Fulfillment Options for Amazon Sellers
Fulfillment is one of the biggest operational expenses for Amazon sellers. This involves packing your inventory, shipping it, and managing returns. Fulfillment is an essential service that no e-commerce seller should be without. It's worth looking at all your options to make sure you get the service you want at a cost you can afford. There are three options when it comes to fulfillment. There are three options when it comes to fulfillment: Fulfillment by Amazon, Seller Fulfilled Prime or Merchant Fulfilled Network. We'll discuss the pros and cons of each option so that you can choose which one is right for you.
Fulfillment By Amazon (FBA) Fulfillment by Amazon (FBA) is a great option if you don't like the idea of packing and shipping your own items. FBA can handle everything related to fulfillment, including warehousing inventory and managing returns. FBA is one of the best logistics services available, with more than 110 fulfillment centers in the U.S.A and over 185 worldwide. This service has serious benefits.
FBA sellers will have access to Amazon’s extensive fulfillment network and cutting-edge operations. FBA allows you to concentrate on other aspects of the business. You won't have to manage your warehouse or process deliveries. FBA sellers can offer Prime members one- or two-day shipping at no extra cost. This is a big advantage as Prime members who have FBA enabled sellers have the best chance to win the Buy Box. It will serve you well to know that Prime members, on average, table of FBA charges_. Keep in mind that fulfillment by amazon fees are subject to change frequently so be prepared for an increase in your costs in the future. FBA has a few drawbacks. Amazon's fulfillment system must be as efficient and effective as possible in order to process large orders. This means that there is one standard. Each product is packaged, wrapped and delivered in the same manner. This means that your products will arrive in Amazon-branded boxes unless you pay more for a generic one. This system is fine if you are selling low-cost or everyday commodities. This is only an issue if your goal is to create your brand. One of the best ways for you to stand out from your competition is to use branded packaging, personalized notes or other unique aspects in your fulfillment process. Before we get on to the next thing, there's one last thing that we want you to know about FBA. Amazon fulfillment centers may require you to ship a significant portion, if not all, of your inventory. You lose physical control of your inventory and this can lead to problems later. Third-party logistics provider DCL Corp explains, "Imagine a scenario in which a seller sends half of their inventory to Amazon for fulfillment but keeps the rest for their own eCommerce store." They are happy until they receive a call from a major retailer (Target or Walmart) about a large order. This is a great win but they then have to draw from their existing inventory, leaving them with very little stock to fulfill orders through their eCommerce store. It is worth considering.
Seller Fulfilled Prime (SFP). There's another option that might work better for you if you don't like FBA's drawbacks but still want Prime members. This is Seller Fulfilled Prime (SFP). It can be described as a hybrid solution that combines the best of both worlds. SFP allows you to personalize your product packaging while maintaining physical control of your inventory. A Prime badge will allow you to attract more customers. Sounds perfect, right? But not so fast. SFP has just as many problems as FBA.
First, you have to meet and keep certain operational requirements in order for Prime badges to be awarded. This is a major challenge for many sellers. All shipping costs including expedited shipping rates for Prime members will be covered by you. Last but not least, you have to take care of shipping, storage, picking, packing and distribution because you are fulfilling your orders yourself. However, there is a way around. This task can be outsourced to third-party logistics (3PL), which specializes in Amazon fulfillment. Fulfillment and ShipBob are some of the reputable companies that you might consider.
Merchant Fulfilled Network (MFN). If you aren't sold on FBA and SFP, you still have another card to play. You can also go the Merchant Fulfilled Network route (MFN). MFN, like SFP and FBA, has its unique set of benefits and disadvantages. Let's begin on a positive note and discuss the benefits first. MFN is basically the same as SFP, except that there is no Prime badge. Although this may seem like a disadvantage, it is actually a positive. It means you don't need to work as hard to attain and keep Prime seller status. This means that you won't be charged an extra fee for expedited shipping. This can help to keep your costs down. You will also have the option to personalize your packaging as you wish. This is a great perk for anyone who wants to grow their brand. Let's now look at the negatives. The obvious one is that you will likely lose out on significant sales if your Prime badge isn't present. You will also need to store, pick, pack, and ship items as with SFP. You will also be responsible for any fulfillment costs. Many sellers find that a Prime badge is an essential part of their selling process. MFN can be a great option for small sellers or those just starting out. You can always modify your fulfillment method later. Before we wrap up, let's not forget that you can still use a third-party provider for 3PL services if you choose to go MFN. If the idea of cluttering your home with boxes and inventory is not appealing to you, then we recommend looking into 3PLs.
A Glance Here's a summary of the pros and cons for each fulfillment option. Fulfillment By Amazon (FBA)
Pros ● ● ●
Prime badge Prime shipping is free of charge Storage and fulfillment are made easy with an outsourced service
Cons ● ● ●
Fees are subject to frequent change There are no customization options Once your inventory has been shipped to Amazon, it is no longer your physical control.
Prime (SFP Fulfilled) Pros ● ● ●
Prime badge Possibility to personalize product packaging Physical control over your inventory remains with you
Cons ● ● ●
It is not easy to obtain and maintain SFP requirements Storage and fulfillment are your responsibility Delivery costs, including Prime Shipping, are your responsibility
Merchant Fulfilled Network Pros ● ●
You have complete control over your inventory Possibility to personalize product packaging
Cons ● ● ●
No Prime badge Storage and fulfillment are your responsibility Delivery costs are your responsibility
There is no one right answer to which option is the best. It all depends on the item or items you are selling, how many you sell, and your profit margin.