We talk to ecommerce retailers of all shapes and sizes – from multi-million dollar divisions of the world’s best-known brands, to mid-size online niche businesses, to start-up companies shipping packages out of their garages. Despite their differences, many of the questions they ask us when considering an outsourced fulfillment partnership are the same. One we always hear? “What do you know about FBA (Fulfillment By Amazon)? How are you different? Should I use them?”
There are a lot of benefits to this program: selling on the largest online marketplace, access to great shipping rates and distribution channels, and ‘outsourcing to an expert’, to name a few. However, when we take a closer look into how FBA actually works, we see a whole lot of issues that we think should be deal-breakers for retailers who are looking for long-term ecommerce success.
1) You’ll offer free shipping in many cases – whether you like it or not. While this might not bother some retailers, others who want to maintain full control of their fulfillment operations will likely not enjoy having their decisions made for them. Consider this: nearly all products on Amazon are eligible for ‘Super Saver Shipping’ or Amazon Prime shipping, meaning that the customer doesn’t pay any delivery charges. However, you better believe that you’ll be paying Amazon to ship your product to your customer! If you don’t have decent margins to compensate for ‘forced’ free shipping, FBA is probably not a good idea.
2) You don’t get to brand. ANYTHING. Custom packaging? No. Package inserts? Absolutely not. In fact, Amazon’s seller agreement states that any unapproved ‘contact’ with their customer (yes, that’s right, these awesome people buying your products and loving your stuff are considered AMAZON’S customers, not yours!) can cause you to be removed from the site as a seller. You’ll get a plain brown box, standard plastic packing materials, and a generic packing slip for every order – and nothing else.
3) Personalization of any kind? Yeah, right. Chances are if you’re selling on Amazon, you don’t care about offering embroidery, engraving, or any other type of product personalization. However, the fact that you can’t get any of these things through the FBA program is a big deterrent for anyone who does. And, as we said above, you don’t get any value-add opportunities with FBA – so no gift-wrapping, handwritten notes, or other “warm and fuzzy” purchase attributes.
4) Customer service is out of your control. Since the entire model is centered around the “Amazon’s customer, not yours” mantra, you don’t get the opportunity to provide customer support after the sale. Using FBA means that buyers will be instructed to contact Amazon, where you have no ability to brand the interaction, control the quality of the conversation or the information being relayed, or do anything else. Amazon customer care representatives aren’t experts on your products – and their hands-off approach means you’ll never get the opportunity to train them.
5) You play by Amazon’s rules. Let’s be honest: Amazon is an ecommerce giant, and you’ll more than likely be a small fish in their very, very large pond. Your orders may be combined with other sellers’ orders to reduce shipping costs, and there’s nothing you can do about it. If you have issues with fees, service levels, or order accuracy and appearance, you’ll stand in line behind hundreds of other sellers to rectify the issue. You might go into an FBA agreement feeling like a rock star.. but chances are you’ll come out of it feeling like a groupie.
Have an FBA horror story to share? A positive experience for us to learn from? Let us know in the comments.