Ultimate Guide to Selling on Amazon – Fulfilment Edition

The Amazon platform and its Prime service are incredibly effective routes to market. But with several fulfilment options available to retailers, there’s some legwork involved in deciding which is the best fit for you. This guide breaks down Amazon fulfilment options to help you develop a strategy to grow your business on the world’s biggest Marketplace.

Firstly, what type of Amazon Seller you are?

Amazon retailers fall into two categories, “Vendor” and “Seller”. Anyone can become an Amazon Seller for a monthly fee. But becoming a Vendor is by invitation only, usually when Amazon sees your products selling well within a category.

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Vendor Central 

Features 

Amazon buys products from you “wholesale” (B2B) and then sells them directly to consumers. 

Benefits 

This is a very straightforward business model – selling to just one customer instead of thousands. As a Vendor, you will have enhanced Amazon Marketing Services to help promote your products and drive sales and loyalty.

Challenges

You will lose brand control, as products will be sold & fulfilled by Amazon. Vendors also lose price control which means Amazon can decide to sell your products at a much lower margin, undercutting the market.   

Things to consider 

As a Vendor Central Business, you will still need a warehouse that can manage bulk storage and stock delivery into the Amazon Fulfilment Centers. Amazon has exceptionally rigid fulfilment and delivery requirements, so getting these wrong can be costly, with chargebacks eating into profit margins. Engaging a fulfilment partner that already successfully works with Amazon can help save a lot of time and money.

Best for B2B Businesses who sell in bulk at lower prices.

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Seller Central

Features

Selling direct to consumers (D2C) via the Amazon platform in exchange for fixed selling fees. 

Benefits

As a Seller Central business, you can choose from fulfilment options giving you the flexibility to meet the needs of your business. At the same time, you will still access many of Amazon’s key benefits, such as consumer data analytics and Prime delivery.

Challenges 

Seller Central is a more complicated business model as it sells directly to a multitude of individual customers. You will also have to drive your sales on the platform. Amazon offers plenty of marketing support to sellers, but you will have to invest time to get a return.

Best for B2C Brands, manufacturers and retailers wanting to benefit from Amazon’s expansive customer base and marketing support 

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Seller Central Fulfilment options explained

Amazon Seller Central businesses can manage fulfilment from their own warehouse / 3rd party warehouse or use one of the many Amazon Fulfilment Centers dotted across the UK. There are three options for Seller Central business. 

  • Fulfiled by Amazon FBA
  • Seller Fulfiled Prime SFP
  • Fulfiled by Merchant FBM

The right fit for you will be based on your business model, goals and objectives. 

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Fulfiled by Amazon (FBA)

Features

With this option, Amazon will handle almost all the fulfilment processes, including storage, pick and pack, shipping, returns handling and customer service. Fees are charged per item by weight and size, and storage costs may be applicable.

Benefits

FBA makes your products automatically eligible for Prime, offering plenty of additional extras and bonuses to help you grow sales on the Amazon platform, such as next-day delivery and free customer service and returns.

Challenges

FBA isn’t always the most competitive service on the market for some products and businesses. It’s always worth comparing with an outside fulfilment solution. Additionally, you lose control over the marketing and presentation of your brand as products are delivered in Amazon packaging and with Amazon inserts.  

Additional Notes

Amazon will expect goods to be pre-packed to a particular requirement, so it is not an end-to-end solution. You will probably need your suppliers to deliver goods in the correct format, or you will need warehousing to rework goods.

Best for B2C Businesses that use Amazon as their central selling platform and for whom brand-building is not a critical business goal.

Read More https://services.amazon.co.uk/services/fulfilment-by-amazon/features-benefits

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Seller Fulfiled Prime (SFP)

Features

Allow sellers to fulfil orders directly from their warehouse while qualifying for benefits like Prime delivery, the Buy Box, Lightning Deals, and Amazon’s free customer service. You will also receive free customer service and returns.

Benefits

Access to Amazon’s Prime listings and brilliant marketing services with the flexibility of using your own fulfilment. You will retain control over your customer interaction via packaging, marketing, and customer data. It allows flexibility for brand-building marketing strategies such as branded packaging and personalised offers – discount codes, free products, gifts, and loyalty schemes. 

Challenges

You will have to commit to a high service level, offering next-day delivery 6 days a week via Amazon’s approved courier and postal providers. You will also need powerful order processing and stock control software to streamline sales and inventory to ensure maintained stock availability. If SFP requirements are challenging to deliver, outsourcing to an experienced SFP logistics partner like the PHL Group is a great solution.

Best for B2C Businesses wanting to benefit from the Amazon Prime service but need a more flexible, bespoke solution for their brand.

Read more here, https://services.amazon.co.uk/services/seller-fulfilled-prime/features-benefits.

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Fulfiled By Merchant (FBM)

Features

Works on the same basis as SFP; however, you are not committed to matching the strict fulfilment and delivery times. Conversely, you do not benefit from the advantages of the Prime service, like quicker delivery and some of their marketing services.

Best for B2C Businesses who need a flexible fulfilment solution that cannot meet the requirements for Prime. For example, large slow moving goods like furniture.

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Regardless of the fulfilment option, most businesses will require additional 3PL warehousing to store and manage their inventory before delivery to Amazon. The natural choice comes down to whether you engage an expert 3rd party provider or undertake to manage your warehouse internally. At PHL, we promote the advantages of outsourcing as saving time and money. However, with our expertise in this area, you will also gain the know-how and services required for a streamlined end-to-end fulfilment solution.

If you want a commitment-free chat about our Amazon fulfilment services, do not hesitate to contact Laura Palmer, our Business Development Director. 

We can provide a detailed cost analysis for each option tailored to your business free of charge!

01938 551919 or hello@thephlgroup.co.uk