Nearly every American has shopped at a Target – the retailer holds a level of popularity comparable to that of Amazon and Walmart. The Minnesota headquartered retailer’s brick and mortar footprint is well spread. As of 2023, Target had 1948 stores in the U.S and hauled in $106 Billion in revenue. More importantly, the company holds a huge audience for sellers and brands to target – according to Business Insider, 8 out of 10 US shoppers are Target customers. The average Target customer makes 23 trips a year to one of their stores. But while Target has had a sizable customer base for years, eCommerce sellers and brands have largely focused on their competitor, Amazon. However, in recent years, Target has begun expanding its online offerings. In 2019, it launched its third party marketplace on its website – Target Plus. This has opened up a massive new audience for eCommerce merchants to expand into. 

In this article, we look at the advantages Target Plus offers sellers, the key factors merchants must consider when evaluating a 3PL for their Target Plus orders, the options that are available to them and our recommendation of the best 3PL.

Why Target Plus Is A Great Option For Sellers

Invite-Only Marketplace With a Large Audience

Target Plus was introduced by the retailer in 2019 as an invite-only platform. The company said it was doing this to carefully curate the assortment of brands and products available to customers on its website. According to Marketplace Pulse, the company started with 30 sellers on Target Plus in 2019. Four years later, that number has grown only to 650. 

This represents enormously exclusive digital real estate for brands. In certain product categories, there may be just one brand featured. This means that all the customers visiting Target’s site focus exclusively on this limited selection, boosting sales enormously for the featured brands.

Autonomy Over Logistics and Fulfillment

Brands have freedom from having to work with another platform-captive fulfillment solution, such as Fulfilled By Amazon (FBA) or Walmart Fulfillment Services (WFS). Target Plus enables them to handle their logistics and order fulfillment however works best for them – through their own warehouse, a traditional 3PL or order fulfillment networks. 

This also means freedom from the fees and surcharges associated with these platform captive fulfillment solutions. Lastly, it allows merchants to manage their inventory in a centralized location – rather than having to send more inbounds to a warehouse owned by a marketplace sales channel, they can simply pull from a centralized pool of inventory that they use for their own website, or Shopify storefront, for example. 

A More Equitable Marketplace – No Inhouse Competitor like Amazon FBA

Target Plus allows merchants to send orders out to customers, Target stores or Target fulfillment centers through whatever logistics operation works for them. Additionally, because Target does not have its own competing logistics network (such as FBA on Amazon), there is no preferential treatment provided to sellers who use certain logistics providers. 

The model is simple – let the merchants compete, and may those with the best products and order fulfillment standards win. 

While Target Plus is a great growth opportunity, the marketplace is still invite-only – Target themselves reach out to the brands that they think would be a good fit for them, explaining the exclusivity. Their website has a form for merchants to fill out if they’re interested in being part of the marketplace, but it is not clear what the chances of getting approved are.

What Should You Look For In A Target Plus 3PL?

In Target’s own words, the items from 3rd party sellers featured on their website appear exactly the same as all other listings, meaning that these merchants are responsible for upholding the experience customers expect from Target through their product assortment and order fulfillment standards. 

Through the invite-only process, Target ensures the product assortment is what customers expect. However, the order fulfillment standards are entirely your responsibility – your ability to maintain enrollment in Target Plus largely depends on the 3PL that you work with. 

We’ve outlined the criteria that we think are most important when choosing a 3PL partner for your Target orders:

Ability to Fulfill Orders in 1 Business Day

Target Plus requires participating brands to fulfill their orders (get it out the warehouse) in 1 business day. This requires warehouses that have excellent picking and packing practices, as well as order fulfillment standards. For example, warehouses in the Cahoot order fulfillment network are vetted through a 44-point checklist, ensuring that only the very best make the cut.

Ensure Order Delivery in 5 Business Days

The marketplace requires that brands / products deliver orders to the end-customer in under 5 business days. However, customers today expect fast, free shipping in under 2 days across every channel. Amazon and their Prime loyalty program have created this customer expectation. With Cahoot’s nationwide network of strategically located warehouses, you’ll be able to delight customers nationwide with shipping in less than 2 days, while also saving costs by using economical ground shipping. 

Flexibility To Use All Shipping Carriers and Services

Target Plus expects participating sellers to be able to accommodate a variety of carriers and shipping services. 

With Cahoot’s next generation shipping software, you get much more than that. Our system intelligently rate shops across different carriers, services and warehouse locations on every single order to ensure that the cheapest shipping label that will meet the 5 day delivery timeline is picked on every order. 

This ensures you see savings on every order, which gives you back money to invest in growing your brand and sales. 

Ability to Produce a Target.com Branded Packing Slip on Every Shipment

On every order that is sent out from the warehouse, Target requires a branded packing slip to be part of the shipment. This is something that needs a 3PL who will sweat the details and ensure that the little, but very important things are taken care of. Cahoot is fully compliant with these requirements, ensuring that you’re always meeting all of Target’s criteria for the program.

Full Compliance with Target’s EDI Requirements

Target requires merchants to be able to receive and push communications via Electronic Data Interchange (EDI). These communications are automated. Target will use EDI to push purchase order information to merchants. To provide acknowledgement of order receipt and notify Target that the order has been shipped from the warehouse, the merchant must EDI to push this information back. 

There are a variety of EDI systems that you can use to connect to Target. Importantly, your 3PL must be able to help you stay fully compliant with these requirements. 

Responsive, Reliable Customer Support

Order fulfillment is a complex operation, involving multiple, intricate steps in the process from click to delivery. Things don’t always go as planned, but what is crucial is ensuring that your 3PL has a responsive, reliable customer support team whom you can rely on to fix problems fast, with minimal disruption to your business operations. 

Most traditional 3PLs may not have personnel with the experience and expertise required to troubleshoot and fix problems fast – costing you precious time and sales. It is important to identify a Target Plus fulfillment partner with a reliable, responsive customer support team – who will be ready to dive in and solve problems quickly, so that you’re always selling and keeping your customers happy.

So now that we’ve taken a look at the important criteria that guide your choice of a 3PL for Target Plus, let’s look at the options that are actually available to you, and the pros and cons of each of them:

Top Target Plus 3PL Companies

Amazon Multi-Channel Fulfillment

Amazon Multi-Channel Fulfillment (MCF) is Amazon’s service through which you can fulfill orders on sales channels outside Amazon, such as eBay and Target Plus. 

The service deploys the same infrastructure and resources that power Amazon’s in house Fulfilled By Amazon (FBA) logistics network.

ShipBob

Cahoot: The Best Target Plus 3PL

Cahoot’s peer-to-peer order fulfillment network is built for the future of eCommerce. Our network of warehouses is located at strategic locations across the US, enabling Target Plus merchants to offer their customers ultrafast shipping. Our fulfillment centers are well equipped to handle all types of SKUs – including heavier, seasonal, larger-sized and slow moving ones (which the typical Amazon Fulfillment Center may struggle to process). 

We are compliant with all aspects of the Target Plus program. Our US based customer support team is always ready and responsive to ensure that your order fulfillment operations are running smoothly all the time. 

Cahoot is committed to helping Target Plus sellers grow their businesses with fast and affordable ecommerce order fulfillment service.

If you’d like to find out how Cahoot can help your ecommerce business, please get in touch with us. We can’t wait to show you how Shopify order fulfillment was meant to be.

