News & Insights
4 Alternatives to Fulfillment by Amazon
Fulfillment by Amazon (FBA) is a dominant e-commerce program that allows a brand to ship its products to an Amazon warehouse. When a customer buys a product on Amazon, the product is shipped from an Amazon warehouse to the end customer. The products are considered Prime eligible, and sellers can offer their customers one- or two-day shipping. While there is an FBA fee to account for, shipping costs are typically much less than seller fulfillment via other providers, and Amazon takes responsibility for the customer service and return processing.
However, life as an Amazon FBA seller comes with its own challenges. First, the brand must ship products into an FBA warehouse, thus creating a separate “warehouse” just for Amazon products. Also, the products must comply with all of the company’s requirements, including labels, temperature, and expiration dates. Then, once the product is at Amazon, it’s challenging to change, inspect or fix problems. Finally, Amazon controls the amount of inventory allocated to each product, frequently resulting in stock-outs during busy seasons.
While FBA is often the key to winning on Amazon, joining is not mandatory for sellers. Instead, they may consider several other fulfillment options. Keep reading to learn more about four of the most popular alternatives.
1. Fulfillment by Merchant
Fulfillment by Merchant (FBM) is when a brand uses its own warehouse to ship a product to the end customer. For example, a customer would place an order for a product on Amazon. That order is transmitted to the brand’s warehouse, which then picks, packs, and ships it to the end customer. On the surface, this seems like a suitable fulfillment method since inventory can be stored in one location and used to fulfill orders on Amazon, on a brand’s website, and on other marketplaces like Walmart.com. In addition, the merchant avoids having to comply with any Amazon-specific packaging, labeling or shipping requirements and may enjoy more flexibility when bundling products for sale to customers.
Using FBM can be a good option for sellers who have their own warehouse or storage space or who can store their products at a third-party fulfillment center. It can also be a good option for sellers who want to have more control over the fulfillment process and be able to customize it to their own needs. For example, a seller may choose to use FBM if they want to include personalized thank-you notes or promotional materials with their orders, or if they want to offer a variety of shipping options to their customers.
However, using FBM also requires a seller to be organized and efficient in managing the fulfillment process. They will need to ensure that they have sufficient inventory to meet customer demand and that they can package and ship orders promptly. Sellers using FBM will also need to handle customer service inquiries related to their orders, including issues with shipping, returns, and exchanges. Companies relying on this model will also be unlikely to gain Prime eligibility for their products and will have to manage the return process in-house. In most cases, shipping costs will also be higher than the FBA alternative, and shipping times will be longer by several days.
2. A Third-Party Fulfillment Partner
Using a fulfillment company to sell on Amazon is a popular option for many sellers, as it allows them to outsource their products’ storage, packaging, and shipping to a third-party fulfillment center. This can be viable for sellers with inadequate warehouse or storage space or who prefer to focus on other aspects of their business while leaving fulfillment to the experts but don’t want to participate in Amazon’s FBA program.
There are many fulfillment companies to choose from, and it is essential to do your research and compare their services, fees, and reputation before deciding which one to use. Once a fulfillment partner is identified, and a relationship is established, the brand’s products are delivered to the fulfillment center along with any necessary information regarding handling instructions and delivery methods.
To sell on Amazon, corresponding product listings will still need to be created for the products that a company plans to sell. When setting up those listings, the brand will designate them as “Fulfilled by Partner” and specify the fulfillment center handling the orders. Once orders are received, the details will need to be relayed to the fulfillment provider to have the product shipped to the customer.
When using a fulfillment partner, it is still critical that the inventory is closely monitored and restocked as needed. Regardless of the fulfillment model, the ability to fulfill orders in a timely manner is the priority, and an order fulfillment service will be able to assist in this process.
3. Seller Fulfilled Prime
Seller Fulfilled Prime (SFP) can appear to be the best of both worlds. It allows a merchant to ship products out of their selected warehouse while still qualifying for Amazon Prime, thereby maintaining the ability to sell inventory on direct-to-consumer sites and other marketplaces as well. In addition, sellers avoid the Amazon packaging requirements and can also kit products for convenience. To be eligible for SFP, sellers must meet certain requirements related to shipping speed, order accuracy, and customer service.
One of the main benefits of SFP is that it allows sellers to offer Prime shipping to their customers, which can be a significant advantage in a competitive marketplace. Prime members are known for their loyalty to the program, and offering Prime shipping can help a seller stand out and potentially attract more customers.
The downsides include expensive shipping costs to meet the Amazon Prime delivery window and the difficulty of meeting Amazon’s high warehouse and carrier standards. In some cases, businesses utilizing this model will lose their SFP capabilities due to a temporary suspension when these standards are not met consistently. The SFP option is also out of reach for many sellers since participation is limited to sellers invited to participate by Amazon.
4. FBA with help from a consultant
While selling FBA products can be less costly and more streamlined than managing all the logistics independently, it’s not the only step brands can take to optimize their Amazon sales. Integrating Amazon FBA consulting into their operations can ensure a company has the support and expertise necessary to make the most of the FBA option.
The most valuable Amazon agencies can provide FBA-optimized warehousing space that is often advantageously located near Amazon’s shipping hubs. In addition to meeting the warehousing challenges an Amazon business faces, a reputable Amazon fulfillment consultant can provide cost-saving logistics solutions. These agencies have experience with Amazon’s FBA guidelines to ensure that products remain in stock for customer orders and that businesses can avoid the expensive aged-inventory fees that Amazon can charge for stagnant inventory. In addition, their technology and experience can keep the correct number of your items in stock at the right time by offering supply strategy, demand planning, tracking, storage monitoring and returns management.
In some cases, retailers find success in traditional sales or via a direct-to-consumer website before attempting to add Amazon to their sales mix. When a brand finds its performance on the leading online marketplace to be lackluster compared with its other channels, it can signal a problem with the strategy or execution on the platform rather than a product weakness.
These circumstances may be a good reason to ask for help from an experienced Amazon FBA partner. Although Amazon FBA sellers can expect some support from the global retailer when it comes to getting started on the site, it won’t match the service that an agency can provide. In some cases, brands can even see their ability to get help from Amazon decline as they become more established sellers, and Amazon’s resources shift toward new businesses that will impact their own growth more. With an Amazon FBA expert, you know exactly who to contact about your account and can be confident that issues will be resolved with urgency.
Clearly, an FBA partner can strengthen a brand’s Amazon presence in several ways, but one of its most essential capabilities is an informed and well-defined strategy. The relationship between an Amazon agency and a seller can add an invaluable perspective when building a plan to reach their goals in the marketplace. An agency with extensive experience and a track record of success will know which tools to turn to first and how to stack efforts effectively to create synergy for its client. Even long-time business owners can struggle with the intricacies of selling on Amazon and benefit from a strategic plan aimed at growth on the platform.
Find the fastest, most efficient way to get your Amazon orders to their destination with help from an experienced partner. Amify can lead your FBA prep and inventory management initiatives, and fill the gap in your team’s Amazon expertise. Your path to success on the platform can start with a conversation.