3rd Party FBA Prep. Company

#1

Evening everyone!

In your plans to scale your Amazon business, have you considered using a 3rd party logistics company to receive from your supplier, sort, prep, label, and ship your inventory to FBA warehouses?

In planning to scale to the next level, we see two possible roads: rent a larger warehouse (plus overhead, utilities, insurance, etc.) and manage employees, or find a logistics company that already has the capacity and people to do this for us. I find the later interesting because it leaves the daily task of employee management, warehouse operation, etc. to someone else, while allowing the FBA seller to focus on growing their business.

Doing some research, I found some companies, but wanted to get everyone’s insight here on how you feel about this. I know that any time you outsource, you give up some control, but that should be manageable. Also, I’m focused on items from suppliers who can’t ship directly to FBA, and their items require some sort of prep before going to FBA.

Thanks a lot and happy Friday!

#2

Yes.

But then I decided it would just be easier and quicker to hand them my entire business plan and vendor list.

#3

Very true! Conflict of interest and intangible property (vendors, prices, etc.) are definitely risk areas and something that should be weighed.

If it’s a larger company and is willing to sign a non-compete and non-disclosure contract, it may help. Plus, anyone viewing your seller profile can see most of your “vendor list”, right?

Also, I think asking if “we can do an on-site inspection” of the warehouse in a day or two would probably reveal a lot about the business.

#4

No, not selling, more so looking to buy. Just wanted to see what the opinions are on a service like this, and if it’s worked well for anyone.

#5

I’ll give you the scoop as a company that actually does FBA prep work for a few clients, as well as FBA handling and shipping ourselves.

Benefits

  1. The cost savings are huge. We provide services for people at very reasonable prices because we have the experience, expertise and infrastructure to do it quickly, efficiently and correctly. This is because when I first built my company, I overbuilt the infrastructure because I’d rather spend $6,500 on a plallet wrapping machine than spin around a pallet 40 times and have burned hands by the end of it.

  2. Freedom for you. Your time is valuable… And I got a couple of workhorse kids that love this stuff (I know how to pick em) so keep them employed and you can sit back and relax.

  3. No costs for extra equipment, warehousing, insurance, property, electricity or setup.

  4. Combined shipping… Now this is where it gets fun. You don’t always have to use Amazon’s own shipping. If you use a 3rd party service and your hired company happens to have 2 other clients that are sending stuff to CHA1… and so are you, your pallets and shipments can be bunched together and launched out under one, cost-effective and money saving shipment. I often combine my own products on their own pallets with my customer’s products on their own pallets and send them out in one shipment. Average cost savings per pallet by combining shipments? Anywhere from $30 to $100, depending the amount.

  5. The ability to process more without up scaling becomes feasible. If you are working out of your garage now, you can’t purchase a forklift or Pallets or Pallet racks or have a place to store the pallets or store the completed pallets or store the forklift you didn’t purchase. You need a warehouse for that unless you’re in the boonies with acres of lands and the truck driver doesn’t mind rolling down your dirt road to your barn. You can only really do small parcel delivery and can only really process a few units at a time. With a 3rd party, you can unload everything on them and fill their warehouse if needed, so long as you pay, and they can have your products ready and stored safely in no time.

Disadvantages:

  1. You’ll probably pay more in the long run than opening your own shop, but truthfully it would take a VERY long time to do that. That of course depends on how much your company charges.

  2. They might get the order wrong and you’d never know. That depends on the experience of the company and their attention to detail.

  3. You risk your purchased goods in someone else’s hands that ISN’T Amazon. It’s up to you if you want to risk that. My clients are happy to drop 100k-worth of stuff at my front door, but that’s only because I proved to them what we have and what we do. Plus, it is my belief that everyone benefits so long as everyone does their part, always. If one person scams another, it is never as good to make the quick dime vs the long dollar.

There’s probably other risks but I can’t think of any right now, probably because I know I run a good and honest company that makes the process quick and easy for my clients to get their FBA stuff out… I don’t know any disadvantages that shady company might have.

#6

Honestly, you sound to me like you’re selling something.

Third party FBA prep services, probably.

#7

Amazon already does the preping and storing.

Why would you want to add another cost to your bottom line?

If you prefer, you can send your items direct from manufacturer.

Just have manufacturer include the fba sheet that goes on the package.

Amazon can tag and bag your inventory for a fee.

However,

I would not trust a company to tag and bag my product.

#8

I’m a small vendor and i already went the 3PL route (FwdToAmazin). They do Canada only at this time but similar outfits can be found easily.

I’m nor scared that the will compete with me. If they did and I found out I would stab them right here on the forum.

Yes Amazon can do the prep work for you but typically at a higher price and it slows down receiving because it introduces steps. Yes you supplier could do that for you but then if you want to get scared about get cut out of the loop…

3PL companies may get your products through customs, saving you the brokerage step.

The decision is yours; you may keep every cent on your sales and do everything yourself. or leave some money on the table and get more time to find good products.

To me it is the difference between 100% of a pie and 90% of a bigger pie.

#9

AA Computers
Could you send me your email address if you are accepting any more clients for fba prep?
My email address is gpugh63@gmail.com
Thanks

Edited by: WelshSooner on Jan 10, 2015 8:44 AM

#10

This would be a great service for a company that sells their own trademarked items and simply want to expand their channels to Amazon, without having to deal with the nitty gritty prep work

#11

I just cut a deal with one vendor to do FBA prep for 18 cents a unit. This will save me 8 to 10 hours a week.

If they choose to compete with me directly, I have a backup plan.

#12

Shopping around is wise. So is checking referrals and references. Personally, I can vouch for AA-he runs an impressive operation.

#13

Hello all, I’m mostly a lurker in the forums but I’ve been selling on Amazon for a couple of years. I had to respond to this thread because I’m interested in the concept of outsourcing FBA prep, but what about the potential for account suspension due to Amazon thinking that your account is linked to multiple other accounts?

Perhaps I’m being overly paranoid, but I’ve read many stories of account suspension due to Amazon flagging the account as being linked to one or more other accounts. My assumption is that you would create a user account for the 3PL that has inventory management capabilities. How do these 3PL companies avoid the risk of their various clients being linked together?

#14

Excellent question! Amazon has been known to throw out the babies with the bath water so a healthy amount of paranoia is good for longevity here…

#15

Yes, Amazon FBA does the prep for you if you send your shipment there from the USA.

closed #16