Four Ways For Amazon Sellers to Clear a Path to Success
Amazon sellers who rely on FBA and/or AWD need to adjust to ensure they don’t get crushed under Amazon’s massive bureaucratic weight. Mission Fulfillment Plus provides a playbook.
Back in March of this year, Amazon added inbound “Placement Fees” to its FBA program. Placement fees are charges for shipping inventory to Amazon fulfillment centers. Amazon also introduced a “Low Inventory Fee” that forces sellers to manage their FBA inventory levels according to Amazon’s best interest as a fulfillment provider. We touched on both of those fees here.
As part of its push to continue to make money from bulk storage while forcing sellers to optimize their FBA inventory holdings for Amazon’s benefit, Amazon has been pushing FBA sellers towards its AWD (Amazon Warehousing and Distribution) solution, which is a network of bulk storage warehouses. The incentive is the waiver of Amazon Placement Fees for sellers who use AWD to refill their FBA inventory.
(As an aside, given Amazon’s long history of taking losses to establish dominance and then using that dominance to squeeze more money out of increasingly dependent sellers, the odds of that Placement Fee (or some other compensating fee) eventually appearing in the AWD to FBA cost structure are high. Very high.)
Both AWD and FBA are experiencing significant receiving delays ahead of the 2024 holidays – and it’s not just the holidays. A quick google search shows that it’s been an issue all summer. Sellers who have already sent their Q4 inventory to Amazon are essentially stuck. They can’t pull the inventory back, and Amazon isn’t making it available for fulfillment. This is the kind of hang up that can kill a small business.
Your fulfillment provider should be on your team, paving the way for a successful Q4 run, not stuffing you and turfing your inventory.
1. Add FBM: Amazon sellers should seriously consider adding an FBM (Fulfillment by Merchant) option to their Amazon listings. For those sellers who are inclined to continue with FBA and who just want an alternative backstop, Amazon will allow FBA and FMB listings from the same seller to coexist for the same items, and it is a perfect avenue for maintaining continued sales when Amazon AWD/FBA is having issues.
Amazon FBM can be managed in house, or by a 3PL (like Mission Fulfillment Plus) with the technical capability to properly route FBM orders while FBA orders continue to function. Not sure whether to manage FBM in house or use a 3PL? We wrote an article to help with the decision making process. Check it out.)
2. Consider Ditching FBA: Shifting Amazon sales completely out of FBA and fully to FBM might actually be a great idea for some sellers. We just wrote about this a couple of weeks ago.
3. Use a 3PL: In the future, Amazon sellers might think twice about relying on Amazon for bulk storage (and fulfillment!). Using it in some capacity to drip fulfillment stock to FBA might make sense, but trusting Amazon with all of one’s stock is just dangerous. For sellers who do not have the capacity to manage their own bulk storage, having a good relationship with a 3PL who can handle their bulk storage is a must.
4. Diversify Your Sales Channels: Finally, sellers who are only selling on Amazon need to start diversifying their sales channels. Omnichannel fulfillment is an increasing requirement for ecommerce survival. Amazon does have a “MCF” (multi-channel fulfillment) solution, but relying on that solution is merely doubling down on the Amazon seller reliance model that once again this year has so many sellers buckling under the weight of Amazon’s indifference to small sellers (scroll to the bottom and open all replies to get the full story!). A good 3PL with the right software and processes, coupled with a partner mentality can help a seller gain strength through developing sales channel diversity.
*Mission Fulfillment Plus is a Midwest based 3PL providing omnichannel fulfillment services primarily for small parcel shipment products in the ecommerce space. Contact us to see how we can help with your 3PL needs.