Online shopping is expected to hit an all-time high this holiday season. Market research company eMarketer forecasts that American consumers will spend more than $192 billion on e-commerce platforms like Amazon. While this is great news at first glance, it also presents possible challenges for both shoppers and sellers. According to a recent report by Bloomberg, Amazon is recommending that shoppers place holiday orders as early as possible to avoid shipping delays. For sellers, increased demand means potential issues with FBA fulfillment – especially as COVID-19 cases surge in many parts of the U.S. You may remember back in March when Amazon abruptly suspended inbound shipments to its fulfillment centers for non-essential items. All of this underscores the importance for brands to prepare for potential Amazon fulfillment challenges during the busiest shopping season of the year.
The Benefits of Securing a FBM or 3PL Backup Strategy
Channel Key recommends that brands consider a Fulfilled by Merchant (FBM) backup strategy that will ensure you don’t lose sales due to FBA inventory challenges. This will enable you to continue selling ASINs that are unavailable in FBA by fulfilling these orders yourselves. High-volume retailers with their own warehouse and logistics network can rely on themselves, but smaller companies or those that depend solely on FBA might need to consider partnering with a 3rd party logistics (3PL) provider.
For a quick overview, 3PL providers offer logistics services such as transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding. Keep in mind, there are many types of 3PL providers. Some provide only basic warehousing and distribution, others offer additional value-added services like branded packaging, while turnkey providers essentially serve as the logistics arm of your company.
Choosing the right 3PL provider for a long-term partnership depends on a lot of factors and warrants its own discussion. For the purposes of securing a backup fulfillment option for the holiday season, the most important factor is the ability to streamline orders so that you meet Amazon delivery and tracking requirements. If your brand has a lot of volume, Channel Key recommends partnering with a 3PL provider that utilizes an Application Programming Interface (API) that can connect directly to your Amazon account. This will automate the process of updating inventory, sending orders, and updating tracking. Without an API, you may have to send orders manually to your 3PL provider, which requires more work and increases the opportunity for mistakes. Too many violations of Amazon’s shipping and tracking protocols can lead to your account being shut down.
Channel Key Takeaway | Preparing for Uncertainty
By all accounts, this holiday shopping season will be lucrative for brands with strong e-commerce strategies on platforms like Amazon. That said, the surge in online shopping along with the spike in COVID-19 cases across the country present potential shipping and inventory challenges that could impact sales. Developing a backup FBM strategy will serve as a safeguard against these possible setbacks and prevent your brand from missing out on holiday sales. To learn more about implementing an FBM backup plan, including the pros and cons of the different types of 3PL providers, contact us today for a free consultation.