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For many US consumers, Amazon is the first place they look when shopping online for a particular product, from furniture to groceries to consumer electronics. With $232 billion in revenue in 2018, it’s no surprise that so many brands choose to sell their products through the marketplace, oftentimes in addition to their own ecommerce business store.
Since Amazon dominates the ecommerce landscape and main sales channels, it can seem as though every retailer has to play by Amazon’s rules — or at least follow their example. This is especially true when it comes to ecommerce fulfilment thanks to Amazon Prime making 2-day shipping a standard customer expectation.
That’s one reason why many brands feel pressured to choose Fulfiled by Amazon (FBA) to fulfil their Amazon orders. With FBA, the seller ships inventory to Amazon, and Amazon fulfils orders on the independent seller’s behalf.
FBA allows sellers to leverage Amazon fulfilment centres to store inventory. In turn, Amazon is responsible for ensuring shipments meet Amazon Prime shipping standards. But while FBA can help Amazon sellers simplify their ecommerce shipping, it isn’t without its downsides, including unpredictable fulfilment fees and little to no control over branding and customer interactions.
In this article, we’ll cover why Amazon sellers should consider an alternative to FBA — and how working with a 3PL can be the best option for your brand.
3 reasons why you need an Amazon FBA alternative
FBA offers many perks including access to its vast network of fulfilment centres, the Amazon Prime badge on product listings, and returns management. That said, Amazon FBA isn’t the best choice for many ecommerce brands because of its limitations and fulfilment fees. Here are some things you can do with Amazon FBA alternatives that you can’t with FBA:
1. Control your inventory
Amazon’s fulfilment centres are not intended to be inventory storage facilities or long-term warehouses. Amazon penalizes sellers with a low inventory turnover rate or whose inventory is still in storage past a certain point in time, especially during the busy holiday season. Inventory management is an important piece of your Amazon selling and shipping strategy, so being able to control and have insight into your inventory is crucial.
2. Use your own branding
When you use FBA, Amazon will ship your products in Amazon-branded boxes. This means that Amazon’s branding is front and centre — you have no opportunity to create a brand experience through your shipping. While this may not be a deal-breaker, it’s worth keeping in mind — especially if you want to build a brand presence outside of Amazon or redirect customers to a separate ecommerce website for future purchases.
3. Stop paying extra fees
Amazon FBA fees can be complex and variable. Outside of a seller fee, Amazon charges two main types of FBA fees: fulfilment fees and inventory storage fees.
- The FBA fulfilment fee includes the entire picking, packing, and shipping process for each order shipped.
- The FBA storage fees include storing your products in Amazon fulfilment centres.
Both prices can vary depending on several factors including seasonality (Amazon storage becomes much more expensive in Q4 around the holidays) and product subcategories (e.g., FBA tacks on an additional $0.40/item for apparel). Plus, Amazon also charges fees to penalize sellers for not following their stringent packaging, FBA prep, and labelling guidelines.
Amazon FBA alternatives
In addition to FBA, Amazon allows sellers to use two fulfilment options: seller-fulfiled prime and fulfiled by merchants.
Seller-Fulfiled Prime (SFP)
The Amazon seller ships their own products directly to the consumer according to Amazon Prime’s strict shipping standards, allowing them to display the Prime badge on listings they fulfil from their own facilities or those of a third-party logistics (3PL) provider. Seller-fulfiled Prime can be an expensive option, as sellers may need to pay for costly 2-day air shipping to meet Prime shipping standards.
Fulfiled by Merchant (FBM)
The Amazon seller ships their own products directly to the customer after receiving the order information from Amazon. This can be done in-house or through a 3PL. While this doesn’t allow you to show the Prime badge on your product listings, it gives you more control over the entire post-purchase customer experience. Keep reading to learn more about working with a 3PL instead of shipping through Amazon FBA.
With the COVID-19 pandemic, many Amazon Prime orders have seen long delays, because of Amazon prioritising essentials. This has made FBM a much more attractive model at this time.
Working with a 3PL as an alternative to Amazon FBA
Working with 3PL fulfilment companies to fulfil Amazon orders can have a wide variety of benefits. While different 3PL companies have different capabilities, all 3PL fulfilment providers offer solutions for managing inventory and packaging, and shipping orders, ultimately providing reliable logistics and a better customer experience for Amazon sellers.
