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Simplify your sales with Amazon Multi-Channel Fulfillment
Even as Amazon grows its share of online sales, the company continues to pioneer ways to disrupt the e-commerce industry beyond its retail marketplace. First, its huge network of distribution warehouses made fast shipping a mainstay of customer expectations. Now, a relatively new service invites brands to turn to an Amazon fulfillment center for orders from multiple sales channels.
Not surprisingly, Amazon’s Multi-Channel Fulfillment option is growing in popularity, particularly among brands that already rely on FBA inventory for their Amazon sales. In many cases, brands are finding this approach to order fulfillment can simplify the sales process and increase customer satisfaction.
What is Amazon Multi-channel Fulfillment?
Many Amazon businesses already take advantage of the platform’s Fulfillment by Amazon (FBA) program to support their efforts to get products ordered on Amazon to the buyer. However, fewer companies may realize that Amazon also offers similar fulfillment services for products that are ordered from other websites. With this option, Amazon Multi-Channel Fulfillment (MCF) can simplify the logistics of order fulfillment by providing the same features and services of Amazon FBA to fulfill orders that originate from most online merchants, including a brand’s direct-to-consumer (DTC) website.
Much like any other third-party logistics (3PL) company, Amazon allows sellers to store their inventory in their vast fulfillment network. Once products are in one or more of the company’s warehouses, order fulfillment can be automated by integrating Amazon’s services with other e-commerce platforms. Amazon will then handle the picking, packing and shipping of products even when they are ordered via a sales channel other than Amazon. These orders remain fully trackable, and Amazon Multi-Channel Fulfillment can also manage customer returns according to the seller’s preferences.
While brands can use Amazon’s MCF and FBA programs simultaneously, it’s worth noting that the company will always prioritize Amazon orders over those from other sources. However, the Multi-Channel Fulfillment program is not restricted to sellers who use Amazon as one of their sales channels. Even brands that use only their own DTC site or alternative e-commerce solutions can still choose to have Amazon handle their order fulfillment.
Establish your eligibility
Unlike some of the more exclusive features and tools that Amazon offers sellers, Multi-Channel Fulfillment is a relatively accessible option for any e-commerce company. As mentioned, it is even open to sellers who don’t want to list their products on Amazon at all, though brands will need to create an Amazon Seller account to use Amazon MCF to get products to customers.
For those new to Amazon’s fulfillment network, the first step after registering for the service is to get inventory into Amazon’s warehouses so that it is available to ship. Amazon sellers who already utilize Fulfillment by Amazon can use MCF almost immediately simply by integrating Amazon’s order fulfillment into their other e-commerce platforms.
Beyond registering for the program and stocking Amazon’s warehouses, the only other eligibility requirements are geographical. In addition to the United States, Multi-Channel Fulfillment is available in Australia, Canada, France, Germany, Italy, Japan, Mexico, Spain and the United Kingdom, but not in other countries.
Save money on shipping and inventory management
For most companies, the primary appeal of Amazon MCF is in the simplification and cost savings it can provide. There are two primary components to the expenses that come with Amazon Multi-Channel Fulfillment: storage fees and fulfillment fees. Brands have to pay to store inventory in an Amazon warehouse, as well as pay for the picking, packing and shipping of each order that’s fulfilled. However, unlike FBA orders, transactions originating outside of the Amazon marketplace don’t result in an additional referral fee.
MCF Storage Fees
The storage fee portion of the Amazon MCF service is identical to the inventory costs of Fulfillment by Amazon and is ultimately determined by the number of cubic feet the inventory takes up inside Amazon’s facility. Determining the exact cost requires accounting for a product’s relative size, the time of year, packing requirements, how many products are stored, and product classification. Each plays a role in the final price, and Amazon fee changes are not unusual. Besides the storage fees, Amazon can also penalize sellers for products that remain in their fulfillment centers for too long, with escalating fees for inventory that remains static for more than 271 days.
For those familiar with Amazon FBA, the fees for MCF is where the differences become more pronounced. Obviously, Amazon charges a fulfillment fee for each order that it fulfills. With Multi-channel fulfillment, that fee is based on the weight of the item, the shipping speed selected, and the number of products in the order.
