A Guide to Choosing the Right Warehouse for Amazon FBA
Choosing a right warehouse for Amazon FBA is a critical decision for Amazon sellers.
It can significantly impact several aspects of your business, including fulfillment costs, delivery times, inventory management complexity, and overall operational efficiency.
Carefully considering your business needs and the options available, you can select the warehousing solution that best positions you for success.
What is Amazon FBA Warehousing?
Amazon FBA warehouse refers to Amazon’s network of fulfillment centers strategically located around the world.
These centers are designed to efficiently process and ship a high volume of products.
Sellers send their inventory to these fulfillment centers, and Amazon takes care of all the downstream fulfillment activities, including picking and packing orders, shipping them to customers, and providing customer service.
This allows sellers to focus on the upstream aspects of their business, such as product sourcing, marketing, and growing their customer base.
By leveraging Amazon’s fulfillment infrastructure, sellers can benefit from faster delivery times, improved customer satisfaction, and potentially reduced fulfillment costs.
What are the Benefits of Using Amazon FBA Warehouses?
With fulfillment centers closer to customers, FBA warehousing enables faster delivery options like Prime free one- or two-day shipping, boosting your product’s competitiveness.
Amazon negotiates discounted rates due to their high volume, potentially saving you money compared to handling fulfillment yourself.
Faster delivery times and efficient order fulfillment lead to happier customers, potentially increasing positive reviews and sales.
What is 3PL?
A 3PL, or third-party logistics provider, is a company that specializes in providing outsourced logistics services to businesses.
These services can encompass a wide range of activities, including warehousing, inventory management, fulfillment, transportation, packaging, labeling, returns processing, and even value-added services like light assembly or kitting.
By outsourcing these tasks to a 3PL, businesses can free up their own resources and focus on their core competencies.
In the context of Amazon, a 3PL for Amazon FBA specifically refers to a 3PL that has experience working with Amazon’s fulfillment systems and can seamlessly integrate their services with Amazon’s Seller Central Platform, which allows for efficient order fulfillment, real-time inventory visibility, and streamlined communication between the seller, the 3PL, and Amazon.
Benefits of Using 3PL for Amazon FBA
3PLs often offer a wider range of services than Amazon FBA, such as kitting, labeling, and returns processing. This allows for more customization and control over your fulfillment process.
For sellers with large or bulky items, or those located far from Amazon fulfillment centers, 3PL can sometimes offer lower storage and fulfillment fees.
3PLs can often scale their services to accommodate your business growth, reducing the need to constantly switch providers.
Mistakes to Avoid While Shipping to Amazon Fulfillment Warehouses
These are the following mistakes you should avoid while shipping to Amazon FBA warehouses.
Improper Labeling
Ensure your products are clearly labeled according to Amazon’s guidelines to avoid delays or rejections at fulfillment centers.
Amazon has specific requirements for product labeling, including information such as the FBA product identifier, manufacturer information, and any special handling instructions.
Following these guidelines assists you in scanning, sorting, and routing to the correct customers.
Incorrect Product Dimensions or Weight
Accurate product information is crucial for Amazon to calculate storage fees and shipping costs. Even slight discrepancies in product dimensions or weight can lead to unexpected charges.
Carefully measure and weigh your products, and factor in packaging materials when entering this information into your Seller Central account.
Exceeding Storage Limits
Amazon charges long-term storage fees for inventory exceeding allocated space in fulfillment centers.
These fees can significantly eat into your profits. Develop a system to track your inventory levels and sales velocity to prevent stockouts while also avoiding long-term storage fees.
Consider implementing forecasting methods to predict demand and optimize your inventory levels throughout the year.
Additionally, Amazon offers tools and reports within Seller Central to help you monitor inventory performance and identify opportunities for improvement.
Factors to Consider when Choosing a 3PL For Amazon FBA
Here’s a detailed breakdown of the key factors to consider when selecting a 3PL for your Amazon FBA business:
Location
Consider the geographic distribution of your customers. Choosing a 3PL for an FBA warehouse located closer to your target market can significantly reduce shipping times, potentially leading to faster delivery options for your customers and increased customer satisfaction.
Faster deliveries can also improve your product’s competitiveness on Amazon.
If you source your products domestically, a 3PL located near your suppliers can streamline the receiving process and potentially reduce transportation costs can be a significant expense.
Services Offered
Ensure the 3PL offers the essential services you need, such as receiving, storing, picking and packing orders, and shipping them to customers.
Many 3PLs offer additional services that can enhance your fulfillment process. These might include kitting, labeling, gift wrapping, returns processing, and even light assembly.
Identify any value-added services that could benefit your business and ensure the 3PL you choose can provide them.
Look for a 3PL that uses technology to seamlessly integrate with your Amazon Seller Central account, which allows for real-time inventory visibility, efficient order fulfillment, and streamlined communication between you, the 3PL, and Amazon.
Storage and Handling Fees
Amazon FBA 3PL typically charges storage fees based on the cubic footage of space your inventory occupies in their warehouse.
These fees can vary depending on the location, the time of year (storage fees often increase during peak seasons), and the specific 3PL. Compare the storage fees between different providers.
These fees typically involve picking, packing, and shipping costs. Some 3PLs offer a flat-rate fee per order, while others may have variable fees based on the number of items, weight, and dimensions of each order. Get detailed quotes from potential 3PLs that outline their specific fee structures to ensure they align with your budget and fulfillment needs.
Be careful of any additional fees that 3PL might charge, such as receiving fees, minimum monthly fees, or fees for special handling requirements.
Integration with Amazon
Be sure that the 3PL’s technology integrates smoothly with Amazon’s Seller Central platforms.
This allows for automotive order downloads, real-time inventory updates, and efficient tracking of fulfillment activities.
Smooth integration minimizes manual data entry and reduces the risk of errors.
Look for a 3PL that offers tools and reports that complement Amazon’s inventory management features. These tools can provide valuable insights into your inventory performance, helping you optimize stock levels and avoid stockouts or excess inventory that adds storage fees.
Amazon FBA Warehouses vs 3PL
Both 3PL vs FBA offer advantages and disadvantages, and the best choice for you depends on your specific needs and business goals.
Control and Flexibility
Amazon dictates most aspects of the fulfillment process, including storage locations, packaging materials, and shipping methods.
While convenient, this lack of control might not be ideal for sellers with specific branding requirements or those who want more customization in their fulfillment process.
Many 3PLs offer a wider range of fulfillment services and allow for more customization. You can choose warehouse locations, packaging materials, and even shipping methods (within certain parameters) to better align with your brand identity and customer needs.
Cost
Amazon negotiates discounted shipping rates due to their high volume, and their fulfillment fees are often transparent and predictable. However, storage fees can add up, especially for slow-moving inventory or bulky items.
3PLs often offer flexible storage fees based on actual space used, which can be advantageous for larger or irregular-shaped items.
Scalability
As your business grows and your inventory needs increase, Amazon automatically allocates more storage space in their fulfillment centers. However, it can also lead to higher storage fees if you’re not careful about inventory management.
Many 3PLs can scale their services to accommodate your growth. You can negotiate additional storage space or fulfillment services as needed. This flexibility can be particularly beneficial for businesses experiencing rapid growth.