Amazon Ends Prep Centers for FBA and Labeling Service in 2026: What Sellers Need to Know

On July 28, 2025, Amazon announced that starting January 1, 2026, prep and item labeling services for all U.S. Fulfillment by Amazon (FBA) shipments will end. This applies to inventory sent directly to FBA or via Amazon programs like Amazon Warehousing & Distribution (AWD), Amazon Global Logistics (AGL), Amazon SEND, or the Supply Chain Portal. In practice, every product must now be fully packaged, labeled, and prepped before it arrives at an Amazon center. This represents a major shift: tasks that Amazon once handled (often for a fee) now fall back entirely on sellers or third-party providers. It effectively removes a long-standing convenience that helped attract new sellers to FBA.

Why This Change Matters

Amazon’s decision strips away one of FBA’s original value propositions. In its early days, FBA offered nearly full-service logistics for sellers: you could ship cases of products without individual labeling, and Amazon’s teams would label, poly-bag, bubble-wrap, or bundle them as needed. This hands-off approach was a key differentiator from other marketplaces like eBay, where sellers must do all prep themselves or hire a 3PL. As Amazon noted, it initially introduced prep services “to help protect products during the shipping process.” In other words, Amazon’s prep service was a safety net that lowered the barrier to entry for new and small sellers.

FBA’s Original Value Proposition Is Eroding

Over time, Amazon argues, seller capabilities have grown to meet these needs. Amazon itself admits it has seen “a significant improvement in seller packaging capabilities and a reduced need for our prep services.” While this may be true for many established sellers, it means that Amazon is effectively turning away a core part of its market: beginners and small businesses who relied on Amazon’s help. Without in-house prep, all sellers must now handle FBA compliance themselves or pay someone else to do it.

Amazon’s Justification: Efficiency and Scale

Officially, Amazon claims the change is about efficiency. The company says most Amazon sellers now pack and label their own products (or have manufacturers do it), which allows FBA centers to run “faster and more efficient” operations. Amazon even suggests that eliminating prep duties will “improve operational efficiency [and] ensure quicker delivery times for customers.” In short, Amazon is doubling down on speed and scale: by offloading prep tasks, they believe their warehouses can operate leaner. From Amazon’s perspective, “We trust you to get your products FBA-ready, or to hire someone who can.”

However, many sellers greet this rationale with skepticism. As one industry expert put it, this is “one of the most significant operational shifts Amazon has made in recent years,” and sellers who wait to adapt risk compliance issues. In practice, Amazon’s removal of prep services will force sellers to become prep experts themselves or depend heavily on third-party prep centers for Amazon FBA.

Is This Really About Efficiency?

Amazon’s efficiency claim doesn’t sit well with many sellers, given the current state of fulfillment center performance. Long delays, lost inventory, and receiving backlogs are already common complaints. Sellers frequently report that inbound shipments can take 30, 60, or even 90+ days to complete, especially when routed through AWD. Inventory sometimes sits “on hold” for weeks and even months, with inadequate Amazon support.

Removing a service that aided the receiving process (such as accurate labeling) seems unlikely to speed things up. If anything, it adds one more point of failure: any labeling mistake at the seller’s end now directly creates processing issues for Amazon. Critics argue this shift simply moves liability onto sellers without a clear benefit.

Fulfillment Center Performance Is Still Lagging

The promise of faster fulfillment is uncertain when bottlenecks remain. Even before this change, Amazon’s receiving centers were stretched. Sellers have seen high “pending” inventory levels and missing units on a regular basis. While we lack an official statistic, independent estimates suggest Amazon may lose 1–5% of units in shipping or receiving each year. Traditionally, Amazon reimbursed sellers for such losses.

With the new policy, however, Amazon can simply blame an improper label and refuse reimbursement. This could create a loophole allowing Amazon to avoid paying for lost goods. In a worst-case scenario, a seller might be told, “Sorry, your product wasn’t labeled correctly. We can’t relabel it anymore, and we won’t reimburse you,” even if the error was tiny.

Labeling and Prep: A Persistent Pain Point

Labeling errors have long plagued FBA. Even when Amazon provided prep, sellers often found products mislabeled or mispackaged and had little recourse. Now that Amazon’s official labeling option is gone, its hands-off approach is formalized policy. In effect, every seller and their chosen 3PL must be flawless. Missing a single FNSKU label or placing it wrong could trigger penalties or the disposal of inventory.