If you are selling on multiple sales channels and are interested in 3PLs that can help you with fulfillment, you can read our other articles:

1. How to Choose the Best 3PL for Your Shopify Store
2. How to Choose the best 3PL for Your Macy’s Orders
3. How to Choose the Best 3PL for Wayfair
4. How to Choose the Best 3PL for the Nordstrom Direct Drop Ship Program

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While each of Amazon, USPS, FedEx, and UPS are implementing peak surcharges for parcel delivery this holiday season, they’re all going about it in different ways.

Amazon, relatively new to the surcharge game, has added flat percentage fee increases to key services throughout the year. For peak, though, they have a sliding scale that will predictably hit bigger packages with bigger cost increases. Their peak surcharge will be added on top of the existing fuel and inflation surcharge they put into effect this summer, further squeezing seller margins.

Similar to Amazon, USPS will be using a sliding scale that increases the surcharge based on the parcel’s weight and zone. Flat Rate Boxes and Envelopes will see big jumps of $0.75 to $0.95, which will pinch the sellers that rely on these shipping options to keep their logistics costs down while selling inexpensive items.

FedEx, on the other hand, has more flat fees to add as surcharges, including a $2.50 per Ground Economy package charge during Black Friday and Cyber Monday. On top of that, they’ve introduced a “peaking factor” calculation to apply to their largest shippers. The more large shippers outstrip their summer volumes during peak, the more they’ll pay per package.

Like FedEx, UPS will use a dynamic pricing scale that will charge large shippers more when they far outstrip their summer volumes. Unlike FedEx (and the others), though, UPS won’t add a flat surcharge to all packages.

Let’s get into the details.

Amazon FBA Peak Surcharges 2022

On August 16th, Amazon announced that for the first time ever, they will implement a Holiday Peak Fulfillment Fee to take effect from October 15th, 2022 to January 14th, 2023. Per Amazon, The fee will be an average of USD $0.35 per item sold using US and Canada FBA.” Even in isolation, a 35 cent increase in order fulfillment fees can be difficult for sellers to absorb. Considering the enormous pressure that inflation is already putting on sellers and other FBA price increases, this could be the straw that breaks the camel’s back.

At an average of another 35 cents on top of the other increases, there are few, if any, items that haven’t shot up over a dollar in cost to fulfill through FBA this year. When you consider that many smaller items only cost $3 or $4 to fulfill through FBA, that’s a staggering 25%+ increase in one of the most important operational costs in one year. Sellers with small, $10 items have now likely seen over 10% more of their revenue disappear in FBA fees in just over half a year.

To add to FBA seller woes, storage costs for FBA will nearly triple from $0.83 to $2.40 per cb. ft. While this has long been Amazon’s policy and thus is expected, it doesn’t hurt margins any less.

USPS Peak Surcharges 2022

USPS announced their rate adjustments for the 2022 peak holiday season on August 10th, covering both commercial and retail parcels in most classes: Priority Mail Express, Priority Mail, First-Class Package Service, Parcel Select, and USPS Retail Ground. The surcharges are set to go into effect on October 2nd, 2022, and to last until January 22nd, 2023.

There are some notably large increases in prices among the surcharges – for instance, Commercial Priority Mail and Priority Mail Express Flat Rate Boxes and Envelopes will rise by $0.75 each, while their Retail counterparts will increase by $0.95 each. Here’s a full list of increases for their most popular services:

Priority Mail and Priority Mail Express Rate Adjustments:

• Commercial:
  • $0.75 increase for PM and PME Flat Rate Boxes and Envelopes.
  • $0.25 increase for Zones 1-4, 0-10 lbs.
  • $0.80 increase for Zones 5-9, 0-10 lbs.
  • $0.75 increase for Zones 1-4, 11-25 lbs.
  • $2.80 increase for Zones 5-9, 11-25 lbs.
  • $3.00 increase for Zones 1-4, 26-70 lbs.
  • $6.50 increase for Zones 5-9, 26-70 lbs.
• Retail:
  • $0.95 increase for PM and PME Flat Rate Boxes and Envelopes.
  • $0.30 increase for Zones 1-4, 0-10 lbs.
  • $1.00 increase for Zones 5-9, 0-10 lbs.
  • $0.95 increase for Zones 1-4, 11-25 lbs.
  • $3.20 increase for Zones 5-9, 11-25 lbs.
  • $3.25 increase for Zones 1-4, 26-70 lbs.
  • $6.45 increase for Zones 5-9, 26-70 lbs.

First-Class Package Service, Parcel Select Ground, and USPS Retail Ground:

• Commercial:
  • $0.25 increase for Zones 1-4, 0-10 lbs.
  • $0.40 increase for Zones 5-9, 0-10 lbs.
  • $0.75 increase for Zones 1-4, 11-25 lbs.
  • $1.60 increase for Zones 5-9, 11-25 lbs.
  • $3.00 increase for Zones 1-4, 26-70 lbs.
  • $5.50 increase for Zones 5-9, 26-70 lbs.
• Retail:
  • $0.30 increase for Zones 1-4, 0-10 lbs.
  • $0.60 increase for Zones 5-9, 0-10 lbs.
  • $0.95 increase for Zones 1-4, 11-25 lbs.
  • $2.70 increase for Zones 5-9, 11-25 lbs.
  • $3.25 increase for Zones 1-4, 26-70 lbs.
  • $5.85 increase for Zones 5-9, 26-70 lbs.

FedEx Peak Surcharges 2022

Unlike USPS, FedEx’s peak surcharges will kick in much earlier, in September. They are taking a much more granular approach to surcharges and fees that split out many different ways in which they’ll increase cost, and those cost increases will vary based on the particular date in peak. Not only will they vary by the particular date, but they’ll also vary by a new “peaking factor” that FedEx will use to dynamically charge more to the sellers that have the biggest spikes in sales. The better you do, the worse your margin will become.

Source: FedEx.com

FedEx’s basic surcharges will start with an additional $1.50 per package for Ground Economy services, in effect during November and from mid-December to mid-January. During the most busy time of Black Friday and Cyber Monday, that surcharge will jump up to an even higher $2.50 per package.

The “peaking factor” charge will be added on top of that, and it will be in effect from October 31st to January 15th. Thankfully for SMBs, it will only apply to enterprise customers that ship more than 20,000 Ground Economy packages per week, but it’s important to keep an eye on for the future regardless. What starts as a limited surcharge often spreads to apply to more people in subsequent years. The peaking factor will be calculated based on the ratio of volume shipped during peak as compared to an average to volume shipped during the relatively sleepy summer weeks of June 6th, 2022 – July 3rd, 2022. A seller that doubles their volume during peak will pay an extra $2.50 per Ground package and an extra $3.50 per Express on top of the previously mentioned surcharges. Quadruple your volume, and you’ll pay an extra $6.00 for Ground and $7.00 for Express, eating heavily into your margin.

UPS Peak Surcharges 2022

Finally, UPS shared their plans for peak surcharges in their September 9th update. Compared to USPS and FedEx, their surcharges are limited in scope and will affect fewer sellers. They have a range of surcharges that cover most international shipments, while their domestic surcharges will operate largely in the same way that FedEx’s “peaking factor” will work.

It will only apply to sellers that have been billed for more than 20,000 packages during any week since October 2021, and the surcharge will vary based on the type of service and the extent to which the seller’s peak volume outstrips their “Baseline Volume”. The baseline volume will be calculated as the customer’s average weekly volume for June 2022.

