Amazon is a giant in the e-commerce landscape. And they’re making even bigger strides to dominate in the fulfillment category as well.
Their accelerated expenditure on projects like warehouses and aircraft, in addition to efforts to grow their fulfillment and logistics network by 50% is lowering delivery costs for shoppers, especially for those with Prime memberships.
Customers are getting the best deals available, but sellers aren’t always happy about the changes. Not to mention the ever-increasing fees that go along with them. The consequences of global supply chain disruption are now materializing. With newly imposed inflation price hikes, it will only get worse during the peak season holiday months.
So while Amazon FBA has often been the first choice for many, the tides are now shifting, with more sellers looking for fresh fulfillment alternatives.
We’ll take a closer look at five of the best FBA alternatives that can help you scale your business — minus the rigid rules and constant fee hikes. But first, let’s understand the FAB landscape for challenges and areas of opportunity.
Thinking about FBA alternatives? Here’s why now might be the time to make your move.
For many sellers, Amazon FBA’s one-stop shop for storage, fulfillment, and customer service is a great way to offset these often expensive and time-consuming tasks.
But while FBA can certainly be a solid option for the early stages of a brand’s growth journey, expanding into new and more bespoke fulfillment strategies is becoming increasingly popular as brands grow.
Of course, FBA’s chronic inventory misfires are also a major motivating factor for sellers thinking about making the switch — not to mention the ever-increasing fees that can constantly chip away at your margins.
Here are some of the fee hikes FBA sellers have been hit within the past few months alone.
A 2-8% Increase in Fulfillment Fees
Amazon explained that this increase was in part due to inflation. Another equally important reason is its massive investments in warehouses, many of which are now sitting empty.
It’s hardly surprising that sellers are angry about the price increases, especially in light of recent headlines about how Amazon is trying to recoup its losses.
Since the increased fees only apply to shipping, storage, and order management, many sellers are exploring Fulfilled by Merchant (FBM) options while continuing to list their products on Amazon.
Increase in Monthly Storage Fees
FBA announced that as of February 2022, inventory storage fees would increase from $0.75 to $0.83 per cubic foot.
Until May, Amazon didn’t charge extra fees for inventory in warehouses for up to 365 days. But that was then. Now, Amazon’s aged inventory surcharge adds $1.50 per cubic foot for unsold inventory in fulfillment centers from 271 to 365 days, and $6.90 per cubic foot after 365 days.
These costs add up.
To add insult to injury, the fee hikes have come just two years after the 220% increase in peak season storage costs, which many sellers are still reeling from.
Inventory Performance Index (IPI) restrictions
Then there’s the IPI threshold for storage limits, which has dropped from 450 to 400 for FBA sellers.
These restrictions have a major impact on sellers with seasonal inventory. As sales fluctuate with each quarter, so does their IPI score — pushing more sellers to explore FBM as a viable alternative.
But dodging fees and IPI restrictions are the only motivators for taking the FBM route.
A 2022 report by JungleScout found that:
- FBM sellers start selling earlier than FBA sellers since they don’t have to wait for their inventory to reach an Amazon warehouse.
- Sellers tend to have larger product catalogs than FBA sellers.
- FBM sellers spend less than FBA sellers to launch their businesses.
By carefully assessing the various fulfillment options available, you can take advantage of all of the above benefits, while improving your Amazon ROI across the board.
Top 5 Amazon FBA Alternatives
- a2b Fulfillment
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5 Amazon FBA Alternatives to Help You Scale More Profitably
As orders increase, you might notice that FBA just isn’t working out as well as it used to.
Mega brands like Nike, Ikea, Beardbrand, and others have quit Amazon and seen massive success as a result of this shift in strategy. By handling their own fulfillment, these brands are working towards a business model that may leave them less vulnerable in the long term.
If you’re ready to reclaim your fulfillment strategy, the following Amazon FBA alternatives are a great place to start.
ShipBob is an emerging fulfillment service that offers FBM options to sellers who are looking to list their products on Amazon but want to avoid the unnecessary costs that come with FBA.
Similar to Amazon, ShipBob has a wide-reaching warehouse network that can compete with Amazon’s one-day and two-day shipping at a lower cost.
According to their website, ShipBob’s automated fulfillment services have helped merchants:
- Save up to 13% of costs
- Increase average order value by 97%
- Reduce cart abandonment by 18%
While ShipBob began as a primarily D2C fulfillment provider, it recently expanded across the B2B ecosystem with powerful wholesale shipping automation technology.
