Which Is Better for Amazon Order Management Processes?
On Amazon, there are more than 1.9 million active sellers, and the number is increasing daily at a rate of more than 3,000 new sellers. When it comes to fulfilling orders, Amazon sellers must decide whether to pay Amazon to handle it or handle it themselves. With the Fulfillment by Amazon (FBA) program, Amazon will ship orders on your behalf as a seller. Alternatively, you will be responsible for all shipping duties with the Fulfillment by Merchant (FBM) program.
According to a survey by Jungle Scout, most Amazon sellers use Amazon FBA as part of their fulfillment strategy, while a third use Amazon FBM. Some retailers use both methods for Amazon order management, while others only use one.
How to Fulfill Orders on Amazon
FBM vs. Amazon FBA
Amazon inventory management and Amazon order fulfillment, known as FBA (Fulfilled by Amazon), enables sellers to send inventory to an Amazon warehouse and have Amazon ship their orders. In the FBM (Fulfilled by Merchant) fulfillment method, the seller assumes complete liability for stock management and order delivery.
Amazon charges fulfillment and monthly inventory storage fees when you use FBA. You can either handle the storage and shipping of the goods with FBM or contract the task to a third party (not Amazon).
Choosing a method can be challenging if you don't know the advantages and disadvantages of each program. In this article, we'll do our best to clarify and demystify FBA and FBM so you can choose the best fulfillment method for your company.
Amazon FBA: Pros and Cons
When a customer places an order for a seller's product on Amazon, Amazon automatically fulfills the order. This is known as Amazon FBA. Amazon will also cover customer service and returns related to that order.
Amazon charges fulfillment and monthly inventory storage fees when you use FBA.
- The fulfillment fee covers the costs associated with picking, packing, shipping, and offering customer service.
- The monthly fee covers the cost of keeping items in Amazon's fulfillment centers for inventory storage.
The referral fees (Amazon's commission for sales on its marketplace) are in addition to these expenses.
Shipping through Prime is available for purchases made through FBA. This indicates that customers with an Amazon Prime membership can get your item with 2-day shipping for no extra charge (even 1-day shipping in some areas). Because Prime members are eager to benefit from the quick delivery times, this increases the likelihood that your products will sell.
More than 110 million in the US alone are Prime subscribers, giving you some idea of the opportunity. Compared to items with standard shipping, they are likelier to buy things with the Prime badge.
Examples of Prime shipping eligibility badges can be found on products.
Success in the Buy Box
Getting your offer into the Buy Box is crucial when competing with other Amazon sellers offering the same product.
The "Add to Cart" and "Buy Now" buttons on a product page are in the Buy Box. One seller is always given credit for a Buy Box sale. The Buy Box is used to award 85% of all sales.
Fulfillment is one of Amazon's most crucial factors when choosing which seller gets the Buy Box. Customers will generally appreciate your shipping and delivery services more if they are quicker, less expensive, more convenient, and more dependable.
Amazon order processing believes that FBA has nearly perfect metrics for all these factors. When competing against FBM sellers, using FBA can significantly improve your chances of winning the Buy Box.
Prioritize Selling over Fulfilling Orders
When it comes to managing your fulfillment, there is a long list of responsibilities, including hiring, training, maintaining inventory records, negotiating carrier rates, purchasing shipping supplies, shipping on schedule, and sending the correct items.
It's challenging to run a smooth shipping and warehousing operation. Amazon order processing already has a cutting-edge fulfillment infrastructure to handle and deliver your orders on schedule. Additionally, the FBA program enables sellers to scale quickly because they don't have to increase staff or warehouse space as the volume of orders fluctuates.
Many Amazon sellers prefer to concentrate on product development, marketing, sales, and excellent product sourcing. They are happy to allow Amazon to oversee their daily fulfillment activities.
On the specifics of how their A9 search algorithm functions, Amazon is mum. Although Amazon will not admit it, it is widely acknowledged that FBA is a ranking factor that affects the search algorithm. Regarding search, FBA offers are probably superior to FBM offers, assuming everything else is equal.
As was previously mentioned, when you use FBA, Amazon handles all order-related customer service and returns processing. Although you won't get to speak with your customers directly, it reduces the support burden that online retailers must bear.
MCF: Multi-Channel Fulfillment
Multi-channel merchants benefit from the MCF program as well. MCF functions similarly to FBA, except that Amazon accepts orders from all sales channels in addition to the Amazon marketplace.
You can ship orders from your website or another marketplace by using Amazon's fulfillment centers. Your customers on other channels and Amazon customers can use the inventory in Amazon's fulfillment centers.
However, be ready to pay. Compared to FBA, MCF has higher fees.
MCF can also be a stand-alone service for businesses that don't want to use the Amazon marketplace.
Cons of FBA
Depending on the types of goods you sell and how well your company does fulfillment, this might be a pro or a con. Small, lightweight items that sell quickly outperform bulky, heavy items in the FBA program in terms of cost. Additionally, storage costs fluctuate seasonally, increasing between October and
December. Standard-size clothing and non-apparel item fees
Monthly Charges for Storing Inventory
Additionally, while Amazon order fulfillment is very effective at handling warehousing and fulfillment tasks, many other merchants are also very skilled in this area.
It's possible for merchants with extensive logistics experience to do it less expensively than Amazon. For these merchants, the advantages of using FBA must be weighed against the additional expense.
Defeat of Control
You cannot inspect your products by going to the warehouse floor with FBA. And it's implausible that Amazon order management will allow you to visit their facilities for a personal tour. You must believe that Amazon order processing won't damage or improperly handle your stock.
When using FBA, be ready to follow Amazon's rules. FBA might not be a good fit for you if you're a seller who prefers to manage your inventory and fulfillment yourself.
Rules for Packaging and Labeling
Before accepting inventory into their warehouses, Amazon order processing has strict guidelines regarding packaging and labeling.
You risk Amazon order fulfillment rejecting an incoming shipment if you don't adequately prepare your inventory to satisfy these requirements; retrieving and pre-preparing your list will cost you time and money.
Between Amazon inventory management and your supplier, there is a whole industry for FBA inspection and preparation services. When assessing the program, consider the time and expense involved in preparing your items for FBA.
Outsource Order Processing Today!
The days of doing order processing internally are over. The outsourcing of order processing to experts is a more effective approach. The advantages of doing this include lowering operating costs and boosting productivity.
Amazon can meet your outsourcing needs because it has over ten years of experience in the field. You can cut costs on outsourcing by utilizing the efficient services offered by the devoted team of order processing specialists at Amazon Listing Services.