The top four alternatives to FBA for eCommerce sellers
Amazon sellers haven’t had the best 2020, leading many to consider alternatives to FBA.
First, FBA halted receipt of all non-essential products, then there were delivery delays of up to a month, and finally, there was that shocking Brexit announcement.
This is causing a significant increase in sellers looking for FBA alternatives – a method to continue selling on Amazon, generating sales and brandishing that Prime badge without using Amazon for fulfilment.
But, in a world dominated by Amazon, what are the alternatives to FBA, and how do they compare?
Rewind – the problems with FBA
Love it or hate it, FBA is a popular fulfilment method for many Amazon sellers, especially those new to selling online. Once you get started with FBA, it’s easy to stick with FBA, using their multi-channel fulfilment capabilities to assist growth.
However, seller interest in FBA alternatives has peaked this year, owing to two unfortunate FBA blunders.
Amazon’s pandemic response
Back in March, when supply chains were dry and panic buying was rife, Amazon dropped a big bombshell. All in-bound deliveries of “non-essential” items were suspended, and Prime delivery estimations increased from next-day to one-month.
Understandably, this was to help Amazon cope with the phenomenal demand for essential items at the beginning of a global pandemic. However, this move caused significant problems for sellers during a very challenging time; a time when other fulfilment providers were seemingly running as normal.
Amazon Brexit announcement
In July, Amazon announced that from 1 January 2021, Pan-European FBA inventory transfers will cease and there will be no more EFN (European Fulfilment Network)
According to Tamebay, this reduces your selling opportunity from 446 million EU consumers to 66 million brits, unless you send stock to a European FBA warehouse or find an UK-EU fulfilment solution who splits your stock for you.
FBA’s existing disadvantages
While these are just two responses to highly unusual situations, unfortunately, they join a long list of existing frustrations with FBA, including:
1. Extra fees and hidden prices
While FBA is cost-effective for small, fast-moving and lightweight products, sellers are stung by extra fees for long-term storage, inventory removal, unplanned prep fees, labelling and returns processing.
2. Multi-channel fulfilment
Using FBA to fulfil orders from other sales channels is considerably more expensive and restrictive, making eCommerce growth difficult.
3. Control (or a lack of)
FBA exerts considerable control over what you ship, when you send it and what packaging you use. For those looking to build an independent brand, this lack of control can be fatal.
Amazon might be the fastest shipper around, but sometimes this comes at the expense of oversized packaging, missing items and damaged deliveries – all damaging your reputation as well as Amazon’s.
Fortunately, you can still sell and perform well on Amazon without using FBA.
The alternatives to FBA for online sellers
Fulfilment by Amazon offers two main benefits:
- Order fulfilment; and
- Automatic Amazon Prime qualification.
Therefore, you need an alternative method of fulfilment and an alternative way to qualify for Prime.
1. Fulfilment by Merchant (FBM)
Fulfilment by Merchant (shortened to FBM) is the term used for sellers fulfilling orders themselves, instead of using FBA. This involves storing, picking, packing and shipping items in-house or using an outsourced fulfilment provider (we’ll come onto these).
There are many benefits of FBM, the primary ones being:
Fulfilment by Merchant gives you control over the entire fulfilment process. This includes where you store items, how you label items, what packaging you use and with which shipping carrier you partner.
FBM sellers have a tighter rein over their fulfilment overheads. Rather than being tied to FBA’s fees, you decide where to invest money and where to save it.
Relevant reading: How fulfilment services can save you time, money and stress
Finally, FBM makes it easier to expand to multiple marketplaces or your own eCommerce platform, without worrying about excessive FBA fees or running a multi-provider fulfilment operation.
There are considerations, too, including:
- Expertise – you need to know how to fulfil orders or partner with someone who does.
- Resources – you must have the resources to fulfil orders in the UK or internationally.
- Capability – you need to match Amazon’s shipping speeds and standards, even during peak periods such as the holiday season.
The extent of these considerations depends on how you fulfil by merchant – specifically are you fulfilling orders in-house or using an FBA-like fulfilment partner.
2. In-house fulfilment
In-house fulfilment involves fulfilling orders yourself, using your own storage space, warehouse team (or willing helpers), packaging materials and shipping carrier.
The benefits of fulfilling by merchant in-house include gaining a first-hand insight into the fulfilment process, being able to cut costs by fulfilling orders yourself and having immediate access to your inventory.
