Amazon is a beast. They pull in sales of over $51 billion dollars a year with a net profit of $1.6 billion. They’re lucrative because they are always innovating. Amazon’s most recent venture promises to prep your stuff. The company now offers a full range of packing services called FBA (Fulfillment by Amazon) Prep. But are they really the best option out there for your business? And do they have your best interests in mind?
What is FBA Prep?
Fulfillment by Amazon (FBA) has packaging and prep requirements for any product that lands in their fulfillment centers. Their sentiment is that when units are properly packaged and prepared it reduces delays, saves on cost, protects your product while stored, and enhances the customer experience.
Previously, Amazon required you to prepare inbound shipments and goods in certain ways, but they didn’t provide a service to help facilitate these preparation services. But now Amazon has some warehouses that are being dedicated to packing and prepping for FBA. They essentially prepare products to send to Amazon DC’s. Amazon then does all of the shipping.
However, some of these requirements can be very restrictive and they will not ship your product if they don’t conform to their policies. Therefore, it’s always best to double check rather than losing revenue. You might also consider looking into a third-party fulfillment center to see what their requirements are. They may necessitate cheaper materials that could make all the difference in the world for your budget.
How Does FBA Prep Work?
If you decide to use FBA Prep, Amazon will pack all eligible products for a per-unit fee. After enabling the service, you choose Amazon to prep the products that you ship to fulfillment centers. Once you build a shipping plan, Amazon will provide an estimate of fees based on those schematics. So, the process can be a tad lengthy, and you have to jump through a number of hoops.
Then the FBA Prep process begins. Consider the following:
When it comes to ticketing, Amazon still expects the vendor to not only create shipping plans but print the labels too. This is so they can track the inbound shipments. A third-party vendor may make it easier on a business by creating the plan themselves.
Rather than bundle units, Amazon has been known to break them up when necessary. As they state on their site “Your qualifying units may be split into multiple additional shipments.”If you seriously need bundled shipments, Amazon may not be the best choice.
Amazon will ship glass and other fragile items. The FBA Prep service includes bubble wrapping and labeling.
Stickering Shrink Wrap
Amazon does not shrink wrap anything. They bag the following: liquids, apparel, fabric, plush, textiles, baby products, small, and adult. If you seriously need your product shrink-wrapped, a third-party fulfillment center might be your best choice.
When you have Amazon prep your products, FBA Label Service may be applied to certain items and you will be charged a fee. Same with anything that requires an Amazon barcode. There have been issues with Amazon surprising people with hidden label fees, so keep your eyes peeled.
Third Party Fulfillment Centers Offer an Alternative to FBA Prep
Amazon is not the only place to offer a prep and pack service. Many third-party fulfillment companies also have this on the menu. And by working with another fulfillment center you may save on overall costs. Amazon is notorious for hidden and “surprise” fees. These tacked onto your order could cripple a budget. Oftentimes, third party fulfillment centers will offer preparation services for FBA at a reduced cost as opposed to using Amazon’s prep service.
Furthermore, using a third-party fulfillment centers offers a host of other benefits. First, these outsourced fulfillment services enable multi-channel shipping through other online platforms. So, if you do business on your own website, or other marketplaces like e-bay and Etsy, it’s ok.
Finally, using a third-party fulfilment house allows you to avoid Amazon’s dreaded long-term storage fee penalties.
What is Long Term Storage Avoidance?
Surprisingly, Amazon doesn’t want you to overstay your welcome. The company will charge you a fee if you store at their warehouse for too long. It’s referred to as the “FBA long-term storage fee.” On the 15thof every month the company conducts a cleanup of their inventory.Inventory that has been in fulfillment centers for 181 to 365 days incur a long-term storage fee (LTSF) of $3.45 per cubic foot.
Items that have been in US fulfillment centers for more than 365 days on the inventory cleanup date incur a long-term storage fee of $6.90 per cubic foot. And it goes up from there. This is what leads to long term storage avoidance. Nobody wants to work with Amazon if they can’t afford to store their stuff.
There are many programs and apps you can install that will use data based on SKUs to help you identify long-term stock issues. Additionally, if you think an item will take a long time to sell, wait until just after the 15thto list. This will give you the maximum time.
Of course, you can avoid all of this noise by working with a third-party fulfillment center. The long-term storage fee is mostly unique to conglomerates like Amazon and is rarely something you would see with traditional third-party warehouses. Long term storage fees are a serious business and why risk having your stuff held hostage?