I think there is a major advantage of Vendor Central Direct Fulfillment that has been overlooked by many Amazon sellers.
And I’m surprised this isn’t discussed more often.
The advantage becomes especially obvious with products that have all three characteristics:
High selling price + high shipping cost + U.S. warehouse fulfillment.
Large fitness equipment is a perfect example.
The Problem for 3P FBM Sellers
Let’s take a simple example.
A third-party seller sells a large piece of fitness equipment for $339 and charges the customer another $150 for shipping.
Customer pays:
$339 product + $150 shipping = $489
For a 3P FBM seller, Amazon’s referral fee is generally calculated on the total sales price, including shipping charged to the customer.
Assuming a 15% referral fee:
$489 × 15% = $73.35
Then the seller still has to pay the actual last-mile shipping cost.
So separating shipping from the product price doesn’t solve the problem.
The higher the shipping cost, the more painful this structure becomes.
And for large fitness equipment, furniture, outdoor equipment and other bulky products, shipping can easily be $100–$200+ per order.
Now Look at Vendor Central Direct Fulfillment
Vendor Central Direct Fulfillment operates under a completely different commercial structure.
The Vendor keeps inventory in its own warehouse and fulfills Amazon customer orders directly from that warehouse under the Direct Fulfillment program.
This is not ordinary 3P FBM.
The relationship is still between Amazon and the Vendor, with economics governed by the Vendor’s purchase price and negotiated Vendor terms rather than the standard 3P seller referral-fee model.
And this difference becomes extremely important when the product is expensive to ship.
For a $20 product with $5 shipping, maybe nobody cares.
But what about:
$300–$700 selling price
and
$100–$200+ last-mile shipping cost?
Now the difference can become enormous.
This Is Where Things Get Interesting
I’ve watched VC offers sell large fitness equipment at retail prices that would be extremely difficult for conventional 3P FBM sellers to match while maintaining a reasonable margin.
And after studying the economics, I think the explanation deserves much more attention:
Direct Fulfillment itself may be particularly well suited to high-ticket products with high last-mile shipping costs.
The Vendor already has inventory in a U.S. warehouse.
Amazon generates the order.
The Vendor ships directly to the customer.
No need to send that inventory into an Amazon FC first.
And the transaction operates under Vendor economics rather than the conventional 3P FBM fee structure.
For certain products, that’s a fundamentally different cost model.
Why Aren’t More Vendors Doing This?
That’s the question I keep asking.
Direct Fulfillment isn’t new.
Vendor Central isn’t new.
U.S. third-party warehouses aren’t new.
Heavy and bulky e-commerce isn’t new.
But put them together:
**Vendor Central
* Direct Fulfillment
* U.S. warehouse
* High selling price
* High last-mile shipping cost**
and suddenly the economics can look very different from those of a traditional 3P seller.
This seems particularly interesting for categories such as:
Home gyms, Smith machines, power racks, large fitness equipment, furniture, beds, outdoor equipment, large home products and other expensive-to-ship merchandise.
If You Have Vendor Central Access, Run the Numbers
I’m genuinely interested in hearing from other Vendors who use Direct Fulfillment.
Take a high-ticket, high-shipping-cost product and compare the economics of:
3P FBM
versus
Vendor Central Direct Fulfillment
Don’t compare only the selling price.
Compare the entire structure:
Product cost
Amazon fees / Vendor deductions
U.S. warehouse costs
Last-mile shipping
Returns
Chargebacks
Allowances
Final net margin
The larger the selling price and shipping cost become, the more interesting the comparison gets.
For years, sellers of large products have accepted that high last-mile shipping costs require high retail prices.
But Vendor Central Direct Fulfillment may change that equation considerably.
If you already have Vendor Central access and U.S. warehouse capabilities, high-ticket, high-shipping-cost products may deserve a much closer look.
I think this opportunity is significantly underestimated.
