Whether you’re launching a new business, or looking for ways to scale your existing venture, selling through Amazon can be a lucrative strategy for today’s entrepreneurs. Amazon is one of the world’s most profitable, and popular ecommerce marketplacses, with hundreds of millions of loyal customers.
What’s more, according to the company, over 60% of its sales come from products offered by independent sellers. Plus, in 2022, US-based sellers averaged more than $230,000 in sales. When you sell on Amazon, it’s up to you to decide how you’re going to manage “order fulfillment” – or getting products to your target customer.
One option is to use the “Fulfillment by Amazon” service, shipping your items to Amazon warehouses and paying the team to manage shipping and delivery for you. While this strategy works for some vendors, it’s not the right solution for every business.
The alternative, shipping your own inventory via Amazon’s “Merchant Fulfilled Network” could be an ideal way to maintain more control over your shipping process, and even reduce costs. Here’s what you need to know to start shipping your own inventory on Amazon.
For a lot of retailers, Amazon’s “FBA” service is the most convenient way to manage order fulfillment. It’s ideal if you have a large inventory, but limited storage solutions, or if you need access to a comprehensive logistics solution, on a pay-as-you-go basis.
However, shipping your own inventory to customers has benefits too. It’s an ideal option for companies who sell products that aren’t ideal for FBA, such as goods that don’t meet fulfillment center requirements, or seasonal products that would incur excessive storage fees.
This method is also ideal for large-scale sellers who already have their own warehousing and delivery networks, and want to maintain control over shipping fees, and logistics services. Some studies even suggest “FBM” sellers can benefit from:
FBM strategies also allow ecommerce retailers to retain some of the key benefits of partnering with Amazon. You can still access support from Amazon when dealing with customer returns, and still offer consumers unique shipping solutions, such as next day “Prime” delivery.
“MFN” or “Merchant Fulfilled Network” is Amazon’s term for companies who fulfill their own orders when selling through the marketplace. There are types of “MFN” vendor. The first covers sellers with an “Individual plan” who ship orders at Amazon’s pre-set rates.
The second covers sellers with a “Professional Plan” who can set their own shipping rates, customize shipping templates for different regions, and adjust shipping charges by order, item, weight, and more.
The plan you choose will determine how much control you have over the fulfillment process, as well as what you’ll pay in terms of “referral fees”. For every item you sell on the Amazon marketplace, you’ll pay a portion of the total price (including shipping costs) to Amazon.
Here’s how you can create an account and start shipping your own inventory on Amazon.
First, to sell products through Amazon, you’ll need to create a seller account and choose either an Individual or Professional selling plan. Make sure you understand the terms and conditions Amazon applies to all merchants on its platform before you sign up.
To create an account (and access Amazon Seller Central), you’ll need an Amazon account, business email address, and government ID. You’ll also need to provide Amazon with your tax information, phone number, and details of a bank account where you can accept revenue from sales.
After creating your account, you’ll need to list the products you want to sell. How you approach this process will depend on whether you want to use an app to import listings from an existing website or dropshipping app, or upload product information manually. Either way, ensure you create compelling, informative product descriptions, add concise feature bullets for your pages, and share clear images.
Once you have your Amazon account set up, and your products listed on the platform, you’ll need to create your shipping templates. Through the Seller Central dashboards, merchants with a “Professional Plan” on Amazon can create multiple different shipping templates for different needs.
You can find the tools to create your Shipping Templates in the “Manage Inventory” dropdown menu on the Seller Central dashboard. You can also use this dashboard to set default handling times and order handling capacity levels, to ensure you’re protected from a surge in demand.
Keep in mind, you may need to set specific policies for your products if you’re running a dropshipping business. You can learn more about Amazon’s approach to dropshipping here.
With your shipping templates set on Amazon, you’ll need to ensure you have the right strategies in place to manage your inventory and shipping processes. The more carefully you manage your inventory, and plan for excellent fulfillment, the more profitable your business can become.
Consider using intelligent inventory management tools to help you keep track of your resources, and monitor your most successful products. These tools can also help you to prepare for seasonal events, sales, and days like “Prime Day” or Cyber Monday.
Ensure you have the right teams and technologies in place throughout your business to efficiently pick, pack, and ship orders to customers. You’ll need to ensure the carriers you’re working with are part of Amazon’s validated network of carriers (particularly if you want to offer Prime shipping).
It’s also important to ensure you’re investing in the right packaging for your products, to protect your items, and deliver a consistent customer experience. Check out Amazon’s requirements for preparing and packaging products to minimize costs and improve your chances of success.
While choosing to ship your own products to customers on Amazon is a relatively straightforward process, it’s important to ensure you’re thinking about how you can adhere to both the expectations set by the marketplace vendor, and the needs of your customers.
Amazon expects all sellers on its marketplace to match and exceed its return policies, and respond to customer messages within 24 hours (when possible). You’ll also need to maintain a late shipment rate of less than 4%, and a seller cancellation rate of less than 2.5%.
To boost your chances of success, you’ll need to:
Choosing to ship your own inventory on Amazon can be an excellent strategy for companies who want to maintain control over the fulfillment process, reduce costs, and optimize customer experiences. Remember, the way you handle shipping can have a huge impact not just on your business operations, but your relationships with customers.
If you choose to ship your own items on Amazon, rather than relying on the FBA network, make sure you follow the steps above to meet and exceed the expectations of both Amazon, and your customers.