Source: UPS

UPS’s surcharges come out at a very similar level to FedEx’s peaking surcharges – for instance, a seller that doubles their baseline volume and uses UPS Ground Residential will pay $2.50 more per package, while Next Day Air Residential will cost $3.50 extra per package. Those numbers are identical to those of FedEx, as are many of the other surcharges.

UPS’s international surcharges will add cost in a linear fashion based on package weight. For instance, international shipments from the US to Europe will cost $0.15 per lb more via UPS Worldwide Express Plus. Most of their international surcharges are going into effect on September 25th, and notably, they haven’t provided an end date to the rate increases.

Reduce Shipping Costs with Cahoot Distributed Order Fulfillment

Cahoot has created an Amazon-like ecommerce order fulfillment network that makes low cost, fast and free shipping a breeze for every eCommerce sales channel. We use our large number of warehouses to strategically stage merchant inventory in multiple locations close to their customers, which minimizes their Zone profile. This both saves on shipping costs and time, which expands margin for the sellers and delights customers with short delivery times.

Cahoot is the next generation of tech-enabled order fulfillment services networks. Unlike other networks that are collections of third party logistics warehouses, Cahoot’s innovative approach empowers merchants across the country to fulfill orders for one another. Our peer-to-peer network is a collective of highly vetted eCommerce retailers who offer up excess warehouse space and resources to provide high-quality order fulfillment to other merchants. Since they fulfill their own DTC orders, they know how important top-notch order fulfillment is, and they put the same care and energy into your orders as they do for their own.

With a peer-to-peer network, multi-channel fulfillment with nationwide 1-day and 2-day delivery at economy shipping rates is the norm.

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Technology platforms govern consumer experience in a huge way. Users simply come to the platform, search for what they want, and start using it. Behind this consumer behavior, is the implicit trust in the platform that its users will act in the best interest of other customers. Apple’s App Store, Amazon’s Marketplace and Mastercard’s payment services are some examples.

Technology platforms govern consumer experience in a huge way. Users simply come to the platform, search for what they want, and start using it. Behind this consumer behavior, is the implicit trust in the platform that its users will act in the best interest of other customers. Apple’s App Store, Amazon’s Marketplace and Mastercard’s payment services are some examples.

Apple vs. Amazon on governing its customers

Apple has been very careful about who it allows to operate on its platform and regularly weeds out apps which might exploit its users, such as the recent case of a few dating apps. They were removed from Apple’s App Store because they allowed children as young as 12 to access them.

On the other end of the spectrum is Amazon. Amazon has aggressively expanded its third-party seller base. Now it accounts for about half the revenue generated by the e-commerce division of Amazon.

But in the process, they have been accused of being lax about the quality of merchants they have allowed on the platform. This has enabled counterfeits and sometimes, dangerous items to be sold on the biggest online marketplace in the US.

3rd party seller avoiding responsibility for defective goods

Recently, a federal court has ruled that Amazon can be held liable for defective goods sold on its site by third-party sellers. This has come after a long battle where earlier a lower court had ruled in Amazon’s favor.

CNBC reported, “The decision on Wednesday related to a case in which a Pennsylvania customer, Heather Oberdorf, purchased a retractable dog leash on Amazon.com from a third-party vendor, The Furry Gang. While walking her dog in 2015, Bernardo was blinded after the leash suddenly recoiled. Neither Oberdorf nor Amazon have been able to contact The Furry Gang.”

How will Amazon deal with the backlash?

So why is Amazon being held responsible? The central point is the customer’s trust in Amazon. Amazon only allows customers to contact the seller through Amazon. This means that the merchants can conceal themselves from the customer, putting the onus squarely on Amazon in case of malfeasance.

There are a couple of paths Amazon can take from here. One, it can increase the scrutiny for the quality of merchants, making it harder to sell on Amazon. On the other hand, it can allow direct access for customers to merchants, losing control of customer experience. Given Amazon’s obsession with customers, we can only expect an innovative solution just around the corner.

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Some drawbacks are obvious – you’ll have to put Amazon branding all over your checkout and post-purchase experience, for instance. Many others are harder to spot, though, and they affect the entire customer experience that you’ve worked so hard to create. 

In this blog, we’ll walk you through the basics of what Buy with Prime (BWP) is, how it’s going to affect the ecommerce industry, and how it negatively affects your customer experience. Finally, we’ll share our perspective on how you can get the key benefit of Buy with Prime (fast and free shipping) without surrendering your brand to Amazon.

What is Buy with Prime?

Amazon Buy with Prime gives DTC sellers the ability to offer their customers the Amazon Prime checkout and delivery experiences. When a seller integrates with the service, they’ll get:

• The Prime logo and expected delivery date in their checkout process
• Checkout financing operated by Amazon Pay
• Checkout will pre-load customer information if they’re already Prime members
• Fulfillment from Amazon FBA, Amazon’s fulfillment network
• Shipping by Amazon Logistics
• Amazon-branded packaging
• Option to adopt Amazon Prime’s returns policy

As we mentioned above, the benefit is obvious: Amazon Prime is the gold standard for speedy online delivery, and you’ll get it on your site. Prime has consistently raised customer expectations for fast and free delivery over its history, to the point where slow shipping and paid shipping are two of the biggest drivers of cart abandonment.

If you don’t currently offer fast and free shipping, Buy with Prime will immediately fix that issue for you. The theory behind Buy with Prime is that the boost in ease of transaction and expectations for fast delivery will increase conversion rate, thus increasing your web store’s growth.

How Buy with Prime Shifts the Ecommerce Landscape

Buy with Prime will leave DTC sellers with little choice but to improve their delivery experience to meet the standards long set by the marketplaces. 

Online brands have long maintained that their curated shopping experiences, community building, and custom boxes counterbalance the raw power of fast and free delivery from marketplaces. A look at ecommerce transaction value in the United States suggests otherwise, though.

US consumers spend nearly four times as much on Amazon, Walmart, and Target’s ecommerce sites than they do on all DTC ecommerce sites combined. And on top of that, the marketplaces are growing faster. We attribute a huge part of the marketplaces’ advantage to the fast and free shipping that they offer by default on most goods. After all, online consumers cite fast and free shipping as a baseline expectation in survey after survey.

Buy with Prime will ratchet up US consumer expectations for fast and free shipping even further. Now, DTC sellers aren’t just putting their superior brand and shopping experience up against the convenience of the marketplaces. They also have to fight against competing DTC sellers that sign up for Buy with Prime and thus combine the power of their brand with Amazon’s famed fulfillment network.

The above example isn’t real – yet. But imagine if your top competitor installs Buy with Prime on their site and blows your delivery speed out of the water. Online consumers love comparison shopping, and you’ll be at a severe disadvantage on your Product Display Page (PDP) and in checkout. You can expect your cart abandonment rate to skyrocket.

In short, your slow delivery experience will become an even bigger liability than it already is.

How Buy with Prime Interrupts Your Customer Experience

So, the answer must be simple, right? Just sign up for Buy with Prime and see your sales skyrocket.

If only it were that easy.

Unfortunately, Amazon Buy with Prime is a much better deal for Amazon than it is for DTC sellers, and it’s all in the way BWP will impact your customer experience and ability to retain loyal buyers.

To Amazon, Buy with Prime is about much more than extending its fulfillment network, Amazon FBA, to DTC sellers. In fact, they care much more about their ability to get your browsing and purchasing data and use it to their advantage. With BWP, a seller has to use Amazon Pay for transactions. That means that Amazon will get all of your customer data, and not to mention they’ll bank tons of transaction fees.

