Amazon Shipping and Fulfillment
Getting your products to Amazon customers is a key part of closing the loop on a purchase. Offering fast and reliable shipping that meets or exceeds customer expectations can create a lifetime customer. Amazon offers many fulfillment services and options to enable you to get your products to customers. Whether you use Amazon storage and fulfillment service (FBA) or warehouse and ship yourself through merchant fulfillment, it is important to consider how Amazon customers will receive the order.
Fulfillment by Amazon - Amazon FBA
Fulfillment by Amazon (FBA) is a paid service to have Amazon handle the fulfillment of your products. Once enrolled, you send your inventory to Amazon’s fulfillment center network where it is stored and then fulfilled by Amazon to the end customer when orders come in. This service provides a better Amazon customer shopping experience and improved operations for your business. You can focus on your specific expertise and outsource the fulfillment to Amazon, where fulfillment is their expertise.
Amazon FBA Customer Experience
When your inventory is in stock through FBA, your product listing will display an offer to Amazon customers for free, two-day shipping through Prime. As Amazon continues to grow its fulfillment network, this lead time can be as low as the same day or within a few hours for Amazon customers to receive their order. This is a great offer as customers expect fast and free shipping for online orders. If your competitors do not offer free shipping, this can be a differentiating factor that could make an Amazon customer purchase your product instead of another. Once the order is delivered, Amazon customers receive specialized Amazon customer service to handle returns and questions around shipping and delivery.
Amazon FBA Fees
We have discussed the benefits of Amazon FBA, but Fulfillment by Amazon is a paid service. The Amazon FBA costs need to be weighed against the benefits to understand from a financial perspective if it is a worthwhile program. Amazon FBA fees are calculated based on the size and weight of the product, which then puts the product into a product size tier. These size tiers have specific formulas to determine the storage and fulfillment fees for using the service. The specific fees associated with using Amazon FBA include: inventory storage fees, fulfillment service fees, long-term storage fees, removal order fees, unplanned services fees, and returns processing fees. An Amazon FBA calculator can be used to estimate the fees for each product.
How to Send Inventory to Amazon Fulfillment Centers
Once you have signed up for Amazon FBA, there is a simple process to follow for you to send in your inventory to Amazon fulfillment centers. Once you have your listings added to Amazon and have converted the offers to FBA, you can start the Send/Replenish Inventory process. Depending on your product, you may need to prepare the products according to Amazon’s packing guidelines. Then create a shipping plan to tell Amazon how many units of each product you want to send. Print and affix the provided Amazon shipment ID labels on each box, then ship the packages to Amazon. Once Amazon receives your products, the items will be available for Amazon customers to purchase.
Amazon FBA Inventory Management
Since there are fees related to using the Amazon FBA service, it is important to properly manage your inventory in order to reduce costs and save money. If you send in too much inventory you will be paying more fees than you need to, but if you send in too little inventory you will be out of stock and missing out on potential sales. Amazon provides limits for how much inventory can be sent to Amazon using the Inventory Performance Index (IPI) and FBA Capacity Management System. If you have inventory at Amazon for too long, you can incur expensive long-term storage fees, but these units can be pulled back to your own warehouse or use other Amazon liquidation programs to clear out stale inventory.
Amazon FBA Multi-Channel Fulfillment
Once your inventory is in stock at FBA, you can use the Amazon FBA multi-channel fulfillment service to create order fulfillment for channels outside of Amazon. For example, if you also have a Shopify or your own website that takes orders, you can create a multi-channel fulfillment order to have Amazon pick, pack, and ship your FBA inventory to send to the customer. This is a great way to fully outsource your order fulfillment responsibilities to the Amazon FBA program for all of your sales channels. This can be done through manual order management or using 3rd party tools and software to automate this process.
International Expansion Using Amazon Remote Fulfillment
Amazon continues to grow it’s network of fulfillment centers around the world. Amazon Remote Fulfillment is a Fulfillment by Amazon (FBA) service that is an option for Amazon sellers to create offers in other countries using their US FBA inventory. Amazon handles the exporting and customs to get the products to the end customer. The offer generally will have a greater lead time then if you warehoused and fulfilled the products in those specific countries, but it is a great option for an initial entrance into an international marketplace.
Amazon Merchant Fulfilled Shipping
Amazon merchant fulfilled shipping is when your warehouse and ship the products yourself. For certain sellers, it is preferred to handle the shipping and fulfillment operations if you have a complicated box configuration or an expensive, large or heavy item. You may want to mitigate the risk of storing expensive items at Amazon’s warehouse and instead warehouse and ship them yourself. Some sellers offer a combination of FBA and merchant fulfilled to fill in gaps in availability when FBA inventory is out of stock. These situations are perfect for the merchant fulfilled shipping option.
Merchant Fulfilled Shipping Template
Merchant fulfilled shipping templates are used to assign the cost you will charge and the shipping lead time that Amazon customers will pay and expect their products to arrive. You can assign shipping rates using either a per-item/weight-based or a price-banded model for how much to charge Amazon customers, if you want to charge customers at all or offer free shipping. Once you have created your shipping template, you can assign the shipping template to your products. It is important to ensure that you create a shipping template that is an attractive offer for Amazon customers, financially works for your unit economics, and you are able to fulfill the order in the promised time to prevent late deliveries.
LTL Shipping Template for Large and Heavy Items
If you sell a large or heavy item on Amazon such as furniture, TV, or anything needing a pallet for delivery, the LTL shipping template could be a viable option for the fulfillment of these orders. This template allows sellers to create options for arranged freight delivery or scheduled delivery. Once the LTL shipping template is assigned to your corresponding products, Amazon customers will have to go through a much better checkout experience by confirming the delivery window and providing their phone number to allow for shipping coordination. This process prevents what can be a challenging shopping experience of renting a truck and carrying a bulky heavy product from a store into a seamless process where your product is delivered directly to an Amazon customer’s home.
Goat Consulting Amazon Shipping & Fulfillment
Ensuring your products get to Amazon customers is an essential part of selling on Amazon. Goat Consulting can help you determine the best strategy for offering merchant-fulfilled and FBA offers depending on your business operational capabilities and desired customer experiences. When you are ready to implement, reach out and we can train you on best practices for setting up shipping templates, preparing and sending in Amazon FBA inventory, and utilizing all the services offered by Amazon.