Many new eCommerce retailers making their way into the world of online marketplaces are often faced with the question: how do I handle my FBA logistics? Some retailers choose to do this work in-house, while others, who do not have the facilities or manpower, decide to have their suppliers ship directly to FBA and have FBA do the prep work. Neither method is wrong, however we believe there is a third and better option: use a 3PL partner with FBA expertise. Lets look at the three options together (we recommend #3):
1. In-House Fulfillment By Amazon (FBA) Product Prep
This option tends to be the most common one. Ecommerce retailers use some of their employees, office or warehouse space, and slight understanding to FBA to received merchandise, prep, and ship back out to FBA. If you aren’t built as a fulfillment house you are likely going to be using employees that are not logistics experts while still paying them a higher rate than a typical logistics employee. You are also going to perhaps be using employee’s (or your own) time that may be more valuable elsewhere within your business. You would likely be paying a premium for the physical space that you are using to prepare these orders because office and non-industrial square footage rates tend to be much higher than what a 3PL is paying for their warehouse in an industrial zone. Mistakes are more likely to happen with shipments, and the overall efficiencies of getting shipments prepared would be low, as your company would likely not have any automated machinery and FBA expert employees.
2. Having Fulfillment By Amazon (FBA) Do Your Own Product Prep
If you do not want to do the product prep in-house and are not using a 3PL, you can ship your product directly to FBA and have them do the product prep for you. The fact that you can do this however, doesn’t mean that you should. This becomes very expensive and very expensive fast. FBA charges a premium for these services. FBA labeling, poly-bagging and product prep fees have a much higher relative cost than doing these tasks in-house or with a 3PL. Though these services will be done correctly by FBA, the higher overall cost would make your products margins shrink or make you less competitive in the highly price-competitive market.
3. Fulfillment By Amazon (FBA) Prep & Shipping By A 3PL Company (OUR RECOMMENDATION)
Finding the right 3PL to do FBA product prep and ship is not easy. In fact, most 3PLs would be more expensive than sending your products directly to FBA and having FBA do the prep work for you. Finding the right 3PL provider that is outfitted to handle eCommerce, especially FBA shipments, is the ideal situation. The right 3PL company can have FBA product prep prices that are up to 50% or less when compared to in-house or FBA product prep done at FBA. Not only would you reduce your costs with the right 3PL provider, their expertise and know-how on the vast amounts of policies for the different product categories will allow you to rest easy knowing that your product is being prepared, packed and shipped meeting FBA standards and policies. Error in product prep can cost your company a lot of money if FBA has to re-pack, re-label, or re-polybag a product. Constant mistakes can also have you lose your FBA shipping abilities. You can have your suppliers ship your merchandise directly to your 3PL partner and they can handle the entire FBA shipment without your company ever having to touch the merchandise. Overall, the right 3PL provider can strengthen your FBA program and make you better able to compete against your competition, and that is why we recommend this third option.