{"id":7809,"date":"2019-07-09T17:31:00","date_gmt":"2019-07-09T17:31:00","guid":{"rendered":"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/amazon-fulfillment\/amazon-fba-vs-3pl\/"},"modified":"2021-05-20T18:13:26","modified_gmt":"2021-05-21T01:13:26","slug":"amazon-fba-vs-3pl","status":"publish","type":"post","link":"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/amazon-fulfillment\/amazon-fba-vs-3pl\/","title":{"rendered":"FBA vs. 3PL &#8211; Which is the Best Amazon Fulfillment Option for You?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">When it comes to building a successful ecommerce business, there are many options available to help <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/fulfillment\/outsourcing-order-fulfillment-guide\/\"><span style=\"font-weight: 400;\">outsource order fulfillment<\/span><\/a><\/span><span style=\"font-weight: 400;\">. Two of the most popular are <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/amazon-fulfillment\/amazon-fba\/\"><span style=\"font-weight: 400;\">FBA (Fulfilled by Amazon)<\/span><\/a><\/span><span style=\"font-weight: 400;\"> and <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/3pl\/guide-third-party-logistics-3pl-fulfillment-providers\/\"><span style=\"font-weight: 400;\">3PL (third-party logistics)<\/span><\/a><\/span><span style=\"font-weight: 400;\">. With both of these options, the basic concept is similar: you send inventory to a third party, who then is responsible for storing it and shipping it. While the basics are similar, there are marked differences between the FBA and 3PL services, and it is important to understand the pros and cons in order to choose what the best option is for your ecommerce business.<\/span><\/p>\n<h2>What is Third-Party Logistics (3PL)<\/h2>\n<p><span style=\"font-weight: 400;\">A 3PL is an outsourced provider that handles many aspects of a company\u2019s supply chain: <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/inventory\/save-time-money-inventory-management-tips\/\"><span style=\"font-weight: 400;\">inventory management<\/span><\/a><\/span><span style=\"font-weight: 400;\"> and storage, fulfillment services, <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/shipping\/beginners-guide-to-shipping\/\"><span style=\"font-weight: 400;\">shipping<\/span><\/a><\/span><span style=\"font-weight: 400;\"> and return logistics, plus many more. Because a 3PL provides the same services to many companies at once, it can be an efficient option to manage big changes in sales, or rapid growth due to introducing a new product.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Seeking a 3PL that is right for your brand is imperative to a successful relationship. Ensure that your 3PL has the resources that are compatible with your needs. It paramount to make sure your fulfillment partner is able to meet all of your requirements to avoid customer-satisfaction issues. A few questions you should ask before partnering with a 3PL:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Does my order volume exceed the cost of a 3PLs monthly fees?\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Will outsourcing the labor of picking, packing, shipping, and return logistics be a benefit?<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Do they work with similar brands and products? Do they know my market?\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Do they already ship to the sales channels I want to be in?\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Do they have software and technology tools that are compatible with my needs?\u00a0<\/span><\/li>\n<\/ul>\n<p style=\"padding-left: 80px;\"><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/3pl\/guide-third-party-logistics-3pl-fulfillment-providers\/\"><em>Click Here For Our Ultimate Guide to Third-Party Logistics<\/em><\/a><\/span><\/p>\n<h2>5 Pros of Working with a 3PL<\/h2>\n<p><span style=\"font-weight: 400;\"><strong>Warehousing and Fulfillment Centers<\/strong>\u2014An established 3PL will have adequate warehouse space for your inventory storage in their <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/fulfillment\/fulfillment-center-difference-warehouse\/\"><span style=\"font-weight: 400;\">fulfillment centers<\/span><\/a><\/span><span style=\"font-weight: 400;\">. Plus integrated into their spaces they will have technology tools to help you manage your inventory on a daily basis. While you will have to pay for storage space within their sites, you might have the opportunity to distribute your inventory to multiple warehouses in the country, which will cut down on shipping fees.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Personal Attention to Your Products<\/strong>\u2014Most 3PLs have dedicated account managers to help you manage sales growth and quickly resolve any issues, should they arise.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Expertise<\/strong>\u2014By working with a 3PL, you\u2019ll have a large group of experts working to move your product. This includes everything from distribution infrastructure, <span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/fulfillment\/order-fulfillment-picking\/\">picking<\/a><\/span> and packing, shipping and handling. Your products will be in the hands of professionals.