FBA means that sellers ship products in batches to Amazon warehouses, and Amazon is responsible for warehousing, picking, packaging, distribution, customer service, returns and other related warehouse and distribution after-sales one-stop services. The corresponding is the merchant’s independent logistics. The FBA model is somewhat similar to Cainiao Cloud Warehouse, and the degree of self-operation is closer to JD.com. The customs and taxation of FBA first leg need to be solved by the seller. As a warehouse for receiving goods, FBA does not provide any customs clearance qualifications. The importer must declare the goods when they arrive at the destination port. FBA has certain restrictions on the size, weight, and category of selected products, and prefers small, high-profit, and high-quality products. The cost of FBA is determined according to the specifications of the goods sold. After the seller uses FBA, the Prime logo will appear on the product, which means that Prime members enjoy free shipping and become potential customers. The search weight of the product will also be increased, and the order rate will be increased. Amazon has more than 100 million Prime members worldwide, and there are more than 200 FBA warehouses, and the number is increasing every year. FBA brings extremely large first-leg transportation demand to cross-border logistics, and also provides a reference for the site selection and operation of overseas warehouses. As Amazon Business expands globally, the demand for traditional B2B cross-border freight and overseas warehouses will further increase. Whether in terms of daily shipments, SKU types, or the number of customers, FBA far exceeds general overseas warehouses, so its warehouse management is extremely difficult. From the market feedback, FBA’s quality reputation is also perfect, with few problems such as wrong shipments, shipments, and inventory. Among them, lean management and intelligent systems are the two cores of FBA.
Amazon’s logistics center has four levels: FC, RFC, RSC, and RDC. “Logistics options” occupy an important position in Amazon’s front-end recommendation algorithm. FBA has limited resources and it is difficult to meet sellers’ more inventory needs. Therefore, seller-fulfilled Prime (SFP) becomes another option. As long as the service level meets the same indicators as FBA requirements, such as local logistics distribution, on-time delivery rate ≥ 92%, effective tracking rate ≥ 94%, etc., the store can also obtain Prime and “2Day Shipping” two-day delivery logo.
FBA rates in North America are about 30% to 50% higher than self-delivery, but they are more time-efficient and stable. On the one hand, Amazon’s logistics operations are the benchmark in the industry and have many advantages; on the other hand, FBA also has many defects. It has long been plagued by problems such as inventory costs and inflexible returns. Sellers can only solve this problem through special customized services of third-party overseas warehouses, seeking benefits and avoiding harm.
The top ten disadvantages of FBA: ① Random warehouse selection makes it impossible to accurately calculate the cost of the first leg: ② No import customs clearance is provided; ③ High requirements for warehousing standards and rules: ④ Limited communication channels and customer service response ⑤ Buyers return goods at will and returns are difficult to handle: ⑥ Due to the inventory warehouse division, the goods are scattered when returning to FBA, the cycle is very long and unplanned; ⑦ Insufficient warehouse space, difficult to enter the warehouse during the peak season, there is an upper limit on the entry of heavy goods, and storage is expensive; ⑧ The product is unsalable or the account is restricted, and the cost of changing the sales platform and changing warehouses is too high; ⑨ If the prohibited or infringing products are sent by mistake, there will be a risk of destruction: ⑩ The same batch of goods cannot be sold by multiple accounts at the same time, otherwise it will cause the store account to be associated.
SFP (Seller Fulfilled Product) is relatively flexible, but cannot use FBA’s delivery discounts. Amazon proposed the Onsite cloud warehouse project on this basis. The core logic is to turn the seller’s warehouse into an FBA warehouse, expand the virtual warehouse, and achieve extended growth in FBA warehouse capacity and SKU volume. Onsite allows sellers to apply FBA warehouse software and logistics systems to their own warehouses. Sellers can use Amazon’s logistics account to obtain freight discounts, which can reduce freight costs by nearly 85%. Amazon Onsite takes into account the advantages of both FBA and SFP. After mature operation, it will be open to more sellers to join the operation, which will drive the strong growth of third-party overseas warehouses.