Amazon is a behemoth marketplace, with the opportunity and buyer volume that can earn a single merchant millions by finding the right product and mastering Amazon marketing. Some merchants stumble onto a great SKU almost by accident, whereas others have Amazon selling down to a science.
Whether your Amazon experience is easy or hair-pulling, you should know how to use their fulfillment arm; Fulfillment by Amazon (FBA), and how FBA prep services can help you make your seller journey a little more simple (and effective).
In this article, we’ll talk a little more about what exactly Amazon FBA is, what an FBA prep service looks like, when it’s time to outsource FBA prep, factors to consider in a partner, and questions to ask before you commit.
Use the contents below to jump to different sections of our guide.
- What is Amazon FBA?
- What is an FBA prep service?
- Benefits of working with an FBA prep service
- When to consider outsourcing FBA prep
- How to choose a good FBA prep service
- Questions to ask when outsourcing FBA Prep
What is Amazon FBA?
FBA stands for “Fulfillment by Amazon” and is Amazon’s fulfillment arm.
Amazon has more than 100 fulfillment centers in the USA, enabling them to achieve fast delivery speeds all across the nation. Amazon merchants like you can tap into that speed by sending SKUs into the FBA network. Then, when someone orders your item on Amazon, the FBA network kicks in to get it to your buyer as quickly as possible.
However, Amazon FBA has a few requirements to keep their operations running so efficiently. For example, all items must be labeled and packaged appropriately. If you send something into the FBA network that is non-compliant (for example, multiple labels, or on their restricted products list), you risk losing time and money with penalties, back-shipping, and more.
So, let’s talk about your options for prepping items to go into the Amazon FBA network. You can do it yourself, following their extensive guidelines, but this is hard to scale as you grow (we’ll talk more about that later). Another popular option is to send your items into an FBA prep service.
What is an FBA prep service?
As far as storage and shipping are concerned, Fulfillment by Amazon has you covered. eCommerce businesses just need to deliver their products to Amazon’s fulfillment centers — but those products need to be prepped.
FBA prep entails sending your inventory into Amazon. It basically focuses on the packaging and labeling of products, and in some cases, sellers require an inspection of their inventory.
FBA prep is more complicated than throwing everything into a box and handing it over to a courier. There are a number of stringent rules you need to follow for your items to be accepted at Amazon fulfillment centers. Complying with their requirements is mission critical. Otherwise, Amazon won’t take your stock, you’ll have it all returned, and unfortunately, you’ll still have to pay.
There are three options when it comes to FBA prep—do it yourself, pay Amazon to do it, or outsource it to a third party.
Benefits of working with an FBA prep service
By hiring an FBA prep company, you can streamline all the tasks required in selling on Amazon. You can rely on the services of the company, which includes receiving, inspecting, shipping, as well as labeling all your products for you.
Here are the benefits of outsourcing Amazon FBA prep, merchant fulfillment, and storage services.
1) They handle the complete packing requirements of Amazon
Amazon has several protocols in packaging products that need to be strictly followed. Firstly, all your FBA products must have a scannable barcode. Aside from the codes, it must have a warning label of the expected size of the product compared to the actual size of the packaging. It must have the right size, fragility, and material for packaging. It must also qualify their three-foot drop test, as well as conform to the quality required of poly bags.
An FBA prep company can handle all the packing requirements from start to finish. Before the product is sent off to Amazon, you’ll be confident that your packaging has passed the tediously strict Amazon requirements.
2) They assure product quality and prepare items for shipment
Inspecting the product and its packaging can consume a chunk of time in your operations. The reality is that packing can cause confusion in sorting. It can also result in incorrect labeling. This will increase the chance of more returns from customers, which will risk spoiling your reputation as a seller.
To make sure that your reputation stays pristine, hire a professional FBA prep company that can handle all the stages of inspection for you. They can provide a complete inspection of each of your products and help to assure quality.
3) They save you time, effort, and money
With the efficiency offered by an FBA prep company, they can lessen your operating costs instead of adding to expenses. For example, one fee can cover the labor and materials needed for labeling, kitting, bundling, and even the price of protective packaging.
Additionally, you’ll only be charged for the services you need per SKU. That means you can customize the services you can offer to your customers, which gives you the leeway to work on your prices.
On top of that, working with an FBA prep company also saves you time and effort. A professional prep company can improve efficiency and save you valuable time that you can use to focus on marketing your products instead.
When to consider outsourcing FBA prep
When you choose to run an Amazon business, it’s either you manage everything yourself, pay Amazon to handle it for you, or delegate operations to a prep service. The first option can leave you frustrated, especially when you’re new in the business, while the second may cost you more than you anticipated. Here are a few signs it’s time to go for the third option.
