Fulfillment by Amazon, or FBA, allows online marketers and companies to sell their products through a vast marketplace. Companies allow Amazon to take over their products, letting them handle all of the order fulfillment tasks.
Amazon is the largest domestic fulfillment company managing one of the world’s largest lists of retail products second to Alibaba. While they may be the biggest and busiest e-commerce company in the U.S., China’s Alibaba delivers way more packages.
According to an infographic compiled by international courier ParcelHero, Amazon ships around three million packages per day, while Alibaba ships 12 million. Another cool statistic is: on Cyber Monday last year Amazon processed 37 million orders, which can be compared to ‘Singles Day’, an annual shopping holiday in China, during which Alibaba processed 278 million orders.
I think you can imagine the benefits of having the world’s largest online retailer list, ship, and manage your products. If you’re an e-commerce marketer or re-seller, it seems like a no brainer.
But buyer be aware (as many retailers join the ranks) that almost as many are trying to bail out of FBA.
Understanding how FBA works:
You sell your product online and outsource all the labor, order processing and shipping tasks involved in the overall fulfillment work to Amazon.
First, the retailer or marketer ships product to a designated Amazon facility. What’s required is that the retailer prepare the products so they are ready to sell on the Amazon’s website. Here is what they do for you, the retailer:
* Amazon unpacks the product and stores it in their fulfillment centers
* Your product becomes searchable and purchasable on Amazon.com
* A customer purchases the product
* Amazon picks and packs the product
* Amazon ships the product to the buyer
* Amazon provides customer service for the buyer after shipment
BTW… just recently Amazon changed their fee structure for FBA. There are now two sets of expenditures: fulfillment fees and monthly storage costs, which are ultimately contingent on the size of the item(s) and the time of year. Be sure to investigate all the costs associated with picking, packing and shipping your orders, not to mention additional fees associated with the size of your product and seasonal spikes. You can find more details on Amazon’s FBA.com pricing page.
If you find, like many others, that Amazon FBA is not right for you, or you need to find something that could be a little more cost effective or give you more control over your destiny, there are certainly alternatives.
The closest alternative to FBA would be to use a 3PF – third-party fulfillment center. With a different fulfillment service, sellers retain control over their product, know where their product is stored, even visit as needed, thus affording them not only more control, but time to concentrate on marketing efforts and growing their business. Most 3PF’s will provide customized fee schedules based on your product campaign and/or fulfillment requirements.
Another alternative to FBA is Seller Fulfilled Prime or SFP. AMS Fulfillment is an Amazon approved 3PF that allows sellers to list their products as Prime eligible, while using AMS for fulfillment services versus use of Amazon fulfillment. This gives AMS clients the benefit of still being on Amazon as well as on any additional sales channels. It also allows them to utilize the Amazon marketplace without all the fees associated with it.
AMS is one of the few premier Southern California 3PF’s and we would certainly be happy to help you with this. If you are interested in Fulfillment and Logistical services, Seller Fulfilled Prime or FBA prep we would love to talk.
About the Freight Freak:
John Bevacqua is the VP of Logistics at AMS Fulfillment. His area of excellence is in creating distribution and fulfillment operations that function as a capable interface between suppliers, retailers, and wholesale distributors. His experience includes developing and leading FedEx/ Kinko’s Distribution Services into the FedEx post acquisition, USA Wireless Technologies, and a top Logistics Management company. He has also worked with third party fulfillment companies, preparing him for his current position with AMS Fulfillment.