The smallest, lightest items sent via standard 3- to 5-day shipping incur a fee of $4.75. Expedited 2-day shipping for the same product would cost $8.10, while the 1-day priority shipping rates more than double to $16.64.
Customers who order more than one product at a time deliver some relief from these fulfillment fees. Multi-item order discounts can reach a peak of 60 percent off the usual cost when five or more items are shipped in a single order.
Active Amazon FBA participants that are also selling via other channels can reap significant rewards from using the company’s Multi-Channel Fulfillment. The additional inventory movement from other e-commerce avenues can reduce the risk of an Aged Inventory Surcharge and positively impact the brand’s Inventory Performance Index (IPI) score.
Otherwise, the savings from using Amazon MCF will depend on how the storage and fulfillment costs compare with other 3PL alternatives or the expense of in-house inventory management and order fulfillment. In many cases, companies with a high quantity of sales and substantial margins will find that Amazon MCF offers a lot of value for their business. Conversely, businesses that face the probability of additional fees for inventory that remains in Amazon’s warehouses for too long or that have minimal margins may be better served by other options.
The logistical advantages of Multi-Channel Fulfillment
In addition to the potential cost savings a company can realize with a Multi-Channel Fulfillment strategy, there are several other advantages that Amazon MCF, in particular, provides. When Amazon first launched its Multi-Channel Fulfillment option, limitations such as branded packaging and an inability to process returns were significant hurdles for some companies. However, as the service has evolved, those deficiencies have been addressed, making it a much more viable option for more retailers.
As mentioned, Amazon MCF offers users more than just the two-day Amazon Prime shipping that has become ubiquitous. Instead, participating brands can choose from Standard (three to five business days), Expedited (two business days) and Priority (one business day) delivery speeds. Assuming the inventory is in stock, an order submitted to Amazon via another sales channel will ship within two business days if using Standard shipping or by the next business day for expedited and priority deliveries.
Amazon’s multi-channel service currently features a Blank Box packaging program for all of its participants. As a result, orders shipped on behalf of MCF sellers are automatically packaged in unbranded boxes rather than Amazon’s FBA packaging. However, non-sortable inventory, apparel, footwear, and any items larger than 56 inches or 49.9 pounds are not eligible and cannot be shipped with this program. It’s also possible for an order to be shipped in branded Amazon packaging to avoid shipping and delivery delays, but multi-channel participants can require unbranded boxes at all times if they are willing to accept the risk of a delay.
While Amazon MCF would not handle a returned order when the program initially launched, that is no longer the case. Now, brands using Multi-Channel Fulfillment from Amazon may choose to either have orders returned to an FBA warehouse or directly to the seller. An order returned to Amazon will be returned to the seller’s MCF inventory if it is still in good condition. Unsellable items will need to be removed from Amazon’s inventory at an additional cost. Unlike FBA sales, the seller or customer will be responsible for the return shipping cost, and the seller will need to generate a Return Merchandise Authorization (RMA) via Seller Central to begin the order return process.
Similarly, a company that opts for Amazon’s Multi-Channel Fulfillment service remains responsible for all of the customer service interactions related to those sales. For example, the seller must handle customer communication regarding an MCF order, including refunds and returns, even though Amazon provided the packing and shipping services. While this may be an additional responsibility compared to FBA transactions completed within Amazon, it is typical of most 3PL relationships. It can also provide more control over the customer experience and valuable insight into customer satisfaction.
In most cases, the carrier used to ship an order fulfilled via Amazon fulfillment will vary depending on the destination and shipping speed requested. In some cases, items will be transported using Amazon Logistics. Unfortunately for some sellers, certain e-commerce channels, such as Walmart and eBay, prohibit the use of Amazon Logistics to deliver to customers of their sites. In the past, this made it impossible to integrate these retailers into an Amazon MCF plan. But recently, Amazon gave its Multi-Channel Fulfillment users the ability to block the use of Amazon Logistics for all or some orders shipping through the service. Still, sellers with a significant sales volume from channels that restrict Amazon Logistics may need to consider another method since Amazon adds a costly five percent surcharge to any order that requires the blocking of their proprietary shipping.
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