1) You’re spending all your time on prep
Amazon enforces a lot of rules when it comes to managing inventory. When you attempt to do it yourself, you can expect to waste a lot of time studying, inspecting stock, acquiring boxes, printing labels, finding space to store items, and so much more. It’s a time-consuming process, and unless you have an assistant, you’ll be tackling the heavy workload on your own. You’re taking time away from growing your business and sourcing new offerings.
Now, if you choose to let a prep service manage your inventory, you’re essentially letting experts take care of the job. You’re allowing people who know their stuff to handle your business. In short, you’ll be in good hands.
2) You’re losing track of inventory
Everyone marvels about the merits of running an Amazon business, but not everyone is open about its drawbacks, especially concerning inventory management. While Fulfillment by Amazon takes the load off the business owner’s shoulders by taking care of storage, packaging, and shipping items, they can’t do much about managing inventory.
Inventory management falls on the merchant’s shoulders, so if something is going wrong, it means you need help. Outsourcing your FBA prep can give you access to inventory management tools, ensure your items stay on track, and help you avoid mistakes.
3) You don’t know rules (or don’t have time to learn)
If you don’t have a deep understanding of the rules and processes, you run the risk of your items being rejected from the FBA network.
By outsourcing, you can hand all the prep work over to the experts. Any FBA prep partner should be specialized and understand the entire process, ensuring compliance with Amazon’s rules, and lowering the risk of your stock being rejected.
The company will do all the work—from inspecting stock to making up boxes and printing labels down to sending the items. You’ll also be saving on both time and money since you don’t have to use your own resources.
4) You want to keep your overhead costs low
Unless you have a dedicated prep team, you may not be ready to meet FBA’s strict quality standards for prep. Getting things wrong may result in your products being refused at the FBA center or warehouse or have a higher rate of product returns that can end in account suppression.
Inspection, packaging, and labeling merchandise must meet FBA’s standards, so you must have access to the personnel, equipment, and resources to try to do so efficiently.
By outsourcing FBA prep work, you don’t need to hire your own teams, rent warehouses, or purchase all the equipment needed.
How to choose a good FBA prep service
There are a lot of things you need to take into consideration when deciding on an FBA prep service, but usually it boils down to costs, capacity, and capabilities. Look at each company and gauge how much they will cost you, whether they can handle your volume, and what they can do.
6 Factors to consider when choosing an FBA prep service
Once you have a general overview of what a prep center can do, it’s time to pick up the phone and dive into their business. Here are 6 things to ask about.
The location of your FBA prep service is a crucial factor. Often, many FBA prep services have more than one warehouse — ask which zip codes their prep centers are in to find out which serves your purposes best.
Some sellers like to choose sales-tax-free or low-cost ports for when shipping on to Amazon from overseas. You’ll want to settle on a warehouse as close as possible to your suppliers to reduce shipping costs.
You should look for a facility that’s close to your own operations for a smoother drop-off and replenishment process. If you import items from overseas, you look for a facility that’s near a major port or airport. Being near a transportation hub also ensures quick easy outbound shipping.
FBA prep centers that operate in other states that can be beneficial to you, since they can minimize inter-state deliveries and help speed up shipments.
2) Specific services
An FBA prep center essentially provides product storage, packaging, and shipping. While these services are basic expectations from every FBA prep service, some centers can go beyond the basics for enterprising merchants who ask.
Some FBA prep services can store additional inventory to scale back total FBA costs. Others also offer traditional 3PL services, freight forwarding, customs negotiation, detailed shipment data, supplier pick-up, import inspection, and inventory processing.
Think about any additional services you need and choose a particular FBA prep center that can fill these needs.
Tip: It is worth inquiring if your FBA prep service includes inspection, apart from labeling and packaging.
3) Turnaround time (TAT)
FBA prep centers can take anywhere from 24 hours to a month to process your goods. This may depend upon the organization, the services required, and the site. If you’re importing from abroad, it’s important to balance costs against speed and the way it impacts your pipeline and inventory.
The turnaround time of your product delivery is a crucial consideration because you don’t want to have any transaction delays with FBA or your customers.
Some FBA prep services ensure a 24-48-hour TAT from the order placement, while others will need more time in the packaging and shipment of your products.
As much as possible, work with a service that can get your products sent to Amazon within days, rather than weeks.
4) Facility size and warehouse conditions
When choosing a particular FBA prep center, you also have to factor in the size of the facility and the warehouse conditions.
First, you need a facility that can accommodate the high volume of goods or products you hold and sell.
Second, you want to ensure that the warehouse provides the right storage condition that can protect your products at all times. With the proper storage conditions, you can ensure that your products won’t get spoiled or damaged.
