Fulfillment by Amazon is a common steppingstone for companies looking to get their eCommerce sales off the ground, but the complexity of FBA prep makes it challenging to be a long-term growth strategy as your only channel.
Amazon is a reliable channel for nearly every eCommerce brand. However, it often makes the most sense as just a single channel to help you land sales while other efforts drive people to websites you own. The two big reasons are that you want people to see you outside of Amazon and that fulfillment performed by Amazon comes with significant prep requirements and costs. Let’s look at those requirements and expenses and how they may limit long-term growth.
What’s the value of FBA?
Fulfillment by Amazon (FBA) is a fulfillment service that eCommerce businesses use to sell on Amazon. Companies send goods in bulk to Amazon’s warehouses. Then, someone buys any of those products on the Amazon site. Amazon will ship those goods out to the customer. The eCommerce seller focuses on getting large quantities of every product to Amazon. At the same time, Amazon manages the final storage, breaking down boxes and bulk packaging, order fulfillment, and customer service efforts related to getting an order.
Amazon charges you various fees for the FBA service, including fees based on product specifications and long-term storage timeframes. Beyond the fees, Amazon also has a very specific set of FBA prep requirements for the products you send to them. Labels, SKU designations, wrapping, and removal of non-scannable barcodes from packaging are just some of the FBA requirements.
To understand if FBA prep services are right for you, let’s look at a few of the benefits and disadvantages of using FBA.
Pros of FBA prep and use
- Amazon oversees final order management, including fulfillment and customer service
- Amazon handles return management and refund processes — your account may still be in trouble if the reasons for returns are your fault
- FBA products are automatically added to Prime and get the Prime badge, which can speed up shipping and help sales
- Potential access to discounted shipping rates
- Can use it for fulfillment on other channels, though fees and storage requirements apply
Significant cons of FBA
- Extensive FBA prep receiving requirements that increase your expenses before sending goods to Amazon
- Fines or fees if you make FBA prep mistakes on any goods you send to Amazon. You pay these at a per-item level
- Risk of increased returns and customer support issues, according to BigCommerce
- FBA fees are deducted from your existing balance before you’re paid for an order, requiring a credit card if you can’t cover those costs
- High storage costs and fees for fulfillment, product categories, storage, removal orders, returns processing, and exceeding storage limits.
- Sales tax can be hard to plan for because you pay based on the location of Amazon’s warehouse
- Limits your ability to build brand loyalty because you’re viewed as an Amazon product
FBA may not be worth it when fees eat into your margins or when you need to grow across multiple sales channels. It’s a narrow sales tactic with opportunities but significant, ever-growing competition.
Do 3PLs offer FBA prep support?
For most 3PLs supporting eCommerce businesses and companies, FBA prep support is an add-on service. That’s because FBA prep is time- and labor-intensive way to support your sales. So, your typical 3PL will want to support FBA and manage your other channels and store inventory for you to ensure your costs are limited elsewhere.
Red Stag Fulfillment collaborates with many companies that use FBA as one of their smaller channels. We’re able to properly package and prep goods for delivery to Amazon’s warehouse locations. However, for non-FBA items, we’re able to offer improved warehouse efficiency, controlled and predictable costs, shipping cost reductions through our accounts, and guarantees on accuracy and shrinkage. Delivering that quality helps keep your customers happy and improve your ability to brand beyond just being an Amazon product.
When you use FBA as your primary or only sales channel and require significant support, it can be best to find a 3PL specializing in FBA prep. They’ll be well-positioned to keep you in line and avoid fees for improper shipments. However, those 3PLs may not have the tools you need to grow your brand outside of Amazon, potentially limiting your overall growth.
FBA prep requirements
So, why do companies like yours often turn to 3PLs like Red Stag to do the FBA prep? Because it’s so complex. Not only do you need to know and adhere to FBA product restrictions and shipping and routing requirements, but you’ve got to properly notify Amazon of everything coming into its locations. Every mistake incurs a fee — not per shipment but per item.
Some of the most significant FBA prep requirements implemented by Amazon are:
- FNSKUs must correspond to a unique product and cannot cover multiple sizes, colors, or other differentiators
- Packages must have external barcodes that are easy to access
- Barcodes that people can’t scan or should not use must be fully covered to prevent accidental scans
- Products cannot require Amazon to perform assembly
- Sets must have separate labels indicating a set and packaging that prevents someone from separating them
- Boxed units must have six complete sides and “must not collapse when medium pressure is applied to any of the sides”
- Products may have unique requirements, such as footwear not having any exposed shoe material
- Expiration dates on boxes can only be in MM-DD-YYYY or MM-YYYY formats
- And many more.
Nearly every type of packaging and product category has its own set of restrictions. As your SKUs diversify, so do the requirements you need to follow. Keeping up with these needs alone is why many companies seek FBA prep support.
Don’t let FBA prep hold back growth
When companies reach out to us about FBA prep services, they’re often looking for help expanding their business. They’re ready to grow and try to understand the best path forward. If that’s you, it might be wiser to look beyond FBA options and see what aligns with your plan for the next three years instead of three months.
Ask yourself if FBA is what you want your business to grow through. Do you want to give Amazon that much control over your sales channels and branding? Will you be satisfied being seen as just a product that Amazon offers, or are you building out your own name recognition? Do you need an alternative?
If you’re looking to expand sales and grow, don’t hand Amazon the reigns. Shake off that weight and take control of your supply chain and customer experience. When you’re ready to improve your logistics and order fulfillment experience for every channel, let’s talk.