Is FBA really the only alternative?

Additional storage space soon only for highest bidders

Amazon is the No. 1 sales channel for numerous brands. Fulfillment by Amazon (FBA) is the perfect solution, especially for fast-growing companies that do not have the time to set up their own shipping, customer service and returns structures. This is how sellers achieve high sales figures with a minimum of operational effort.

However, due to the FBA price adjustments just announced, rethinking the convenient FBA fulfilment strategy makes sense. This is because a new capacity limit will be introduced from the 1st of March. Furthermore, additional storage space will be auctioned off to the highest bidders in the future. Whoever then bids too little will be left empty-handed. Many retailers find this an imposition.

It is therefore time to look at alternatives. Many FBA sellers have already taken a cursory look at the alternative “Fulfillment by Merchant” (FBM). The latter is usually much cheaper than the Amazon complete service, but also has disadvantages. For example, the items of FBM sellers are no longer marked as “prime products” with a fast delivery time and the probability of being displayed in the Buy Box is greater for FBA sellers than for FBM sellers, because this is where how quickly, cheaply and reliably the delivery reaches the customer flows in. Since about 90% of all Amazon purchases are made via the Buy Box, placement here is an absolute must.

The Seller Fulfilled Prime Programme (SFP) is therefore likely to be the most exciting option within FBM for most retailers: sellers can participate in Prime shipping here while handling their logistics via an external fulfilment service provider, as long as the latter enables 2-day deliveries at no additional cost for Prime subscribers. For this, however, the sellers must complete a probationary period and prove that they comply with the FBA performance standards. Therefore, retailers who take this route need a reliable logistics partner, otherwise they risk losing their SFP status.

The switch from the FBA seller to the SFP programme is a lengthy and error-prone undertaking for retailers without existing logistics structures, suitable processes and interfaces for retailers. After all, opting out of the FBA service not only means setting up your own parcel shipping service, but those who take this route must also cover customer service and returns management on their own or with a service provider.

This is also the reason why the majority of retailers continue to rely on FBA despite high costs. Because there are currently only a few available holistic solutions that are just as convenient for merchants and guarantee the same quality as Amazon fulfilment. Only when retailers can use an out-of-the-box plug-and-play solution that covers the FBA service portfolio and guarantees that all processes run smoothly will Fulfillment by Amazon no longer be without alternative. That’s why PVS Europe is currently working on a holistic FBA alternative that will allow our customers to flexibly change their Amazon set-up after a quick onboarding. Our goal: With the help of customised PVS complete solutions consisting of customer care, IT and fulfilment services, we make our clients independent of the FBA programme without them having to adapt or invest in their own structures.

In this context, we are interested in your ideas. What challenges do you face in your day-to-day FBA or FBM work? Do you need support? I look forward to your input.

Yours sincerely, Jan Felix Topp janfelix.topp@pvs-europe.com