a deep dive into amazon’s global shipping...

Fulfillment by Amazon: A Deep Dive into Amazon’s Global Shipping Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A Deep Dive into Amazon’s Global Shipping Network


It’s no secret that Amazon is an online selling giant. In 2014, sellers on Amazon’s marketplaces sold

more than two billion units worldwide.1 Amazon’s growth has outpaced that of e-commerce at large since

2006.2

The accelerated rate of growth may be linked to two ideas that seemed avant-garde at the time: 1. Welcoming third-party sellers and 2. Implementing long-term free shipping programs.

Most sellers know by now that Amazon has intersected the two with Fulfillment by Amazon (FBA). FBA is Amazon’s fulfillment service and an incredibly powerful stimulus for the marketplace’s growth, but it also offers myriad benefits to participating third-party sellers. In 2014, the number of active Amazon sellers using FBA increased 65% globally.3

In this eBook, we outline the benefits of FBA for third-party sellers, share tips for getting started and show you how ChannelAdvisor’s latest technology can help.

1 Source: http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=18893172 Source: http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=18893173 Source: http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=2002794

Fulfillment by Amazon: A Deep Dive into Amazon’s Global Shipping Network

http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1889317




That’s the tagline and the foundation of the FBA program. Amazon has been strategically expanding its fulfillment footprint by building fulfillment centers (FCs) around the country in populated regions, bringing products closer to customers with the goal of drastically reducing fulfillment costs. And sellers are taking note of these benefits at a rapid pace. In 2014, a record number of third-party sellers on Amazon — from over 100 different countries — fulfilled orders to customers in 185 countries using FBA.4

Less ground between product and customers = lower transportation cost

The structure of the program is simple: retailers opt into the FBA program and store products in Amazon’s network of FCs. When a customer orders a product, Amazon picks, packages and ships the item to its final destination, and handles customer service on your behalf. There is no contract, no minimum quantity required, no minimum SKU count required and sellers can recall their inventory as needed.

1. Sellers send products to Amazon. You send your products – new or used – to Amazon’s FCs. Amazon does not require that you send a minimum amount of products, and gives you the flexibility to choose what you want to send on a month-to-month basis.

2. Amazon stores the products. Amazon intakes, catalogs and stores your products safely in its network of FCs.3. Customers order the products. Customers order your products on Amazon.com or other sales channels registered with

Amazon’s fulfillment program.4. Amazon fulfills the product order. Amazon fulfills the order on your behalf, picking, packaging and shipping it to its

final destination. Fulfillment fees for the seller are broken down by category type (Media or Non-Media), product-size tier (Standard Size or Oversize) and Zero-Free Fulfillment. See Amazon’s Pricing Page for more detail.

5. Amazon provides customer service. Amazon’s world-class customer service team takes responsibility for all customer service issues – including inquiries, refunds, returns and more.

4 Source: http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=2002794

“You Sell It, We Ship It.”

http://services.amazon.com/fulfillment-by-amazon/pricing.htm?ld=AOMWShomeAS



Chances are, you’re not a large retailer with the budget and task force to handle global fulfillment, logistics and customer service duties. The price – and measurable return on investment – is right for many retailers, and the numbers prove it. According to Amazon, a 2014 survey revealed that 71% of FBA respondents said their unit sales on Amazon.com increased by more than 20% since joining the program.5

But what is it about Fulfillment by Amazon that sets it apart from other third-party services, and why should you consider FBA?

1. Products in Amazon FBA have access to Amazon Prime members and are eligible for FREE shipping. Nearly 50 million Amazon customers subscribe to Amazon Prime.6 And on average, Prime members spend more than double the amount on Amazon per year as non-Prime shoppers.7 Amazon Prime members have the option to filter search results by Prime-eligible offers, after which only Amazon-fulfilled products are shown. By using FBA, sellers receive the added benefit of enhanced visibility in front of Amazon’s most active shoppers. As a bonus, FBA sellers may place an Amazon Prime widget on their webstores, building an additional layer of trust with customers.

