This is very intriguing. The products that we sell are not usually purchased one at a time but in a mix-and-match scenario and then packed together for shipping. I don't think what we are doing is in any way unusual but the way Amazon calculates monthly storage fees:
"The cubic feet of any Unit will be based on the Unit's size as properly packaged and ready for shipment to customers in accordance with the Guidelines. Amazon will be entitled to make its own measurement of the cubic feet of any packaged unit or representative sample thereof, and in the event of any conflict between such measurement and information provided by Seller, Amazon's measurement will govern."
Could literally quadruple the space needed to store products as they would need to be individually packaged for shipment to the customer?
Here's the true genius behind this offering:
|Plus, products that are fulfilled by Amazon qualify for all of Amazon's buyer shipping and customer promotions (such as free Super Saver shipping and Amazon Prime) and Amazon takes care of customer service and returns. |
Shipping rates are a major hurdle for most ecommerce sites and being able to get access to Amazon's discount shipping rates, especially the annual flat fee Amazon Prime, could literally spell the success or death of an online reseller.
People may find it hard to believe but thanks to Amazon Prime it's less expensive to shop online for small purchases than it is to hop in the car and head to a book store, computer store, or whatever. We typically have a minimum of one box a week from Amazon show up at the house due almost exclusively to Amazon Prime.
Plus the reduction in staffing and warehouse space costs for ecommerce fulfillment makes this a very good offer for many struggling online merchants.
Very smart move, I like it.
Even if you do your fulfillment in-house, this program could make great sense for meeting seasonal demand increases without having to hire/train part-time workers.
Sounds like a great way for small businesses to outsource their fulfillment (that is if they're lucky enough to have products that don't have to be customized or mix-and-match packaged). Now you can sell your products online and take a vacation in Hawaii while Amazon ships your stuff for you ;)
By the way, I use Amazon Prime also and am loving the idea that this means more products will be available for me to buy using my Prime membership. Retailers should be even more thrilled of course.
One problem I see is that companies will have to first ship the products to Amazon, which will mean an extra shipping charge.
|One problem I see is that companies will have to first ship the products to Amazon, which will mean an extra shipping charge |
Offset that shipping charge with your own warehouse costs, employees, etc. and it's probably much cheaper overall.
My concern is that every time you sell via Amazon they end up getting valuable information as to what products are being purchased from you and who is purchasing them(your customer list). It may be coincidence, but I have listed items on Amazon Marketplace in the past. Interestingly our top selling items eventually ended up being stocked and sold directly by Amazon, and our ability to sell those same products via Amazon diminished once they started selling them themselves. My concern with using Amazon Fulfillment Web Services is that the same thing would happen. Any item that sells well they would stock themselves. Other 3PL(3rd Party Logistic) services don't also sell direct to consumer like Amazon does.
|Merchants have the option of branding the packing slips on Amazon.com boxes |
Which means you get Amazon branded boxes with your company shown only on the packing slip.
My concern is that the association with Amazon is going to break down your own brand and loyalty. With such a strong brand, your customer may well remember Amazon as the provider and place to look for more, not you - branding on the packing slip or not.
Someone should tell Amazon.com about the ¢ symbol. I'm sure I'm not the only one to miss the tiny . after the $ in $.60 per cubic foot per month.
On the other hand there's not much new here; just an API on top of their previous services.
oh wow - I saw this a few months ago but said to myself "forget it! - not for $60 / cubic foot" now I see how silly I was... 60 cents / cubic foot seems fair as I sell small, high margin items...
The major downside is you just sold your soul to amazon. Really, when your stuff is delivered in amazon boxes your customer will go back to amazon and oder what is cheapest again - even if it was fulfilled from YOUR OWN STORE because the box says amazon, the packing slip says amazon and the ONLY mention of your store is in the "note" field.
Lots of other fulfillment centers that will allow you to ship volume on your own Fedex/UPS numbers, give you real rates and guarantee you better service and your own identity for the same price.
The amazon prime is only valid if the item is then sold on amazon.com's marketplace in which fees are up to 15% before your fulfillment service even kicks in.
Does Amazon process the payment via their own systems?, I am wondering if you can benefit from their antifraud expertise?
|Does Amazon process the payment via their own systems?, I am wondering if you can benefit from their antifraud expertise? |
The Amazon fulfillment by itself doesn't offer merchant yet - they're beta testing their own gateway however if you also use "Selling on amazon" then you get the payment protection/antifraud. It isn't cheap though ;) need 20+ % margin to break even in most cases!
|The amazon prime is only valid if the item is then sold on amazon.com's marketplace in which fees are up to 15% before your fulfillment service even kicks in. |
Can you please provide references for all of your claims, including the one you made about anti-fraud protection? I had difficulty verifying them after Googling around. For instance, Amazon says:
|FBA products qualify for all of Amazon's buyer shipping and customer services (orders can be combined with Amazon products, free Super Saver shipping and Prime are enabled, Amazon takes care of customer service and returns) |
Thank you very much for the information you have provided ByronM.
|vincevincevince: My concern is that the association with Amazon is going to break down your own brand and loyalty. With such a strong brand, your customer may well remember Amazon as the provider and place to look for more, not you - branding on the packing slip or not. |
|The major downside is you just sold your soul to amazon. Really, when your stuff is delivered in amazon boxes your customer will go back to amazon and oder what is cheapest again - even if it was fulfilled from YOUR OWN STORE because the box says amazon |
This is what they are banking on.
Second issue: Amazon will know YOUR suppliers, Amazon will know which products sell best and which products bring more revenue. Then what prevents Amazon from stepping into a competition with you, and put you out of business? Absolutely nothing.