What is Amazon FBA Onsite and is it Right for Your Business?

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[vc_row][vc_column][vc_column_text]Amazon inadvertently created intrigue once again with FBA Onsite. Towards the end of 2017, the company invited about 50 of its marketplace partner merchants to test the new system. Amazon FBA Onsite caused UPS and FedEx to be concerned they might be losing customers. The world of eCommerce was abuzz about what Amazon was brewing. When one of the invited sellers divulged key features of the said system in Amazon’s own seller forum, the topic exploded.
Amazon inadvertently created intrigue once again with FBA Onsite. Towards the end of 2017, the company invited about 50 of its marketplace partner merchants to test the new system. Amazon FBA Onsite caused UPS and FedEx to be concerned they might be losing customers. The world of eCommerce was abuzz about what Amazon was brewing. When one of the invited sellers divulged key features of the said system in Amazon’s own seller forum, the topic exploded.

What is Amazon FBA Onsite

Although tight-lipped as usual, Amazon eventually provided some background on Amazon FBA Onsite. The company shed light on the new feature, reporting that it launched a cost-effective tool that is both favorable to its third party sellers and to Amazon itself. It is known as Amazon FBA Onsite.  FBA Onsite is warehouse management software that provides third party sellers with faster and simpler shipping, plus delivery logistics at a cheaper cost.  It is actually a composite but simplified version of SFP and FBA.

Third-party sellers and independent merchants under Fulfillment by Amazon send their inventory to Amazon warehouses for storage, packing, and delivery, and pay commissions on every sale. These sellers and merchants also pay additional fees for product handling in order for the same to be eligible for the free two-day shipping offered through the Amazon Prime membership program. This ensures quick product delivery to customers and thereby increases the demand for the service.

Lately, however, Amazon has been experiencing an overload at its warehouse facilities. In order to decongest product inventory, Amazon introduced SFP or “Seller Fulfilled Prime”. This lets select merchants keep inventory in their own warehouses and still have their products listed on Amazon as Prime eligible. Amazon still requires sellers to deliver products quickly, of course, so merchants have to shell out more for the SFP service.

With FBA Onsite, Amazon not only increases inventory without the hassle, but also shortens delivery time and cuts costs by removing storage fees, reducing inbound shipping payments and literally taking over the last-mile delivery chain. It’s a win-win situation.

inventory forklift

How FBA Onsite Works

Most importantly, FBA Onsite has made it possible for sellers and vendors to set up their own warehouses in their respective locations. They no longer have to ship their products to an Amazon warehouse for storage purposes under SFP or FBA. Sellers and vendors can now have complete control over their inventory with FBA Onsite, at least in terms of restocking and removal of products.

Through FBA Onsite, Amazon still helps in managing the nitty gritty of fulfillment and literally does most of the tedious legwork. FBA Onsite takes care of picking up the product from the seller’s or vendor’s warehouse and figures the best way for the product to reach the customer. It either uses Amazon’s own fulfillment network or avails of third party delivery services. In order to do this, FBA Onsite needs to set up the onsite warehouse as sort of Amazon fulfillment center annex, then install the proper warehouse management software on the local servers. Better still, Amazon also handles customer service and troubleshooting for FBA Onsite should anything come up during the delivery process.

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    The Advantages of the Amazon FBA Onsite Program

    Participating in the FBA Onsite program can have significant benefits for your business. The program brings the best of Amazon FBA and Seller Fulfilled Prime to one place – your warehouse. The advantages of joining the Onsite program can hugely benefit your business.

    Amazon Will Optimize Your Warehouse

    As part of the program, Amazon will visit your warehouse and see how operations can be improved. One of the ways they will help will be to determine the optimal configuration for your warehouse. Amazon will create a layout that makes your storage, picking and packaging seamless.

    They also install inventory management software in your warehouse to monitor and manage your logistics better. Amazon’s vast experience in warehousing from their network of fulfillment centers can provide some great insights and benefits for your business. Improving the functioning of your ware house will make it easier for Amazon – and you – to get your products to the customer.

    Reducing Shipments to FBA Centers

    Managing inventory at FBA centers and dealing with unknown lead times is one of the most frustrating aspects of being an Amazon Seller. At times you can send inventory to Amazon that may not go live for almost a month. Tracking issues and ensuring everything properly arrives is also difficult on the Seller Central platform.

    FBA Onsite can eliminate the need to send shipments to the Amazon Fulfillment Network. Participating in the program allows you to store your goods in your own warehouse. Amazon will then use their existing carriers and fulfillment options to pick up the inventory as the orders come in.

    USPS delivery

    Listings Become Prime Eligible

    Another great advantage of the Onsite program is that all your eligible products gain the FBA Prime badge. You can normally only have a Prime badge if you utilize FBA or Seller Fulfilled Prime. With Onsite, you don’t have to worry about meeting SFP requirements or inventory shipments to fulfillment centers. Everything you sell can easily maintain its Prime status.