2. Your products are more likely to win the Buy Box. While Amazon does not disclose the details of what it takes to win the almighty Buy Box, our experience shows the algorithm gives strong preference to products whose sellers meet Amazon’s lofty standards of customer experience expectations. Because products in FBA are fulfilled by Amazon’s own teams, sellers are guaranteed a quick, consistent fulfillment experience for their products.

3. Exclusive access to last-minute holiday shoppers. The holiday season usually brings a flurry of last-minute shoppers. Even the savviest of retailers who forecast this spike and would like to scoop up the extra sales by offering last-minute promotions cannot do so without teeing up fulfillment operations far in advance – an added stress during an already busy Q4. Because Amazon’s FCs are used to seeing last-minute orders during the holiday season, the FCs are able to fulfill them without added operational stress, so you can run last-minute holiday promotions with confidence.

What’s the Catch?

5 Source: http://services.amazon.com/fulfillment-by-amazon/benefits.htm6 Source: http://www.geekwire.com/2014/amazon-may-50-million-prime-members-according-analyst-estimate/7 Source: http://www.businessinsider.com/amazon-prime-members-may-spend-more-than-double-what-non-members-do-2015-1

http://services.amazon.com/fulfillment-by-amazon/benefits.htm

http://www.geekwire.com/2014/amazon-may-50-million-prime-members-according-analyst-estimate/

http://www.businessinsider.com/amazon-prime-members-may-spend-more-than-double-what-non-members-do-2015-1


4. Amazon helps take care of your customers. Amazon.com processes millions of orders every year while consistently maintaining its high rank for trustworthiness and customer satisfaction. Customer service excellence is at the core of Amazon’s success, and its FCs are no exception. Retailers can lean on FBA to handle shipping, issues, returns and to offer a growing array of other customer benefits such as gift wrapping.

5. Lower-cost fulfillment to international customers. The FBA program isn’t just making strides in the US. Non-domestic FBA centers are popping up on the map just as quickly, with more than 100 fulfillment centers around the world, totaling more than 70 million square feet.8

6. FBA can fulfill orders from other sales channels. Amazon FBA allows you to single-source your inventory to streamline your fulfillment operations. Retailers who register other sales channels through FBA Multi-Channel Fulfillment can fulfill orders from other marketplaces such as eBay and Newegg or from their own webstores. However, it’s important to note that Amazon’s Multi-Channel FBA program does not provide customer service for orders placed outside of Amazon at this time and that additional Multi-Channel fees may apply.

7. Complement international growth plans with FBA Global Export. With Amazon’s FBA Global Export program, eligible products can be ordered from international locations if the buyer is in an FBA-supported country. Sellers can use this program to gauge the appetite of product lines in various countries around the world to determine international growth plans. Amazon currently enlists no extra FBA charge to sellers for this international delivery service from Amazon.com, so you can reach global markets with less hassle. Extra costs are only incurred when using Amazon’s Multi-Channel Fulfillment. One item of note for retailers that sell in categories where free returns are offered through FBA (such as softlines and apparel): these categories require free return shipping for FBA products globally, so sellers should be prepared to cover the customer’s return shipping costs. From the inventory side, Amazon will handle the return process to its warehouse and the inspection of your merchandise upon its return.

8. FBA is likely more cost-effective than outsourcing to several third-party drop shippers. The strategy for retailers outsourcing fulfillment has long been to identify a handful of centers in strategic locations. The trouble with this is that every drop shipper has its unique requirements and pricing, and retailers are responsible for managing the flow of products to and relationship with each of them. FBA allows you to streamline operations for both products sold on Amazon.com or elsewhere if you’re using FBA Multi-Channel Fulfillment.

8 Source: http://www.internetretailer.com/2013/04/29/amazon-tops-100-warehouses

http://www.internetretailer.com/2013/04/29/amazon-tops-100-warehouses


It’s relatively easy to get started with Amazon’s FBA program. Retailers can check whether their products are eligible on the site, convert inventory within Seller Central and create a shipment to Amazon FCs. Amazon then handles all fulfillment and customer service logistics.

