Does Fulfillment by Amazon boost the Reputation of Third-Party Sellers?

In 2006, Amazon launched the Fulfillment by Amazon (FBA) program, providing support to thirdparty sellers for a fee. While the program has the potential to enhance sellers' reputations, evidence regarding its effectiveness is limited. This study estimates the impact of FBA usage on seller reputation, measured by the average star rating a seller receives. Using 26 weeks of panel data from Canada, the United Kingdom, and the United States, three key findings emerge from fixed effects and staggered adoption estimation approaches. First, using FBA significantly boosts a seller's reputation, leading to higher average ratings in the short term than in the long term. This improvement is mainly due to FBA's competitive advantages, such as eligibility for Amazon Prime, standardized fulfillment quality, and excellent customer service. Second, although FBA impacts are positive in every country, we find crosscountry heterogeneity in effect sizes and significance levels, with the largest effects in Canada. Third, we show that large sellers have the best reputation, and all sellers benefit from the FBA program. However, medium-sized sellers benefit the most from the program. This trend can be attributed to how the benefits of the FBA program accrue optimally to sellers based on their operational scale. These results suggest that the FBA program is indeed effective in enhancing seller reputation, with implications for third-party sellers, Amazon, and regulators.