If you’re already outsourcing your order fulfillment process to Amazon FBA, why would you need another third party prep center to send your products to Amazon? That’s probably the big question that’s looming in your mind if you’re considering hiring a prep center to help out with your business.
But the truth is, there will come a time in your business when you can no longer keep up with the demand for your product. When that day comes, one of your best options might just be to outsource to a prep center. But first, you have to find out whether outsourcing to a prep center is the right move for your business.
What is FBA Prep?
There’s a lot of confusion between Amazon’s FBA fulfillment and a third party prep center. For starters, those are two completely different things. While Amazon already offers a lot of convenience via its FBA fulfillment service that let you stock your products in their warehouse and then takes care of packaging and shipping, sometimes you will still hit a bottleneck. When your business gets busy enough, there might be a delay in shipping your product to the Amazon warehouse, and that’s where a third party FBA prep center steps in.
These FBA prep centers assist you in the process of making sure that your stocks are ready and meet the strict standards of Amazon before shipping them to FBA. That’s where the difficulty lies - in making sure that your stocks are packed, wrapped, and ready in a way that’s up to Amazon standards. Otherwise, you will get a penalty for not adhereing to Amazon’s standards and it will cost you more to have Amazon prep and label them for you.
Basically, FBA prep centers ‘prep’ your stocks to make sure that they’re acceptable to Amazon’s FBA program.
Is Outsourcing to a Prep Center Right For Your Business
Prepping your products for FBA is something that you can do yourself and it’s also what I recommend when starting to sell on Amazon, unless you are working with your manufacturer to handle that part as well as shipping direct to Amazon. This is what most private label sellers do, especially if their products are coming from China. Doing it this way is just more efficient and cost-effective.
If you’re not sure whether your business is ready for a third party FBA prep, there are other options that you can consider. For example, you can hire someone and train him to do the FBA prep for you. It’s likely that this person will be working somewhere within your home grounds, if that’s where you keep your products. If that’s something you’re comfortable with, then you can go for this more affordable option.
However, if your business is growing at a fast rate, hiring one person to do your FBA prep for you might just be putting a band-aid on a bigger problem. Sooner or later, if you’re committed to selling on Amazon and scaling up your business, you’re going to have to consider using the services of an FBA prep, especially if you’re starting to sell more volume. Another option is to hire employees and rent a warehouse.
Advantages of Outsourcing to a Prep Center
Despite being marketed as a convenience for Amazon sellers, the FBA fulfillment service has a lot of strict rules and rigorous standards that need to be complied with to the letter. If you’re an Amazon seller, you may have already learned that not complying with even just one of these standards will get you some consequences.
By turning over the process of prepping for FBA to the experts, you’re guaranteed that there will be no send backs and that they will be updated with Amazon’s warehouse protocols. You’ll also spare yourself from all the time and effort of inspecting the stocks, labeling, and shipping, time better spent on expanding your online business. For me, this is really the main purpose of outsourcing. So that I can free myself up to do other things that have better ROI for my time.
Trust us when we say that when you’re trying to grow your online business, the last thing you want to do is to be doing everything yourself. You’re going to end up overworked and tired, which will leave very little for any creative thought.
Considerations When Choosing an FBA Prep
The top consideration for any Amazon seller when choosing an FBA prep center is, of course, price. While it’s completely understandable that you want the best deal possible (you’re running a business after all), always balance the value you’re getting with the price your paying. Check their fees and additional charges and compare with others. I also always do my own due diligence by talking to their existing clients to make sure I’m choosing a reliable business partner with solid referrals from satisfied customers.
Location is also an important consideration. If you’re expecting a lot of shipments from overseas, consider choosing an FBA prep center that’s within the vicinity of your usual ports of shipment. Also, another thing to consider in relation to location is sales tax. If you’re outsourcing to an FBA prep center that’s in a state where there’s no sales tax, then you can potentially save yourself anything between 0.5% to 10% in tax. Even if you’re just saving yourself 3% in tax money, that’s money you can invest somewhere else.
Another tax consideration is that if you’re doing online arbitrage and using your tax exempt certificate, you won’t be able to use that if you’re shipping those items to a prep center located in a state where you don’t have tax exempt certificate. So that is a lot of savings if you ask me! As an entrepreneur, my goal is to improve my bottom line so the more savings I get, the better my bottom line is.
When your business reaches a point where you can no longer keep up with the demand for your products, one of the solutions you can consider is outsourcing to an FBA prep center. An FBA prep center receives, packages, and ships your products to Amazon FBA, making sure that it meets all of the rigorous rules and standards of the warehouse.
An FBA prep center can help streamline your business, freeing up your time, and preparing you for selling to an even bigger market. While these services come at a price, they will help you expand your online business and prepare you for even more products and customers!