Amazon values customer experience above all else. For sellers, this comes down to order fulfillment and operations. Shoppers love Amazon because they know they will receive their orders quickly. In Amazon’s FBA program, brands don’t need to worry about fulfilling orders. You send your products to a fulfillment center and Amazon takes care of the rest. With Fulfilled by Merchant (FBM), sellers are responsible for packing and shipping. While this eliminates FBA costs, it also adds responsibility. If you don’t fulfill orders the right way, Amazon will penalize you. Keep it up and they will suspend your account. The following best practices for order fulfillment and operations will help ensure your success as a FBM seller.
What is Amazon Fulfilled by Merchant (FBM)?
First, the basics. Amazon FBM is when the seller packs and ships orders. This is common for brands that have their own warehouse and logistics network. Smaller brands also sometimes begin selling through FBM. In-house fulfillment is worth considering if you:
- Sell a low volume of products
- Have a functioning logistics network
- Sell products with complicated packing and shipping requirements
This option might also be right if your products aren’t ideal for FBA. This can include hazardous goods or products that are costly to store. In general, in-house fulfillment allows you to:
- Keep your inventory on hand
- Use your own packaging or labels
- Stay profitable on products with tighter margins
- Offer products that are eligible for sale on Amazon, but ineligible for FBA
One of the biggest challenges of FBM is meeting Amazon’s fulfillment requirements. Amazon requires you to ship an order within 24 hours of receipt. You also need to provide valid tracking. Amazon monitors FBM sellers with performance metrics, including late shipment rate, pre-fulfillment cancellation rate, and valid tracking rate. If you don’t adhere to these standards, Amazon may suspend your selling privileges.
Third-Party Order Fulfillment and Operations on Amazon
Many sellers enlist a third-party logistics partner to handle order fulfillment and operations. Amazon has specific policies around this practice. If you choose this option, be sure to follow these requirements:
- Be the seller of record of your products
- Identify yourself as the seller on all packing slips, invoices, external packaging
- Remove any information identifying a third-party drop-shipper
- Be responsible for accepting and processing customer returns of your products
- Follow all other terms of your seller agreement and applicable Amazon policies
Examples of drop-shipping that are NOT permitted include:
- Purchasing products from another online retailer and having that retailer ship to customers
- Shipping orders with packing slips, invoices, or other information indicating a different seller
If you fail to meet these requirements, Amazon may suspend your account.
Top Order Fulfillment Principles for Amazon FBM Sellers
- Maintain Inventory
You can’t sell on Amazon if you don’t have inventory. This happens more often than you might think. When a customer places an order, you need to be able to fulfill it. Shoppers become upset when they place an order that doesn’t arrive. Keeping adequate inventory is a prerequisite to order fulfillment.
- Reduce Handling Time
Always fulfill your orders right away. Aim for a 24-hour handling time. Amazon factors this into your total delivery speed. If it takes you two days to package a product and four days to ship it, Amazon calculates this as a 6-day delivery window. This is too long. Remember, Prime members receive free two-day shipping. Reducing handling time will shorten the shipping process and improve customer experience.
- Know What Amazon Customers Expect
Amazon customers have high expectations. They want fast, inexpensive shipping with accurate tracking. FBA is popular because Amazon guarantees sellers will meet fulfillment expectations. With FBM, the burden is on you. As your business grows, make sure you offer fast shipping, keep charges low, and provide tracking.
Tips to Fulfilling Your Amazon Orders on Time
Amazon’s fulfillment standards revolve around customer expectations. They know happy shoppers will come back. To sell on Amazon, you need to maintain their standards. The company pays attention to everything you do as a seller – especially order fulfillment. The following tips will make it easier to meet Amazon’s fulfillment requirements:
- Use an Inventory Management Tool
Managing your inventory is essential to order fulfillment. This includes being able to resolve inventory issues. An inventory management tool that syncs to your Seller Central account will make it easier to prevent and resolve inventory problems.
- Keep Scheduled Cycle Counts
Maintaining cycle counts is a good way to make sure your inventory is accurate. This is more important for sellers with high volume. As you grow on Amazon, the harder it will be to keep track of inventory.
- Set the Right Shipping Cutoff Time
Your Cutoff Time is the deadline for placing an order that will be meet the given shipping timeline. By setting your cutoff as late as possible, customers will view a shorter delivery speed. This will help increase conversion rates.
- Using the Right Carrier
FBM sellers don’t have the benefit of Amazon’s vast delivery network. They must use a carrier service. Be sure to choose one that provides valid tracking. A few carriers that Amazon recognizes include the USPS, UPS, and FedEx.
Channel Key Takeaway on Order Fulfillment and Operation
Customer experience is Amazon’s top priority. As a seller, it should be your top priority, too. You want orders to reach your customers as fast as possible. FBA sellers don’t have to worry about this. FBM sellers must work hard to maintain inventory, reduce handling time, offer valid tracking, and meet delivery dates. This is not always easy. As your business grows, you may need to adjust these processes. The good news is many sellers achieve great success through FBM. Staying on top of order fulfillment and operations can help you become one of them.