Amazon is the world’s largest online retailer, with hundreds of warehouses, millions of shoppers, and billions of dollars of spending. It makes absolute sense to start your eCommerce business there with Fulfillment by Amazon (FBA). But, does it make sense to stay?
Once you enter the FBA club, leaving is difficult, making selling on multiple sales channels challenging. Do the benefits of a multi-channel eCommerce business outweigh the ease and success of selling through Amazon FBA? You’re about to find out.
The benefits of starting your eCommerce business with FBA
In the beginning, there is nearly always Amazon. Amazon has nailed the online marketplace model, attracting, and pleasing vast numbers of online shoppers and sellers.
Amazon is a particularly successful channel for new online sellers, too, thanks to:
- The Amazon brand that online shoppers trust and head straight for when shopping online.
- The extensive seller tools that power sellers to enhance their listings, boost visibility, and multiply conversions.
- The Fulfillment by Amazon (FBA) service that enables even the smallest of sellers to qualify for Prime and offer nationwide, fast shipping for free.
These benefits mean that even the newest and most unheard-of online seller can achieve significant visibility, clicks, and conversions from day one of their online business.
The risks of keeping your business with FBA
However, there’s always a “but.” When you start selling on Amazon, and start seeing results, the natural next step is to increase those results by taking your business multi-channel.
Recap: What is multi-channel selling, and why is it beneficial?
Multi-channel selling is when you sell on multiple online marketplaces and/or your own website via an eCommerce platform. For example, selling on Amazon, eBay, Wish, and a Shopify website.
While this might sound like hard work, there are serious benefits to multi-channel selling.
Different marketplaces attract different shoppers, and while Amazon is undoubtedly the most popular starting place, it isn’t the only one.
Prices, free shipping eligibility, incentives, and product niches all tempt shoppers to different channels; the more channels you sell on, the more chance you have of reaching the best audience for your products.
Your competition isn’t restricted to Amazon either. Multi-channel selling ensures your products are everywhere your competitors are and aren’t selling.
This helps you become a market leader and establish brand consistency across the Internet.
The ease of comparing and researching products online has increased the average number of pre-sale touchpoints to six.
Multi-channel selling maximizes your appearance at every touchpoint possible, across marketplaces and Google, to increase recognition, build trust, and win that sale.
Input vs. output
Multi-channel management listing tools duplicate your listings, update your inventory, and channel your orders, meaning that multiple sales channels don’t mean multiple efforts.
You can easily double, triple or quadruple your sales with very little extra work or resource requirements.
Amazon Multi-Channel Fulfillment
In fact, multi-channel selling is such a big deal that Amazon will fulfill orders from your other sales channels for you. This service is called Amazon Multi-Channel Fulfillment – perfect for Amazon sellers looking to expand, right?
Not quite. While Amazon MCF accommodates orders from other sales channels, it’s inherently designed to promote and grow Amazon.
This brings challenges, including additional costs, channel ineligibility, Amazon-branded boxes, and more.
Multi-Channel FBA costs
Amazon charges a premium for shipping multi-channel orders, reducing your profit margins.
Fast shipping program ineligibility
FBA uses Amazon-branded boxes. This is prohibited by marketplaces like Walmart, and makes it difficult to establish your own brand when selling via Shopify.
Slow shipping speeds
Amazon prioritizes Amazon deliveries, meaning that multi-channel orders can be slower when fulfilled by FBA – not great for driving sales.
In short, Amazon Multi-Channel Fulfillment makes it harder to succeed on other sales channels – reducing your shipping speeds, barring you from fast shipping programs, and reducing your profit margins. This leads many sellers to wrongly assume that other sales channels aren’t as effective as Amazon when in reality, it’s FBA that isn’t as effective for non-Amazon orders.
The benefits of a multi-channel eCommerce business
So, how does a successful Amazon seller continue their success beyond Amazon without being held back by FBA? It’s all about multiple channels.