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Customization<\/strong>\u2014Many 3PLs are adept at offering numerous value added services, such as\u00a0 packing inserts, specialty packaging, in-person inventory counts, and many more. Additionally most 3PLs can handle both B2B and B2C fulfillment, supporting many different sales channels, from Shopify and Amazon, to brick-and-mortar stores.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Reduced Shipping and Storage Rates<\/strong>\u2014A benefit of outsourcing to a 3PL is their ability to choose between different shipping carriers and negotiate the best price. Often a 3PL will get lower rates than you could find on your own, based on the volume they are shipping (more than just your product) and relationships that they have with the carriers. Many people find it surprising, but storage costs are also often cheaper than managing your own because you are basically leasing space in an existing warehouse as opposed to having to handle and manage your own.<\/span><\/p>\n<h2>Cons of Working with a 3PL<\/h2>\n<p><span style=\"font-weight: 400;\"><strong>Erratic or Small Order Volume<\/strong>\u2014A 3PL is not the best option if you are just starting out and don\u2019t really have a gauge for what your order volume will be. If you aren\u2019t getting very many orders each month, it might not benefit you to have inventory in storage with a 3PL until you can ensure you will be shipping out a steady amount each month.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Initial Fees<\/strong>\u2014To get started with a 3PL there are upfront costs. In most cases, you will have to pay the following fees, either per month or per SKU, depending on your 3PL:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Setup\u2014Depending on the 3PL, this one-time fee will include software integration, warehouse tours, and training.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Receiving\u2014Most 3PLs charge per shipment received to their warehouse. It may be an hourly rate for unloading, performing cycle counts, and entering products into inventory management system. It could also be a flat fee per delivery, or a flat rate per SKU.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Storage\u2014Most 3PLs charge a storage fee per square feet or necessary space in their fulfillment center. Some charge on a per pallet basis.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Fulfillment\u2014This covers picking, packaging, labels, package inserts, package customization (if desired), and order processing. Costs vary depending on how many of the above steps are necessary for your products.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Shipping\u2014In most cases, you will receive a significant discount over shipping carrier listed rates because 3PLs receive bulk shipping rates based on their scale and order volume, as well as discounts negotiated with specific carriers.<\/span><\/li>\n<\/ul>\n<h2>Fulfilled by Amazon (FBA)<\/h2>\n<p><span style=\"font-weight: 400;\">FBA allows any ecommerce business registered as a seller on Amazon to hold inventory in its distribution centers until customers place an order. Amazon then picks, packs, and delivers the item\u2014and provides return logistics and customer support as well.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Because Amazon is currently the top platform for ecommerce business, it\u2019s a priority for sellers to have products there, but it does come at a cost. Using FBA also means giving up some control of your sales process. FBA does allow you to handle product preparation yourself, and you can always choose to start with a small amount of inventory to start\u2014only increasing your fulfillment volume if your sales start rising accordingly.<\/span><\/p>\n<h2>3 Pros of FBA<\/h2>\n<p><span style=\"font-weight: 400;\"><strong>Prime Access to Online Shoppers<\/strong>\u2014One of the biggest pros of using Fulfilled By Amazon is direct access to the over 100 million Prime subscribers. The Amazon FBA platform includes many benefits that are designed to help boost your sales revenue: Prime shipping which has become a huge differentiator when customers choose which products to purchase, and extra exposure related to Prime Day and other Amazon boosts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Customer Support<\/strong>\u2014Part of the FBA package includes handling all customer support, complaints, and return logistics.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Simple Fees and Integration<\/strong>\u2014Amazon offers a <\/span><a href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/understanding-fulfillment-costs-on-amazon-an-explanation-of-fba-fees\/\"><span style=\"font-weight: 400;\">transparent fee structure<\/span><\/a><span style=\"font-weight: 400;\"> so you can easily calculate costs to estimate what your profits will be. Plus <\/span><span style=\"font-weight: 400;\">Amazon offers multi-channel fulfillment which means you can fulfill orders from other sales channels using your inventory stored in Amazon distribution centers.