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What is Amazon FBA & 3PL

Amazon FBA is a fulfillment service provided by Amazon that allows sellers to store their products in Amazon's fulfillment centers. Amazon then picks, packs, and ships the products on behalf of the seller, as well as manages customer service and returns.
Amazon FBA & 3PL, 3pl for amazon fba, 3pl for fba

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Today, several outsourcing order fulfillment options are available to build a successful e-commerce business.  Two of the most popular are Fulfillment by Amazon (FBA) and 3PL (third-party logistics.

The basic idea of both systems is the same. Your inventory will be with a third party. They will be responsible for major work of logistics. It will include picking, packing, sorting, shipping, and managing the after-sale services. 

Still, there are some differences between both services. We will discuss both services in this article in detail. This will help you to conclude which method suits you the best.

Let’s discuss the important advantages and disadvantages of both methods in a detailed comparison.

What is Fulfillment by Amazon or Amazon FBA

What is Fulfillment by Amazon (FBA)

Amazon FBA is an outsourcing system that supports Amazon global sellers.  Enroll your inventory in FBA to store products in Amazon Fulfillment centers.

In this service, Amazon picks, packs, and ships on behalf of the seller. And, later provides customer service for FBA goods. FBA costs 32% less per unit on average in comparison to any other method.

Advantages of opting for Fulfillment by Amazon or Amazon FBA

  1. FBA offers direct Access to Online Shoppers. By enrolling in Amazon FBA you can give you access of more than 100 million Amazon subscribers.
  2. Amazon’s well-crafted sale days are the Plus point. Days like “Prime Day” or any other Amazon boosts benefit Amazon sellers. Upfront Amazon Prime eligibility enhances the visibility of the product. It also plays an important role in increasing sales revenue. 
  3. There is no upper or lower limit of product enrolment in FBA. Even with one product, you can start your process.
  4. Access to distributed warehouses is the biggest advantage. This benefits the businesses having a large volume of sales. It also helps the business with customers spread across different regions.
  5. Amazon FBA is a complete package that frees you from all the hassles related to customer dealing. Amazon customer support deals with all the purchases and returns of logistics.
  6. Amazon’s reputation for reliable and efficient fulfillment services is the biggest advantage. It can help build trust with customers. Also, can lead to increased sales and positive reviews.
  7. Simple and transparent fee structures offered by Amazon help in easy profit calculations.

Disadvantages of opting for Fulfillment by Amazon or Amazon FBA

  1. Quality control will be a major issue of Amazon FBA. In some cases, Amazon picks up any product from the nearest warehouse. This means it might not be your product. This practice reduces your ability to control quality. 
  2. Lack of direct communication, Amazon will not provide a dedicated account manager.
  3. Amazon FBA impacts your brand impact. The standard packing of Amazon loses the zest of personalized branding.
  4. Without a doubt, Amazon itself is a competitor for various brands. You will find Amazon is selling the same products which you have listed in the system.

What is Third-Party Logistics (3PL)

A third-party logistics provider (3PL) is an outsource system provider.

They handle several phases of a company’s supply chain and inventory management. This includes storage, shipping, fulfillment services, return logistics, and more. 3PL with a larger scope often offer customizable and flexible solutions.

It also offers flexibility to manage specific business needs. You can avail of services like kitting, labelling, and reverse logistics in your package.

What is third-party logistics (3PL)

Advantages of Third-Party Logistics (3PL)

  1. Tailor-made solution to your business needs. It is one such thing that attracts you to the 3PL option of outsourcing. It is the most popular choice among sellers. This offer many value-added services. Services includes packing inserts, personalized packing, manual inventory count, and more.
  2. It also can handle B2B and B2C fulfillment. This system supports various sales channels, from brick-to-mortar stores, from Amazon to Shopify.
  3. Facility of a Dedicated account manager to support your sales and customer support. 
  4. Well-managed warehouse and storage centers. It has adequate warehouse facilities and advanced technology. Thus, 3PL helps to manage your inventory daily.
  5. 3PL has Manageable Shipping Fees. They have storage spaces at various locations. You can distribute your inventory to various warehouses to cut down on shipping fees.

Disadvantages of Third-Party Logistics (3PL)

  • You may find various challenges during the integration process. It requires robust communication channels. Also, it will demand proper coordination to ensure seamless order processing and inventory management.
  • If your order numbers are small or irregular, then opting 3PL option can be an expensive choice for you.
  • The upfront cost of 3PL can be a cause of concern for many sellers. You will have to pay the fees for various steps. These are set up, storage, receiving, fulfillment and shipping of your product. This can be paid either per month or per SKU. This will depend upon the 3PL you choose.

Factors to consider while opting best option between Amazon FBA vs 3PL

  • A clear understanding of the characteristics of your product is very important. It helps in choosing the right option between both options.
  • A clear understanding of order volumes and inventory velocity.
  • The impact of seasonality in selling your product plays a major role. It can affect your choice of storage solution.
  • The cost ratio of your business should be comfortable enough to bear the cost of either 3PL or FBA.
  • The current scenario of your company can be the deciding factor as well. Choose fulfillment services that are easy to manage and set up. Also, make sure they are flexible and customizable as per your business requirements.
  • Performance of the fulfillment service

Both Amazon FBA and 3PL have their pros and cons. Amazon FBA offers advantages like Amazon Prime eligibility and consumer trust. Along with that, it offers an unmatched fulfillment network and reputation. 

While 3PL services offer you benefits like flexibility and tailored support. Support of experts and unmatched ability to handle a wide range of services is a plus. 

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