, have been better positioned to weather the shifts. The FBA story is not just about Amazon’s dominance; it’s about how ecosystems evolve and how those with foresight can ride the wave rather than be crushed by it.