    Amazon FBA Onsite Cost Savings

    Another great benefit of being in the Onsite program is the money you save on typical Amazon fees. You no longer need to pay or worry about FBA storage fees or inbound shipping fees. Amazon still charges for shipping at a customized rate that you are provided when you join the program.

    Not having to worry about Long Term Storage Fees or FBA storage fees is a huge benefit – especially since Amazon’s new FBA fees went into effect in February 2019. Shipping fees may be slightly higher depending on where your warehouse is located in relation to where the product is being shipped. This is due to a centralized warehouse location versus a dispersed network like FBA.

    The full list of fees that you can avoid with Amazon Onsite is below:

    • FBA Inbound Shipping Fees
    • FBA Workflow Prep / Labeling Fees
    • Order Handling Fees
    • Pick & Pack Fees
    • Weight Handling Fees
    • Return Fees
    • Short Term Inventory Storage Fees
    • Long-Term Inventory Storage Fees

    As you can see, the amount you can save by being in the FBA Onsite program can really add up.

    Outsourced Customer Service and Returns

    outsourced customer service

    Amazon gives invited Sellers so many benefits with Onsite. Another great feature is the handling of Customer Service and returns. Amazon still handles all your customer service as if your products were at an FBA fulfillment center.

    You also do not put more work on your warehouse to deal with returns. Amazon has all returns sent back to their fulfillment centers. The units are then set aside and then sent back in batches to your warehouse on a regular basis. Instead of dealing with individual returns you will get one bulk return instead.

    Is Amazon FBA Onsite Right for Your Business?

    What’s in it for Sellers:

    At last, a faster, cheaper, more efficient alternative for current and future sellers has become possible with FBA Onsite.

    Sellers avail of the following advantages under FBA Onsite:

    • A Nationwide, 2-day Prime offer for a flat fulfillment rate
    • Fast and easy set-up with Amazon’s FBA Onsite WMS
    • Immediate, no-cost inventory receipt and removal
    • Integration with previously FBA-only programs like Subscribe and Save and Small and Light
    • Simplified returns
    • Prime offers for Hazmat inventory
    • Flexible same-day shipping SLA

    This translates to sellers enjoying low shipping and delivery costs and hassle-free logistics while they also get to control their product inventory. Simply put, they get to focus on running and growing their business. For sellers who have been hassled by shipping and delivery issues, this feature further lightens that burden with Amazon taking care of customer service during the delivery process.

    Business Insider adds that the program, in a way, commissions third party sellers to function like an Amazon warehouse to meet the rigid customer requirements guaranteed by Prime membership. FBA Onsite provides such a flawless buying experience for Amazon Prime members that they wouldn’t know the difference whether they are buying from a third party seller or Amazon itself.

    On the part of Amazon, the FBA Onsite program signifies more warehouse space, a potential increase of independent merchant partners with products that qualify for Amazon’s Prime shipping program, and an opportunity to reinforce an already solid reputation for its reliable service. Amazon continually strives to be more effective and to continue to be more dependable in its speedy delivery. The company is now taking the next steps in expanding its shipping and delivery service by establishing its own air, trucking, and delivery fleet. Plus, since it remains in control of all the logistics anyway, the company is preparing to use delivery drones in the near future.

    So, is FBA Onsite right for your business? If you are a business looking to save time and money without the hassles of shipping and delivery logistics while still being able to satisfy customers with punctual delivery, then FBA Onsite is absolutely right for you.

    How to Join the Amazon Onsite Program

    Amazon Retail Analytics sign up

    Amazon FBA Onsite is currently invite only. Amazon appears to slowly be rolling out the program to a select number of sellers. The idea is that they are choosing customers that they believe will have the most success in the program.

    The invitations to the Onsite program do appear to be based on a few factors. Each Amazon category manager seems to be recommending accounts of the Onsite program depending on these metrics:

    • How long the account has been open
    • How the account has performed
    • How dominant the seller’s market share is in that category
    • Cost analysis of fulfilling the products FBA vs FBM

    Amazon cannot roll out the program on a larger scale at this point because of the investment they need to make to get each seller’s warehouse optimized. We believe that if Amazon sees success with the FBA Onsite program they will look for additional sellers who can be successful with it. Amazon is constantly innovating and the introduction of their Onsite program is just one further step to how they can dominate the eCommerce space.

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    Julia Valdez

    Julia Valdez

    Julia is a professional teacher and long-time lover of the art of words on paper and the stage. She has an entrepreneurial heart and spends most of her time doing marketing and management, freelance content writing, volunteer work, and sharing lots of laughs over little crazy things.

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