Running a multi-channel eCommerce business doesn’t just mean selling via different marketplaces. It covers everything, including the platforms you advertise on, your buyer communication methods, and, importantly, the fulfillment method you use.
A multi-channel fulfillment partner overcomes the FBA problems to provide a consolidated fulfillment service across your sales channels, with benefits including fast tags across maketplaces, affordable fulfillment, and and more comprehensive insights.
Fast tags across marketplaces
Efficient processes, meticulous attention, and fast shipping speeds enable you to qualify for fast shipping programs and tags across your sales channels.
Cheaper fulfillment costs
While Amazon FBA is certainly cost effective for Amazon orders, they have different pricing tiers for their multi-channel arm.
Economies of scale mean reasonable storage, packaging, and shipping costs, while all-inclusive pricing means you don’t have to worry about FBA’s hidden fees and fines. This protects your profit margins both on and off of Amazon.
For those Amazon sellers running a hybrid fulfillment operation that uses FBA for Amazon and in-house methods for other orders, a multi-channel solution can help unify your fulfillment.
This hassle-free method means you have one pool of inventory, no silos, and no need to ring-fence stock for different sales channels – more efficient and much more cost-effective.
Finally, a multi-channel fulfillment provider integrates with your other sales channels to give you a better overall insight into your inventory, sales, and performance. Plus, you don’t have to switch between FBA and your other sales channels to update orders, inventory, or tracking information.
To put it succinctly, a multi-channel fulfillment partner gives your sales channels an equal shot at success and growth; FBA just wants Amazon to win.
What to look for in a multi-channel fulfillment partner
Handing over your fulfillment to Amazon FBA is simple. You know the brand, you trust the name, and you probably have first-hand experience of its super-fast deliveries.
Finding and choosing a third-party, multi-channel fulfillment partner involves a little more research, trust, and consideration.
However, that shouldn’t stop you. The four essential things to look for in a multi-channel fulfillment partner are:
Ideally, they should integrate directly with your current and any future sales channels, or multi-channel management software.
Direct integrations are crucial for:
- Processing orders – sending orders straight to the warehouse for quick picking and packing.
- Updating orders – keeping customers updated with order status and tracking information.
- Inventory control – syncing live inventory across sales channels to avoid overselling or selling out.
Fast shipping speeds
Amazon FBA has set the bar of fast shipping at 2-days or fewer; your fulfillment partner should offer the same if you want to qualify for marketplace fast shipping programs and tags.
If you’re serious about fast shipping, look for a provider that guarantees customers fast deliveries or store credit if they fail to do so. This is perfect for boosting trust and conversions on eCommerce platforms such as Shopify.
Fast shipping programs
Fast shipping isn’t the only requirement of marketplace fast shipping programs. Ensure your fulfillment partner meets all speed, tracking, quality, and any other eligibility criteria for fast shipping programs.
Further reading: Fast shipping program requirements for Amazon, Walmart, and eBay
Some multi-channel fulfillment partners automatically qualify you, while others make you eligible to apply for qualification – either way, look for evidence from customer testimonials and research.
Finally, to match the speed of FBA, you must match the breadth of FBA. A multi-channel fulfillment partner should use multiple warehouse locations that cover the US and provide fast shipping to every nook and cranny.
Don’t let FBA stunt your growth
The only business growing exponentially on Amazon is…Amazon. While Amazon and FBA are ideal for new sellers looking to grow, there comes the point where your growth on the platform is limited.
Multi-channel selling allows you to expand beyond Amazon onto different sales channels and your own website – where the potential for growth is unstoppable. The only thing holding you back is FBA.
While FBA facilitates multi-channel fulfillment, it doesn’t always facilitate success or large profit margins on other sales channels. To give your channels an equal shot at growth, take your multi-channel strategy beyond marketplaces and into fulfillment, using a multi-channel fulfillment provider who provides a consistent FBA service wherever you sell.