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3PL FBA Services to Reduce Overhead and Optimize Profit

By Rachel Go

Fulfilled by Amazon (FBA) is an Amazon service that lets third-party sellers use the platform’s own warehousing, fulfillment, and customer service. Through the program, sellers can access two-day shipping and the Prime label for less than the cost of most major carriers. Thanks to these perks, an estimated 94% of Amazon sellers use FBA, but not all FBA services are 3PL FBA services.

However, FBA can be expensive. If inbound shipments aren’t planned properly, you’ll pay higher inbound placement fees. If products are prepped incorrectly, you could face costly fines and shipment rejection when sending goods to warehousing. Additionally, failure to plan ahead for replenishment can result in stockouts and lost sales. A 3PL that offers FBA services, though, can take much of that planning and prep out of your hands and handle it professionally to give you peace of mind.

Is FBA a 3PL service?

FBA offers third-party warehousing and logistical services. It’s often considered a 2P service because it’s a middle ground between selling 1P on Amazon (i.e., Fulfilled by Seller) and using Amazon Vendor Central.

However, FBA won’t take on all logistical tasks like a 3PL. For example, you’ll still have to deal with receiving, prepping for Amazon, breaking down pallets, distribution, and retail replenishment on your own. That’s where 3PL FBA services come into play.

What does a 3PL FBA service have to offer?

3PL FBA services specialize in the Amazon program and include a range of offerings designed to ready products for FBA without error, such as:

  • Receiving: A 3PL FBA service will receive your goods straight from the manufacturer into their warehouse. The provider thus handles transport to the warehouse, as well as quality inspection and any counts you need to do to accept the shipment.
  • FBA prep: Products are packaged and labeled according to Amazon’s strict standards for receiving shipments at an FBA warehouse. That means using approved packaging, removing old labels and stickers, adding barcodes and FBA labels, warning labels, and more.
  • Less-than-truckload (LTL) shipments: Usually, a 3PL works with multiple eCommerce stores to secure lower shipping rates for all their clients. LTL shipments should be a standard offering as well, so it costs you less to ship smaller cycles of inventory to FBA.
  • Pallet breakdown: Many 3PL FBA services provide pallet breakdown and distribution of goods across Amazon warehouses to reduce replenishment expenses. That entails breaking up and putting together new pallets with inventory designated for different Amazon regions.
  • Quality assurance: From initial inspection to products shipping out for FBA, a 3PL can ensure a high level of quality assurance. That comprises hands-on stickering and labeling, inspection of bundled goods, and final checks on packaging to make sure Amazon will accept your shipments.
  • Kitting and bundling: Bundles and kits can be market differentiators, so look for a 3PL that offers this service. The provider should streamline and lower costs for kitting and bundling, such as through shrink-wrapping kits rather than relying on Amazon’s virtual bundling services.
  • Retail replenishment services: Tracking and replenishing inventory is a big job, but a well-established 3PL can handle it. Your provider will send goods to Amazon fulfillment centers based on rate of sale and projected stock-out dates so you minimize the total time products spend in Amazon fulfillment centers. In turn, that cuts expenses and improves your throughput ratio.

A 3PL that specializes in FBA can take over procedural management, ensure product quality, and provide top-notch item prep. 3PL FBAs bring their expertise to help plan inventory and shipments, handle distribution, and ready your products for sale on Amazon.

When to use a 3PL FBA

Contracting with a 3PL FBA is a major decision. It’s not right for every eCommerce seller, especially if the volume of sales is low. Consider moving to a 3PL FBA if:

  • Sales volume is high: The general recommendation for when to move to a 3PL FBA services is having between 15 and 50 sales per day. Ultimately though, it comes down to when you reach a point where you can no longer handle everything in-house comfortably. For example, if product prep, planning, and inventory management consume more time than you have, it’s time to outsource.
  • Overhead is high: Paying people to prep products on an ad-hoc basis, storing inventory in Amazon for a long period, and failing to plan inbound shipments around fee and cost reductions (and thus incurring higher Amazon fees) all hurt your bottom line. Switching to an FBA-specialized 3PL can resolve these issues.
  • Coordinating replenishment is difficult: Replenishing FBA requires you to stay on top of data from multiple FBA regions, understand buying patterns, and track when you can send inventory. If you struggle with restocking, frequently have excess stock, or face high replenishment fees, you may want to switch to a 3PL to save money.
  • Error rate is high: Rejected shipments, fees for repackaging on site, and returns due to inferior item quality greatly impact your bottom line. However, a 3PL can minimize those issues to lower costs and improve customer satisfaction.

A 3PL FBA is an excellent choice if you’re looking to expand your business’s capabilities but lack the capital to build logistical infrastructure internally, or if you simply want to off-load FBA prep to experts. Additionally, many 3PLs offer services that can increase sales, such as bundling and kitting and custom packaging inserts, as well as secure lower packaging costs that you couldn’t access on your own thanks to their economies of scale.

What to look for in your 3PL FBA

When selecting a 3PL FBA, comb through each provider’s service offerings, reputation, and customer service. Find a company that can accommodate your needs and works well with your brand; you’ll be business partners, so it needs to feel like a genuine partnership. Specifically, look for:

  • Software integrations or APIs to synchronize your data with theirs
  • White-glove service for FBA prep, as you can’t automate labeling and repackaging
  • Custom solutions you might need, like bundling or machinery to reduce packaging costs
  • Robust customer service and transparent assistance for when things go wrong

Review logistical capabilities, included software and services, and the 3PL FBA’s ability to scale with your organization.

Wrapping up — 3PL FBA services are an asset to your Amazon business

FBA allows eCommerce sellers to take a hands-off approach to their business. However, you still have to plan and execute shipments, as well as manage strict product preparation for the Amazon program. A 3PL that specializes in FBA can offer those services and handle the fulfillment process for you while introducing cost efficiencies through economies of scale, first-class services, and diligent management designed to slash your FBA expenses. In addition, with replenishment services available, your 3PL FBA can time restocking to optimize your inbound and stored inventory to reduce costs at every part of your FBA operation.