Amazon Ends FBA Prep Services; 3PL Providers Poised to Benefit

Amazon Ends FBA Prep Services; 3PL Providers Poised to Benefit

Amazon has announced it will stop offering its Fulfillment by Amazon (FBA) prep and labeling services for sellers, effective January 1, 2026. This means Amazon’s warehouses will no longer handle tasks like applying barcodes or protective packaging on behalf of sellers. While some merchants are dismayed at the change – one seller without a warehouse said the new policy “will crush” their business – the development is widely seen as a huge opportunity for third-party logistics (3PL) providers. 3PL companies can step in to fill the void, offering these essential prep services to sellers and potentially doing so at lower costs. This policy shift could open new revenue streams for 3PLs and even help merchants save money, all while Amazon refocuses on its core fulfillment operations.

What Are Amazon’s FBA Prep Services and What’s Changing?

FBA prep services refer to the optional tasks Amazon performed (for a fee) to prepare sellers’ products before storing and shipping them through FBA. These tasks ensured items met Amazon’s strict packaging and labeling requirements, such as adding scannable barcodes, polybagging products, bubble-wrapping fragile items, etc. Amazon began phasing out certain prep services earlier this year and now plans to end all FBA prep and item-labeling services by January 1, 2026.

This applies to all inventory bound for U.S. FBA warehouses, whether sent directly or via Amazon’s own logistics programs. Sellers must ensure every product is fully prepped and labeled before it arrives at Amazon’s fulfillment centers. If not, Amazon warns those items may not be eligible for reimbursement.

Amazon’s rationale is operational efficiency. In communications to sellers, Amazon noted that the majority already handle prep themselves or use third-party providers. Eliminating these services lets Amazon fulfillment centers concentrate on picking, packing, and shipping. For sellers who relied on Amazon’s prep services for convenience, this marks a major policy shift.

Impact on Sellers: Adapting to a DIY Prep Era

Sellers must now handle all aspects of FBA prep on their own or outsource to a third-party. That includes applying FNSKU labels, polybagging, bubble-wrapping, sealing caps, kitting, and more. Sellers who relied on Amazon’s prep – particularly those without warehouse space – will need to either invest in prep capabilities or partner with a qualified service provider.

Amazon provides a directory of vetted prep providers and encourages sellers to explore their Service Provider Network. One recent example is MyFBAPrep, which was officially selected as a Recommended Prep Service Provider.

Compliance is critical. Amazon has detailed prep rules for labeling and packaging, and sellers face delays or fees if shipments don’t meet those standards. While Amazon’s previous services came at a cost (e.g., $0.55 per unit for labeling), many third-party providers offer lower pricing. Some advertise labeling for $0.20–$0.30 per unit.

Amazon’s Ships in Product Packaging (SIPP) program may help reduce prep needs for eligible sellers by allowing shipments to go directly in retail packaging. Nonetheless, most sellers will need some level of external prep support.

Opportunity for 3PL Providers: Filling the Prep Gap

This change presents a significant opportunity for 3PLs. Amazon is offloading all prep to the seller or a third party and is actively referring merchants to vetted 3PLs. Services now in demand include:

• Item labeling
• Polybagging
• Bubble wrapping
• Cap sealing
• Boxing/over-boxing
• Opaque bagging
• Set creation/kitting

Prep centers that meet Amazon’s standards are poised to receive a major influx of volume. According to MyFBAPrep, Amazon projects more than 1 billion prep actions annually, including 850 million item labels and 160 million polybags.

Even 3PLs not on Amazon’s shortlist can tap into this market. Many sellers will seek regional partners or niche expertise (e.g., apparel, cosmetics). Fulfillment firms already offering FBA prep can expand their offerings; others can invest in equipment and staff training to meet compliance requirements.

A Win-Win for 3PLs and Sellers

This transition may ultimately benefit both logistics providers and merchants. 3PLs gain new business opportunities; sellers gain flexibility and potentially lower costs. A seller that previously paid Amazon $0.70 to label and polybag a product may now find a 3PL willing to perform the same task for half that amount.

Sellers also gain better support and quality control. A 3PL can communicate issues early, reduce labeling errors, and offer additional services like inspections, bundling, or rework. This gives merchants more control over how their products are handled before arriving at Amazon.

Preparing for 2026

Sellers should begin evaluating their FBA prep needs immediately. Audit which products currently rely on Amazon’s prep services and determine whether to handle these tasks in-house or outsource to a reliable partner. Now is the time to conduct trial runs, request quotes, and seek referrals from fellow sellers to ensure a smooth transition before the January 2026 deadline.

3PLs, meanwhile, should assess their readiness to offer compliant FBA prep services at scale. This includes investing in tools like label printers, polybagging stations, and training on Amazon’s detailed labeling and packaging requirements. Those who act quickly and effectively communicate their capabilities will be well positioned to win new business and become long-term logistics partners for Amazon sellers.

Whether you're a 3PL looking to connect with merchants or a seller searching for the right fulfillment partner, Racklify can help. As the world’s largest marketplace for 3PLs, Racklify makes it easy for sellers to discover and compare fulfillment providers based on location, capabilities, and service offerings—including FBA prep. For 3PLs, it’s a powerful way to get discovered by thousands of merchants who now need exactly what you offer. With Amazon stepping back, Racklify is stepping up to make these critical connections happen.