Which should I use – Amazon’s new FBA Prep Service
– or a Third-Party Service Provider?
In case you missed it, Amazon now offers a full range of FBA Prep Services for many classes of products, including Fragile and Glass, Liquids, Clothing, and even Adult items. The full list and complete explanation can be found on Amazon’s FBA Prep Service page. This new service is considerably more exhaustive than the “poly-bagging and labeling” that their former service used to be limited to.
In certain situations, it may make sense for some sellers to take advantage of Amazon’s FBA Prep service. If you are able to manage the inbound shipping of products to your location, sort them according to where Amazon wants them shipped, create the inbound shipping plans to Amazon, and do any initial prep required for safe transportation to the Amazon warehouse, then Amazon’s FBA Prep Service may very well fit your business model. This seems to be well suited for those who use Retail Arbitrage as their main sourcing model, as well as smaller Online Arbitrage businesses. Some wholesale and import shipments may be able to be scheduled on your behalf by the shipper in order to take advantage of this new Prep service.
Amazon will still require you create the shipping plans and print the shipping labels so they can track the inbound shipments. They will not allow online retailers to ship items into the Amazon warehouse. You will need to make sure the items can safely be transported to the Amazon Prep Warehouse, which might mean that you need to do some prep work before Amazon even receives the item. You may also find that your items are being shipped to warehouses that you are not familiar with, depending on how Amazon chooses to handle the workflow.
For many, especially the larger sellers, this will not be an option. They may have already grown beyond their capacity to process the amount of shipments they receive from online retailers, wholesalers, or imports, and need a Third Party Fulfillment Service to handle receiving their orders. In addition to prepping, these 3rd-party services can receive shipments, hold the items until all orders are received (or even longer), palletize when necessary to save inbound shipping costs to Amazon, and provide other services that neither a small seller working out of their home, nor a large seller sitting on the beach with their laptop would be able to do.
Keep in mind that not all items need to be prepped. As always, Amazon reserves the right to split shipments to be sent to multiple Fulfillment Centers. Do not be surprised if Amazon starts demanding that items needing Prep Services be shipped separately from items that do not need to be prepped. It is also worth noting that Amazon may decide at any time to discontinue providing this service, so it would be a good idea to have a backup plan in any event.
The Prep Centers listed below stand ready to assist you in getting your goods prepped and delivered to the Amazon FBA Warehouse where they can be sold. Not sure what you need? Watch the short video at the top of the page to learn how to choose the FBA Prep Service that is right for your business.
Location – Where is the prep center located? Is it near the Port of Entry for your Import shipments? Is it near your wholesale supplier? Sometimes it makes sense to use multiple Prep Centers in order to save money on inbound shipping charges.
Tax Free – Is the prep center located in a tax free state? This allows you to have Online Arbitrage (OA) orders shipped without paying sales tax. Some retailers do not allow you to use your Reseller Certificate, so this is a way to eliminate the Sales Tax that your state may charge when orders are shipped to you. Many times, the tax savings will more than pay for the Prep services.
* Wholesale and Import shipments should not incur any sales tax. Services that are strictly Wholesale or Private Label may be marked “Tax-Free” in the table below since you are not the end user of the product. Consult your tax adviser for more clarification.
Prep Time – How long it takes to prep & ship your items once everything has arrived. Keep in mind that shipping times to the Prep Center may vary, so you will want to know how long will it take to complete your shipment to Amazon after the entire order has been checked in at the Prep Center.
Wholesale – Larger Shipments of similar items that are purchased from manufacturers and distributors. Setting up wholesale accounts usually requires a Tax ID number, business bank account, and credit references.
Imports – Bulk shipments direct from the overseas manufacturer that are usually shipped on pallets. Depending on the size of the order, it may arrive by plane or cargo ship. Usually requires a broker or agent to handle US Customs and transportation from the Port of Entry.
RA – Retail Arbitrage – Finding items in retail stores that can be resold elsewhere for a profit. Some Prep Centers allow you to drop off or ship items to them that were purchased at local retail stores. Some Prep Centers do not handle RA processing due to the additional labor involved in removing price tags and labels.
OA – Online Arbitrage – A form of Retail Arbitrage that involves finding items online that can be resold elsewhere for a profit. Sometimes these items are also available in the retailer’s stores. Many online retailers offer free shipping for orders that reach a minimum price level.