As a FBA seller, your job is to not only source products, but also prepare them to Amazon’s (rigid) standards for fulfillment. Doing this yourself can entail a good amount of sweat equity, especially if alone. Fortunately, there are two alternatives to this that cut you out of the equation. The first is to utilize Amazon’s own prep service, which comes in the form of an added fee to your existing fee structure. The second is to use one of many FBA prep services, which can save you both time and money. Let’s explore what a FBA prep service is, and if using one is right for your business.
What are FBA prep services?
In recent years, FBA prep services have become a very popular option for Amazon FBA sellers. A prep service will handle all receiving, preparation, and re-shipping of your inventory to Amazon. Using a prep service will mean you won’t even see your inventory, leaving you free and clear to run your business from virtually anywhere.
Properly preparing your products for Amazon fulfillment is very important. If your products are not prepped to fit Amazon's criteria, you'll risk being charged to only have your inventory returned. Another risk of improperly prepared inventory is damaged products, which if received by a customer, may result in negative feedback and returns.
A FBA prep center will take any and all guesswork out of this tedious process. Not only will your inventory be prepped to Amazon's standards each and every time, the entire process can be essentially removed from your responsibilities.
Who are FBA prep services for?
FBA prep services can benefit any Amazon seller, up to a point. Because FBA prep centers generally charge by the unit, most of the costs associated will be variable. Therefore, utilizing a prep center makes the most sense up to a point, or until it becomes more cost effective to prep your products in-house.
For most sellers, however, using a prep center in the early stages makes sense as the overhead of a warehouse exceeds the variable cost of a prep center. By removing the prep work, the time created allows you to focus on scaling your business, rather than creating shipping plans and applying labels.
What can a FBA prep service do?
Prep services can offer a variety of services for your inventory, but their primary function is to handle all of the product inspections and prep that you would otherwise do. Consider using a prep center to be handing off the entire process off to experts.
In addition to the actual preparation work, using a prep center also saves significant amounts of space, as prep centers are their own warehouses. Instead of boxing and labeling hundreds of units from your garage, a prep center allows these to be outsourced, freeing your time and space.
Things to consider when choosing a FBA prep center:
Picking the right prep center for your Amazon FBA business requires thought into where it is physically located. Depending on the particular model of your Amazon business, it would make sense to position your prep center strategically.
For example, if your business is involved in private label, it would make sense to consider prep centers near ports of entry for international shipments. Doing so will save both time and transport costs. If your business model is focused on retail arbitrage, selecting a prep center that's close to you may make most sense, as you could delivery products yourself and save on trucking costs.
Another factor that should be considered when choosing your prep center are each states’ sales tax schedules. When selling on Amazon under the online arbitrage model, sales tax may be incurred. If your prep center is located in either Delawarec, Montana, New Hampshire, or Oregon, any inventory shipped to those states will not be subject to sales tax. Choosing a prep center in one of these states could significantly lower costs, and increase margins.
Pricing schedules for FBA prep centers will also vary, although most will charge per-unit, with some variations. Many prep centers have monthly unit minimums, but can also be tiered to offer larger volume sellers more competitive pricing. Add-on services are also widely available, with prep centers offering product bundling, special labeling, fragile item protection, as well as professional photography and promotional services. Before you choose a prep center, it is imperative to find the pricing structure that fits best with your Amazon business.
Aside from pricing, processing and turnaround time should be high on the list of criteria. Many prep centers offer fulfillment times of 24 or 48 hours, which is critical if you send inventory based on sales velocity. The faster your products can be inspected and fulfilled, the quicker your capital can be deployed and compounded. While most prep centers offer time guarantees, some may not, which is important to learn beforehand.
Supported FBA models
Choosing the right prep center will vary depending on the type of business model you’re deploying. For FBA businesses focused on private label, choosing a prep center with close proximity to ports of entry would make the most sense. If sourcing via online arbitrage methods, it may make sense to choose a prep center in a tax-advantage state, where your products will be exempt. For wholesale with large volumes, selecting a prep center with low per-unit costs can greatly reduce your variable costs at scale.
Why use a FBA prep center?
Using a prep center for your FBA inventory can reap many advantages. The time gained that would otherwise be spent receiving, inspecting, prepping, and repacking your inventory can instead be used to strategically scale your business. In addition, the space and overhead associated with FBA prepping can be daunting, but won't be an issue with the preparation process outsourced.
As your business grows, so will the time required to properly prep your inventory, which can become a major bottleneck. At scale, it becomes easier to mislabel or incorrectly package products, and the process can easily become overwhelming. With the help of a FBA prep center, you may kiss those worries goodbye, and never have to deal with inventory again.