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Warehousing & Fulfillment

Thinking About Amazon Multi Channel Fulfillment?

Warehousing & Fulfillment
November 5, 2020
8 min read
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This overview of the services and business outcomes of Amazon Multi Channel Fulfillment outlines important considerations for Amazon sellers launching a new sales channel. Explore alternative options for streamlining a multichannel fulfillment strategy and understand the true impact of fulfillment and delivery on brand and customer satisfaction.

What Is Amazon Multi Channel Fulfillment [MCF]?

Most Amazon sellers are familiar with Fulfillment By Amazon [FBA], the fulfillment solution provided by Amazon to help sellers maintain their Prime status. The ecommerce giant has famously invested heavily in their warehouse and delivery infrastructure to continually improve delivery speed to more and more of the country. Amazon’s Multi Channel Fulfillment [MCF] program takes this offering a step further, providing fulfillment services for merchants regardless of the channel the sale comes through. Merchants store their products at Amazon warehouses, orders from multiple platforms are routed through Amazon’s API, and Amazon picks, packs, and delivers the order.

Typically, Multi Channel Fulfillment is favored by Amazon-only sellers who are taking their first step into a multichannel ecommerce strategy (perhaps launching an ecommerce site or listing on multiple marketplaces for the first time). The convenience of outsourcing fulfillment to a single provider is attractive to most fast-growing SMB’s, but before committing to MCF, merchants should consider the cost of sacrificing supply chain resilience in the name of convenience. And ultimately, merchants should consider the long-term effects of relinquishing control of brand identity, business objectives, and customer experience to a competitor rather than a partner.

Amazon Multi Channel Fulfillment [MCF] Dilutes Brand Identity

Building a strong brand identity is essential for growing businesses to differentiate themselves in the marketplace, build a loyal customer base, and eventually lower customer acquisition costs. Brand is built through more than just logos and marketing efforts but through the end-to-end customer experience.

That experience begins with a customer’s first introduction to your brand at the top of the sales funnel, continues through the purchase decision, and includes the delivery and at-home experience with your product. One major downfall of MCF is its allegiance to the Amazon brand. All shipments are packaged in Amazon-branded packaging, regardless of whether the sale originates from Amazon, your ecommerce store, or another participating marketplace. (Although marketplace options will be limited when fulfilling through MCF. More on that later.) This can create a confusing customer experience and potentially dilute your brand identity. Receiving a product from your ecommerce storefront in Amazon-branded packaging may well send shoppers back to Amazon (and possibly to another seller) for their next purchase.

Amazon Multichannel Fulfillment delivering a package to a consumer in Amazon branded packaging

A Case for Seller-Fulfilled Prime [SFP]

Merchants considering Amazon Multi Channel Fulfillment may be currently fulfilling their Amazon orders through Fulfillment by Amazon (FBA). These sellers may be hesitant to find an additional fulfillment provider for their new sales channels, but there is another option to streamline fulfillment through a single partner with Seller-Fulfilled Prime (SFP). SFP allows merchants to choose their own fulfillment provider and keep their Prime status as long as they can meet Prime delivery requirements. This allows fulfillment for multiple sales channels to be funneled through a single provider without the limitations of Amazon Multi Channel Fulfillment.

Cambridge Audio is a UK-based company that entered the US market in 2017. They knew that Amazon marketplace sales would be a key to establishing their US presence and breaking into the mass consumer market. However, as an established high-end brand with a distinct brand voice, they knew they needed to enter the marketplace on their own terms to keep from diluting or muddy-ing their brand.

Their carefully curated Amazon store leaves a browser with no doubt that they’re shopping Cambridge Audio’s store and clearly differentiates themselves from their competitors. And on the fulfillment side, Cambridge Audio chose a single on-demand warehousing partner with the capabilities to package their products in their branded packaging and according to their requirements. This way the customer journey from start to finish is clearly a journey with Cambridge Audio and always points back to their brand and products.

Cambridge Audio's Amazon store has excellent product photos and strong branding
Cambridge Audio maintains a strong brand voice on Amazon throughout the customer journey: from the layout of their Amazon store to branded packaging at delivery.

Amazon Multi Channel Fulfillment [MCF] Impedes Business Objectives

Amazon’s fulfillment network is rapidly growing to meet fast shipping expectations by distributing inventory across multiple warehouse locations closer to end customers enabling affordable 1 to 2-day ground shipping. When it comes to building this warehouse network, however, Amazon holds all of the decision-making power. Rather than guiding merchants through the process of selecting a warehouse network based on their historical sales data and demand forecasting, they choose which warehouses to stock and the quantities to carry at each. SMB’s should carefully consider giving this level of control over to what is essentially a competitor.

Amazon Multi Channel Fulfillment also has quite a few limitations, beginning with strict storage limits and high storage rates for inventory that doesn’t meet its Inventory Performance Threshold limits. Amazon announced these efforts to free up space in its warehouses earlier this year, prompting many sellers to reconsider their reliance on Fulfillment by Amazon [FBA]. These requirements apply to merchants enrolled in MCF and should be a warning sign to businesses hoping to grow across multiple sales channels.

Additionally, MCF is not an approved fulfillment partner for Walmart Marketplace or eBay. Between its Walmart+ subscription program and Shopify partnership, Walmart has become a major contender for Amazon’s position as the number one online marketplace. Merchants hoping to build a viable multichannel selling strategy would be remiss to overlook its broad audience and loyal customer base and will be forced to piecemeal their multichannel fulfillment solution if fully reliant on Amazon’s fulfillment services.

And finally, MCF does not support international shipments. Establishing an international customer base is an important growth lever for many small to mid-sized merchants. Cutting yourself off from the international market in any stage of business growth is not a decision to be taken lightly.

The Importance of Delivery Experience

Although Amazon has in many ways set the standard for fast delivery, their dogged commitment to their customers means that Amazon Prime and FBA orders will always take first priority. Merchants enrolled in MCF have complained that their orders have fallen by the wayside during times of high demand for Amazon Prime. The delivery experience is a main driver of customer satisfaction and retention and should be placed in the hands of a provider that you consider a true partner and champion of your brand.

And when it comes to closing the loop on fulfillment by way of returns, MCF places the entire responsibility on the merchant. Ecommerce return rates average around 20%, meaning that Amazon is leaving a significant portion of the fulfillment process out of its service offerings. This is not only an added burden to merchants but a frustrating experience for customers, and up to 60% of consumers report that a negative return experience will keep them from shopping with a brand again.

So as merchants branch into multichannel growth, they should take a step back to consider the full impacts of fulfillment on their brand, business objectives, and customer experience. Amazon Multi Channel Fulfillment may seem like a convenient option, but its limitations could be too high of a price to pay in the name of convenience.

To learn more about how Ware2Go is simplifying multichannel fulfillment for merchants of all sizes, take a look at Our Solution.

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