Mistakes Businesses Make When Using Amazon Fulfillment Services
Fulfillment by Amazon makes it easy for entrepreneurs to start selling products on Amazon. They handle all the logistics for you, allowing you to focus on marketing and scaling your business. You don't have to worry about packaging or processing returns; Amazon does it for you.
However, while Amazon fulfillment services can be profitable, sellers do make mistakes that eat into their profits. In extreme cases, Amazon can terminate your account and delist your products.
If you are using Amazon fulfillment services for the first time, identifying these issues will help you save money and time.
Underestimating Amazon Fulfillment Services Fees
One of the biggest issues new sellers and businesses encounter is the complex Amazon fulfillment fee structure. Fulfillment by Amazon will charge you for storage, handling, packing, and even returns.
The longer your products stay in their warehouses, the more storage fees you will pay.
Most business owners don't factor in the expenses when setting up shop. Your product can sell well, but your profit margins can take a hit because of fulfillment fees. However, there is a hack around it.
Always use Amazon’s FBA Revenue Calculator before using the services. Compare their fees to those of other providers, especially for goods that require significant warehouse space.
Sending Too Much Inventory in One Go
Sending a massive inventory to Amazon is never a good idea. Two things come into play. First, you will pay more when it comes to storage fees. The other thing is that you may be allocated limited storage space in the future if your products don't move as fast as you expected.
Excess inventory will hurt your Amazon Inventory Performance Index. A low score means that the amount of stock you can send will be limited.
There are easy ways you can avoid this issue. Ship in small batches and monitor the sales rates. You can also lease a storage unit or partner with a 3PL company to avoid overstocking Amazon's washhouses.
Ignoring Multichannel Fulfillment Partners
This is not to say that using Amazon fulfillment services is bad. However, partnering with companies like Packageman that offer multichannel fulfillment makes more business sense, especially if you operate other stores on Shopify or eBay.
Not using multichannel partners means you have to juggle between different warehouses and shipping processes, racking up more expenses.
Always compare the costs charged by different potential 3PL partners offering multichannel fulfillment services. You will be better off using a 3PL service if it can handle orders from different channels with a streamlined shipping process.
Failure to Follow Through
Most sellers often think that using Amazon fulfillment services means sending their inventory to an Amazon warehouse and hoping everything will run well without oversight. Without regular checks, you might miss low-inventory alerts, rising fees, or changes in Amazon’s policies that affect your sales and profits.
Monitor your account on a regular basis and watch out for pricing, performance, and policy changes. Also, always have a backup fulfillment plan should there be disruptions in Amazon’s network.
By avoiding the common mistakes above, you’ll make the most of Amazon’s logistics network while keeping your business profitable.