Selling on Amazon means you need to meet the multiple prerequisites defined by Amazon and prepare you inventory accordingly. Either opting for Fulfillment by Amazon (FBA) or collaborating with third-party logistics provider makes it easier to store and ship your inventory, as both FBA and 3PLs handle these tasks. In this article, we will discuss these two methods, the pros and cons of FBA and how you can benefit from outsourcing eCommerce fulfillment to a 3rd party logistics (3PL) provider.
What is FBA Prep?
FBA Prep is preparing your inventory through inspection, packaging and labeling to be sent to an Amazon fulfillment center for receipt. It ensures that your inventory is in compliance with Amazon’s requirements. While FBA prep warehouses offer cost-effective inventory prep, opting for it requires you to give up some control of your sales process.
What is Third-Party Logistics (3PL)?
Third-party logistics companies are service providers that allow you to outsource your order fulfillment procedures to them. A 3PL takes care of inventory storage and management, picking and packing, shipping orders, customer support and even returns management. Although 3PLs take most of the load off your hands, you must first find one that is truly compatible with your business ideology and needs and has sufficient resources and expertise to cater to your business.
What are the Pros of Amazon FBA?
Amazon FBA undeniably has its share of advantages that attract more sellers to join its community. With Amazon, sellers get to access a huge number of potential customers as well as benefit from customer support services and a fee structure that is totally transparent.
Direct Access to a Massive Online Shoppers’ Community
Amazon FBA sellers can enjoy direct access to millions of subscribers and features specifically designed to enhance sales revenue, which is almost unachievable for small businesses and startups.
Customer Support
Being an Amazon FBA seller, you don’t need to worry about dealing with customer queries and complaints and managing returns.
Multichannel Fulfillment and Transparency
Amazon offers multichannel fulfillment meaning you can sell your inventory through other sales channels too. Moreover, Amazon’s fee structure is totally transparent, and you can break down and verify all costs.
What are the Cons of Amazon FBA?
It’s pros aside, what are the reasons that would make you consider collaborating with a 3PL for fulfillment services? It’s the pricier Amazon storage, lesser control over managing quality, and far less direct access to customers. Moreover, Amazon markets and sells its own products too, which can affect your eCommerce business through added competition.
Higher Storage Fees
For a successful and profitable business, you need to cut down on the costs as much as possible. Amazon’s charges higher storage fees compared with 3PLs and during holiday season, it’s charges increase more than double.
Diminished Quality Control
Amazon focuses on reduced shipping times and costs; therefore, for sellers not dealing with private label products, Amazon picks the ordered product from any warehouse that is closest to the customer. This diminishes the seller’s control over quality.
No Custom Packaging
This era in business is all about enhancing the customer experience, which in addition to offering competitive pricing and fast deliveries, is the unboxing experience. However, Amazon believes in no frills. It ships FBA products in Amazon branded boxes and without any custom packaging. This way the customer associates the purchase solely with Amazon and not with the seller as there is close to zero brand experience.
Limited Direct Communication
There is no direct communication with Amazon, as it only has a single hotline, therefore it is very hard to get in touch with live agents for important decisions regarding your brand.
Why Should You Outsource Fulfillment as an Amazon FBA Seller?
Inventory preparation for order fulfillment is a time-consuming activity, that alone requires undivided resources and seller attention, in addition to extra equipment, labor and materials. Outsourcing fulfillment to professional experts in the 3PL fulfillment process enables sellers to focus their time and resources on the core business activities. Other key benefits of forming 3PL partnerships for FBA prep are as follows.
Lower Storage Costs
Outsourcing fulfillment to a 3PL enables businesses to store their inventory in the 3PL warehouse that costs significantly lesser than Amazon storage costs. Amazon sellers can move this inventory to Amazon fulfillment centers, in portions based on customer demand and sales, and avoid having to pay long-term storage fees. This also serves as a precautionary measure in case of being suspended by Amazon, as you don’t need to spend a huge amount on recovering your suspended stock from the Amazon fulfillment center.
Compliance with Amazon FBA Requirements
Collaborating with a trusted and experienced 3PL shipping warehouse takes a lot of burden off your back. Experienced 3PLs ensure that their pick and pack methods are top notch and the end products comply with the Amazon FBA requirements, so the clients’ Amazon account suffers no issues in eCommerce fulfillment.
Scalable Storage Capacity
With 3PLs, it is a lot easier to adjust storage based on the short-term and long-term needs of your business. 3PLs focus on building a relationship with their client by effectively meeting their needs. Therefore, even startups can outsource fulfillment to 3PL warehouse and get additional storage during peak shopping seasons, for lesser rates than they would elsewhere.
Evade Peak Season Storage Pricing at Amazon
While Amazon already offers more expensive storage, its storage pricing during holiday peak season is more than double of its regular pricing. The only way to mitigate having to pay such high storage rents, is to outsource inventory management and storage to a reliable 3PL.
Final Thoughts
As an Amazon Seller, you need to constantly keep tabs on the shifting market trends and customer priorities and interest, by outsourcing fulfillment you can redirect your focus from packing and shipping and inventory management to your business growth and cashing new opportunities. A trusted 3PL will enable you to deliver better quality and branding and provide enhanced customer experience for relatively lower costs. If you want to learn more about the order fulfillment services offered by ShipBots, you can contact for a free consultation here.
