It’s likely you’ve heard of Amazon. What was originally an online book marketplace founded in 1994 has grown to $281 billion dollars in sales in 2019. It’s also likely you’re familiar with their third-party logistics provider, Fulfillment by Amazon. It’s the 3rd largest logistics company in the world.
With FBA, sellers can ship their products to warehouses, and once there, FBA can pick, pack and ship the merchandise to fulfill orders for Amazon customers with no other intervention necessary. It sounds like a great deal for small to mid-sized businesses, doesn’t it? But it turns out that isn’t always true. Though it seems like a natural choice, a careful consideration of all the factors for choosing an e-tail 3PL provider could increase your bottom line and improve your experience.
At last count, FBA held 100 fulfillment centers and 15 sorting centers worldwide. This large of an organization comes with huge overhead costs that are always growing to keep up with demand. To fund all of this, FBA increases prices periodically on fulfillment and inventory storage fees. Sometimes, they’re not so periodic. The cost for storage tripled in the 2018 Christmas season! Comparing costs with a few 3PL providers could drastically alter your bottom line.
Limited Responsive Strategy
A responsive logistics strategy has the opportunity to ship directly to customers, but it should also be capable of reacting quickly when larger opportunities to move inventory arrive. Amazon FBA requires a seller to stock most if not all of their inventory in an FBA warehouse and will only sell to the Amazon customer. But fulfillment through another 3rd party logistics company allows your business to also sell to wholesale customers and brick and mortar retailers when the opportunity arises. This flexibility could mean big profits with little legwork.
Customer Care Quandary
Ideally once your fulfillment strategy is in place, everything would run smoothly, but the reality of business is that no matter how much you plan and optimize, there will be hiccups along the way. How do you want issues to be handled for your customers? Better yet, how do you yourself want to be treated when you need a prompt resolution? With FBA and Seller Central, you are stuck calling a general 800 number as one account of the thousands and speaking to a general-purpose employee with no insight for your personal needs as a business. But working with an independent 3PL includes dedicated customer service representatives steps from your inventory and a personal connection to your business.
Keep Your Prime Badge
Some sellers are concerned that they will lose their Prime badge on the Amazon marketplace if they don’t use the Fulfillment by Amazon program. While this used to be true, Amazon has since rolled out the Seller Fulfilled Prime Program, and sellers can keep their Prime status on their products while being fulfilled through a 3PL partner. This way, a seller can maintain control of their supply chain, costs and customer service while delivering the best offer to their customers on Amazon.
The Ethical Choice
Amazon has a long history of questionable ethical choices dating back to its inception, and FBA is no exception. It was founded to take advantage of the sales tax loophole for online transactions and has since not paid corporate tax on $5.6 billion in profits and only one-third of its taxes in the last five years. In every state it operates, at least 10% of its employees are enrolled in food stamps despite having richest man in the world as a CEO. And fulfillment workers have reported peeing in bottles, wearing adult diapers, and avoiding hydrating during their shift for fear of being reprimanded or fired for wasting time. These practices do not fall in line with JIT’s value system, and many other third-party logistics providers follow suit.
Fulfillment by Amazon is a natural choice for many sellers, but a little consideration of your business’ unique needs may show that you can save money, create more opportunity, and provide better customer service while meeting Prime standards and supporting local business by choosing another 3PL partnership. Contact us for more information about warehousing and fulfillment options for your online business.