If you have made an online purchase, then you have made a purchase through an e-commerce site. E-commerce is defined as the buying and selling of products or services exclusively through electronic platforms. Consumers are now spending more and more time scrolling through the internet, thus they are more likely to make online purchases. The e-commerce industry is growing rapidly, and U.S. sales projections are set to a fast pace in the coming years. With over 300 million active members worldwide and the leading online retailer in the United States, Amazon has become one of the largest sales channels for most US sellers. In turn, with the number of sales options for sellers significantly increasing on Amazon, so too do the complications. An experienced 3PL can help optimize your sales channels, and save your business time and money while you still sell through Amazon.
What is FBA and how does it work?
FBA stands for Fulfillment by Amazon. This is the process that allows online sellers to utilize Amazon’s numerous warehouses and ship products through the Amazon website while using their packaging. Sellers pay Amazon to store and fulfill their products that are being sold on Amazon. The sellers retain ownership of the products and are responsible for marketing their products on and off Amazon. Sellers benefit from having the Prime badge listed on their goods by giving them access to prime subscribers. Fulfillment by Amazon is an efficient operating model, but there are costs and penalties that sellers will face.
How a 3PL can help
Amazon has strict requirements when receiving products from sellers. From the product UPC code to how those products are packaged to the bulk shipping requirements, all of these variables add up. A 3PL can take your inventory directly from the manufacturer and prepare it for Amazon bulk delivery.
Avoid or lessen financial penalties.
Products that are not prepared according to Amazon requirements are subject to monetary penalties called chargebacks. The different types of chargebacks include, but are not limited to:
- a lack of proper product preparation;
- missing designated delivery windows;
- not sending the properly advanced shipping notification (ASN); and
- submitting the incorrect purchase order information.
Chargebacks can result in a predefined flat fee penalty or a percent of your gross sales on Amazon. A 3PL can help minimize or eliminate these chargebacks.
No unpredictable monthly fees.
Amazon also has monthly storage fees that frequently change. While these fees may seem insignificant when dealing with a few items, they can quickly add up when you are dealing with bulk orders.
More inventory control.
Controlling inventory can prove to be difficult when a major downside to the FBA program is that sellers are required to send a large portion, if not all inventory, to an Amazon fulfillment center. Keeping track of the demand for products and adjusting to meet consumer wants can be costly: when all of your items are stored with Amazon you’re relinquishing physical control of the inventory and met with a huge disadvantage to keep up with competitors.
Lower storage fees, higher cost savings.
3PLs offer lower storage fees and significant cost savings. Sellers can leverage the 3PLs lower storage fees by only shipping their products to Amazon when supply is running low to ensure their products are not sitting in Amazon’s warehouse for extended periods. A full-service third-party logistics company offers cross docking services when you arrange for your suppliers to ship directly to the warehouse. The 3PL can then package your products and send them to Amazon or store them for you.
Likewise, branding is important when creating your business’s image, and with a 3PL you can provide your own packaging solutions.
Personal customer care.
Communicating with Amazon has been proven to be difficult, with having to call into the same 800 number as consumers. When dealing with a 3PL you have a dedicated associate prepared to answer all questions. 3PLs have an onboarding process and will be in frequent communication before and after product launch. A collaborative approach is encouraged. Many 3PLs can handle both B2B and B2C fulfillment, resulting in one e-commerce fulfillment partner for all sales channels.
FBA or 3PL
Order fulfillment services are a crucial part of any business and will assist when assessing its success or failure. Whether you entrust your fulfillment services to FBA or a 3PL, there is a greater chance that you will be in good hands. The key among these fulfillment experts is where you feel the most comfortable. Keep in mind what you want for your brand and what kind of customer experience you want to give to your customers.
At Westhub Logistics we practice a client-first approach. We stand out with an unprecedented standard for personalized 3PL services. Our first goal is to listen to your needs and provide you with unique solutions. WHL can work with you to create a customized FBA plan, and you won’t have to pay for unnecessary services. If you are seeking logistics support, we’d love to hear from you, our team is ready to help. Give us a call today 408-585-9346 or send us an email at email@example.com