While Amazon is laughing its way to the bank, it will be interrupting your customer experience at every step of the journey. 

How BWP Affects Discovery

We’ll start at the beginning of the customer journey: product discovery. Here, DTC stores are already at a severe disadvantage: a majority of US shoppers say that they start their online product searches on Amazon.

It’s already an uphill battle trying to get customers to your website. If you install Amazon Buy with Prime, you’ll give Amazon even more ammunition to prevent shoppers from ever making it to you. 

It’s simple: if you give Amazon rich data on what your customers are purchasing, they’ll know exactly what to suggest to the customer the next time they stop by Amazon. Since most of these shoppers are Prime customers, it’s a sure bet that they’ll do so. And when they visit, they’ll see product recommendations perfectly targeted to them, thanks to the additional information that you gave Amazon through Buy with Prime.

Fewer customers will make it to your site organically, because more of them find what they’re looking for on Prime without ever turning to a search engine. You’ll have to react by spending more on digital advertising, raising your ACOS and hurting your margin.

How BWP Affects Conversion

As a plug-in that will prominently live on the PDP and checkout pages, Amazon Buy with Prime most obviously affects conversion.

While the Prime button promising fast and free shipping from Amazon should help lower cart abandonment rate from shoppers that want fast shipping, it raises a whole host of other issues that counteract the benefits.

First, and perhaps most obviously, Buy with Prime will repeatedly remind shoppers that they should check Amazon before completing a purchase on a DTC website. Price checking is already a core part of many shoppers’ online purchasing behavior, and the Prime logo will only serve to further solidify this trend. 

When the price check occurs, the DTC brand can only lose. The customer may see that Amazon has the same item for less (a common occurrence because Amazon strictly enforces their “lowest price” rule), and they’ll also see a host of competitive offers.

Taken together, the increased risk of losing a customer to Amazon counteracts the benefit of fast and free shipping.

On top of that challenge, Buy with Prime also removes a key DTC seller tool to boost AOV. Many sellers use free shipping as a carrot to induce customers to sign up for loyalty programs or to increase their cart size. “Free shipping for orders over $49” is a tried and true tool to increase profit, but with Buy with Prime, it goes out the window. Larger order sizes and customer loyalty programs are key pillars in DTC profitability, because each maximizes profit dollars relative to overhead and marketing spend. Amazon will interrupt your ability to use these tools, and instead it replaces your tools with its own loyalty program – Prime.

Finally, Buy with Prime will hurt conversion because it will likely increase cart abandonment rate. According to BigCommerce, the average cart abandonment rate is nearly 70%, and that number rises to a whopping 86% for mobile shoppers. Most DTC sellers know the truth behind that large number – many shoppers use online carts as a “save for later” feature, and they come back to complete their purchase at a later date.

Buy with Prime will interrupt that process and steal customers that are carefully considering a purchase. It’s simple: they know what’s in your customer’s cart, and they’ll be sure to show that customer competitive options when they visit Amazon.com.

How BWP Affects Post Purchase

Since Buy with Prime is so new, we don’t yet have a complete picture of its price structure, but sellers expecting FBA’s low rates will likely be disappointed. Amazon already lets sellers use FBA for their DTC orders through its re-branded offer, Amazon Multi-Channel Fulfillment, and the prices aren’t great.

Cahoot’s analysis of FBA rates versus MCF rates reveal that MCF is over 50% more expensive than FBA – and that’s with small items that Amazon loves to ship. Sellers that have done the math to consider Amazon FBA vs FBM already know that FBA is a bad deal for items larger than a few pounds, and Amazon’s history suggests that Buy with Prime will be an even worse deal.

On top of that, Buy with Prime will replace your beautiful custom branded box with an Amazon Prime box. No more free marketing from unboxing videos, no more custom inserts to boost repeat rate, and no more amazing first impressions: Amazon now owns your post-purchase experience. Yes, the experience is improving in terms of delivery speed, but it’s degrading in every other way. And to add insult to injury, you’re now marketing for Amazon by using their ubiquitous packaging – not to mention the literal ads they often put on the boxes or the packing tape.

How BWP Affects Repeat Purchases

Last but certainly not least, Amazon Buy with Prime will also interrupt your ability to win repeat purchases from your customers – the linchpin of sustainable profitability.

You’re up against some daunting statistics – according to Fool.com’s survey of over 1,500 Prime customers, 85% visit Amazon at least once per week, and 45% make a purchase at least once per week. 

And now, every time they visit Amazon, they’ll see recommendations to buy your products right then and there instead of going back to your website.

Amazon can and will use the data it gains from its Buy with Prime plugin on your site to sell to your customers with pinpoint precision. With Prime users visiting Amazon.com just about every week, they’ll quickly start buying your product (or a competitor’s) on Amazon instead of your site.

Amazon is touting Buy with Prime as a way that you can tap into Prime’s huge customer base.

In reality, it’s Amazon’s way to tap into your customer base.

Alternatives to Amazon Buy with Prime and FBA

DTC sellers must feel like they’re stuck in between a rock and a hard place: on one side, they’re squeezed by demanding customer expectations for fast and free shipping. On the other, they’re faced with the incredible expense of providing fast and free shipping. And now Amazon comes along promising to help with the latter challenge – but it’s a poison pill that comes with an invasion of their customer experience. 

The major players in ecommerce all want to extract as much value from sellers as they can at every step of the journey. We’ve already covered Buy with Prime at length, but Amazon is far from the only one building a fulfillment network: Walmart is building Walmart Fulfillment Services, and Shopify just acquired a 3PL network for $2.1 billion to reinforce the failing Shopify Fulfillment Network. 

The common theme among each is their desire to control sellers – they won’t work with one another, and so if you want to enjoy a successful multichannel fulfillment and sales strategy, you’ll have to duplicate inventory. This in turn will significantly increase your carrying costs and overhead, and it will be impossible to optimize.

Thankfully, there’s a better way.

Amazon can provide fast and free shipping affordably across the country thanks to its ability to distribute inventory to multiple locations and tightly control fulfillment with intelligent, automated rules. Ten years ago, they were on the forefront of this revolution in fulfillment, but now they’re far from the only ones that can affordably power fast and free shipping.

Cahoot is at the forefront of boosting profitable growth for online sellers by enabling fast and free shipping across all channels. Unlike Amazon Buy with Prime, Cahoot fulfillment operates in the background, leaving you to own your customer experience – but with new and improved fast delivery. And again unlike Amazon Buy with Prime, it works for all sales channels: Buy with Prime certainly won’t be available for Walmart and other major marketplaces, and it likely won’t be available for Shopify either.

And more than Amazon – and other distributed 3PL networks – Cahoot offers unparalleled flexibility in fulfillment to support the exact needs of DTC sellers. We offer efficient B2B fulfillment alongside our fast B2C fulfillment, and we also can integrate seamlessly with existing merchant-operated warehouses. If you have one warehouse on the East Coast, and shipping across the country is killing your margin, we can stand up a West Coast location for you and install our market-leading technology to intelligently govern your new, nationwide fulfillment network. Of course, if you need a full service solution, that’s in our wheelhouse as well.

Contact us to speak with a fulfillment expert and learn how we can boost your growth while cutting costs and headaches today.

