Getting started with and using Amazon FBA is mostly a breeze which is why it is so popular. But should some Amazon FBA sellers consider moving from Amazon logistics to a third party logistics provider?
This is what we will examine in this post.
What is 3PL?
3PL stands for Third Party Logistics. A third party fulfillment center similar to Amazon FBA that will be picking, packing, and shipping your orders to customers — so you don’t have to.
Just like you do with Amazon FBA you would send inventory to the 3PL service provider warehouse and work to integrate your business workflow with their systems.
And the good news is there are plenty of great 3PL service providers available — and the number is growing as eCommerce overtakes traditional lines of retail.
What are the Benefits of Using a 3PL instead of Amazon FBA?
Let’s review some of the reasons that seasoned Amazon sellers may consider moving from fulfillment by Amazon to using a 3PL provider.
Using FBA is great, but it is not without negatives or limitations.
Amazon Expense Spikes Without Warning
Amazon FBA fees can go up unexpectedly during periods of heavy use and Amazon does not hesitate to force changes like this on customers.
With 3PL businesses being smaller you would expect that these third-party logistics companies are more sensitive to unannounced pricing hikes. I have never heard of any third-party logistics providers increasing costs during busy periods.
Amazon has a bit of a bully pulpit in the marketplace and that does not favor your business.
Amazon Emergency Shutdowns Can Kill Your Business
Amazon FBA during the season of Covid caused chaos and agony for many Amazon sellers reliant on the Amazon FBA fulfillment network.
For a period only masks or other medical products were being processed for fulfillment, leaving many small business owners in the lurch.
Sellers who were deemed as selling non-essential goods saw huge delays in delivery times and to make matters worse, Amazon was not accepting inbound shipments to replenish inventory.
Limited Control of your Inventory
In a word these Amazon sellers were frozen. I know there were many sellers who had devastating negative effects on their business from these Amazon restrictions.
Do you want to go through that again?
Considering recent history, it is smart for sellers to have multiple fulfillment partners in place. A single point of failure during the next major crisis will not be pleasant.
Amazon Has Limited Personalization Options
Amazon just announced that you can get fulfillment by Amazon orders sent out in a plain brown box with no Amazon logos — and that is a nice new feature.
But with third-party fulfillment you can have your own personalized branded boxes or even have inserts, coupons or catalogues inserted within your shipments.
That could be a game changer for many businesses.
Beyond branded boxes if you wanted some other unique packing materials to enhance customer experience — there is no way of getting that with Amazon fulfillment.
But most 3PL firms will gladly work with you.
Customer Service Challenges
While Amazon is arguably the best run big-tech company in the universe, we are still talking about a massively huge company.
Getting customer support for fulfillment by FBA issues quickly and easily is always going to be a challenge. That is how these things go when you are one of MILLIONS of customers.
Something will go wrong and when it does do you want to be able to dial up help on the phone or navigate through layers of back and forth email messages for days?
Amazon Seller Central Has Poor Usability
Amazon obviously is a great company that can get things done, but strangely the usability of much of their software is poor. Amazon Seller Central as whole strikes me as software that was created and designed by engineers for engineers.
What this means is that the usability of Amazon Seller Central is poor. It can be hard to get started, use, and is difficult to in general.
There are third party tools you can use to create Amazon FBA shipments more easily but this speaks to the void Amazon created by not employing care about usability in their software.
What to Look for in a 3PL Service Provider?
When looking for alternatives to Amazon FBA there are some key elements to consider in partnering with a 3PL service provider.
It is pretty obvious that shipping times are a vital consideration for any eCommerce business. What is also obvious is that some 3PLs will do a better job shipping out orders quickly.
So you need to do some shopping around and research the different third party fulfillment centers in terms of shipping capabilities.
Generally more warehouse locations means added flexibility. This can be especially helpful when working with a third party fulfillment provider possessing locations outside of the US.
Companies with more fulfillment centers increases odds of quicker delivery to your Amazon customers.
Some 3PL firms will be more expensive than using Amazon FBA, some could be less expensive. Some of the 3PL firms even have explicit tools or pages to compare their charges to Amazon FBA such as this ShipBob Amazon FBA calculator tool.
The main areas to review for cost would be:
- Shipment to 3PL warehouse = costs for mailing packages to the 3PL warehouse. Note that Amazon provides some nice discounts with shipping inventory to their warehouses.
- Inventory receiving = costs for unpacking your incoming inventory sent to the 3PL warehouse.
- Storage fees = costs for storing your inventory at the 3PL warehouses. If you have slow moving items, keep in mind that long-term storage fees could eat into your profit margins.
- Order fulfillment fees = costs for picking, packing, and shipping out your customer orders.
- Other fees = some 3PL service providers have additional charges you will want to consider.
Amazon Seller Fulfilled Prime
You may be thinking that not using Amazon FBA means you cannot have that welcomed Amazon Prime badge displayed for your items on Amazon.
With the Seller Fulfilled Prime (SFP) program you can still have your products sold as Amazon Prime items.
Seller Fulfilled Prime is an Amazon Prime program that allows you to deliver directly to domestic Prime customers from your own warehouse. Many 3PL service providers will support this.
The caveat here is that unless you already have access to Amazon Seller Fulfilled Prime, you likely will have to wait for access to this program.
Currently there is a waitlist to join Amazon Seller Fulfilled Prime.
Who are Some of the Best 3PL Service Providers?
Do your own research to find ones that look like a good fit for your needs. There are lot of 3PL companies now and this is a rapidly growing industry.
You may even find that there are some good providers located near you.
Here is a list of 3PL firms I see most often mentioned within Amazon Seller forums.
3PL for Amazon Seller Conclusions
Amazon FBA is great program, but it is not without its negatives or limitations. Using a 3PL provider can help grow your Amazon business, provide more dynamic capabilities, and enhanced branding opportunities.
You may also find that using a 3PL saves time, trouble, and stress in the operation or your Amazon selling business — while providing new opportunities. And with Amazon Fulfilled Prime you could still have products with Prime eligible status.
Large Amazon sellers should seriously consider using a 3PL provider and investigate the benefits to their Amazon selling business.
* Please note we may include affiliate links in some posts. But only for products we use personally and have deep faith in.