Amazon Fulfilment Solutions: Which One Should It Be?

If you’re a seller on Amazon, you have a plethora of fulfilment solutions at your disposal, tailored to meet your needs. In this blog post, we’ll briefly dive into possible fulfilment options to help you make a choice for your business. Ready? Let’s get started!

In Short: What are the well-known fulfilment options offered by Amazon?

As we all know, Amazon offers various fulfilment solutions, designed to cater to the diverse needs and preferences of sellers:

Fulfilment by Amazon (FBA)

Here, Amazon takes care of storing, packaging, and shipping your products. With Fulfilment by Amazon (FBA), Amazon handles the complete processing of your orders. This includes storing your products in an Amazon fulfilment centre, packaging, and shipping to your customers. You benefit from Amazon’s customer service and fast Prime shipping.

Advantages of FBA:

• Prime Shipping: Products sold through FBA automatically qualify for Amazon Prime, meaning they offer free two-day shipping to Prime customers.
• Customer Service: Amazon handles customer service and returns processing for FBA products, saving you time and resources.
• Easy Scalability: Since logistics are handled by Amazon, you can easily scale your business without worrying about expanding your storage or shipping capacities.

Disadvantages of FBA:

• Costs: FBA can be costly, as fees for storage, fulfilment, and optional services like preparation and labelling service accrue. Read here for more on all possible fees.
• Inventory Management: You must keep a close eye on your inventory to avoid additional long-term storage fees.

Among FBA’s special programmes, you can find a suitable and flexible shipping solution for your business. These include special programmes for newly listed items with free services, reduced shipping fees for inexpensive and lightweight products, savings subscriptions, multi-channel shipping options, and solutions for shipping heavy and bulky items, all at no extra cost.

Seller Fulfilled Prime (SFP)

Seller Fulfilled Prime allows sellers to carry the coveted Prime badge by shipping orders from their own warehouse with the promise of two-day shipping for Prime customers. This option enables you to carry the Prime badge while shipping orders from your own warehouse.

Advantages:

• Control over Shipping: You have full control over the shipping process and can choose your own shipping providers.
• Flexibility: SFP offers flexibility regarding storage and packaging since you use your own premises.
• Prime-Eligibility: The ability to use the Prime badge without sending your products to Amazon can lead to better visibility and higher sales numbers.

Disadvantages:

• Strict Performance Requirements: To be eligible for SFP, you must meet strict performance standards, including high delivery reliability and low cancellation rates.
• Self-Responsibility: You are responsible for customer service and processing returns.

Multi-Channel Fulfilment (MCF)

Multi-Channel Fulfilment enables you to use Amazon’s fulfilment services to fulfil orders received through channels other than Amazon, e.g., your own webshop. Use Amazon’s fulfilment services to fulfil orders across different sales channels – not just on Amazon.

Advantages:

• Consistent Fulfilment: With Multi-Channel Fulfilment, you benefit from the same reliable fulfilment and fast delivery that Amazon offers, even for orders not placed on Amazon.
• Easy Integration: MCF can be easily integrated with various e-commerce platforms, simplifying the management of orders across different channels.

Disadvantages:

• Costs: Similar to FBA, the costs for MCF, depending on the dimensions and weight of the products and chosen shipping speeds, can vary.
• Brand Presentation: Orders are shipped in Amazon packaging, which can impact the brand experience.

Merchant Fulfilled Network (MFN) or FBM

With the Merchant Fulfilled Network (MFN), also known as Fulfilment by Merchant (FBM), you as a seller ship products directly to customers without using Amazon’s fulfilment services.

Advantages:

• Control: You have full control over the storage, packaging, and shipping of your products.
• Flexibility in Shipping Options: You can choose your own shipping providers and adjust shipping strategies to meet your customers’ needs.

Disadvantages:

• No Automatic Prime Status: Products sold through MFN do not automatically qualify for Amazon Prime, which can impact competitiveness.
• Self-Responsibility for Customer Service: You are fully responsible for customer service and returns, which can lead to additional effort and costs.

How do I choose the right fulfillment option for my Amazon business?

Choosing the right fulfilment option depends on understanding the unique advantages and limitations of Amazon’s diverse fulfilment solutions. Whether Fulfilment by Amazon (FBA), Seller Fulfilled Prime (SFP), Multi-Channel Fulfilment (MCF), or Merchant Fulfilled Network (MFN/FBM), it’s crucial to consider factors such as the size of your business, product types, and customer service preferences:

• Business Size: Smaller businesses with lower volume might benefit from MFN, while larger businesses can enjoy the advantages of FBA.
• Product Type: Large or bulky items may incur higher FBA fees. Consider whether SFP or MFN are more suitable.
• Customer Support: Do you want to handle customer service yourself or leave it to Amazon?

Weighing the Pros and Cons of Different Options

Each fulfillment option has its pros and cons. For example, FBA offers the advantage of Prime shipping, but with potential higher costs. MFN gives you more control and flexibility but requires more work on your part.

Understanding Costs and Optimizing Fulfillment Options

Cost is a crucial factor when choosing a fulfillment option. Compare fees for storage, shipping, and additional services for your products to find the most economical solution for your business. Remember, you can always adjust your strategy! Amazon regularly updates its fulfillment options and technologies. Staying current can provide new opportunities to optimize your fulfillment strategy for customers and potentially save costs.

Further Tips for Optimizing Your Fulfillment Strategy

1. Explore Amazon’s Special Programs Learn about special Amazon programs that can offer cost savings or increase visibility, such as FBA Small and Light for low-cost items or Amazon’s Subscribe & Save for recurring purchases.
2. Monitor Performance Indicators Keep a close eye on your seller performance indicators. High performance can qualify you for programs like Seller Fulfilled Prime, boosting your competitiveness.
3. Optimize for Prime If using FBA, fully leverage the Prime badge to increase visibility and sales. If choosing SFP, ensure your operations meet Amazon’s Prime performance criteria.

Example: Success with FBA

Consider the example of “EcoWidgets,” a small business selling eco-friendly household products. By using FBA, EcoWidgets was able to gain Prime status, leading to an increase in sales numbers. The ability to focus on product development and customer service, rather than logistics, was a key factor in their success.

Conclusion

Choosing the right fulfillment option on Amazon can be overwhelming, but making an informed decision can mean the difference between success and stagnation. Whether FBA, SFP, MCF, or MFN, the most important thing is to choose a solution that fits your business needs while providing excellent customer service.