For new or small operations without dedicated warehousing, this is a major headache. As one seller grimly put it, “This will crush us. We don’t have the facilities to do prep work.” Indeed, with Amazon’s prep fallback removed, there is literally no room for error; shipments that arrive non-compliant will simply be rejected or written off.

Transitioning Away from Amazon Prep Services

Given the changes, FBA sellers must pivot quickly. Amazon has essentially left only two paths forward: handling all prep internally or hiring a third-party prep service.

Option 1: Do It Yourself (In-House Prep)

Sellers can bring prep back into their own operations. This means purchasing barcode label printers, poly-bagging supplies, bubble wrap, and other FBA-compliant packaging materials. You’ll need trained staff or virtual assistants who know exactly where to place FNSKU labels, how to cover existing barcodes, when to polybag vs. bundle, and so on.

Stock up on Amazon’s label templates and materials, and update your SOPs accordingly. Amazon provides guidance on how to prepare products for FBA, and this will now be your playbook. The upside is full control, but the downside is high effort, cost, and risk of mistakes.

Option 2: Use a Third-Party Prep Provider

Many sellers will find it simpler to outsource. Prep centers for Amazon FBA are 3PL warehouses that specialize in FBA requirements, inspecting goods, polybagging, bubble-wrapping, labeling, bundling kits, and then forwarding inventory to Amazon. For example, Rite Prep Fulfillment and other vetted providers offer end-to-end FBA prep services. Outsourcing means you avoid learning every little rule yourself.

A professional prep center will handle the actual Amazon prep tasks quickly and accurately, helping ensure compliance and protecting you from errors. The trade-off is a service fee, but for many sellers that cost is worth avoiding non-compliance fees or lost inventory. Amazon itself has created a dedicated “FBA Prep Providers” category in its Service Provider Network, highlighting vetted partners that meet strict prep criteria (accuracy, speed, insurance, etc.).

In short, while this option comes with a price, it can save time and headaches, and as industry experts note, the 3PL space is about to explode with demand. One observer wrote, “The real winner from this will be 3PLs… As millions of sellers go hunting for these services, these companies will print cash.”

Transition Period Exception

Amazon has offered a small grace period. Any FBA shipment created before January 1, 2026 will still receive Amazon’s prep and labeling service even if it arrives after that date. In other words, you can safely ship unlabeled inventory to Amazon until Dec 31, 2025; the fulfillment center will prep it. But be very cautious: this only applies if the shipment plan was made before the cutoff. And in practice, relying on Amazon’s help even now is risky. Seller support remains slow and inconsistent, so it’s unwise to push the limits. The safest approach is to start preparing everything yourself (or via a 3PL) as soon as possible.

Major Risk: No Reimbursement Without Proper Labeling

The New Reimbursement Policy

Perhaps the most alarming part of Amazon’s announcement is the strict new reimbursement rule. Starting January 1, 2026, any FBA shipment created after that date that arrives without correct prep/labeling will not be reimbursed if items are lost or damaged. In short: “No prep = no reimbursement.” If Amazon claims your incoming shipment wasn’t properly labeled and then loses inventory, they won’t cover it.

This is an unprecedented stance. Previously, if Amazon lost or damaged your goods (even if an in-center error), it typically paid you back. Under the new policy, a missing or incorrect label is enough excuse to deny reimbursement.

Why This Is a Big Problem

This policy change shifts enormous risk onto sellers. Amazon’s fulfillment network is vast, and inventory does go missing at a non-trivial rate (industry estimates are in the low single-digit percentages of units). Historically, Amazon reimbursed sellers for these losses. Now, even a tiny labeling oversight means you could absorb a 100% loss on any missing items.

In effect, it handcuffs sellers: you must be utterly perfect with labels and prep or accept the gamble that Amazon might find a compliance issue and refuse payment. Many sellers fear Amazon will use this as a “gotcha” rule to blame any loss on a prep mistake. Given how strict Amazon is about FBA labels, this is a major new liability. Sellers who once breathed easy knowing Amazon had their backs may now face a scenario like, “Sorry, we can’t refund your lost inventory—it wasn’t labeled correctly.”

How Sellers Should Respond

This change demands a proactive response. If you haven’t already, immediately eliminate dependency on Amazon’s prep service by building your own prep workflows or outsourcing them. Treat January 1, 2026, as non-negotiable: every inbound shipment you create on or after that date must be 100% FBA-compliant. Begin by auditing your current processes: ensure you have the right label printers, barcode scanners, polybaggers, and trained staff or VAs.

