Fulfilled By Amazon [FBA] Announces Big Changes Ahead of Peak Season
In light of Amazon’s recent announcement regarding the changes to its Inventory Performance Index threshold and quantity limits, many Amazon sellers are weighing alternative fulfillment options. The announcement comes mere weeks ahead of this year’s postponed Prime Day (currently scheduled for the week of October 5th) and just as many sellers are gearing up for the busy holiday shopping season. The current inventory cutoff for Prime Day is September 11, giving sellers limited time to prepare their inventory for the historically pivotal shopping holiday, and with Prime Day now butting up right next to Black Friday and Cyber Monday, sellers will have to act fast to restock their inventory in time for the holidays. In the past, sellers enrolled in FBA could have stocked up their Amazon warehouse shelves to ensure smooth fulfillment throughout the entire season, but these new inventory caps will require some creativity from sellers as they retool their supply chain and fulfillment to work within the new guidelines.
Amazon is offering free removals for a limited time starting July 14th, and as sellers begin pulling their slower-moving products and inventory over the quantity limits from Amazon’s warehouses, they may be thinking of giving their fulfillment process a complete overhaul for this shopping season. Merchants are currently weighing the options of inbounding multiple small shipments to meet new inventory limits through FBA, trying their luck on the SFP waitlist, or migrating more inventory to SFP if currently enrolled. No matter the option these merchants choose, Amazon Prime’s 2-day delivery standard (and customer expectations for 2-day delivery) will remain constant and will require either extensive internal resources or strategic and meaningful partnerships.
Increase Inbound Shipments to Amazon Facilities
This year’s Prime Day and holiday season may be more critical than ever for sellers looking to bounce back from sluggish sales resulting from the COVID-19 crisis, putting sellers in the position to respond quickly and decisively to these new inventory thresholds. Many merchants will respond by inbounding smaller shipments at a greater frequency in order to keep inventory levels up throughout the peak season. These merchants can forward stock their fast-moving inventory closer to Amazon fulfillment centers in order to cut down on inbound shipment times. This method will undoubtedly require more oversight and planning, so merchants should look for warehouse partners that offer high and accurate visibility into current inventory levels and inbound and outbound statuses.
Seller Fulfilled Prime [SFP] – Insourced or Outsourced
Sellers enrolled in Seller Fulfilled Prime may already be balancing multiple fulfillment channels — moving their bulky and slower-moving inventory through SFP and their more lightweight and faster-moving products through FBA. These new guidelines, however, will likely change the definition of “fast-moving”, and these merchants may be looking to migrate even more of their inventory to SFP. Managing these two fulfillment channels has always been a balancing act for merchants trying to find the most expedient and cost effective system to manage their inventory, and these new measures could be tipping the scales even further towards SFP.
But as sellers begin to migrate more inventory to SFP, the question remains if they will manage and execute fulfillment with inhouse resources or outsource to a logistics partner. While insourcing may be most merchants’ first inclination, creating a viable inhouse fulfillment model that meets all of SFP’s fulfillment requirements can divert sellers’ attention away from key business drivers during the busiest season of the year. At a time when sellers should be launching new products, creating promotions, or marketing their store, they may be hiring and training warehouse staff, finding additional storage space, or negotiating shipping rates. Otherwise, sellers who choose to use internal resources to meet the demands of SFP will find themselves at a bottleneck when order volumes surge with the shopping season or when their business inevitably outgrows their inhouse model. Ultimately, most sellers will find that opting for fully insourced SFP operations will leave them constantly reinventing and refining their operations to keep up with growth.
Many merchants have found that the alternate solution of partnering with an on-demand logistics provider to manage SFP offers the scalability once found through FBA and the level of control and insight offered by an inhouse SFP solution. These partners enable sellers of all sizes to meet the requirements of SFP without placing additional strain on internal resources. They offer a comprehensive network of warehouses to ensure a large 1-2 day delivery footprint and integrated technology to connect all of their sales channels directly to their fulfillment network.
As sellers take this opportunity to rethink their Amazon fulfillment strategy, they may like to explore the option of removing a layer of complexity from their supply chain by moving all of their inventory to SFP through a logistics partner. Managing Amazon fulfillment through a single vendor streamlines operations by allowing for greater visibility and a high level view of all inventory and fulfillment statuses. It also allows sellers to manage all operations through a single platform and reduce time spent juggling and reconciling multiple channels. If the price is right, this may offer the most flexible, scalable, and low-stress solution available, and this time when most Amazon fulfillment models have already been upended, is the perfect time to fully explore all available options.
Revisit a Multi-Channel Approach
Again, this is the perfect opportunity to leave no stone unturned in search of the ideal fulfillment option for many businesses. This could be a time for merchants to consider whether they have been relying too heavily on their Amazon sales channel and need to reinvest more resources into diversifying their approach to sales. Ultimately, in this shifting landscape, the most dynamic sales strategies that meet customers where they want to be met are the ones that will succeed and adapt quickly to change.
Seller Fulfilled Prime [SFP] Is Viable for Any Seller
While these new measures may offer a competitive advantage to top sellers and Amazon private labels, they could also offer the perfect opportunity for merchants to rethink their approach to Seller Fulfilled Prime. Sellers who currently qualify for SFP but aren’t using it or who need to increase the inventory they move through SFP have an opportunity to revisit their fulfillment options and potentially give their fulfillment process a complete refresh to find the ideal balance of scalability, flexibility, and delivery speed to help their business compete and grow.
Click here to learn more about how Ware2Go is solving logistics problems for merchants of all sizes or reach out to one of our logistics experts to learn more about migrating your Amazon order fulfillment to SFP.