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We hear it all the time – you start out on your own with a Shopify store, fulfilling orders from your garage. Your ecommerce website catches on, and soon, what started as a side-hustle has turned into a full-time boxing and label-printing and shipping operation. The success is great, but your back isn’t happy with all the box-lifting. 

It’s time to outsource your Shopify Order fulfillment to a third party logistics (3PL) company who can solve your operational headaches and let you get back to what you do best – creating and selling amazing products. There are so many 3PLs and warehouses out there. How do you choose one that’s right for your ecommerce business?

In this post, we’ll dive into what makes the best Shopify 3PL, and evaluate a few of the leading order fulfillment options in the industry today.

What Makes a Good 3PL for Shopify Sellers?

If you’re an ambitious ecommerce seller looking to boost your growth, you should know that the right Shopify 3PL can be a revenue driver, and not just a cost center. The best 3PLs will improve your delivery experience, delight customers and open new avenues for growth. 

Here are the most important things to look for in your a 3PL for your Shopify store:

1. Nationwide USA warehouses

Don’t sell yourself short. Even if you’re small now, you can still distribute your inventory across the country to unlock affordable fast and free shipping without huge expense. That is, if your Shopify 3PL has nationwide warehouses.

You’ll want to make sure your Shopify 3PL has at least 4 order fulfillment centers across the USA, but ideally the best 3PL will have many more warehouses so that they can fine-tune exactly where your product inventory is placed to be near your largest customer base.

The best 3PLs offer true national order fulfillment services by placing inventory in 4+ locations strategically across the country. The benefit to you is that these networks cover 99%+ of US consumers with 2-day shipping at economy shipping rates. No matter where your customer wants their product shipped, you’ll have inventory nearby. They will get their products quickly, and you’ll pay the cheapest shipping rates possible. 

If you aren’t already offering free 2-day shipping, it’s a recommended upgrade that can truly turbocharge your ecommerce growth. A recent McKinsey study found that a whopping 90% of US online shoppers expect free one-day and two-day shipping. Amazon metrics show that turning on the Amazon Prime badge can net up to 50% growth for a product!

Adding a banner or top bar to your Shopify store that says “Fast and free shipping” can boost your ecommerce conversions and revenue. See example below.

Source: Shopify App Store Free Shipping Bar

2. User-friendly shipping software

As a business owner, it’s tough to give up control and outsource to other companies. The best Shopify 3PLs know that, so they provide their customers with easy-to-use shipping software that provides proactive notifications and robust reporting on how they’re doing. If you can’t get real-time updates on the status of your orders, your inventory levels, and shipping and order fulfillment costs, then you’re not working with a cutting-edge 3PL.

One key benefit of great 3PL shipping software is proactive notifications. Unfortunately, things go wrong all the time in the shipping logistics world. It can be as simple as an undeliverable address incorrectly input by the customer, or, as complex as a worldwide supply chain and shipping crisis. The best Shopify 3PLs don’t leave it up to you to identify order fulfillment problems. Their shipping software should alert you when a customer places an order with an undeliverable address. You can immediately fix the issue before it turns into a late order shipment, and you’ll keep the customer happy.

“I use Cahoot to process our shipping labels. Their auto label creation feature is a huge time saver. We are continuing to use Cahoot over our previous shipping label provider.”  

––Home and Garden Supply
Speak to a Fulfilment Export

3. Achieve a 99% Order Fulfillment Rate

Reviews are the lifeblood of your ecommerce business, and a happy customer is a repeat customer. You can probably recall more than a few lost customers and poor reviews that were due to errors in order fulfillment and shipping process that were not your fault.

The best Shopify 3PLs should minimize these issues have on-time fulfillment rate of 99.9% or higher. Anything less signals a Shopify 3PL that isn’t built for the rigorous demands of modern ecommerce.

Top 3PLs designed for ecommerce order fulfillment also integrate technology like barcode scanning into their warehouses to eliminate errors. Simple but effective innovations like these stop issues before they happen, and they also fuel the functionality of the software mentioned above.

4. Multi-carrier shipping discounts and carrier flexibility

Shipping fees eat up a significant chunk of every ecommerce merchant’s profits, but where there’s extra cost, there’s an opportunity to save. The best 3PLs who ship huge volumes of packages every year will negotiate preferred rates with major and regional parcel carriers, and they should pass those savings on to you.

Source: ShipStation

Beware though. A trick in the 3PL industry is to consolidate pricing into a single one line item, and not itemize what you’re paying for every component of their service. While it can feel helpful to be quoted one simple price, keep in mind this enables the 3PL to charge you more for shipping than what they’re paying the carrier, and keep the difference without you knowing. 

The best Shopify 3PLs work with all shipping carriers, not just one. The reason why is simple. Different carriers have the best rates for different routes and package sizes, and types of products. If you’re locked into just one carrier, you’re not getting the best shipping prices.

5. Pre-built ecommerce integrations and open APIs

It shouldn’t be hard to connect your Shopify store to your 3PL. The best 3PLs have pre-built integrations that will do it in a few clicks.

This goes for other ecommerce platforms too. Many merchants are scaling into multiple sales channels to maximize growth, and your 3PL should be able to integrate easily with all of them.

Not every ecommerce merchant can work with pre-built integrations, especially larger ecommerce merchants with custom and complex order and inventory management systems. For that, your Shopify 3PL of choice should have an open API and support resources that make the order fulfillment integration process as seamless as possible.

6. Responsive customer service

Finally, the best Shopify 3PLs offer amazing customer suppport. You should be able to get in touch with your 3PL easily to troubleshoot challenges. Look for a Shopify 3PL that assigns a real person to work with your ecommerce account. Make sure there are multiple ways to get in touch with them. If it’s a small issue, live chat works. Complex challenges,, should be handled by an advanced ticket system. And finally, , you need a direct phone number for critical order fulfillment issues.

“We switched to Cahoot from a different 3PL and the team has bent over backwards to make the transition easy and seamless. Great personal assistance every day from the team and very quick, reliable shipping from the Cahoot partner warehouse. Highly recommend their service.”  

–Cut.com
Speak to a Fulfilment Export

Top Shopify 3PL Companies

Now that you know what to look for, how do a few of the top players in the 3PL industry stack up? We’ve provided a primer to help jump-start your order fulfillment research.

Amazon Multi-Channel Fulfillment

You can use Amazon’s fulfillment network, FBA, to fulfill Shopify orders. When you do so, it’s called Amazon Multi-Channel Fulfillment – but it does in fact use the exact same FBA resources.

Shopify Fulfillment Network

Like Amazon FBA, Shopify is building its own logistics service for ecommerce sellers called Shopify Fulfillment Network.

ShipBob

ShipBob is a 3PL that focuses on serving ecommerce merchants. They have a nationwide network of order fulfillment centers that enable fast shipping, but they charge extra for guaranteed 2-day shipping. Built for ecommerce, they have an easy-to-use shipping software platform and a large set of pre-built integrations.

Red Stag Fulfillment

Red Stag Fulfillment is a more traditional 3PL, with only two locations in the United States. They offer B2B fulfillment in addition to B2C since they have a wider focus than just ecommerce.

Cahoot: The Best Shopify 3PL

Cahoot’s order fulfillment services network is built for ecommerce. We’ll help you level the playing field with marketplaces and delight your customers with a stellar, Amazon-like delivery experience – right from your Shopify store. And we don’t stop there. We have pre-built ecommerce integrations with major marketplaces to fuel your multi-channel growth.

