Amazon is the world leader for e-commerce and for good reason. Their online marketplace has extensive reach, and the convenience of their fulfillment services is an attractive feature to many business owners. Outsourcing all fulfillment services to Amazon (aka: FBA), while convenient, comes at a price that can sometimes be not-so-convenient. With the high storage rates and continuous pressure for a high number of inventory turns, some businesses using FBA services may be looking for alternative options that are a better fit for them.
Pre-FBA Warehousing and Prep
Pre-FBA is storing inventory in a warehouse, whether the seller purchases one or partners with a third-party logistics provider (3PL), and moving portions of the inventory to Amazon fulfillment centers as needed. Businesses using Pre-FBA typically keep their Amazon inventory levels equivalent to 4-6 weeks’ worth of sales and have it prepped before sending it to an Amazon fulfillment center for FBA.
Outsourcing pre-FBA warehousing and prep to a 3PL can provide significant cost savings when it comes to storage and prep fees. Amazon’s pricing encourages businesses to keep little inventory in their fulfillment centers and move inventory quickly. This pricing does not work for every business that wants to sell through Amazon’s marketplace. Pre-FBA warehousing allows businesses to utilize the Amazon marketplace and their order fulfillment while reducing storage and prep fees. To learn more about Pre-FBA, visit our blog about outsourcing FBA prep and pre-fulfillment warehousing to a third-party.
Fulfilled by Merchant (FBM)
Amazon FBM is where the merchant (Amazon seller) is responsible for fulfilling their own orders placed through Amazon. This fulfillment method allows sellers to utilize the Amazon marketplace while the fulfillment is handled by either the seller directly or through their third-party logistics provider. Partnering with a 3PL to fulfill Amazon orders provides many benefits including:
FBM fees are lower than FBA. With FBM, Amazon sellers are typically billed a monthly subscription fee, a small per-order fee, and a per-order referral fee. Fulfilling orders using FBM means that the seller will acquire other costs associated with outsourcing fulfillment to a 3PL. However, storage and fulfillment costs through a 3PL are often lower compared to Amazon’s pricing, which leaves businesses with a higher profit margin on their sales.
Partnering with a 3PL for FBM provides businesses a great opportunity to expand their business with a coordinated omni-channel strategy. When it comes to 3PL partnerships, one of the most beneficial features is scalability as their business partners grow. Services can be expanded or added as businesses grow their distribution channels beyond Amazon’s online marketplace, such as their own online store or other retailers (Walmart, Target, etc.). Companies with a current omni-channel strategy can have their entire inventory managed efficiently under one logistics provider.
Some sellers prefer to have more control over their branding, packaging, and inventory management. 3PLs can offer more customization than Amazon when it comes to their client’s inventory. Amazon inventory must comply with FBA requirements and there is little that a seller can change about the management of inventory once it enters an Amazon fulfillment center.
Avoiding FBA Requirements and Penalties
Amazon has requirements that inventory must meet to be accepted into their fulfillment centers without incurring penalties. There are requirements for the products themselves in addition to the labeling, packaging, and shipping of the inventory. FBM has fewer requirements and a 3PL can guarantee that any and all requirements for orders will be met.
Eliminate the Hassle of Managing Your Own Fulfillment
Sellers who are looking for an alternative option for FBA can get overwhelmed looking at the complexity behind fulfillment processes. A 3PL partnership eliminates the hassle of trying to fulfill your own orders and leaves the complex processes to the logistics professionals. 3PLs already have the necessary equipment, labor, space, technology, and proven processes for fast and efficient fulfillment.
Develop Your Amazon Fulfillment Strategy with Beyond Warehousing
Beyond Warehousing can help set up a fulfillment strategy that works for you, whether it is Pre-FBA, FBM, through your company website, or omni-channel. Our leadership team has over 30 years of combined experience working at Amazon and over 90 years of industry experience. Our warehouse location in the Kansas City metro is less than one mile from the BNSF intermodal facility and within a heavy haul corridor. Kansas City is also the only metro area that can reach 100% of the continental U.S. population in 3 days. To learn more about how you can benefit from partnering with Beyond Warehousing, contact our team.