9 Ways to Save Money, Time & Trouble by Outsourcing FBA Prep Fulfillment Work—
Before you try saving money by slogging your way through Amazon’s packaging, labeling and shipping rules, penalty fees and labor intensive processes, look at the true costs of trying to prepare inventory for Fulfillment by Amazon (FBA). Outsourcing your FBA Prep needs to a order fulfillment company affords you time and capital to invest in your business.
1. FBA Prep Services Allow You The Opportunity to Build Your Ecommerce Business
The most important risk to packing boxes headed to Amazon warehouses is the lost time that ecommerce merchants should be spending promoting products and managing your business.
No one knows as much about your products and how to promote your online business than you do. And professional fulfillment centers are designed to cost effectively meet Amazon’s regulations, taking advantage of economies of scale, buying power, and technology.
2. FBA Prep Services Speed Your Inventory Replenishment at Amazon
If you get any of Amazon’s shipping rules wrong, your inventory could spend 2 hours, 2 days or 2 weeks waiting for a human to scan it into Amazon’s inventory. Slow inventory replenishment is something you risk without expert FBA Prep Services. And during the peak selling season, delays are longer and more critical. Being out-of-stock risks lost sales now or a damaged IPI score longer term.
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3. Avoid Misplaced Inventory Using Experts & Fulfillment Software
In addition to having inventory stalled in Amazon’s problem-solving area, there are other ways inventory can be mis-managed without professional fulfillment help. If you’re using multiple channels, you’ll need to sync online orders across all those channels in real-time. Having inventory go unsold, because you don’t know you have it or selling inventory you don’t have are two problems that professional fulfillment centers can help you avoid.
For example, Amazon only updates twice daily, at midnight and noon. If you’re selling on both Amazon and your Shopify site, then Amazon could be selling product it doesn’t know you don’t have. At Amazon, out-of-stocks and backorders will affect your IPI (Inventory Performance Index) score. Your 3PL partner should guide you on how to use cart inventory, separating inventory for particular channels or marketplaces based on that marketplace’s practices. The client care team at a professional fulfillment center will be able to help you set up and maximize strategies to use the software to manage your inventory, and establish reliable low stock thresholds.
Your returns from online orders will need to get back into inventory where appropriate, quickly and accurately.
And Amazon removal order shipments don’t follow Amazon’s own rules. Cartons will arrive with mixed SKUs, damaged packaging and packing slips with incorrect quantities. When those shipments arrive, you’ll have to stop building your business to sort out the mess and inspect every item for damage. Using a receiving team that is accustomed to sorting Amazon’s removal orders, supported by inventory control software will help keep your inventory ready for sale to consumers.
If your products are out of stock, even if they are in Amazon’s building at the problem-solving area, your IPI score suffers.
4. Increased Software & Development Costs for Inventory Management
Whether you buy inventory management software off the shelf, or hire developers to build it, you’re footing the whole bill. When you’re working with professional FBA Prep Service fulfillment centers, your software and development costs are divided across many clients, and hundreds of shipments.
5. Doing FBA Prep Work Inhouse Risks a Lower IPI Score
If your products are out of stock, even if they are in Amazon’s building at the problem-solving area, your IPI score suffers.
Additionally, units that aren’t properly protected, can get mangled inside Amazon. When Amazon ships those units to customers, they lower your IPI score by returning the item as “damaged”.
6. Hiring a FBA Prep Center Avoids Increased Fees From Amazon
If items aren’t properly labeled, Amazon reserves the right to label them and charge you, under Unplanned Services. The same is true if they feel you need to bag, bubblewrap or tape items. If you fail again, after they give you 21 days to learn to do it properly, then they charge you even more per item. Fulfillment warehouses have all the equipment, materials and expertise to know how to label and package Amazon inventory. And they keep up with changes from Amazon, so you don’t have to.
Clients who started using eFulfillment Service for FBA Prep Services, report saving as much as $1,000 per pallet in penalty fees, from excessive inventory and long-term storage, to lessor errors like the wrong FNSKU label.
7. Avoid Increased Real Estate Expenses by Using FBA Prep Services
If you’re warehousing your products yourself, you’ll cover the rent for the space. If that’s the guest bedroom, an empty office, or an urban area those rents are a high price to pay. Look for an FBA Prep partner that is centrally located, to reach Amazon facilities all over the country, and offers economical storage.
8. No Need to Buy & Store Packaging Materials When You Use FBA Prep
FBA Prep Service companies get better pricing on ecommerce boxes because they buy in bulk to cover the needs of all their clients. When you outsource FBA Prep activities, you don’t have to tie up capital in empty boxes, or the space to store them. And you don’t have to guess what size boxes you’ll need. And you don’t have to negotiate packaging prices, or anticipate supply chain issues or seasonal challenges. Providing you with the right packaging, at a lower cost is part of the benefits of outsourcing your FBA Prep needs.
At eFulfillment Service, we have a handy FBA Prep Services Pricing Calculator.
eFulfillment Service is one of the few top fulfillment centers offering FBA Prep Services as a stand alone:
- No ecommerce order minimums to use FBA Prep Services
- Only use eFulfillment Service for FBA Prep Services and storage
- Get a complete Quote for FBA Prep Services
9. Volatile staffing costs, recruiting for seasonal increase
Either you’re hiring people to do this work, or taking staffers away from their primary responsibilities.
If you hire folks to handle your peak season, you’ll have all those recruiting, management and benefits costs, too. And then the heartache of layoffs if things slow down.
How do Amazon IPI Scores Affect Fulfillment By Amazon (FBA)?
About three months after you start selling on the Amazon marketplace, Amazon will review your sales activity and give you a score called an Inventory Performance Index (IPI). For them a good scenario is one where you have lots of orders going out, you don’t have too much inventory on the shelves and you’re never out of inventory. Your ability to maintain lively ongoing online sales, without running out, is captured in your IPI score.
IPI score thresholds change. In 2018, an ecommerce business needed to have an IPI score of 350 or above for Amazon to be happy. It has been as high as 450. As of January 1, 2022, sellers with a score below 400 will be asked to meet additional requirements (read: pay fees) or reduce the amount of inventory housed at Amazon.
That’s where an FBA Prep Service provider can help, keeping your excess inventory until Amazon needs it and following FBA Prep Service best practices.
Rather than trying to pull off FBA Prep in house, Amazon sellers can hire a professional fulfillment center to prep inventory for Fulfillment By Amazon. Outsourcing your FBA Prep needs allows you to focus on building your ecommerce business including your Amazon IPI score, promoting your online order volume and investing your capital in your store.
Profitability as an Amazon FBA seller depends on managing processes and implementing the right logistics. Supply chain optimization compensates for the investment in FBA preparatory services. Therefore, it is worth investing in transport and logistics management software to save time and money in the end, and to complete the process safely.
Software can help with logistics, shipping rates (although most Amazon Prep orders ship on Amazon’s account) and inventory management, for those sellers doing prep in-house. I suspect that you’re working with Fluix, one of those software companies. Some ecommerce merchants elect to avoid learning and using software, and have professional fulfillment centers do that work for them, as an option. Thanks for sharing your viewpoint.