5) Pricing system
Some services provide flat rates based on weight and shipping destination, others might charge based on unit, and others charge by the month.
There’s a lot of factors that go into pricing from an FBA prep center. For example, some places charge extra for providing packaging materials, while others already include it in the fees.
Different prep centers also offer different payment options, ranging from upfront to an installment basis.
Learn how your preferred prep centers handle billing and pricing, then work backwards from your sales price to find out what you can afford when you factor in fulfillment costs and payment timelines.
No matter what option you choose, look for a service with fair and transparent pricing so that you can budget appropriately, and forecast future finances.
Tip: Look at intangible value besides flat costs, such as customer service and available technology.
6) Storage space
Sometimes, it may be cheaper for you to store your inventory in prep centers rather than Amazon’s fulfillment center. The prep service will only send stock to Amazon when the demand calls for it. This can be more cost effective for your business, as Amazon tends to penalize businesses who have their stocks in limbo for so long. You may end up paying fees per item you want to have returned and then pay again to have your stock repackaged.
More and more sellers prefer to use prep centers to store their inventory thanks to the cost efficiency and convenience. Plus, if anything happens with an Amazon suspension, you won’t have to pay extra to get your suspended items returned.
Figure out what you need to support your sales velocity, minimum order quantity from your supplier, and total costs of maintaining inventory yourself, storing it at FBA, or paying for storage at a prep center.
Overall, you want to choose an FBA prep service capable of turning around inventory quickly, offering all the services your business needs, and providing insurance to protect you against incidents like fire and theft. Consider the six factors above to help choose a great FBA prep center and ensure your products are stored safely, packaged properly, and sent on time.
Questions to ask when outsourcing FBA Prep
Every FBA prep service is different. Here are 7 questions that you can ask FBA prep services before you make your decision.
1. What’s the best location you have for us?
Do you need the facility nearby for easy drop-off? Or a facility near a major port or airport?
Some FBA prep services can even offer more bang for your buck by operating out of states with no sales taxes. You want to choose a partner that has ample coverage and ideally redundancy in case you have issues with a particular warehouse or they become overworked.
2. What’s your pricing system?
Many services offer flat rates based on weight and shipping destination. Some may price according to what’s being shipped. Shoes, for example, might carry a higher price than other forms of clothing. Seek a company that is fair and transparent in their pricing and that allows you to accurately forecast the potential impact on your business.
3. What’s your full service list?
While every FBA prep service is going to provide the same essential services, some provide additional services that may be just what you need.
Before you pick an FBA prep service, determine whether you need services like the following: freight forwarding, customs negotiation, detailed shipment data, supplier pick-up, import inspection or inventory processing. Do you have products that need to be bundled? To you have containers or pallets that need unloading? Consider each of these and create a list as you evaluate your options.
4. What turnaround time do you guarantee?
Some FBA prep centers will guarantee turnaround within 24 to 48 hours. Is that something you need? Or would you be OK with a slower turnaround time? Getting your products to Amazon is the most critical step of the supply chain and the faster you can move the faster your products will start selling.
5. Can you meet specific conditions inside your warehouse(s)?
Many FBA prep services do their work in climate-controlled spaces. But some do not. If you suspect that extreme temperatures may damage your products in any way, you want to make sure that your products are in a climate-controlled environment—or that they’re in a warehouse in a mild climate.
6. What size facility do you have?
If you’re dealing in wholesale goods that get shipped on pallets, you’re going to need a facility that can store pallets and that comes equipped with a loading dock. You also need to determine the volume that you’ll be shipping. Every facility comes with its own minimum requirements and maximum capacity.
7. Can you store our products?
In the future you may find yourself needing a facility to hold onto your products for a while. You don’t want to get caught needing to store your products when they’re already at a facility that can’t store them. Determine ahead of time whether an FBA prep service can store your products and how much storage will cost.
You haven’t gotten this far without planning ahead. Doing your homework now before selecting an FBA prep service will save you time and improve your bottom line.
Wrapping up: How to choose an FBA prep service
Using a service like this does have operational costs, but it allows businesses of all sizes to utilize one of the world’s largest companies to help them get their products to customers. You also won’t have to worry about shipping, handling, or processing refunds or returns.
An FBA prep service can handle importing, inspecting, processing, labeling, and shipping inventory to Amazon. However, it’s crucial to review the costs and suitability of every choice to ensure that your FBA prep solution offers quality customer service and a return on value for your store.
With rates starting at around $1.00 per item at most companies, FBA prep is often an inexpensive and accessible choice to assist you in increasing sales on Amazon, reducing internal costs, or reducing the entire size of your organization.