Here’s a truth that the most successful businesses know: Happy customers are the driving force behind a thriving company. As an FBA seller (that stands for “Fulfilled By Amazon”), fulfillment is one of the biggest obstacles standing between your business and those coveted five-star customer satisfaction reviews.
Amazon has become the leading e-retailer in America, raking in nearly $470 billion in revenue in 2021 alone. With roughly 150 million Amazon Prime Members and 300 million active customer accounts around the globe, the powerhouse has experienced an estimated 21% revenue growth, on average, year over year.
While it’s hard to wrap your head around the enormity of those numbers, they certainly aren’t surprising. After all, the platform offers consumers a simple way to stock up on everything from groceries and electronics to clothes and school supplies.
As your Amazon business grows, there ultimately comes an inflection point when your sales volume requires a robust, efficient, cost-effective logistics and fulfillment strategy. Managing orders in-house simply isn’t viable as you build your sales volume. And utilizing your living room as a makeshift storage space is akin to skipping leisurely through a minefield.
A third-party logistics (3PL) provider can help keep all your limbs intact and ensure you maximize your success as an Amazon seller. A 3PL partner can handle everything from warehousing and inventory storage to order fulfillment, distribution, and delivery.
Outsourcing to a 3PL can provide much value for Amazon FBA sellers who want to improve efficiency and profit margins. Here are four ways a 3PL offers a beneficial alternative to FBA and bridge fulfillment gaps for Amazon sellers.
1. Packaging and Personalization
What makes your kid-friendly arts and crafts kit different from those of another Amazon Seller? That’s the million-dollar question. What’s the differentiator? The price tag is the same. They both have googly eyes, pom poms, and an array of paint colors. So one essential way to gain a competitive edge and build a memorable brand is through your customer experience.
Today’s savvy consumers want a pain-free experience, from checkout through a product’s arrival on their doorstep. Now, there’s no denying that Amazon is a well-oiled machine for order fulfillment. After all, their multibillion-dollar operation cranks out thousands of orders daily – a feat that requires the utmost efficiency. But, in the same breath, this is a key weakness.
Why? The FBA processes must be as streamlined as possible to manage this volume. Deviating from the norm is not the name of the FBA game. Every item is packaged, wrapped, and shipped identically. Every. Single. Time.
And to make matters worse, the FBA service sends your merchandise in Amazon-branded boxes. Custom inserts or packaging? Not in their wheelhouse.
If you’re a small business that only receives a handful of orders each month, and you have no interest in scaling, this isn’t an issue. However, if you’re looking to increase revenue and retain brand identity, then customized packaging will play an integral role in building brand awareness and customer loyalty.
Think about it from a customer experience standpoint. If someone receives an Amazon-branded package, they’ll naturally associate that product and purchase with Amazon – in other words, NOT your business. The customer experience is a pivotal piece of a successful business, and the spotlight should be on your brand, not the vendors. Implementing branded packaging, gifting, or a similar means of differentiation into your fulfillment process is an effective way to ensure people continuously choose your craft kit over a competitor.
Whether you opt to utilize custom inserts, unique packing filler, or branded boxes with your logo and tagline, partnering with a 3PL will eliminate this roadblock and ensure you’re delivering an optimal customer experience.
2. Seamless Inventory Management
Year over year, Fulfillment by Amazon fees have continued to rise. In 2021, FBA storage costs increased by 4%. As a result, many businesses were forced to either understock – a money-saving strategy that could be detrimental to sales during holidays and seasonal peaks – or overstock, which poses the risk of unnecessary storage expenses for idle inventory. And fulfillment fees across the board have increased as much as 20% over the last 18 months.
Generally, Amazon distribution centers have higher storage fees compared to 3PLs. These expenses only tend to rise during periods of high demand. And because they offer less fluidity in inventory cycles, FBA sellers often face difficulties negotiating pricing due to inventory spikes and dips.
Because buying trends constantly fluctuate, staying ahead of the competition requires sellers to stay agile and adjust their strategy to meet the market's evolving needs. Due to inventory requirements and limitations, the FBA program requires sellers to relinquish control of their inventory, making it difficult to quickly adapt to meet consumer demands.
Beyond pricing, there are other advantages surrounding inventory that are important to consider. For one, the right 3PL partner will provide added value in the form of inventory management solutions. They utilize innovative software and systems to provide real-time inventory insights, maintain and replenish stock, perform cycle counts, and more. This ensures you’re adequately meeting consumer demand and that inventory is accounted for, saving you from any potential financial loss due to inaccuracies.
3. Elevated Customer Service
Even with excellent planning and preparation, an issue is bound to pop up every so often. The question is: what will happen when a customer runs into a problem? How will it be handled? Or, in a similar vein, what happens if you encounter an issue and need prompt resolution?
By now, you likely know the drill. Searching for a solution via FBA or Amazon Seller Central can be incredibly frustrating. You or a customer will dial a 1-800 number and speak with a representative unfamiliar with your business, history, branding, or how you’d like to communicate with your consumer base.
But that scenario would play out completely differently when you align your business with the right 3PL partner. Why? Because they have specialized customer support personnel with whom you’ll form a close working relationship. They’ll come to know your business intimately and serve as an advocate for all your needs — whether those needs are inventory-related or a customer requesting a return.
First-class customer service is a non-negotiable in today’s cutthroat business world. And knowing you have a dedicated team to represent your company’s best interests and uphold your brand promises is crucial for building customer loyalty and repeat business.
4. Expertise to Drive Your Success
As a growing FBA brand, you need two crucial factors to drive upward mobility: specialized expertise and a fulfillment partner with the resources to adapt to your changing needs. Need a partner with the ability to handle high-volume orders seamlessly? Launching a new line of temperature-sensitive goods that requires specific equipment to maintain product integrity?
A 3PL has the flexibility to adjust solutions and implement new strategies to accommodate demand, growth, or business changes that may arise. This level of personalization simply can’t be replicated through FBA. And at the end of the day, to truly maximize your ROI, you need a partner that can tick off all the boxes, from omnichannel fulfillment and two-day delivery to the ability to integrate with your tech stack.
Leveraging a 3PL with expertise in supply chain logistics is an effective way to drive improvements across different areas of the business: profitability, operations, workflow efficiency, and more. From exploring shipping options to strengthening order accuracy, a 3PL provider can devise strategies to help move you closer to hitting your goals.
Your business is not just another cog in the machine when you partner with a 3PL. 3PLs have the infrastructure and expertise needed for your business to scale and succeed. Because you’re not just a contract, you’re a partner. And staying on top of your game requires a partner that can both navigate challenges and provide innovative solutions, like automation, to bolster efficiency and ensure you’re making data-backed business decisions.
Discover a Smarter Way
The difference between success and failure as an Amazon seller? Utilizing the right fulfillment and logistics partner. By outsourcing your FBA needs to a 3PL like Smart Warehousing, you can rest easy knowing your customers and inventory are being taken care of, so your team can focus on sales, production, and branding initiatives. Why limit yourself? Contact us today to learn more about how Smart Warehousing can support your FBA-related business needs.