As the holiday season is fast approaching, sellers are once again faced with the mounting pressure of accommodating a large influx of orders. Q4 is poised to be even bigger and better this year, according to Deloitte, which predicts a 9% spike in holiday sales.
For multichannel sellers, the job is even trickier. Apart from being able to fulfill orders quickly, you need the wherewithal to meet marketplace expectations and keep your inventory and order lines from getting crossed. To help, Amazon has expanded its Multi-Channel Fulfillment (MCF) services to better support sellers. Meanwhile, Walmart is harping its own WFS program.
In a recent webinar with Teikametrics, we discussed how each of these can or should play a role in your Q4 strategy this year. Watch the full recording below or keep reading for key takeaways.
4 Multichannel Fulfillment Options at Your Disposal
Today, there are four standard ways of handling order fulfillment:
- Self-fulfill: Receive and ship all orders out of your own warehouse
- Marketplace programs: Outsource storage and shipping to programs like Amazon MCF, Walmart WFS, and Newegg SBN
- 3PLs: Work with third-party logistics partners (3PLs), like Deliverr and ShipBob, that are agnostic of the sales channel
- Hybrid approach: Split up inventory and responsibilities across any combination of the fulfillment options above (this is good in the event that you want to diversify your risks or leverage Prime status/shipping for some products, but not all, as an example)
Among these, you’re likely leveraging Amazon FBA to some extent and may naturally wonder if MCF is a good option. MCF, as it turns out, has undergone several changes that benefit sellers by and large.
The Latest Scoop on Amazon MCF
One of the most exciting updates to MCF has been the ability to ship orders in unbranded boxes. Your Shopify orders no longer have to sport a large Amazon logo if you go through MCF, albeit that this feature is still in beta mode. Only a handful of Amazon warehouses currently support blank box packaging, and you’ll need to apply for access (then split your inventory between blank box and regular FBA inventory).
In addition to this, 100% of MCF orders are now trackable through AfterShip. This addresses former concerns involving sales channels—such as Wish, Walmart and eBay—that explicitly reject Amazon Logistics codes. Not to mention, you can opt out of Amazon Logistics for these channels for a 5% surcharge. Amazon will fulfill such orders using its non-FBA carriers to avoid you having to pay the penalties.
Amazon has also introduced updates like counting your MCF orders towards the Inventory Performance Index (IPI) score. View a full list of updates here.
When it comes to why Amazon may be making these updates, Zentail’s Director of Sales Michael Goldmeier boils it down to competition and the industry shift to multichannel.
“I think what it comes down to is...sellers knew they had to expand off Amazon after a certain point,” he surmises, “but they couldn’t use FBA for that, so they were limiting what they were sending to FBA.”
“That was harmful for Amazon,” Goldmeier adds, “so I think there [was] an incentive for Amazon as a company to encourage people to leverage FBA as much as possible. I imagine they’d prefer to keep the sale on Amazon, but they understand that the trends are going multichannel and people are going to figure out a way [to ship orders if not through FBA]...[so why wouldn’t] FBA be the FBA for non-Amazon channels?”
Early Observations Around WFS
Now when it comes to Amazon's top competitor, Walmart, and its FBA-lookalike, WFS—much is still left to be seen. WFS is still very much in its infancy.
While WFS offers perks like granting users pro-seller status and the two-day shipping badge (which increase visibility), some sellers have had difficulty allocating inventory for WFS and tracking those units, according to Goldmeier.
For this reason, it’s recommended that you tread carefully when experimenting with WFS during the holidays. Don’t put yourself in a situation where you’re scrambling to learn a new system as orders are flooding in. Rather, consider how you can use WFS responsibly, either now or in the future, and keep an eye on new developments.
It’s interesting to note that aside from having one of the largest, most efficient supply chains in the world, Walmart has the second-mover advantage when it comes to WFS.
“That’s been a big advantage for Walmart as they’ve rolled the marketplace to say, ‘Okay, well what did Amazon do that maybe wasn’t as great as they could have the first time?’” comments Liz Downing, ecommerce marketing manager at Teikametrics. “The sellers and brand owners that I know who sell on Walmart say that while [the marketplace] does have its challenges, [Walmart] is definitely taking a lesson from Amazon’s mistakes.”
6-Part Holiday Fulfillment Checklist
Given the above, what should you do to best prepare your fulfillment operations for the Q4 season? Here are six tips to bear in mind.
1. Get Holiday Inventory into FBA Early
Processing time can vary a lot for FBA/MCF users. Some inbound shipments may hit warehouse shelves within a few days, while others may take weeks. Unfortunately, Amazon doesn’t provide an estimate for how long processing will take for each shipment, so you’ll want to give yourself a lot of buffer so that your ASINs remain stocked up.
View Also: Key FBA Holiday Selling Dates for the U.S.
2. Have Non-FBA Inventory Ready as Backup
To be safe, you’ll want to set aside non-FBA inventory (and fulfillment method) as a fallback for your FBA SKUs, in case your FBA inventory doesn’t become available in time. This ensures that your ASINs remain active, and that you’re prepared to pull inventory from another source as orders come in.
3. Get Blank Box Set up ASAP
If you’re looking to take advantage of MCF’s blank box offer, make sure that this is ready early on. You’ll have to request access to the program and manually designate SKUs for blank box packaging within Seller Central. Don’t save this for the last minute, lest you lose the ability to leverage this when orders start coming in.
4. Understand Your Costs
Before jumping into MCF, WFS and/or a 3PL agreement, know what costs you’re facing. Calculate everything from storage costs, to potential removal feels, to the costs of preparing and shipping your inventory to MCF warehouses. Also consider the 5% surcharge if you need to block Amazon Logistics from certain sales channels. Inbound shipment costs may make the biggest difference when weighing your options.
5. Audit Your Listing Quality
Keep in mind that as you anticipate more sales on your listings, you’ll want to make sure your listings are optimized for each channel so that you can actually capitalize on the surge in traffic. Strive to publish high-quality listings, enrich with as much product details, descriptions and helpful media as possible. Consider leveraging ads to gain sales and feedback early on to boost your organic rankings and/or bring your listings front and center as the crowd trickles in.
6. Have an Automated Inventory Tracking System
Last but not least, you’ll need to have the system in place to keep your inventory and orders organized. The last thing you want is to oversell and/or prematurely show “out of stock” all because your inventory isn’t properly synced across channels. Zential offers inventory management tools that update your available quantities in real time, plus route your multichannel orders. Whether you’re leveraging FBA, WFS, a 3PL, your own warehouse—or a combination—Zentail can ensure that the right channels are firing to the right warehouses.