FBA promises access to Amazon’s logistical infrastructure, but its hefty price tag may make it worth considering alternative options.

With the rising popularity of Amazon’s fulfillment services, it’s no surprise that online retailers are looking to tap into the platform’s impressive shipping and logistics infrastructure. By participating in Fulfillment by Amazon (FBA), third-party sellers can expand their reach, take advantage of Amazon’s customer service and reverse logistics offerings, and minimize warehousing and inventory overhead.

It’s an appealing concept: send Amazon your products and let them take care of the rest. Of course, opting into FBA has its potential drawbacks as well. If you’re considering participating in the program, here are a few things to consider that will help you make the best possible decision for your business.

Advantages of FBA

In 2016 alone, the number of active sellers using FBA rose more than 70%. For small- and medium-sized businesses still getting their sea legs, the ability to opt into an existing shipping and logistics network — with Amazon at the core — offers significant ease of use.

Participating in FBA is simple. You send items to Amazon’s fulfillment centers, which then store your inventory and enable you to track it remotely. Online shoppers can purchase your stock through Amazon, your own website, or other e-commerce platforms. Amazon then picks, packs, and ships the item, providing customers with tracking information along the way.

As you might expect, tasking Amazon with order fulfillment can greatly simplify a company’s shipping and logistics strategies. Just as importantly, however, selling on Amazon allows businesses to get their products in front of a wider, more engaged audience. Frequent Amazon users, and Prime members especially, have learned to trust products fulfilled by Amazon because of the platform’s affordable (or free) shipping, dependable customer service, and efficient returns process.

Disadvantages of FBA

FBA provides shipping and logistics services that may be right for certain businesses, but with its shifting fees and structural quirks, it’s certainly not a one-size-fits-all solution.

Take Amazon’s initial fulfillment and storage fees, which cover picking, packing, and shipping orders, customer service, returns, and monthly storage for remaining inventory. Those costs tend to change over time, spiking at intervals throughout the year. Indeed, standard-size inventory storage that costs $0.64 from January to September nearly quadruples from October to December. Similarly, while FBA offers multi-channel fulfillment, two-day shipping for smaller products purchased on another site can cost up to $8.00 for single-item orders.

In addition to these fees, FBA’s infrastructure can make it difficult to maintain quality control and oversight. For example, if a customer purchases an item from you on Amazon but a vendor with an identical item has inventory in a fulfillment center closer to the point of delivery, Amazon will ship that seller’s item instead. While you’ll still receive the revenue, you have no quality control over the other vendor’s product — that means orders could arrive damaged, incomplete, or with the wrong products altogether. This can result in negative reviews, unnecessary returns, and even getting kicked off of Amazon’s marketplace altogether.

Further, if your business sells items with longer shelf lives or if you often have stale inventory on your hands, storage fees really start to add up. After six months in one of Amazon’s fulfillment centers, your items will incur higher fees. After 12 months, those costs become prohibitive. FBA’s proprietary inventory tracking system can make it difficult to keep tabs on your stock — and without alerts to easily understand whether you’re in danger of being back-ordered — meaning it’s often difficult to know whether your business is prepared to meet fluctuations in demand or, alternatively, whether you’re burning cash on items that aren’t going anywhere.

How 3PLs Can Help

From reliable, if not relatively bare bones, customer service to a solid reverse logistics infrastructure, FBA certainly has its advantages, but that doesn’t necessarily mean it’s the best option for every retailer. If you’re looking for more control over your fulfillment program, Amazon offers several options in addition to FBA — Fulfilled By Merchant (FBM) and Seller Fulfilled Prime — that allow retailers to manage their own inventory and fulfill customers’ orders as they see fit.

Of course, these options come with their own sets of logistical challenges and considerations, meaning that if you intend on managing your own Amazon fulfillment program, you should consider working with a qualified shipping and logistics partner.

At Primary Freight, we have over 20 years of experience designing tailor-made shipping and logistics solutions for businesses of every size and in every industry. Our team is ready to craft a bespoke fulfillment strategy for you that balances your budget with your short- and long-term goals — all without the hidden costs and fees of FBA. Our dedicated team of experts, expansive partnership network, and sophisticated technological infrastructure will ensure your products are where they need to be when they need to be there, every time.

If you’re interested in learning more about Primary Freight’s award-winning services and support, give us a call today at (800) 635-0013.