Sellers on Amazon currently have a few different options when selling their products. Amazon offers a service called Seller Fulfilled Prime, this allows sellers to ship prime-eligible products directly from their own warehouse. However, many sellers cannot afford to provide two-day shipping directly from their warehouse, because of this not many sellers have joined. Another option is called Fulfillment by Amazon, sellers send their products to be stored in Amazon’s warehouse and Amazon’s logistics systems handles the sale of the product. The third option is the seller-only option, merchants sell products from their own warehouse without any benefits of Amazon Prime; these sellers typically receive fewer buyers because their products are not prime eligible. Because of the issues with Seller Fulfilled Prime and the seller-only option, many sellers decide to use Fulfillment by Amazon. This means that Amazon is storing many different sellers’ products within their own warehouses, these products are also congesting their logistics systems. In order to relieve some of this congestion, Amazon is testing an invitation-only program called FBA Onsite.
FBA Onsite is a program that will allow sellers to have more efficient storage and shipping options, and it will allow them to use Amazon’s software and logistics systems in their own warehouses. This is program is supposed to alleviate some of the headaches that merchants on Amazon are having in their order fulfillment processes. It would also allow Amazon to free space in their own fulfillment centers and give that task back to its third party sellers. Currently, Amazon has invited fifty of its top sellers to participate in this program.
Amazon is sending representatives to help third-party sellers model their processes to be more like Amazon’s. A large majority of the program involves reconfiguring the layout of third-party warehouse floor plans in order to make them more efficient in the order fulfillment process. As a way to repay Amazon for their services, part of the new floor plan will included a fenced area where Amazon will be able to store some of their own inventory. In addition, participating merchants will be installing Amazon’s warehouse management program, this will greatly reduce the time required to upload products to Amazon’s database. This program also gives sellers a big break on shipping costs, with FBA Onsite they will be able to ship directly from their own warehouses instead of having to ship to an Amazon warehouse as an intermediary before the product is shipped to customer. Amazon will be helping them to lower the two-day shipping rates by allowing sellers to use Amazon’s shipping accounts. One seller claims that this will discount shipping costs by up to eighty-five percent.
This article demonstrates the need for constant process analysis. Through this analysis, Amazon is able to make the most efficient order fulfillment systems possible and continue to update them to give Amazon customers the best user experience. Amazon’s processes are so tuned that they are able to use them as an asset and sell them to merchants on their website.