Shipping to Amazon? You’ve come to the right place.
We’ve broken down what working with Amazon looks like for both first-party and third-party sellers (more info below) and how sellers can most effectively optimize their Amazon supply chain, and in turn, profitability with Amazon overall.
Are You a 1P or 3P Amazon Seller?
It is almost a “must” for any business to sell on Amazon these days. In a world where consumers log on to Amazon to buy items that were out-of-stock at the store, selling on Amazon helps companies stay competitive and win market share.
Firstly, shipping into Amazon looks a little bit different depending on if you are a first party (1P) or third-party (3P) seller.
To be a 1P Seller, you need to be invited by Amazon directly. In this set up, Amazon acts as the retailer and the seller operates as a wholesale supplier. Sellers receive bulk purchase orders and pay a flat fee for Amazon to entirely take over the selling process. After the seller ships their product to Amazon, Amazon gains complete control of the product’s pricing and promotion. Overall, it’s a hands-off set up for the seller.
1P sellers typically ship full truckload to an Amazon distribution center (DC). Amazon also offers customer pick-up (CPU) for 1P sellers – but more on that later.
3P sellers act as the retailer and have more control of their operation overall. The seller lists and sells products directly to consumers via the Amazon marketplace, with full control over pricing and promotion. 3P sellers have a few options for how they can ship to customers, but most often use Fulfillment By Amazon (FBA). FBA is an Amazon service that provides storage, packaging, and shipping assistance to sellers.
A recent report stated that from Oct. 15, 2022, to Jan. 14, 2023, 3P sellers will have to pay an extra 35 cents per item shipped via FBA. The extra charge, due to record-setting expense increases, will be in addition to other fees Amazon already charges FBA users.
Technically, companies can act as both a 1P and 3P seller. We’ve had clients receive Amazon POs for certain SKUs while simultaneously acting as a 3P seller of their remaining inventory.
Shipping to Amazon
Amazon is notorious for being a challenging receiver to work with. Delivery appointments book up very quickly and can be cancelled within 24 hours of your designated delivery window, sometimes when trucks are already enroute.
For information on pallet requirements or how to prep Amazon shipments for delivery in general, Amazon has detailed shipment guidelines listed on Seller Central for both Amazon Distribution Centers and FBA centers.
Otherwise, here’s what you need to know about shipping to Amazon:
1. Amazon appointments book up fast.
Usually, you won’t be able to get an appointment closer than five days after the booking date. This means maximizing lead time is crucial.
2. Amazon requires shippers to meet at least a 90% OTIF.
Amazon keeps tabs on missed or late appointments. If sellers do not meet or exceed a 90% on-time in-full average (OTIF) rate, this gives Amazon grounds to give up their appointment to someone else or boot the seller off the portal altogether.
If a carrier misses their scheduled appointment by 30 minutes or more, the freight will be refused at no cost to Amazon. In most situations, the seller will be held responsible to eat that cost.
3. Amazon charges a fine for shipments that don’t meet OTIF.
For example, Amazon orders 20,000 cases of a 1P seller’s product but the seller only ships 18,000 cases. The seller will then be charged a fine for not arriving in-full. If the order shows up late or not at all, the seller will be charged an additional fine for not being on time.
4. Amazon is known to cancel appointments less than 24 hours in advance.
Amazon has cancelled appointments while our carriers is already enroute to their DC. If this happens, there are two possible routes of action.
First, the carrier could hold the freight for a layover fee, which is usually between $150-500 per day. The other option is that the carrier could drop the load at their hub and another carrier would be sourced to recover it. This means the seller would then be charged the cost of two separate carriers.
Neither are fantastic options, especially if you need a shipment to arrive ASAP.
5. Amazon is extremely difficult to contact.
Amazon has grown into the giant that it is in a very short time. Somewhere along the way it’s become incredibly difficult to contact anyone working inside the distribution or fulfillment centers. This makes problem-solving very difficult when issues arise, which can lead to further delays and charges.
6. Amazon shipment numbers are important.
When booking freight and making an appointment, sellers will receive an ASN (or PRO) number from their carrier and a confirmation number from Amazon. These numbers are what Amazon uses to track the shipment. Without them, Amazon can apply chargebacks to the shipment or even refuse to accept it once it arrives. Sellers must ensure they receive this number with each order so they can fight back against any unwarranted chargebacks.
Sellers will also need to confirm this number ahead of time with Amazon. If this step is missed, it can cause inbound, processing, or stock issues, possibly resulting in extra fees sellers must pay or fight.
Amazon offers customer pick-up (CPU) for 1P sellers. A CPU arrangement means Amazon will pick up the seller’s freight instead of the seller outsourcing a third party.
Sellers can book an Amazon-partnered carrier using Amazon’s seller portal, which will either be a truck from Amazon’s own fleet or another carrier depending on availability and pickup location. This all sounds well and good, except for one issue: Amazon-partnered carriers have been known to frequently miss pickups without any communication or warning.
So, the seller’s freight is staged and ready to go, but nobody shows to pick it up. Since warehouses are already tight on space, they can’t afford to have the freight sit staged and untouched for very long. This means the shipment will have to be restacked and put back into storage – and the seller will get charged a penalty for all the extra fuss, not Amazon.
This is a common theme with retailers who use CPU delivery models. At Zipline, we normally suggest avoiding these set-ups altogether for this reason.
CPU arrangements sacrifice all control of shipments but still hold the seller responsible for anything that goes wrong. The outcome is usually extra fees, delays, and headaches in getting the freight moved.
Make Shipping to Amazon Seamless
Since Amazon isn’t exactly easy to work with when it comes to transportation, it’s important to control the controllables of your supply chain wherever you can. The good news is, with a retail-specialized third-party like Zipline Logistics, that part is made easy.
Our uniquely qualified carrier network, world-class team of retail transportation experts, and state-of-the-art shipper intelligence tools maximize client revenue and by capturing market share through optimized, on-time in-full performance.
Zipline processes were built specifically to resolve the most critical logistics challenges faced by consumer goods brands. We tailor strategies to reduce overall transportation spend, optimize logistics performance, and beat out the competition for market share.
Shipping to Amazon?