\u00a0<\/span><\/p>\n<h2>Cons of FBA<\/h2>\n<p><span style=\"font-weight: 400;\"><strong>Quality Control<\/strong>\u2014Some sellers are reluctant to use FBA due to concerns over the service. For example, when Amazon ships your product, it might not be the same product that you shipped to Amazon. If you aren\u2019t selling private label products, Amazon will simply pick that product from any warehouse nearest to the buyer and ship that to them. This reduces costs and improves shipping speed, but it greatly reduces your ability to control quality.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Minimal Order Customization<\/strong>\u2014Amazon ships FBA products in Amazon branded boxes with no inserts or custom packaging, reducing the impression of your brand. From the customers\u2019 perspective, they are buying directly from Amazon.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Higher Fees<\/strong>\u2014Amazon\u2019s storage fees are generally higher compared with 3PLs and usually rise during holidays. Plus they offer less fluidity in your inventory cycles, so it might be harder to negotiate your inventory based on spikes and dips.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Amazon is Direct Competition<\/strong>\u2014There is also the fact that while you utilize FBA, Amazon might actually be a competitor. Amazon is not just a fulfillment provider, but also sells, ships and markets its own products which might pose some level of conflict of interest with your ecommerce business.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Limited Direct Access<\/strong>\u2014There is also a lack of a direct communication with Amazon. There are a few forums you can visit to help get answers and guidance, but Amazon only has a single hotline account, no dedicated account managers to help you make the best decisions for your brand. It can often be challenging to get in touch with an actual person if issues arise because so much of their infrastructure is cloud based technology.\u00a0<\/span><\/p>\n<p style=\"padding-left: 80px;\"><em><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/blog\/understanding-fulfillment-costs-on-amazon-an-explanation-of-fba-fees\/\">Click Here For Our Guide to Understanding FBA Fulfillment Costs<\/a><\/span><\/em><\/p>\n<h2>Bottom Line<\/h2>\n<p><span style=\"font-weight: 400;\">By outsourcing ecommerce fulfillment you\u2019ll have an expert handling your inventory and orders. This can be a crucial factor in the success or failure of your company, because it will allow you to focus on production and branding, plus you\u2019ll probably get higher quality customer satisfaction, and a lower overall cost.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When deciding who will help you fulfill your customer\u2019s orders, choosing between FBA and a 3PL is difficult. FBA might be ideal for you if you have products that sell quickly and you are utilizing Amazon part of a multi-channel sales approach. However if you need more flexibility and control, as well as a higher level of customer service you are likely to be better off with a 3PL. It\u2019s also important to consider costs. Amazon FBA and 3PL have a variety of costs depending on the fulfillment services you choose, some requiring a one-time payment and others requiring monthly payments. It\u2019s important that you weigh these expenses to ensure that the solution you choose is cost-effective. There is no absolute right answer for every ecommerce business, so you must choose the best option for your specific needs, budget, and sales volume.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you are looking for help with your Amazon order fulfillment we would love to hear from you. You can read <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/services\/ecommerce-fulfillment\/\"><span style=\"font-weight: 400;\">DCL\u2019s list of services<\/span><\/a><\/span><span style=\"font-weight: 400;\"> to learn more, or check out <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/resources\/integrations\/\"><span style=\"font-weight: 400;\">the many companies we work with<\/span><\/a><\/span><span style=\"font-weight: 400;\"> to ensure great logistics support. <\/span><span style=\"color: #3366ff;\"><a style=\"color: #3366ff;\" href=\"https:\/\/michaeljbrumm.com\/dclcorp-phase2\/company\/contact-us\/\"><span style=\"font-weight: 400;\">Send us a note<\/span><\/a><\/span><span style=\"font-weight: 400;\"> to connect about how we can help your company grow.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When it comes to building a successful ecommerce business, there are many options available to help outsource order fulfillment. Two of the most popular are FBA (Fulfilled by Amazon) and 3PL (third-party logistics). With both of these options, the basic concept is similar: you send inventory to a third party, who then is responsible for [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"template-blog-chapters.php","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[43,6],"class_list":["post-7809","post","type-post","status-publish","format-standard","hentry","category-amazon-fulfillment","tag-fba","tag-3pl"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>3PL vs. Amazon for Order Fulfillment: Pros &amp; Cons - DCL Logistics<\/title>\n<meta name=\"description\" content=\"Evaluating third-party logistics (3PL) provider vs Amazon FBA (fulfilled by Amazon) for order fulfillment. 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