What Is Amazon Direct Fulfillment?
Under the impact of COVID, e-commerce giant Amazon is also facing delivery and supply chain delays. Many Amazon vendors find they need to deal with this issue themselves at this point, so they opt for an alternative: Amazon direct fulfillment. And fulfilled the customer’s order perfectly.
So what exactly is Amazon direct fulfillment? Can it be used as a preferred or alternative plan for your business to deal with risk? Stay tuned to this page to find out how much direct fulfillment can bring you in sales.
What is Amazon Direct Fulfillment?
It is a retail drop shipping program for vendors on amazon. Amazon vendors are different from Amazon sellers.
Amazon sellers are independent e-commerce sellers who set up shop on Amazon and sell products wholesaled from different channels. While vendors on amazon directly provide wholesale products to Amazon, and Amazon will mark the products as “Sold by Amazon“.
Simply put, direct fulfillment by Amazon allows vendors on amazon to sell products directly to amazon customers without using Amazon’s fulfillment centers.
Suppose you are an Amazon vendor. When a customer places an order on Amazon, Amazon forwards the order to you who offers the product. Then you send the order directly to the end customer. No longer go through Amazon’s warehouses and logistics in the middle.
At the same time, you will also be responsible for shipping the product to the customer yourself. This means you should have your own warehouse storage and shipping processes.
So what are the benefits for the vendors? Let’s first look at the specific process.
How does Amazon Direct Fulfillment Work?
The buyer checks out and places an order on Amazon.
Amazon sends the same purchase order to the vendors.
Create shipping labels on Amazon and vendors attach them to each product before shipping.
The vendors will package the product directly to the buyer, and the shipping fee will be paid by Amazon.
We can see this process eliminates the need to send the goods to the Amazon warehouse center, which saves this part of the freight. And instead of shipping the goods through Amazon to your customers, you can significantly reduce damaged goods and wrong shipment by yourself.
What are the Pros and Cons of Amazon Direct Fulfillment?
Before you start using amazon direct fulfillment program, take a closer look at its pros and cons.
The Pros of Amazon Direct Fulfillment
Shows Item Availability InstantlyAmazon extracts inventory from electronic data interchange (EDI) in real time to show buyers that the seller’s items are available for purchase.
The Cons of Amazon Direct Fulfillment
You need to have your own warehouse inventory and shipping procedures. And you have to manage your inventory yourself. This will take a lot of your time and effort. And you still need prepaid shipping. If you ship your products to customers all over the world, you will pay a lot of money.
In the end, this needs to be delivered by the merchant. At the same time, if there is a problem with the procurement or supply chain, you need to deal with customer service yourself. This is time-consuming and may require additional personnel. Increased labor costs.
Amazon Direct Fulfillment and Amazon FBA
Amazon Direct Fulfillment and Amazon FBM
FBM (Fulfillment by merchants) refers to Amazon sellers listing their products for sale on Amazon. But the sellers themselves ship the products to each buyer. This means that sellers are responsible for fulfilling their own orders, which Amazon doesn’t handle.
This sounds similar to direct fulfillment, but they are different.
Amazon Direct Fulfillment and Dropshipping
If you’re not sure if direct fulfillment amazon is right for your eCommerce business, you can compare it to other fulfillment options.
Direct fulfillment is necessary, but it is important to have a reliable shipping process and contact suppliers. This is also why many direct fulfillment amazon vendors choose to outsource their own shipping to 3PLs.
When to Choose Amazon Direct Fulfillment?
While direct fulfillment has certain limitations, it cannot match its potential advantages. Fortunately, direct fulfillment by Amazon is an excellent option if you want to reduce your inventory management and order fulfillment costs. Is Amazon direct fulfillment right for you? It depends on the following:
Business scaleSuppliers with larger operations stand to benefit the most from direct fulfillment.
Large businesses don’t need to rely on Amazon’s warehousing and shipping services. Fulfillment costs are minimized by shipping directly to customers. There are also no ongoing fees associated with Amazon fulfillment.
Continue sales within inventory lead timeDirect fulfillment is a great way for suppliers to keep important revenue streams flowing during periods of fluctuating demand.
E-commerce sales have grown during the pandemic, while Amazon has run out of warehouse space. FBA operations can’t keep up, and the delivery of non-essential FBA items was once stopped. So many Amazon merchants are turning to direct fulfillment.
Low disposable capitalIn some cases, the direct fulfillment business model allows you to purchase items only after buyers actually place an order. This direct transportation method is very attractive to entrepreneurs. In the case of limited stock funds, entrepreneurs can start a business first.
How To Set Up Amazon Vendor Central Direct Fulfillment
If you are an existing vendor on Amazon:
If you are not, the registration process is as follows:
Now you should know that Amazon has limited inventory capacity and Amazon direct fulfillment is the best option for your business to avoid losing sales on Amazon when your own warehouse is out of stock. Many vendors on amazon choose to benefit from outsourcing their logistics fulfillment to experts. Now more than ever you need well-run and professional logistics to meet your customers’ needs.
Honest FulPhilment, which provides comprehensive eCommerce fulfillment services. We have warehouses all over the world and all orders are at your fingertips. Not handling physical objects, not paying for warehouse space, not distributing ordered items, or not managing inventory levels appeals to most Amazon vendors. Please contact us now.
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