“In my eyes, ShipBob is competing against the Amazons of the world. Not only are they very cost-competitive and quick, they actually care.”
Carl Protsch, Co-Founder of FLEO
Amazon Prime has made free 2-day shipping the standard — especially for Amazon sellers. But offering 2-day shipping through Seller-fulfiled Prime can take a huge toll on your margins. Working with a 3PL can help you offer 100% 2-day shipping coverage for your Fulfiled by Merchant Amazon orders.
“ShipBob’s 2-Day Express Program has been phenomenal for us. Because of Amazon, our customers expect 2-day shipping and we couldn’t find other 3PLs that can provide that.”
Founder of My Calm Blanket
3PLs often have relationships with shipping carriers that allow them to negotiate discounted shipping rates. In addition, distributing your inventory across fulfilment centres can result in significant cost savings for 2-day shipping.
If you work with a 3PL with several ecommerce warehouse locations, you can distribute your inventory across fulfilment centres to ship each order out from the one closest to your customer. This puts your inventory closer to more shipping destinations, meaning you can offer two-day shipping via ground to more customers. This can be much cheaper than expedited air shipping — without the stringent requirements of Amazon Prime.
“ShipBob also continues to expand its geographic footprint. We use their fulfilment centres across the United States. There is a cost benefit to being spread out, as orders can be shipped from warehouses that are closer to customers and delivered very quickly.”
Matt Dryfhout, Founder & CEO of BAKblade
Fulfiling Amazon orders through a 3PL can offer you more control over and insight into your inventory. Managing inventory involves much more than just warehousing your products; you need full visibility into what is available to ship to your customers at any given time. A 3PL should allow you to view real-time inventory counts at each fulfilment centre location and proactively reorder inventory to avoid stockouts.
Having the right order management strategy in place can help prevent stockouts or backordered items, and unhappy customers. 3PL order management software can streamline the Amazon fulfilment process by aggregating critical data and improving order accuracy.
“In contrast to working in the Amazon fulfilment dashboard, which looks like a Bloomberg terminal upon opening it, the ShipBob dashboard is awesome and extremely user-friendly.”
Steve Staffan, Founder and CEO of Brummell
As mentioned above, FBA shipping puts Amazon’s brand front and centre. Working with a 3PL gives you the opportunity to create a brand experience through custom packaging and inserts. Your packaging is the first in-person experience a customer has with your brand, so being able to use branded packaging can make a big impression.
Amazon FBA costs are dynamic, varying based on the season, the type and size of the items being stored and shipped, the product category, and a variety of other factors. While different third-party providers use different fulfilment fees, 3PL pricing is often much more streamlined and consistent than FBA.
For example, a total fulfilment cost pricing model (like the one used by ShipBob) simplifies the number of fulfilment fees by only charging for implementation, receiving, storage, and shipping. Standard packaging and picking (up to 5 items) incur no additional costs.
“As we expand with B2B and B2C orders, ShipBob’s pricing structure remains simple without any add-on charges. With most 3PLs, you will see a lot of hidden fees when you do your homework. ShipBob doesn’t play games — the pricing is clear and easy to understand.”
Matt Dryfhout, Founder & CEO of BAKblade
If you sell on multiple platforms or marketplaces, working with a 3PL can be imperative to keeping fulfilment streamlined. Working with a 3PL that integrates with every platform you use allows you to view all of your inventory and orders in one place, making it easy to manage multichannel sales.
ShipBob’s Alternative Amazon FBA fulfilment services
If you’re looking for an outsourced alternative to Amazon FBA, consider partnering with ShipBob.
Note: ShipBob offers Fulfilment by Merchant (FBM) and if you utilise Amazon fulfilment today, we highly recommend diversifying your fulfilment options (e.g., use both FBA and FBM) to maximise sales. Learn why sellers have moved off of Amazon to ShipBob for FBM here.
ShipBob offers simple, fast, and affordable fulfilment for Amazon sellers across the supply chain. Our software integrates with Amazon and other leading ecommerce platforms and marketplaces to automatically fulfil orders as they are placed online. With a network of fulfilment centres across the US, ShipBob lets Amazon sellers split inventory across locations to reduce shipping costs and time in transit.
Ready to learn more about how ShipBob can help you take control of your Amazon fulfilment while meeting customer expectations? Click the link below to get started with your pricing quote.