Sending inventory to an Amazon fulfillment center for FBA (Fulfilled by Amazon) is not as easy as throwing it in boxes and sending it on its way. Amazon has many requirements that the inventory must meet to be accepted into their facility without incurring penalties. There are a few ways that businesses can get their inventory prepared for an Amazon fulfillment center such as prepping in-house or paying Amazon to do it. However, an increasing number of sellers on Amazon are outsourcing prep to a third-party.
What is FBA Prep?
FBA Prep is the process of preparing inventory to send to an Amazon fulfillment center for receipt. The main elements of this process are inventory inspection, packaging, and labeling. It is important to make sure that inventory is compliant with Amazon’s requirements otherwise they will charge you additional fees and in a worst-case scenario, refuse to accept the products. FBA Prep warehouses are a cost-effective way for e-commerce companies to outsource the preparation of their inventory.
Advantages of Outsourcing FBA Prep
Lower Storage Costs with Pre-Fulfillment Warehousing
The typical use of FBA prep facilities has been preparing inventory for an Amazon fulfillment center, but a growing number of e-commerce companies are using a prep facility for pre-fulfillment warehousing in addition to FBA prep services. Companies are moving to this strategy because of the significant savings when it comes to storage fees relative to Amazon storage costs. Sellers are storing inventory with a third-party and moving portions of their inventory to Amazon fulfillment centers as needed based on sales volumes and to avoid long-term storage fees (LTSF). Most sellers using this strategy keep inventory levels in Amazon fulfillment centers equal to 4-6 weeks of sales.
This strategy can also be used as a safeguard in case a company gets suspended by Amazon. Inventory of suspended accounts can become stuck in fulfillment centers and is costly to have returned. These costs can be minimized by storing inventory with a third-party and sending only the needed amount of stock to Amazon.
Avoiding Amazon's "Peak Season" Pricing
Amazon’s storage pricing is already more expensive than standard third-party warehousing, but their rates also increase by 220% during “peak season” (October-December). Amazon is all about moving product quickly and therefore their pricing model encourages companies to limit their use of storage space in fulfillment centers. Amazon sellers have the opportunity to avoid this profit-eating price increase by utilizing pre-fulfillment warehousing and FBA prep with a third-party warehouse.
3PLs make it easy to acquire additional storage for short-term or long-term needs. They are a business partner focused on meeting client needs and building relationships. A 3PL warehouse offers scalability by providing more storage and processing as a business grows and during their peak selling season.
Ensure Amazon FBA Requirements are Met
Outsourcing FBA prep to an experienced 3PL warehouse ensures that Amazon’s requirements will be met. 3PLs that have previous experience with FBA know the requirements involved and will make sure products will not get rejected or cause problems with their clients’ Amazon accounts.
Free Up Time for Other Operations
Preparing inventory can be time consuming and requires additional labor, equipment, and materials. Allowing industry professionals to handle FBA prep frees up time and effort for online businesses to focus on their core business.
Considering Outsourcing FBA Prep or Pre-Fulfillment Warehousing?
Beyond Warehousing’s leadership team has over 30 years of combined experienced working at the leading e-commerce company in the world, Amazon. E-Commerce is in our DNA. FBA customers take advantage of our lower storage rates for pre-fulfillment warehousing and utilize our industry expertise for FBA prep. We are located within 35 miles of four Amazon fulfillment centers. To learn more about how you can benefit from outsourcing pre-fulfillment warehousing and FBA prep, contact the Beyond Warehousing team.