Zero To Hero: Building a Brand Series
Inventory Storage, FBA Prep & Fulfillment Centres
Ecommerce inventory best practices – Welcome to another part of our Building a Brand Blog Series. In last week’s blog post we went over a brief introduction on social media and which social networks are best for Ecommerce sellers or importers.
This week’s blog post will be on a completely different, but equally important subject – Inventory Storage & Fulfillment. When it comes to product-based businesses such as ours, it’s important to not only get your logistics right, but also have the best rates and fast shipping.
I have used both FBM(Fulfilled by Merchant) and also FBA so I will also give my point of view on what works and what doesn’t. Although my main focus is on FBA, I normally still leave some units in a storage facility either to reduce my Amazon fees or to fulfill any orders from my own Ecommerce store.
This blog post will be all about how you can manage your inventory effectively and save fees when compared to Amazon. I will also show you how you can use a third-party fulfillment center to take advantage of busy periods such as the Chinese New Year or the December holiday seasons.
So let’s have a look at what options are there for importers or sellers and explore different ways on how you can manage your inventory effectively.
What To Look For In a Fulfillment Center?
If using a third-party fulfillment centre, ideally it should be as similar to Amazon FBA as possible in terms of service and efficiency. However, here are some features I look for when making my decision:
- The fulfillment centre should be in a strategic location so I reduce shipping costs from the country of origin.
- The FC should have a backend software system that enables me to track my inventory and gather other important data(fees, shipping rates, SKUs comparison, etc.).
- They should have integrations with all major Ecommerce marketplaces(Ebay, Amazon, Shopify, BigCommerce, etc.). This allows me to manage all my marketplaces(in terms of logistics) from one place.
- Their shipping rates should be as low as possible and they use all major courier services. Never use a fulfillment center that relies on one courier as it limits your options.
- If I’m using the fulfillment center exclusively for Amazon, I look for ones that have extensive experience dealing with FBM. The requirements are more strict when it comes to FBM and a few late shipments can compromise your Amazon seller account.
The Benefits of Fulfillment Centers
Fulfillment centers offer a lot of advantages for ecommerce sellers who want to expand towards other sales channels. Some of the benefits are:
- Cheaper long term storage than Amazon.
- Backend dashboard allows you to track inventory and shipping status of your products.
- Some FCs offer great rates for oversize items and storage.
- Ultimate control over pricing and customer experience(if selling from your own store).
- Brand-able shipping packages.
- No restrictions on inserts or marketing materials.
- Multiple integrations with eCommerce marketplaces.
- Ability to process returns easily.
- FC’s can make custom orders for special clients.
As you can see, choosing the right fulfillment center has a lot of benefits and if you’re planning on launching your own store, a FC outside of FBA is recommended.
FBA Prep Companies
Prep centres are storage facilities specifically used for preparing or assembling your products according to your requirements. FBA prep centres will make sure to prepare your shipments according to Amazon’s guidelines. This service might be very useful if you want to make sure that you have everything in order or if your product(s) come in multiple pieces and need assembly.
Nowadays prep centers have evolved and offer multiple services, including:
- Goods Inspection.
- Product Photography.
- Labeling, Knitting and Bundling.
- Inventory Updates.
- & much more.
Please note that prep centers don’t fulfill any customer orders, they should be exclusively used for storage, inspection and prepping.
Location, Location, Location!
When choosing a fulfillment center or storage facility, location is very important. Since ideally you want to save on shipping costs from your supplier/manufacturer to the destination(if not an FBA warehouse). When it comes to locations, my preference would be coastal states in the US. In particular:
- New York
If your supplier is in China or any other Asian country, Los Angeles would be my choice. LA has both the busiest port and airport in the US in terms of cargo, making it an ideal destination to ship your inventory. Also, a lot of fulfillment centers and storage facilities are situated around LAX airport or close to the port.
Shipping your goods domestically will always be cheaper, so the only way to save time and money with your imports is to pick the closest location in the US from your supplier/manufacturer.
Amazon Multi-Channel Fulfillment
Image Source: Forbes
Amazon’s multi-channel fulfillment service where you can use FBA to fulfill third-party orders such as Ebay or your own ecommerce store. This is extremely convenient if you want to have all the shipping and fulfillment in one place. However, in my opinion, the
Amazon fees are quite high and you even have to pay extra to have a multi-channel order.
If you don’t have a lot of sales from other channels you can use Amazon’s multi-channel fulfillment, however, if you really want ultimate control over pricing and customer experience on your own website, you should pick a third-party FC.
Fulfillment centers, prep companies and storage facilities allow you to diversify how you manage your inventory. If you sell on your own ecommerce store or have large/oversize items, a fulfillment center will help you reduce your fees substantially.
I would still suggest you to use FBA if most of your sales come from Amazon, however, ideally you would want to expand into other sales channels. By using a FC you would have ultimate control on pricing and customer experience.
In next week’s blog post we will talk about Product Branding. Manuel will guide you on the best practices on how to brand your product effectively and create stunning inserts and marketing materials.
We hope this blog post was helpful and as always, if you have any questions, kindly leave a comment below.
All the best and happy selling,