Our innovative peer-to-peer model offers low-cost, fast nationwide order fulfillment by design. As a result, our pricing is typically 30% lower than the 3PL providers listed above, and we can beat them on order fulfillment speed and delivery reliability.

Cahoot is committed to helping Shopify sellers grow their businesses with fast and affordable ecommerce order fulfillment service.

If you’d like to find out how Cahoot can help your ecommerce business, please get in touch with us. We can’t wait to show you how Shopify order fulfillment was meant to be.

If you are selling on multiple sales channels and are interested in 3PLs that can help you with fulfillment, you can read our other articles:

1. How to Choose the Best 3PL for Wayfair
2. How to Choose the best 3PL for Your Macy’s Orders
3. How to Choose the Best 3PL for Target Plus
4. How to Choose the Best 3PL for the Nordstrom Direct Drop Ship Program

Offer 1-day and 2-day shipping at ground rates or less.

Recent Blog Posts

In the era of online marketplaces, most eCommerce merchants and brands find themselves at the mercy of order fulfillment solutions operated by the powerful corporations who act as gatekeepers for these platforms – for example, Fulfillment By Amazon and Walmart Fulfillment Services. Each platform requires merchants to send inventory to their warehouses and follow their unique policies and requirements. All of them also come with their respective fees and surcharges. Sellers seeking a better deal have often turned to Third Party Logistics Providers (3PLs). They do so with the ambition of not just regaining control and autonomy over their logistics, but also boosting their profits. The problem, however, is that the vast majority of 3PLs operate from an extremely limited number of locations – hampering the seller from being able to offer customers the free, fast shipping experience that they now expect and demand. To solve this problem, a disruptive, radically different strategy is needed – a peer-to-peer order fulfillment network.  

While merchants have worked with traditional 3PLs, a peer-to-peer network is an entirely new idea. Those merchants who have used traditional 3PLs are often unaware of their pros and cons. Far fewer are aware of how they compare to a peer-to-peer network. In this article, we take a deep dive, looking at every factor that influences a seller’s choice of fulfillment partner, and compare traditional 3PLs to peer-to-peer networks on each of them. We highlight how a Peer-to-Peer network can offer significant advantages compared to working with legacy 3PLs.

Cost

Traditional 3PL – What Do They Have in Common With Traditional Hotels?

Think of a time when you stayed at a boutique, traditional hotel – are you struggling to find or remember when you last did that? In the era of Airbnb, these single-location hotels have entirely faded. 

Why is that? 

The reason is not competition – there is still a segment of travelers looking for a more economical, boutique experience compared to staying at a large hotel chain like Marriott or Hilton. The reason is that these traditional hotels are asset-heavy businesses that have no economies of scale. Because they primarily operate from a single location that they rent or own, they are significantly prone to cost pressures driven by land availability and rental rates. They are also vulnerable to cost pressures around staffing. 

All this has meant that a marketplace model with a vast network, such as Airbnb (almost anyone can rent out a space), offers significant advantages to travelers that traditional hotels cannot hope to match. 

What if we told you a traditional 3PL is exactly like these hotels? 

A traditional 3PL usually operates from an extremely limited number of locations (2-3 at the most). This provides them with no economies of scale. They are also asset-heavy businesses that rent or own their properties. With warehouse lease rates at an all-time high, these traditional 3PLs are forced to pass on these extra costs to their customers. This is compounded by the fact that staff in the warehouse now expect to be paid $19 / hr. At this rate, this is no longer a minimum wage occupation. With multiple players, such as Walmart and Target, setting up fulfillment centers to deliver their eCommerce orders, traditional 3PLs must pay people more if they are to staff their warehouses. This is also a cost pressure that has to be ultimately absorbed by the merchants who work with them. 

Peer-to-Peer – What do Cahoot and Airbnb Have in Common?

Airbnb’s business model is asset-light – their idea is simple but powerful – anyone that has a spare room at their house that they don’t use can monetize it. 

This two-sided marketplace model generates network effects, with millions of customers (property owners and travelers) interacting to ensure the platform offers competitive prices constantly. It is no surprise that Harvard Real Estate Review found that in the business districts of major US cities, Airbnb is, on average, 28% cheaper than traditional hotels.

We have a similar idea for the future of eCommerce – rather than everyone building more warehouses as part of their own private, isolated networks, what if we optimized what’s already available? 

Cahoot’s peer-to-peer network aims to unlock the potential of over 2 million retailers with their own warehouses. Any merchant with excess capacity in their warehouses can monetize it by becoming a fulfillment partner for Cahoot. 

Our two-sided marketplace model generates network effects, with numerous businesses (sellers and fulfillment partners) interacting to drive prices downward. Just like Airbnb has a massive spread of listings, our model provides us with a vast network of strategically located warehouses across the country. And just like them, we’re on average 30% more economical than the previous solutions customers used.

Quality

Traditional 3PL – “Fast Shipping or Economical Shipping? Pick One”

With the limited number of locations these traditional 3PLs operate from, it becomes near impossible for them to cover the country through economical ground shipping in under two days. 

Based on our research, inventory needs to be spread across at least 4 strategic locations if a merchant is aiming for 2-day delivery to the entire contiguous United States (the lower 48 states). If the brand aims for 1-day delivery, it requires nine strategic locations. 

When we talk about ‘strategic’ location, we mean it – a location is only strategic if it is located near a major population center. Suppose you’re a brand in the Midwest. In that case, it makes no sense to get excited about saving costs on inbounds by working with a traditional 3PL in Maddison, WI, when most of your orders might be coming from Southern California! Great candidates for strategic locations include New York, Chicago, and Southern California, as examples.

Most traditional 3PLs do not have warehouses at strategic locations – forcing their customers to decide whether to use economic ground services (but not meet the customer expectation for fast delivery) or incur extremely high costs by providing fast delivery through air shipping.

Peer-to-Peer – “Fast Shipping and Economical Shipping – Get Them Both.”

A Peer-to-Peer Fulfillment Network has a vast network of strategically located warehouses nationwide. With such a network, it is possible to cover the entire country through ground shipping in under two days. This makes it possible to meet the customer’s expectation for fast shipping while using economical services. 

Many sellers might face hefty fees with platform-specific fulfillment services, such as Fulfillment By Amazon (FBA) for Amazon and Walmart Fulfillment Services (WFS) for Walmart. Merchants have no viable alternative because the only way traditional 3PLs can hope to offer the delivery speeds customers are used to is by using expensive air shipping. As no seller is willing to take a margin hit that deep, they are stuck with fulfillment services run by the marketplaces themselves. 

With a Peer-to-Peer network, you do not have to make an either-or decision – you get the best of both worlds – providing both your business and your customers with benefits. Our network offers cost savings that boost your bottom line while also improving the experience your customers have.

Service Levels

Traditional 3PLs – Struggle to Offer The Bare Minimum

Traditional 3PLs just about get the basics done (with a lot of huffing and puffing and seller pain) – receiving your inbounds, picking, packing, and shipping your orders out the door on time. If you’re trying to handle additional requirements – such as operating the warehouse, arranging for carrier pickups, or fulfilling orders on the weekends, you’re likely out of luck. 

The problem is that these ‘additional’ requirements are now becoming table stakes as this is what programs like Amazon Seller Fulfilled Prime expect. Additionally, customers expect their orders faster and faster, meaning that doing the basics alone may no longer be enough even to stay afloat.