The transition is fairly seamless, but here are a few additional tips you’ll want to know:

1. If you’re not 100% sold on FBA, consider starting with your most popular items and including at least a month’s worth of current volume to test your sales and the operational flow of the program.

2. Carefully prepare your shipments for FBA to reduce problems that may cause delays. Make sure the items you are shipping match exactly the items you have listed based on the UPC of the product – don’t rely on name alone.

3. When determining product pricing with FBA, remember that shipping will default to $0. This may be the perfect opportunity to increase the price of an item by that difference to subsidize the cost of shipping. ChannelAdvisor’s Repricer feature allows you to set up different pricing rules for FBA products, which is recommended, since you’ll have different fees involved.

4. Review the Amazon Selling Coach in your Seller Central homepage to see what FBA listing opportunities Amazon suggests. The Selling Coach will suggest products or brands that you sell where there are currently no or few FBA offers and there is buyer interest. ChannelAdvisor’s platform also pulls in Fulfillment Insights from Amazon to show you which items might be a good candidate for FBA.

Getting Started


To ease management of the Amazon channel as a whole, ChannelAdvisor’s Amazon 360 Seller Dashboard provides a comprehensive view of all Amazon sales and key metrics, merging essential information such as top-selling products, error listings, unshipped orders, performance metrics and more into one interface so that retailers can quickly check off to-dos and shift attention from Amazon mechanics to Amazon strategy.

ChannelAdvisor’s Amazon integration tools complement the benefits of FBA. The software supports both FBA and merchant-fulfillment, allowing sellers to ship through FBA, other channels or a combination of the two. Sellers can also easily see whether products have been fulfilled by FBA or another network by drilling down into Sales.

Our Multiple Distribution Centers feature, part of ChannelAdvisor Marketplaces, integrates with FBA, allowing you to fulfill orders on any channel from your FBA inventory. In addition, you can use ChannelAdvisor’s Auto-Flip feature to indicate that when the product is available through FBA, you want to use FBA, but if no quantity is available through FBA, then you want to use your seller-fulfilled quantity.

As a result, you can make sure that FBA trumps any other distribution setting for your products sold on Amazon. Also, because you can fulfill using FBA for any other channel where you sell, ChannelAdvisor gives you the flexibility to prioritize whether FBA is your first, middle or last priority when fulfilling non-Amazon orders. You can even customize the priority for each specific channel, so that you maximize your warehouse coverage while differentiating your shipping strategy and cost model for each marketplace.

ChannelAdvisor works constantly to improve the functionality of its integration with FBA. As Amazon expands retailer options associated with this program, we enhance our platform accordingly. Be on the lookout for updates as FBA evolves.

How ChannelAdvisor Can Help


Fulfillment by Amazon offers a strong hand of incentives, especially to small and mid-size retailers who want to scale sales but are unsure whether they can handle the cost or stress of a heavy operational lift. FBA offers an ideal solution by enabling you to pass operational responsibility to a dependable network of FCs with the added bonus of excellent services to support customers during the post-purchase journey. The additional visibility you receive by leaning on Amazon FCs — increased likelihood of winning the Buy Box, access to Amazon Prime members and FREE shipping eligibility — is simply an added benefit.

If fulfillment and customer service are bringing you added stress, distracting you from business strategy or hindering opportunities for growth, consider letting Amazon handle the details of your orders to save you time so you can focus on your business. Amazon also offers an FBA Revenue Calculator so you can determine how cost effective FBA is for your products.

For more about ChannelAdvisor’s solutions, and how our software can help you transfer products to and maintain inventory upkeep with Amazon’s FBA program, call us at 866-264-8594 or email us at [email protected].

Trust us. Be Seen. To learn more: Call 866.264.8594 • Visit www.channeladvisor.com • Email [email protected]

Is Fulfillment by Amazon for Me?

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