Engaging the Supply Chain

10 Apr

Engaging the Supply Chain

Are all the options with Amazon's fulfillment causing you to question your current strategy? Choosing the right option can reduce fees, boost efficiency, increase customer satisfaction, and significantly grow sales.

3 options when it comes to Amazon's fulfillment: Fulfillment by Amazon (FBA), Seller Fulfilled Prime (SFP), and Merchant Fulfilled Network (MFN). We only suggest FBA and SFP because these are the two that meet the requirements to be a part of Amazon Prime. If you shop on Amazon yourself, then, you know this is mandatory if you want your brand to compete with your competitors. Consumers shop on Amazon because of the convenience Amazon Prime offers — two-day shipping, convenient returns, and so on. When your listing is stamped with the Prime badge, shoppers know that you are competitively positioned on the Amazon marketplace.

When in doubt, choose FBA. FBA is the solution that integrates with Amazon fulfillment centers. Amazon handles the rest of the fulfillment process from there, but it isn’t a free service. Amazon charges storage fees for the amount of space being taken up by inventory.

In order to get the most out of FBA, the idea is to only store the inventory necessary to fill demand and no extra. That’s where demand planning comes in. You don’t ever want to run out of inventory, but you also don’t want to incur extra Amazon storage fees — that’s the fine line that needs to be maintained.

Brands also need to consider whether or not their supply chain is best suited to their products’ needs. Large products or products with special requirements — such as food-grade or cold storage — will need to be catered for specifically. There isn’t a one-size-fits-all solution. Brands will need to find a strategy that works for their own unique needs.

Lastly, brands need to have a supply chain team in place that can dedicate an appropriate amount of focus towards Amazon-focused fulfillment. This becomes especially important as sales volume increases. If logistics aren’t worked out ahead of time, it will be very difficult to keep up with any sort of growth.

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