Update your SOPs to include Amazon’s latest packaging requirements. Double-check each SKU’s prep steps, and consider running a test shipment to verify your team follows Amazon’s label placement and packaging rules perfectly.

Also vet third-party prep services carefully. Don’t rush into the first low-cost 3PL you find. Look for FBA-specialized prep centers with proven accuracy, fast turnaround, and insurance. For example, some providers (including Rite Prep Fulfillment) are already Amazon-recommended for FBA prep. Ask potential partners about their error rates and reimbursement policies.

Will they cover your losses if they make a mistake? Do they have Amazon compliance specialists on staff? Check reviews or case studies. Remember: as one 3PL exec noted, providers who can “handle volume quickly and compliantly” will dominate in this new era.

Finally, double-check all labels and packaging before shipping. Use Amazon’s official FNSKU label templates and ensure barcodes are printed at high quality. Verify that you’ve covered any original UPCs as required. Follow Amazon’s polybagging, bubble-wrap, and bundling guidelines to the letter. Even a minor packaging defect can trigger a compliance issue.

In practice, make label verification a formal step in your process. Some sellers require two-person checks or barcode scanners to confirm each label matches the SKU. Under the new rules, this diligence is non-negotiable. One Amazon expert bluntly put it: “We trust you to get your products FBA-ready,” so take that trust seriously with rigorous quality control.

Impact on New Sellers

A Tougher Learning Curve

One of Amazon’s traditional strengths has been its accessibility to beginners. By handling prep, Amazon made it easy for anyone with a product to start FBA selling. Now that safety net is gone. New sellers will need to learn Amazon’s FBA compliance rules immediately, invest in label printers and packing supplies, or have the budget to hire prep services. The barrier to entry has effectively risen. According to Amazon’s announcement, “millions of sellers rely on Amazon prep” as a safety net.

Losing it means all sellers, even small ones, must ship units that are labeled, polybagged, kitted, or bubble-wrapped beforehand. In Amazon’s words, there is “no room for error” once this change hits. If a newbie fails to label properly, their shipment could be rejected or written off. This steep learning curve may deter some aspiring sellers or push them to seek other platforms for their first product launches.

Long-Term Implications for Amazon’s Ecosystem

Seasoned Amazon sellers will adapt; many already run their own warehouses or use 3PLs and won’t notice much difference. But for the ecosystem as a whole, the move may shift the balance. Amazon is clearly prioritizing efficiency and scale, essentially telling sellers, “If you can’t handle prep, consider another channel.” Over time, this could filter out the smallest operations and favor larger sellers who can absorb the new overhead.

The broader implication is a shift in risk: Amazon is moving toward a model where sellers (or their providers) bear more responsibility. As one analyst warned, if “your supply chain isn’t turnkey, you risk delays, chargebacks, or stranded inventory” under Amazon’s new regime. In other words, flexibility has been traded for efficiency. For FBA’s marketplace health, the key question will be whether the potential gains in Amazon’s throughput offset any reduced appeal for smaller entrants.

Final Thoughts

Amazon’s decision to end FBA prep services marks a significant turning point. While it may be framed as an efficiency play, the practical effects are clear: sellers now carry the full burden of compliance. Some red flags to remember:

• Risk of lost reimbursement: Under the new rules, any shipment created after Jan 1, 2026, that arrives without proper prep/labeling will not be eligible for reimbursement if goods are lost or damaged. This dramatically increases seller liability.
• No grace for mistakes: If an item is mislabeled or improperly packaged, Amazon can refuse the entire shipment. There’s no longer an Amazon “fix.” As one industry blog put it, sending non-compliant goods will “mean either Amazon will return them (costing time/money) or dispose of them (costing inventory).”
• Transition planning is critical: With fulfillment delays still a concern, waiting until the last minute to switch workflows is risky. Every seller should now build or secure reliable prep processes. This may mean investing in equipment and training or vetting prep centers for Amazon FBA that already know Amazon’s requirements. For example, our Top 10 Amazon FBA Prep Center Services guide covers leading 3PLs (including RitePrep) that specialize in FBA prep.
• Shift in Amazon’s strategy: This move reflects Amazon’s broader trend of shifting liability to sellers. By 2026, Amazon’s support structure will reward those with mature supply chains. Sellers who adapt, whether through internal SOPs or third-party partners, will continue thriving.

Explore and find trusted FBA prep partners like Rite Prep Fulfillment to meet compliance and protect your inventory.

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