Overall, ShipBob offers:
- Reduced shipping costs
- Branded packaging so customers feel connected to brands (and not the fulfillment service)
- Platform integrations for seamless multichannel fulfillment
- Dedicated account management support
For sellers looking for cost-effective storage, streamlined inventory management, and competitively speedy fulfillment, ShipBob can be a great FBA alternative to consider.
And with their new Merchant Plus offering, sellers get even more control over orders and inventory by using ShipBob’s software within their own facilities.
2. a2b Fulfillment
a2b Fulfillment has been a leader in the 3PL industry for over 20 years.
With almost 700,000 square feet of warehousing space, a2b specializes in 1-2 day shipping along with live agent customer care so sellers always have the support they need.
a2b Fulfillment provides:
- Multichannel fulfillment and integrations with e-commerce platforms
- Storage and inventory management services
- International fulfillment and shipping
- Wholesale order bundling
- Expanding warehouse efforts to make shipping faster and storage easier
ShipMonk’s 4-in-1 cloud software lets merchants “kiss [their] cumbersome spreadsheets goodbye.”
The fulfillment provider covers inventory, order, shipping, and warehouse management software.
ShipMonk’s many services include:
- E-commerce fulfillment
- Retail and subscription box fulfillment
- Crowdfunding options
- Seller-fulfilled prime services
In 2021, ShipMonk even expanded internationally to Mexico, dramatically reducing export and import costs for merchants.
For sellers looking to ship products across borders, ShipMonk is a great way to reduce costs while also having the peace of mind that goods will be delivered reliably and securely.
Ships-a-Lot is a DTC-focused fulfillment service specifically for small-sized products.
They’re selective about the brands they work with, but fewer brands means better support for you and your business. Ships-a-Lot describes its team as “industry experts providing a boutique, hands-on approach with a personal one-to-one human experience.”
During the pandemic, Ships-a Lot took advantage of the boom in e-commerce to further expand its warehouse network. Today, what had originally started as a beef jerky company is now a leading third-party fulfillment service.
Among many other services, Ships-a-Lot offers:
- Customized shipping boxes with your branding
- Integration with various marketplaces with no one-time set-up fees
- Low-cost returns management
Ships-a-Lot prides itself in offering very personal service to sellers and their clients, unlike FBA, where sellers have little control over their own inventory once it’s shipped off to warehouses.
Ships-a-Lot also offers support within FBA fulfillment, so sellers can try out their service while still using FBA and then transition smoothly if it’s a good fit.
5. ShipNetwork (formerly Rakuten Super Logistics)
In August 2022, FirstMile bought Rakuten Super Logistics and rebranded as ShipNetwork.
By combining these companies’ extensive nationwide and international shipping networks, sellers get a much better deal on price, delivery time, and reach.
Another big benefit of this FBA alternative is that ShipNetwork is a continually evolving fulfillment service. Apart from getting acquired by FirstMile, they’ve also partnered with Zebra automation to scale efficiency and workflow management. They also adopted FlexShelf AMRs, which are said to deliver up to three times increased productivity.
- Dock-to-doorstep logistics
- 1-2 day shipping (and undertakes the cost of delivering the right product in case of any order mix-ups)
- Kitting and subscription box fulfillment
- Lot tracking, temperature control, and customized fulfillment support
- Seamless marketplace integration and support
For brands that are looking for high-volume fulfillment services, Rakuten is a good option as it has running partnerships with big-name shippers like FedEx, UPS, FirstMile, and more, which can help sellers pinpoint the best combination of price and service for each product.
Finding Better Amazon FBA Alternatives is Doable — but It Takes Some Effort
There’s a reason Amazon has 9.7 million sellers worldwide, but only 1.9 million are active.
While the rate of new sellers joining Amazon has been constant since 2016, more and more sellers are either quitting or going inactive.
Many are realizing that gaining more control over their fulfillment strategy can result in an elevated customer experience. It also helps better brand loyalty while sidestepping Amazon FBA’s rigid inventory restrictions and constant fee hikes.
But in the end, choosing between FBA or an alternative fulfillment service is always going to depend on your brand, business model, and product range.
The good news is, you don’t need to make the switch overnight.
Many 3P fulfillment services offer integrations with FBA where they handle inventory and order management in conjunction with Amazon. You can make a slow transition by combining both FBA and a third-party service, and then see which works better for you.
And when you need a hand with your future growth plans, we’ll be here to help.
Whether you’re looking for a quick capital injection to stay on top of inventory or you just need reliable data to keep sales on track, our flexible e-commerce funding solutions can help you reach the next level.
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