The holiday season is just around the corner, and with the growing share of e-commerce sales that received a strong boost with the outbreak of the Coronavirus, this year will be more exciting and challenging than ever. This is why many retailers, e-commerce providers, and logistics companies have already started getting ready to optimize their setup. Amazon, for example, is hiring 100,000 new employees to scale up its fulfillment capacities to manage the upcoming holiday season successfully.
The Amazon FBA fulfillment solution, which is being used by many retailers selling via the marketplace, is quite popular because it facilitates effortless outsourcing of the fulfillment process. Amazon realized a long time ago that logistics and e-commerce shipping is a critical factor for online success. In the last 20 years, Amazon has invested millions of dollars into growing its logistics network to enable rapid and free shipping for consumers.
In fact, shipping prices influence the decision-making process, and shipping costs are one of the main reasons for shopping cart abandonment. Besides, slow shipping and limited delivery options are also conversion killers that highlight the importance of an optimized fulfillment process for meeting and exceeding online shoppers’ expectations.
Although Amazon FBA might be a good solution for some e-commerce businesses, others might want to consider other fulfillment alternatives that provide more flexible solutions for their D2C (direct-to-consumer) brand. With a growing number of 3PL (third-party logistics) providers, some decision-makers can feel overwhelmed. For that reason, we want to help out by providing an overview of how to choose the best cross-border fulfillment solution for Amazon FBA.
One of the main advantages of Amazon FBA is that the order fulfillment process is completely automated, which means that you, as a retailer. Do not have to take care of fulfillment at all. It renders it hassle-free and gives you the resources to focus on your core competencies.
Luckily, nowadays, modern 3PL providers offer a wide range of APIs to various e-commerce platforms. That enables you to integrate and automate your order fulfillment process as well fully. It will also empower you to get real-time insights into the order fulfillment process and the inventory levels, retaining full control of your logistics while outsourcing it.
However, depending on which channels you are selling your products, you should choose the fulfillment provider wisely. Also, it is worth mentioning that Channelengine can help you to implement a multi-channel sales approach successfully.
One of the main advantages of Amazon FBA is that it provides a network of warehouses across multiple countries. It gives you the possibility to distribute your inventory across several fulfillment locations to store your products in proximity to your customers. Suppose you have a strong international e-commerce presence and sell to your customers in various markets. In that case, you should look for a fulfillment provider that offers multiple fulfillment locations - at least in your strongest markets with high demand and considerable growth potential.
You definitely want to avoid working with multiple fulfillment providers at once in various countries because this will create more work as complexity increases and will prevent you from getting centralized reports to optimize your fulfillment.
One of the main reasons why retailers decide not to choose Amazon FBA as their fulfillment solution is the lack of flexibility in the fulfillment process. When you decide to outsource your pick, pack, and shipping processes to Amazon, you have to be aware of the fact that you lose full control over it. It is especially relevant when you’re running a D2C brand where your brand is one of your most important assets. Creating a memorable, unboxing experience helps e-commerce brands to increase their reach through social media shares.
Additionally, it improves customer lifetime-value (LTV) through increased retention. To achieve that, you need to find a fulfillment provider who provides customizable and sustainable packaging options for your orders. It will enable you to differentiate your e-commerce brand from your competitors. One possible solution is to provide the warehouse with your own branded packaging material. So when doing your fulfillment partner research, make sure to clarify to which extent you can customize the pick and pack process and communicate your expectations.
Depending on the country you are shipping from with Amazon FBA, Amazon will use its own delivery network or one of its partner-carriers. Since Amazon is responsible for a considerable share of the total shipping volume for carriers, they have strong leverage when talking to shipping service providers.
Most 3PL providers don’t have the same leverage and, in many cases, only have contracts with one single carrier. This dependency can be problematic for online retailers and the fulfillment partner, as the coronavirus outbreak has shown. In times of crisis or peak seasons, logistics companies face bottlenecks, leading to technical timeouts or operational difficulties. It, in turn, prevents you from delivering the products to your customers. Therefore, you should look for a fulfillment partner who works with several shipping service providers to reduce the risk of operational timeouts. Besides, this will give you the possibility to offer multiple delivery options, which will positively impact your conversion rate.
Returns are, without any doubt, an essential part of e-commerce and play an important role in the decision-making process of consumers. In fact, according to a study conducted by Klarna, 82% of consumers consider returns as a regular part of contemporary shopping. Also, 54% of consumers state that free returns would increase their likelihood of purchasing again from the same store.
It clearly shows that offering free returns to online shoppers contributes to increased trust levels and encourages purchases in your online store. Therefore, a hassle-free return-management process is critical for your e-commerce business. As a result, when looking for an alternative to Amazon FBA, you should make sure to choose a fulfillment provider that facilitates a smooth and automated returns process. It can be achieved via the usage of a returns portal, which will help you increase customer satisfaction, improve retention, and get better insights on why people return products to reduce your return rate.
Besides FBA, Amazon offers two fulfillment options: seller-fulfilled prime and fulfilled by merchant:
Amazon Fulfilled by Merchant (FBM) is when the merchant directly completes the e-commerce fulfillment process or does that via third-party fulfillment (3PL). In this case, you, as a retailer, have full control of storage, pick & pack, shipping, and returns management. You can then choose to outsource that to a fulfillment provider.
Seller Fulfilled Prime (SFP) is an order fulfillment program offered through Amazon that enables a seller to ship Prime orders directly to customers from their warehouse or a 3PL provider. By meeting the Amazon Seller Fulfilled Prime strict requirements and high shipping standards, you can display the Prime badge on listings, enabling you to get easily noticed by online shoppers.
Of course, there are also other alternatives that you have to consider when choosing your fulfillment partner. For example, if your fulfillment partner can handle dangerous or fresh goods, in case this is required in your industry. Even if the 5 factors we have described are critical ones, there are other aspects you might want to consider and evaluate. Again, this shows how complex fulfillment can be and emphasizes the argument that choosing the right logistics partner is an important business decision. In the end, you have to find a logistics partner who fits your industry and can meet your needs and expectations.
byrd offers a scalable and digital fulfillment solution for online retailers. With the cloud-based logistics software, companies can outsource and automate their complete logistics, from storage to shipping, and gain access to an international logistics network. With our partner, ChannelEngine.com, retailers can connect their systems to global marketplaces and sales channels, enabling them to increase their reach and fully automate their multi-channel fulfillment.