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Multi-channel Amazon fulfillment: Pros and Cons of Multi-Channel FBA

Shopping habits have shifted dramatically over the past decade, with online retail sales worldwide estimated to reach US $2.4 trillion by the end of 2018. In 2017, Amazon alone accounted for 44 percent of all eCommerce purchases in the United States, and the platform attracts more than a million new sellers per year.

Amazon has done their part to make it easy to manage an eCommerce business on their platform. Fulfillment by Amazon (FBA) allows sellers to utilize Amazon’s fulfillment and distribution network, delivery routes, and even customer services.

Once only applicable to orders placed on Amazon itself, this has been extended to include purchases made across multiple sales websites with Amazon Multi-Channel FBA.

However, multi-channel FBA differs from FBA for Amazon sales in many ways. In this article, we go over the differences, as well as pros and cons on each service.

What is multi-channel Amazon fulfillment?

Multi-Channel Fulfillment (MCF) is an Amazon-run fulfillment service for sellers who sell on marketplaces outside of Amazon. For example, if you sell items through your own website.

Businesses can store part or all of their inventory in an Amazon warehouse. When a product is purchased on a non-Amazon sales channel, Amazon will process and ship your item directly to your customer.

MCF gives non-Amazon eCommerce sellers access to an efficient fulfillment network, reliable shipping options, and operational expertise.

MCF vs FBA

Many Amazon sellers should be familiar with Fulfillment by Amazon, which is a clear fulfillment choice for Amazon orders. With FBA, sellers send Amazon their inventory, which is stored in Amazon fulfillment centers closest to demand. When an order comes in, Amazon handles everything and sends the product out in an Amazon-branded box.

Items under FBA are eligible for free standard shipping, and free two-day shipping for Prime customers. Since Amazon can guarantee the shipping experience with it, these are also usually eligible for Prime. These orders are also covered by Amazon’s customer support and returns center, making it a simple and easy way for sellers to fulfill Amazon orders.

However, Multi-Channel Fulfillment from Amazon is a different story. This service is for sellers who want a way to fulfill orders from other channels. It comes with different pricing, service levels, and support.

Note: MCF is not allowed by some marketplaces, such as Walmart and eBay, since all packages are sent with Amazon-branded boxes.

Whereas FBA is simply FBA, MCF comes with standard, 2-day, and 1-day shipping. These all have different price tiers, and usually ends up being more expensive than FBA.

 

Calculate your fulfillment costs on MCF, a typical 3PL, and Deliverr

 

Multi-Channel Fulfillment by Amazon pricing

Fees for Multi-Channel Fulfillment depend on several factors, including weight, number of units per shipment, and delivery speed. Generally, their pricing is composed of a fulfillment fee and a storage fee.

Fulfillment fees

Amazon Multi-Channel Fulfillment offers three service tiers;

  • 3-5 business days
  • 2-day
  • Next day

To give you an idea of their rates, the table below shows 2-day pricing for a standard sized item.

Next, products are grouped as standard or oversized units. Amazon classifies an item as oversized if its weight exceeds 20 pounds or the girth + length is more than 130 inches. Oversized packages are more expensive to ship.

(Source)

If you want to use FBA Export to send your items overseas through MCF, use the table below to find your fees.

(Source)

Storage fees

Amazon charges fees for inventory storage, calculated based on the average daily volume of inventory stored, per cubic foot.

This time, oversized units are charged at a slightly lower rate than standard-size. It is worth noting that inventory stored in Amazon fulfillment centers between October and December costs more per cubic foot than at other times of the year.

Benefits of multi-channel FBA

Amazon’s Multi-Channel Fulfillment is useful for the sake of inventory efficiency. Sellers can leave their stock with Amazon, all in one place, and fulfill both Amazon and non-Amazon orders with one dashboard. You can track both Amazon and non-Amazon orders in Seller Central, and your inventory will be neatly stored with one provider.

In addition to an integrated tracking system, MCF also has simple pricing that’s easy to understand. Just calculate your storage fees and fulfillment fee from their tables, and you can estimate your expenses.

Finally, Amazon is a reliable fulfillment partner with a large network of resources. Since they operate in so many cities already, their service comes with credibility.

Easy to set up with simple pricing, MCF offers businesses a competitive advantage. By allowing Amazon to take care of fulfillment across all sales channels, your business could be more organized and less stressful, leaving you more time to develop other valuable growth and marketing strategies.

Downsides of multi-channel FBA

As useful as MCF is, there are some downsides that sellers should consider carefully.

Possibly the most revenue-limiting restriction is that not all marketplaces allow multi-channel FBA. For example, Walmart and Jet.com have banned MCF due to the Amazon-exclusive branding. Walmart is a large marketplace with potential for impressive sales, and restrictions like this will make it hard to use MCF if you’re trying to diversify. Amazon-branded boxes are also bad for your branding, and could confuse your customers.

MCF has strict product restrictions, and won’t take certain items. Sellers will have trouble with perishables, aerosols, flammable substances, and even batteries. Be sure to do your research about this to avoid fines and reimbursement fees.

Amazon charges a steep long-term storage fee if inventory remains unsold for longer than 181 days. Their costs ramp up quickly and can end up cutting into your profits.

Shipping times can be slower with MCF than FBA, since FBA is prioritized. MCF doesn’t integrate into any other marketplaces’ fast shipping tags, like eBay Guaranteed Delivery or Walmart Free 2-Day Shipping.

As you may have noticed in the pricing section, MCF is more expensive than FBA by 40 to 50% in some cases. Whereas FBA is the clear choice, it’s also Amazon’s priority when it comes to competitive pricing, speed, and service. That isn’t the case with MCF.

Finally, MCF doesn’t support returns or international shipping.

Amazon’s Multi-Channel Fulfillment provides simplified inventory management and reliable shipping. However, it also comes with branding and item restrictions. Also, due to higher fees involved, even products that do qualify may not be cost effective to fulfill with Amazon. Inexpensive or oversized items, items that need to be delivered quickly, or items with low profit margins are not a good fit for Amazon fulfillment when sold outside of the Amazon marketplace.

If you want to focus on fast shipping, we recommend taking a look at what Deliverr can do for you.

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