Choosing a 3PL for Amazon Sellers is bridge crossed, once you need to re-claim control of your supply chain. It marks a moment in your growth, where you need to optimize supply chain solutions, get costs down, and navigate new logistics partners. Let’s review how we get there and what to do when were ready to cross that bridge.
Amazon Seller Supply Chain Basics
Alibaba Shipping to Amazon Warehouse
Before the 3PL, Amazon Sellers start with a product idea. It’s a brilliant idea. It looks great on paper. The numbers line up. And the creative juices are flowing. However, underneath the hood of this money-making-machine, exist the guts of the supply chain.
At first, this supply chain doesn’t matter. In fact, your Alibaba sourced, supplier usually offers an end-to-end price point on the product delivered to you. In other words, they manage all of the shipping. Perhaps your purchased a batch of 100 or 200 units. Nothing too crazy right? In fact, the piece of mind that you purchase here seems totally worth it. After all, this will buy time for you to learn supply chain details. However, after you quickly sell out, its time to scale up on inventory. This in turn will stress test your currently supply chain solutions.
Understanding Supply Chain Costs – When Do Amazon Sellers Need a 3PL?
On your 3rd or 4th purchase order, you’ll probably want to purchase more bulk product. Yet, you can’t buy a large enough quantity to break into the next level of bulk discounts. In other words, you can’t quite buy enough to earn a bulk discount from the supplier. What’s this translate into really? Increased shipping costs and more custom’s duties. Consequently, your ROI on the products is less, though you sold a bit more. How do you break this cycle? This is the point at which you need a 3PL for Amazon Sellers. A 3PL or Freight forwarder can negotiate lower logistics costs, extending those savings to you.
3PL For Amazon Sellers – Freight Forwarding Services
Again, get the supplier’s hand out of your pocket. Guaranteed, when you give them control of the entire supply chain, they over overcharge on:
- FOB Delivery to Port in China
- Chinese Customs
- Sea Freight
- US Customs & Duties
- Bonded Warehousing
- LTL or FCL trucking to Amazon or a 3PL
These same services can be secured by a 3PL or freight forwarder – at much less costs. In fact, your supplier probably make just as much off your shipping as they do the product itself. Ultimately, this is money out of your bottom line. It is time to re-take control of logistics from your supplier. It’s time to open the hood on your money making machine and learn supply chain basics. So – when do you need a 3PL as an Amazon Seller? When you decide to you want help reclaiming your supply chain from a Chinese supplier.
3PL vs Freight Forwarder for Amazon Sellers
We’ll use the two nouns, 3PL vs Freight Forwarder, inter-changeably. Note they both offer the same brokerage of supply chain solutions. They both outsource shipping and customs requests to 3rd parties. In turn, a small upcharge is applied to you, the Amazon Seller, by the 3PL. However, this upcharge leagues below what you were shelling out to your Chinese supplier. Instead of paying a ransom to your supplier, you now pay a fair market rate to American supply chain professionals. Just note the difference between a 3PL and Freight Forwarder, is at the end of the supply chain, a 3PL usually offers access to their brick and mortar warehouse for long term storage and multi-channel e-commerce order fulfilment.
3PLs Help you Scale
3PLs Increase Amazon Seller’s ROI
If you take the savings on shipping with a 3PL and apply them to purchasing more product – that’s a game changer. Often times bigger purchase orders mean purchasing bigger discounts. Get your cost per unit down. Bump up the net profit on each product sold. A 3PL for Amazon sellers will offer sound supply chain solutions and in-house inventory or order fulfilment. This allows you to work on the business – not in the business. In other words, now that you optimized your supply chain partners, you can focus on optimizing your website, social media, marketing and overall growth.
How to Compare 3PLs for Amazon Sellers
Know what services, as an Amazon Seller, you need from a 3PL. Odds are you’ve done alot of ‘warehousing’ in your garage on behalf of your Amazon business. That is, you received products, stored them, forwarded cartons to Amazon as needed etc…Now is the time to find a 3PL for Amazon Sellers. How do you shop for a 3PL as an Amazon Sellers? It’s easy – compare who offers the same set of services for a fairer market price.
Here are the basic services you will want to compare:
- Full Container Load Receiving
- Less Than Truckload (LTL) Pallet Receiving
- Small Parcel Delivery (SPD) Receiving
- Seller Central Management
- Order Prep – Print & Apply Shipping Labels + FBA Labels
- Full Container Load Forwarding
- LTL Pallet Forwarding
- SPD Forwarding
Also be on the look out for any extra fee’s they charge:
- Subscription Fees
- Software Fees
- Startup Fees
Combine and compare their warehouse rates & extra fees to figure out who’s really offering good value. Every Amazon Seller has different products with different needs. So make sure the 3PL’s overall expense makes sense for your business model.