If you’ve ever gone on an FBA fulfillment center tour, you’ve seen the millions of square feet of inventory that Amazon stores, picks, packs and distributes from a single location. With more fulfillment centers opening around the world and over 100 million Prime members expecting free two-day (or faster) shipping, there’s simply no room for stale inventory.
More Inventory, More Problems
In the past couple of years Amazon has introduced several changes to FBA storage fees. In Q3 2018, long term storage fees will be assessed monthly rather than twice a year, encouraging sellers to keep FBA inventory moving. After all, storing inventory long term costs Amazon money by taking up precious warehouse space. For sellers, holding onto inventory that isn’t selling means making cashflow sacrifices that affect business growth.
In another effort to help reduce onsite FBA inventory, Amazon launched the Seller-Fulfilled Prime program in 2016, offering merchants who meet specific seller performance standards the ability to fulfill items with the Amazon Prime designation. Since many buyers filter for Prime-eligible products while shopping on the Amazon marketplace, this program offers a competitive advantage and eliminates the need for shipping items into the FBA warehouse. However, merchants must continue to meet Amazon’s guidelines to remain in the program and paying full price for two-day shipping gets expensive.
Enter FBA Onsite
While Amazon FBA Onsite is currently only open to select sellers, the program offers some terrific advantages. The system essentially allows third-party sellers to turn their own warehouses into auxiliary Amazon warehouses. Participants will be able to use Amazon’s own warehouse software in their own warehouses. The Amazon FBA Onsite Warehouse Management System (WMS) allows merchants to scan their inventory and print Prime labels. The fulfillment process from pickup to delivery is managed by Amazon. By using Amazon’s software, sellers are eligible for shipping discounts.
This program allows third-party sellers to set up efficient FBA inventory management practices in their own warehouses, eliminating FBA storage fees as well as fees associated with shipping inventory to the Amazon fulfillment centers. Customer service and returns are managed by Amazon rather than the merchant. Sellers using FBA Onsite WMS can integrate with programs like Small and Light as well as Subscribe and Save, which were previously only available to products shipped into the FBA warehouses. Additionally, hazmat products can be fulfilled through FBA Onsite.
How to Participate
Currently the FBA Onsite program is still invitation only. Based on eligibility requirements for other Amazon programs, however, it’s very likely that seller performance metrics will play an important role in determining who can participate. Metrics such as low ODR, high seller feedback, overall account performance and more.
Originally published on June 21, 2018, updated January 20, 2020
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.
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