It’s no secret that Amazon is the powerhouse when it comes to online commerce. If you’re thinking of selling products through Amazon’s marketplace, you’ll want to make sure you have the preparation process figured out down to a T.
If you’ve ever seen an FBA warehouse (Fulfillment by Amazon) operation in action, it’s pretty impressive. They employ more that 15,000 robots to help retrieve products, have huge conveyor belts to transport product from storage to packing stations, and they ship 35 items every second. In fact, Amazon’s outbound shipping cost is over $1.5 billion a year!
One of the main reasons why Amazon can ship so many items each day is because they’ve streamlined their inbound process. That minimizes the time it takes to receive products and get them ready to be picked, packed and shipped. They’ve been able to streamline their receivings by passing the preparation process on to its vendors.
Failing to comply with FBA product preparation requirements may result in the vendor being charged for non-compliance and/or their products being returned, disposed of, or even blocked from future shipments to the fulfillment center.
Amazon does offer its vendors guidelines such as its Quick Reference Guide on how to prepare inventory for FBA. However, the opportunity cost of vendors preparing products for fulfillment takes away from sales and marketing. A lot of fulfillment centers—like ShipMonk, for instance—saw an opportunity and began offering FBA prep services to help vendors prepare their inventory before it’s sent to an FBA warehouse. Everything from opening containers and repackaging thousands of SKUs to simply labeling products correctly with barcodes—prepping products for FBA is essential if you want to be a successful Amazon vendor.
Here’s a list of various FBA Prep Services:
- Quality control
- Fragile item preparation
- Loose products
- Sold as a set
- Boxed units
- Poly bagged units
- Case-packed products
- Expiration dates
Now that you understand the importance of Amazon preparation, you’re probably wondering if you should do it yourself or look to a fulfillment center for help.
The answer isn’t anywhere near cut and dried. Therefore, you’ll need to take into account the following:
Where is your product manufactured?
The best solution would be for your manufacturer to prep the products for FBA for you, but you’d have to calculate how much that affects your shipping rates. If you’re importing from China or another foreign country, you’ll probably want to save as much as you can on shipping to the U.S. To do this you’ll need to put more than 1 SKU on a pallet—which is great for lowering costs but makes the product unfit as an FBA receivable.
How many SKUs do you have?
If you have a lot of different SKUs that require different prep services, it may be too much to keep track of and stay up-to-date. Also, do you have the space and equipment to de-palletize and repack the products on pallets or in boxes for FBA?
What packing materials are needed?
If you need specific packing materials such as poly mailers, fragile item wrapping, or labels, a fulfillment center may be a great option. They have various materials in stock and may even give you a discount since they can purchase in bulk.
What’s your profit margin?
How much are you selling your products for and what are you making? If you have room in your profit margin, it probably makes sense to outsource the FBA prep service. Then you can focus your efforts on expanding your product line and/or selling more product. (Unless, of course, you just love working in the warehouse, then absolutely, you should not outsource!)
Is the risk worth the reward?
Can your business afford to have its products returned or be billed a non-compliance fee for failing to meet FBA standards? A reputable fulfillment center will include in their SLA that if something happens due to not following FBA guidelines, the fulfillment center will assume responsibility.
Are there seasonal spikes throughout the year?
You may want to prepare inventory yourself throughout the year except for the holiday season. During that time, you’ll probably want to focus on customer service and marketing. So consider outsourcing FBA prep during those busy months and then take it back into your own hands if you want to cut back on outside costs during the off season.
What can I be doing with the resources it takes to manage FBA prep?
This is the million-dollar question that only you can answer. Most business owners can manage the FBA prep process, but—will it take away from growing your business?