As eCommerce businesses grow and look for new markets, becoming an Amazon seller seems like a no-brainer. When a retailer chooses to sell on Amazon, options for Amazon fulfillment include Fulfillment by Amazon (FBA) and Seller-Fulfilled Prime (SFP). In the first model, all inventory gets shipped to Amazon, which then takes on the responsibility of picking, packing, and shipping out customer orders. In the latter model, the seller remains responsible for getting orders to customers within the tight shipping windows Amazon defines for its Prime customers.
Amazon Announces Fee Changes in 2022
Letting Amazon take the wheel could make sense for most growing online businesses since they typically lack warehouses or internal fulfillment capabilities. As order volumes climb higher, however, Fulfillment by Amazon can become prohibitively expensive for the third-party seller. Even worse, sellers moving high inventory volumes through Amazon’s FBA service must also take an added financial hit as FBA raises its prices.
Though 2021 adjustments to FBA fees were minimal, Amazon recently announced a variety of fee changes for 2022, including:
- January 18, 2022: A 2–8% increase in FBA fulfillment fees, depending on product
- January 18, 2022: More than 100% increase in removal/disposal fees in most categories
- February 1, 2022: Increases in monthly storage fees
- May 15, 2022: Additional surcharges for aged inventory
FBA sellers should send inventory disposal requests and remove aged inventory from Amazon’s custody before the deadlines above to avoid unnecessary expenses in the short-term. Given these costs and their impact on an eCommerce seller’s profit margin, it may also be time for larger eTailers to seek alternatives to Amazon FBA.
What are the Alternatives to Amazon FBA?
Fortunately, it’s possible to continue selling on Amazon without relying on the eCommerce giant to fulfill your orders. Fulfillment under the Seller-Fulfilled Prime program can be handled in one of two ways:
- Do it yourself. You, the retailer, take on all responsibility for fulfillment. This process means buying or leasing one or more fulfillment centers, staffing those facilities, and obtaining all necessary equipment and technology.
- Outsource to a third-party fulfillment partner (3PL). Companies like Amware Fulfillment can provide the building, staff and equipment to meet your fulfillment requirements.
3PLs stand as practical alternatives to Amazon FBA for mid-to-large-volume Amazon sellers, especially those with eCommerce order volumes across all B2C channels of at least 10,000 a month. No 3PL can match the size of Amazon’s warehouse network, but many do offer a nationwide fulfillment network for 2-day delivery. In addition, 3PLs provide a level of personalized service and customized fulfillment processes that FBA can’t match.
Turning to a 3PL fulfillment partner to manage your Amazon orders offers numerous advantages over FBA:
Cheaper storage. Recent storage fee hikes from FBA are not a new trend. Amazon raises costs associated with storage for existing FBA users at least once every few years. Now, given Amazon’s latest fee adjustments for storage and aged inventory, a 3PL could make more financial sense for many sellers.
More channels. A 3PL can use the inventory you provide for fulfillment on any of your sales channels. While Amazon does offer a multi-channel fulfillment service, storing inventory and fulfilling to non-Amazon channels comes with additional fees.
Greater customization. Your Amazon orders typically ship in Amazon-branded boxes. There is little-to-no opportunity to customize packaging. In contrast, 3PLs will pack out your order according to your precise SOPs. That might include:
- Shipping in your own branded boxes
- Customizing dunnage to match your brand colors
- Insertion of coupons or other promotions
Amware Fulfillment: Your Alternative to Amazon FBA
Amware Fulfillment is ready to help existing FBA users who ship at least 10,000 monthly orders across all B2C channels. If you’re concerned about what new FBA rates will mean for your bottom line, please don’t hesitate to contact us.
