Fulfillment by Amazon (FBA) is an incredibly popular program, and some estimates show that nearly 90% of sellers on Amazon use FBA. But did you know that there’s another option for Amazon fulfillment? Amazon Direct Fulfillment is another option for sellers on Amazon’s platform, but an understanding of the details of the program is critical for any brand to determine if the service is a fit for their business.
This guide walks brands through the benefits and disadvantages of Amazon Direct Fulfillment as well as alternatives. Before committing to any new marketplace fulfillment partner, even if its Amazon, brands need to fully understand the ins and outs of the service to ensure it’s the best fit for them.
What is Amazon Direct Fulfillment?
Amazon Direct Fulfillment is a retail dropshipping program for Amazon vendors. Amazon purchases wholesale from a vendor and markets that vendor’s products as “Sold by Amazon.” When a customer order is placed on Amazon.com, the purchase order is forwarded to the vendor, who ships the product directly to the Amazon customer.
Amazon Direct Fulfillment vs FBA (Fulfillment by Amazon)
Amazon Direct Fulfillment and Fulfillment by Amazon (FBA) are the two leading Amazon fulfillment programs. It’s key for brands to understand the differences before deciding which program is right for their brand. Brands that use Direct Fulfillment generally wholesale products to Amazon and handle order fulfillment, while brands that use FBA generally sell directly to consumers on Amazon’s marketplace. When brands use FBA, they ship products to Amazon’s warehouses, and Amazon handles fulfillment.
With Amazon Direct Fulfillment, Amazon handles the marketing and product listings for the vendor’s products. With FBA, the brand handles the marketing and product listings for its own products.
Benefits of Amazon Direct Fulfillment
There are many pros and cons of selling on Amazon. One of the benefits of Amazon Direct Fulfillment is that Amazon handles so much of the process, from marketing the products to storing the products and from customer service to shipping.
Amazon covers shipping costs
Does Amazon pay for shipping? With Amazon Direct Fulfillment, Amazon pays all of the shipping fees for fulfilling orders through Amazon Direct Fulfillment. The only costs a vendor pays are the costs for fulfillment labor and packing materials.
Outsourced customer service
Amazon handles all of the customer services for products sold through Amazon Direct Fulfillment, which frees up a brand’s employees to focus on other aspects of the business.
Better shipping quality control
Because the brand handles the shipping of the products, they are better able to ensure the quality of the packaging and shipping to make sure products arrive undamaged. Making sure that products arrive on time and are undamaged is a critical way to ensure customer satisfaction.
Ability to leverage the full catalog
Because a brand isn’t dependent on Amazon’s warehouse limits, it can sell more of its products. There’s also less of a risk of stockouts because the brand doesn’t need to ship the products to an Amazon warehouse first, as they do with Fulfillment by Amazon.
With FBA, brands ship their products to an Amazon warehouse before a sale can be made. With Amazon Direct Fulfillment, vendors ship directly to the Amazon customer after the customer order is placed on Amazon. This streamlined shipping reduces the opportunities for supply chain issues, like damaged products and delays.
Disadvantages of Amazon Direct Fulfillment
While Amazon Direct Fulfillment has plenty of benefits for brands, there are also downsides, including the fact that it can involve more work for sellers.
More work for brands
Brands need to handle the storage and shipping of products to customers from their own warehouse space or fulfillment partner. While this does allow brands more control, they need to make sure they have the people power to handle extra work. Brands also need to handle customer service, which can also be a strain on a brand’s personnel resources.
Brands also need to manage their own inventory. When using FBA, Amazon tells the brand when inventory is running low and when to send more products to their warehouse. With Amazon Direct Fulfillment, brands manage their own inventory.
Lower visibility in search
Amazon search tends to prioritize FBA listings. Brands using Amazon Direct Fulfillment might see their products ranking lower in Amazon product searches than other sellers offering the same product who are using FBA.
How to enroll in Amazon Direct Fulfillment
Enrolling in Amazon Direct Fulfillment is simple for existing Amazon vendors and involves minimal setup. For new vendors, the process is a little more involved, but can still be relatively painless.
Brands can sign up for Amazon Direct Fulfillment if they meet the following criteria:
- Have an Amazon business registered in the United States
- Have a warehouse in the United States
- Have the capacity to pick, pack, and ship perfect orders to customers
- Have the ability to meet Amazon’s shipping deadlines
- Agree to Amazon’s terms and conditions
If existing vendors meet all of the above criteria, they can enroll in Amazon Direct Fulfillment by accessing their Amazon Vendor Central professional account. Brands create a product listing, which is sent to Amazon for approval. Once the listing is approved, the product is live on the Amazon marketplace.
For new vendors, they’ll need to set up a Vendor Central account and select “Direct Fulfillment.” During this process, the Amazon vendor will receive an invitation to the Drop Ship Portal, where they will manage their direct fulfillment orders. During the setup process, brands will also need to provide additional information, including warehouse information, hours of operations, closure schedules, and carrier pick-up times.
Amazon Direct Fulfillment alternatives
Alternatives to Amazon Direct Fulfillment include Fulfillment by Amazon and Amazon drop shipping. Non-Amazon options include on-demand warehousing, a warehousing and distribution model that connects available warehousing space with e-commerce businesses in need of a small amount of space, for a short amount of time.
Brands can also work with a 3PL or other partner for the fulfillment, whether that’s to Amazon or direct to consumers. Most 3PL solutions allow brands to maximize their omnichannel strategy and offer the same customer experience across sales channels—from Amazon’s marketplace to their own ecommerce website.
Turn to Flowspace for your Amazon fulfillment needs
Flowspace fills a critical need for e-commerce businesses, enabling sellers to readily meet demand without exerting the extra cost, time, and effort of complying with Amazon’s strict rules.
Flowspace provides storage, transportation, product inventory management, and all the warehousing services brands need for their inventory month over month. What’s more, Flowspace provides Amazon integration, handling the picking, packing, and shipping of Amazon orders directly from its networked, distributed order fulfillment centers.
There are no space minimums, so e-commerce businesses can eliminate the issue of overpaying for unneeded space, improve the logistics network and even avoid selling through Amazon all together if they choose. With a nationwide fulfillment network, Flowspace is the perfect fulfillment partner solution for e-commerce businesses that are looking for Amazon Direct Fulfillment alternatives. Get started today!