However, in-house fulfilment is incredibly resource and time-intensive – taking you and your budget away from business growth activities. It’s also challenging to meet Amazon’s fast shipping speeds in-house, especially when order volumes spike.
3. Outsourced fulfilment
Outsourced fulfilment involves using a third-party fulfilment partner to fulfil your orders. They disburse, store, pick, pack and ship your orders for you, in the same way that FBA does.
Outsourced fulfilment is a popular option for sellers leaving FBA because of benefits, including:
eCommerce 3PLs know shipping like the back of their hand. They’re experienced in providing the fastest and most cost-effective delivery service, which can boost your delivery speeds while saving you money.
A third-party fulfilment team has the resources to match Amazon’s shipping speeds, even during peak retail periods. You can scale your requirements throughout the year, so you’re never paying for space you’re not using.
Top tip: compare fulfilment prices using our fulfilment pricing and cost page
A 3PL grows with your business, providing more space, locations and resources when you need them. They also have economies of scale to increase your delivery capacity at the lowest cost possible.
What are the considerations of using an external fulfilment service? Some providers don’t work with branded boxes, others don’t ship internationally, and of course, it is a business outgoing. However, the best thing about using a 3PL is that you don’t have to settle – take the time to find a partner who fits your needs, budgets and aspirations.
4. Seller fulfilled Prime (SFP)
As mentioned, SFP is the alternative method to FBA for earning your Amazon Prime status. You get all the perks of Amazon Prime without the disadvantages of FBA.
Recap: Amazon Prime is a fast shipping program that provides shoppers with next-day deliveries for free, and sellers with increased visibility and buy box eligibility.
To become an Amazon Prime seller via SFP, you must be an FBM seller using in-house or outsourced fulfilment. You must also meet the SFP eligibility requirements:
- Ship over 99% of your orders on time
- Have an order cancellation rate of less than 1%
- Buy shipping labels through Buy Delivery Services or Amazon Shipping
- Deliver orders with supported Seller Fulfilled Prime carriers
- Agree to the Amazon Returns Policy
- Allow Amazon to handle all customer service enquiries.
As you see, these requirements are stringent and may be difficult to achieve and maintain in-house, especially at Christmas. When deciding between in-house or outsourced FBM, this is a crucial factor that could sway you towards using an outsourced fulfilment provider who already meets the SFP requirements.
A note about Amazon FBA vs Amazon Shipping
You may have recently heard about Amazon Shipping and wondered whether this is an alternative to FBA.
Amazon Shipping is a premium, next-day shipping service that provides sellers with collections and deliveries seven days a week. In short: Amazon Shipping is not a fulfilment service. While you or your fulfilment partner can use the service to deliver items, this would be part of “fulfilling by merchant” as opposed to an alternative in its own right.
When to consider FBA alternatives
So, you’re using FBA, and you’re either happy, frustrated or at your wit’s end – when is the right time to consider alternatives?
You can and should reassess your options regularly, but five strong signs you’re ready for an alternative are:
Expanding to multiple sales channels
FBA becomes restrictive and less cost-effective when selling on non-Amazon channels. If you’re expanding to channels such as eBay, or opening your own Shopify store, use it as an opportunity to refresh your fulfilment strategy and consider a multi-channel fulfilment alternative.
Significant growth on Amazon
Sellers experiencing significant growth on Amazon sometimes find they’ve outgrown FBA. If you’re becoming frustrated with the restrictions FBA places on your development, consider your options.
Following FBA’s Brexit restrictions, anyone selling or intending to sell internationally must find alternative arrangements for European orders. Use this time to analyse alternative fulfilment providers who accommodate national and international orders, by shipping internationally and distributing stock to European warehouses.
Want to grow your brand
Any brand looking to grow and establish a name for itself should always analyse their fulfilment strategy against their current and future needs. FBA is ideal for small, first-time Amazon sellers, but if you’re a growth brand, is FBA supporting that growth?
Starting selling online
Finally, just because you’re new to eCommerce and fulfilment, doesn’t mean you have to fulfil with FBA or do it all yourself. By using an FBA-alternative like Huboo, you get the benefits of Fulfilment by Amazon with the benefits of Fulfiled by Merchant.
FBA is a great service for online sellers, but there are many comparable and better alternatives out there – it all depends on your business vision and goals for growth.