Those aiming to compete with Amazon, including large retailers like Walmart are realizing they must offer customers Prime-like experiences. Walmart’s shipping standards are also challenging – products with 2 and 3 day delivery speeds are ranked higher in search results, win the buy box more often, and see higher conversion rates. Sellers are also expected to ensure that they deliver 95% or more of orders within the promised time to customers. 

Many of these 3PLs may also be unable to offer late cut-off times. Late cut-off times allow for carrier pickups and scans to occur the same day, meaning more of your customers will receive their orders in 1 or 2 days. 

Perhaps most worryingly of all, customer support can often be erratic, unreliable, or slow to respond. Shipping and order fulfillment is a crucial part of your business operations. Lengthy resolution items can mean significant outages and downtime for your company.

Peer-to-Peer – Meet and Exceed the Gold Standard for Order Fulfillment

With Cahoot’s peer-to-peer network, you don’t just have to do the basics. We help sellers on Amazon meet and surpass the demanding criteria of the Seller Fulfilled Prime (SFP) program. The SFP program’s requirements are arguably the most challenging in the industry. Any merchant who can meet and surpass them has an excellent order fulfillment strategy in place.

We support warehouse operations, carrier pickups, and delivery on the weekends. We also offer late cut-off times, ensuring that you can increase the proportion of customers whom you service with 1- and 2-day delivery. 

Our US-based customer support team is also ready and responsive to any of your questions. We know that eCommerce order fulfillment is complex, and things don’t always go as planned. What’s crucial is ensuring that those issues are addressed quickly, getting your business back on track. With our team, you can count on minimum downtime.

Technology

Traditional 3PLs Try to Handle Fulfillment Without Tailormade Tools

Many traditional 3PLs solve just one piece of the problem – the task of order fulfillment itself. Most of them fail to provide customers or their employees with the shipping software technology needed to speed up order fulfillment at scale. 

The technology that most traditional 3PLs deploy is not much more advanced than what a micro-shipper fulfilling their orders on their own might be using. 

Even if traditional 3PLs deploy technology, it tends to be legacy software, like ShipStation. Such tools require constant human intervention and oversight. For example, for every single customer order that is received, a tool like ShipStation requires staff to compare rates across different fulfillment locations and carrier services, manually identifying the cheapest option to pick.

Such systems mean that an enormous amount of time is wasted every single day by employees simply rate-shopping for shipping labels when they could be engaged in higher-order work. 

For other workflows like keeping track of inventory, traditional 3PLs deploy similarly clunky, inflexible software incapable of meeting today’s needs. This runs the risk of accepting customer orders on SKUs that are out of stock, leading to canceled orders and unhappy customers. Unfortunately, your customers aren’t going to blame your 3PL’s poor technology when there are issues with their deliveries – they’re going to point the finger at you.

Peer-To-Peer – Scale Order Fulfillment with Purpose-Built Software

While our peer-to-peer network provides nationwide coverage, our next-generation shipping software supercharges productivity and accelerates order fulfillment. 

For every order received, Cahoot’s software can intelligently compare multiple warehouse locations and shipping services, instantly determining the most economical shipping label that meets customer delivery promises. 

Our software is designed and purpose-built from the ground up to excel at scale. When your order volumes surge, manually printing shipping labels can be a massive source of inefficiency. With Cahoot, all your shipping labels are ready to print in one click – dramatically speeding up fulfillment and freeing up staff to concentrate on higher-order work.

Our technology comes with other intelligent features – such as optimizing packaging choices for Multi-Line, Multi-Quantity (MLMQ) orders, as well as intelligently keeping track of inventory decrements. Color-coded alerts on our dashboard provide merchants with real-time visibility into dipping inventory levels. This allows for proactive decision making to accelerate sales, rather than scrambling to react too late.

Redundancy and Backup

Traditional 3PL – Highly Vulnerable to Single Point Failures

eCommerce order fulfillment is not an easy thing, and there are potentially many things that can go wrong – such as 3PL delays with receiving your inventory, damages to inventory in transit, misplaced inventory, or carrier errors. 

There are also things for which it is difficult to account for – such as unexpected, extreme weather events that disrupt carrier operations. 

While you can strategize to minimize or avoid some issues, others are simply out of your control. Unfortunately, this is where a traditional 3PL is highly vulnerable. When you operate from a single location, an outage in that location can be catastrophic. Your entire order fulfillment operations come to a grinding halt, putting your sales on pause. Worse, customer complaints will surge, resulting in lots of negative reviews and refund requests. 

Customers today may not be forgiving even of circumstances outside your control, such as weather events – they ask a pertinent question, “Why weren’t you prepared with an alternative strategy?”

One minor issue at your 3PL can quickly snowball into a disaster for your brand reputation and customer loyalty. The only option sellers have is to find fulfillment partners whose solutions come with excellent risk mitigation, ensuring that orders reach customers no matter what.

Peer-To-Peer – Always Lights On For Your Business

A network of warehouses in different locations ensures that you’re inherently much more likely to keep your business operations constantly running smoothly. 

You’re de-risked on multiple dimensions – if there’s terrible weather in 1 location, you can still fulfill orders from another warehouse. If there are issues with a carrier over there, you can ship from another location. If there’s an outage there….you get the idea.

(We would like to say that the odds of all these events occurring simultaneously are almost close to zero).

This ensures that you’re constantly selling and customers are constantly getting their orders. They may also really appreciate how your business is always ready to serve them, no matter the circumstances. Unexpected, adverse circumstances don’t result in angry customers and negative reviews when working with Peer-to-peer fulfillment networks, they’re just another opportunity to continue selling and keep providing your customers a great experience. 

Scalability

Traditional 3PL – Works Initially, But Stumbles at Scale

Going back to our earlier example, let’s say you’re a brand starting out in the Midwest, and you found a great traditional 3PL in Madison, WI. You’re thrilled because your geographical proximity to them means that you’ll be saving a lot on inbound freight costs (sending your inventory to their warehouse on a truck).

In your first few days, most of your customers are your friends, who spread the word about your brand to their circles. Most of your orders tend to come from the Chicago area and Michigan – things are working well with the traditional 3PL. You can service your customers with fast delivery while using economical ground shipping. 

At some point, your brand surges in popularity, and you start receiving orders nationwide – you’re thrilled and can already imagine the cash registers ringing! However, after an initial surge, you soon see very few orders coming in. After doing some investigation, you discover that your 3PL’s inefficiencies are costing you – customers in Southern California are receiving their orders far too slowly. Worst of all, knock-off listings on the Amazon marketplace have seized on your idea, and are now winning against you because they’re offering customers faster shipping. You also see a surge of refund requests, from customers who are unhappy with the time it’s taking for their orders to arrive. 

Traditional 3PLs are ill-equipped to deal with spikes in order volume that happen naturally as you scale. These companies don’t become an enabler of your growth; they can be just the opposite – a bottleneck that slows you down. 

The problems with traditional 3PLs mount at the worst possible time – once you start seeing orders come in from Southern California, let’s say you identify another fulfillment partner in Los Angeles. Now you have two contracts, each with its own pricing structure. There are 2 different SLAs for order fulfillment and you have to pick which location each of your orders is routed to, all on your own. Managing these two 3PLs can completely consume your bandwidth, overtaking your focus on the activities that actually matter – selling and taking care of your customers. 

