The choice between Amazon and 3PL providers is a difficult one. Both have their strengths and weaknesses, but you need to explore every option for distribution. So, which order fulfillment option best fits your business? Read on to find out if you should use Amazon or 3PL for Order fulfillment.
It Can Be Hard to Know Whether Your Needs Are Better Served by 3PLS or Amazon.
Amazon FBA is a service that allows sellers to store their products in Amazon’s warehouses. The program streamlines order fulfillment for sellers. In return for this convenience, Amazon charges fees based on the size of each product’s box and weight. It sets an annual fee ranging from $40-$249 per month, depending on how many items you sell through them.
A 3PL can help small businesses with order fulfillment by simultaneously taking over all these tasks. This may include packaging orders and picking them up from vendors.
Knowing whether a third-party logistics provider better serves your needs can be hard. So, if you want control over pricing, then using something like eBay maybe help you achieve those goals. But they don’t provide much protection against intellectual property theft either. So, having enough stock kept somewhere else might cost more money.
Third-Party Logistics(3PL) vs. Amazon Fulfilment Service (FBA)
Amazon Fulfillment Service (FBA) and 3PL are two different ways of handling order fulfillment. To understand the difference between the two, it’s essential to know what each one does.
Amazon FBA is a service offered by Amazon that allows you to store your products in Amazon’s centers. You can pick, pack, ship, and provide customer support for those products.
In contrast, a third-party logistics company (3PL) is an outside vendor. It handles order fulfillment for companies that do not have warehouse capabilities.
Quick read: Top 5 Value Added Services 3PL Companies Can Offer.
Will My Products Sale?
If you’re planning on starting your own business, or if you’ve already begun and are looking for ways to expand, there are a lot of decisions to make. One is whether or not to use an Amazon 3PL service like Order Fulfillment by SellerCloud.
The first thing you need to think about is how extensive your inventory will be in the future. Suppose you’re just starting with only a few items in stock. It might be difficult for even an expert packing team at an Amazon fulfillment center (FBA).
On the other hand, if there’s no limit on inventory orders, then it could lead to an increase in profits. The profits could help offset some costs incurred elsewhere.
Storage Space
Another important consideration is whether or not you need a warehouse. If you are storing a lot of inventory, it may be best to work with a 3PL. But if you are not keeping a lot of stock and do not want the hassle of managing your warehouse, then working with a 3PL might be the better option.
Working with an Amazon FBA seller is crucial. However, the area must be secure when setting up your storage space. Furthermore, it must have good lighting and ventilation systems. These requirements will help you keep products fresh and safe from theft or damage. It can also shield products from natural disasters like earthquakes.
Handling Returns
Returns are a fact of life in eCommerce, and how you handle them can make or break your business. If you are selling on Amazon, it takes returns for you and refunds the customer’s money. But if you sell on your website, it’s up to you to process the customer’s return request and refund their money.
Many sellers use a 3PL like ShipBob or Fulfillment by Amazon (FBA) to handle these functions. This ranges from receiving inventory at their warehouse to fulfilling orders.
Advantages of Shipping With A a 3PL
Shipping with a third-party logistics provider (3PL) can offer many benefits. Here are some of the main ones:
1. Lower costs. Shipping with a 3PL can be cheaper than other methods. This is because they can negotiate better shipping rates. Plus, they can cut out the middleman and use their equipment.
2. Faster delivery times. Working with a 3PL fleet of trucks and drivers is beneficial. There’s no reason you should have to wait around for days on end for shipments to arrive. You can expect them on time and ready to go!
3. Better tracking. 3PLs will keep track of your shipments. So, you can see exactly where they are at all times. Therefore, if something goes wrong, they will help fix it.
Storage Location
3PLs provide more flexibility when it comes to storage locations. This is especially important if you sell your products on Amazon Marketplace. If you sell a product that does well in one area, you can use a 3PL to store that product in another room where demand is lower than expected or vice versa. 3PLs don’t charge per unit of storage as Amazon FBA does. So, they can save money by storing less-popular products at lower costs.
Third-party logistics allow greater flexibility with storage locations. Therefore, this will lead to lower costs over time. Besides, they don’t offer the same level of convenience as FBA.
Ease Of Use
Ease of use is one of the most significant factors to consider when choosing a fulfillment method. You may not be familiar with your company’s inventory management system. So, consider a third-party logistics (3PL) provider. 3PLs will handle all aspects of order fulfillment. They also help manage inventory levels. They do this by managing inbound and outbound shipments based on demand.
In contrast, if you are familiar with the technology, FBA may be an easier choice. With FBA, customers can purchase directly from Amazon on their site. But they can have their products fulfilled through an existing account at FBA.
This process requires less setup time than working directly with sellers through 3PLs. So, there are fewer opportunities for errors. The errors could lead to unhappy customers or lost sales.
Conclusion
Depending on your needs, you should choose between AMAZON OR 3PL for Order Fulfillment. Amazon might not be the best option if you’re a small business because their inventory and shipping costs can add up quickly. Plus, many other fees come with using their services. For more details, contact sales support.