Other problems emerge as you scale – let’s say you’ve somehow figured things out, and have made DTC fulfillment work with these two traditional 3PLs. As you grow further, you start sending pallets to retailers all over the US, such as Target, Nordstrom or Home Depot. Suddenly, your 3PL has no space for your containers and struggles to handle B2B fulfillment. Additionally, many of these traditional 3PLs may lack the EDI technology which is a prerequisite to work with many retailers and brands.

Peer-to-Peer – Accelerates Growth By Scaling Alongside You

Let’s imagine you’re the Midwest brand again. This time, you’re working with Cahoot’s peer-to-peer network. When you start out, you ship orders from one of our Midwest fulfillment centers, providing customers with free, fast shipping. 

When your brand surges in popularity, things don’t fall apart – you simply add more nodes on the Cahoot network to fulfill orders from. You use our fulfillment centers in Southern California to ensure you deliver a high-quality experience to your customers on the West Coast. 

You also work only with 1 vendor, offering you 1 contract. This ensures you can scale nationwide fulfillment, with none of the process management overhead that working with traditional 3PLs brings.  

We also have experience and expertise in handling B2B fulfillment, in addition to DTC fulfillment. Whatever the spike in order volume you see, we’ll make sure that you actually celebrate your success. You won’t be spending your time thinking, “Can our fulfillment keep up with all this growth?”

Traditional 3PL – Great for Regional Shipping

Traditional 3PLs do a reasonably good job of servicing the specific parts of the country that they are located in. For example, a traditional 3PL on the West Coast might be great for orders in all states in that part of the country.  

Because of the restrictions on the number of locations they have, these 3PLs find offering nationwide coverage at affordable rates extremely difficult. 

While these models may work for brands with a strongly regional customer base, the problem is that nearly every seller dreams of scaling nationally and globally at some point – these 3PLs can often become a hindrance when the sellers do decide to start expanding.

Peer-to-Peer – Great For National Programs Like Amazon SFP

Previously, Amazon’s  Seller Fulfilled Prime (SFP) program had a regional component – brands could fulfill orders just in their region of the country on their own while still featuring the Prime badge on their product listings on the Amazon marketplace. However, Amazon now expects fast shipping across the entire contiguous U.S. on the program – products across every size category must be delivered in 3-5 days, while approximately 70% of orders on standard-sized products must be delivered in under 2 days.

Traditional 3PLs will find it nearly impossible to meet this requirement using ground shipping because of their location constraints. Using air shipping is not an option for sellers in most cases because that erodes any cost savings they were hoping to see over FBA.  

Analytics and Reporting

Traditional 3PLs – Decisions Made on Instinct

Traditional 3PLs tend to make most decisions using a combination of intuition and guessing. Some of the most crucial pieces of the eCommerce order fulfillment workflow are – Which warehouse to dispatch an order from, and which box to pack the items in?

Most traditional 3PLs do not have the purpose-built technology needed to determine the warehouse each order should be sent from. At best, a rudimentary heuristic based on the customer’s ZIP code might be deployed. The problem is that you could be losing money on every shipment. Until you invest in the right technology, you’ll never actually know the full extent of your losses. 

The second crucial factor is the choice of box to use. Traditional 3PLs have a limited number of boxes of the most popular sizes. They randomly throw products into any box that fits. In the best case, an ad-hoc heuristic might be defined to map each SKU to a box, by eyeballing the box and product sizes. This creates problems on multiple dimensions. The first is that the overall cost of packaging materials increased 30% in 2022, while the cost of paper and cardboard increased by as much as 50% that year. This means that if you’re selecting larger sized boxes on each order, your costs surge. More crucially, the shipping carriers set their prices in tiers, based on the dimensional weight of items. This means that the wrong choice of box for a lightweight item can tip it over into a higher pricing tier than is actually needed. Sellers can bleed money on both avenues – cost of supplies, and the fees they pay to the shipping carriers. Today, there is also a growing consumer demand for environmentally responsible, sustainable packaging. When items reach environmentally conscious consumers in oversized boxes, it can negatively impact the experience they have with your brand. 

Lastly, most traditional 3PLs do not offer enough variety of warehouse locations to actually place your inventory close to where most of your customers live – even in cases where they have multiple warehouse locations, they could still place your products in the wrong fulfillment center! 

 The only way to eliminate ambiguity and make the optimal selection each time is to ensure decisions are guided by past data and real-time technology automation – unfortunately, most 3PLs do not offer that.

Peer-to-Peer – Decisions Informed by Data

With Cahoot’s Peer-to-peer network, we let data and technology make the most critical decisions.

For order routing, our next-generation software intelligently compares multiple warehouse locations, carriers and shipping services before picking the most optimal location and service that can meet the delivery promise committed to the customer. 

We use advanced 3D bin technology to evaluate the % fit of items in boxes, ensuring that each SKU goes into the best-sized box. Our software also comes with intelligent automation for Multi-Line, Multi-Quantity (MLMQ) orders, where our system learns from box and SKU dimensions, as well as past packaging choices to optimize box selection. 

Lastly, while warehouses on our network are located near major population centers, it still means nothing if we don’t place your inventory in the location closest to where most of your customers live. We go deep and sweat the details to identify geographic trends in your historical orders, ensuring that we set you up to see maximum savings. 

Flexibility and Agility

Traditional 3PL – High Switching Costs, Painful Migration

Traditional 3PLs often do not operate with flexible, merchant-centric models where you can build from what you have. Like we mentioned earlier, each of them comes with limited geographic coverage of the country, and offers their own pricing contract and SLA. 

Let’s say you’re working with a traditional 3PL that gives you coverage on the East Coast. While their services are good, you’re trying to find out if there’s a way for you to expand to the West Coast. Traditional 3PLs do well when they have as much of your inventory tied to their warehouses as possible. You may be hit by high fees on both fronts – the removal fees from the East Coast 3PL, and the inbound fees with the West Coast provider. 

Worst of all, once you do manage to migrate your inventory over, you’ll still have to deal with the process management overhead that comes from working with two fulfillment partners.

While this does not sound like an easy process, we’ve put together a step-by-step guide on how to migrate from one fulfillment partner to another, which you can read here.

Peer-to-Peer – Seamless, Painless Migration

A Peer-to-Peer Network is the most merchant-centric, merchant-inclusive platform for Order Fulfillment. Cahoot’s Peer-to-Peer network is not a ‘winner takes all’ arrangement. We’re not just an option for merchants looking for ultrafast eCommerce order fulfillment, we’re also an option for 3PLs looking to serve their customers better. 

When our customers are happy with using their existing 3PL to serve a particular part of the country, say the West Coast, we can flexibly scale nationwide coverage on top of their current setup. They can bring their 3PL to our network, where we provide them with an economical way to cover the East Coast. 

In fact, one of the biggest features of the peer-to-peer model is that it can be a way through which traditional 3PLs can overcome their geographical constraints while helping merchants achieve free, fast nationwide shipping.

Integration and Consistency

Traditional 3PL – Extremely Fragmented, Increased Overhead

Many traditional 3PLs were designed for the older, pre-Amazon Prime era of eCommerce when merchants fulfilled orders from just one or two channels. In today’s world of online marketplaces, traditional 3PLs may not support all of the different marketplaces. You may have to work with one 3PL for your Walmart orders, while handling Shopify fulfillment through another. The depth of integration also matters – for example, does the technology these 3PLs use transmit inventory count information back to the sales channel so that you avoid receiving orders on out-of-stock items? Can they transmit tracking information back to the channel? And does your order fulfillment help you meet the unique expectations customers have on each marketplace?

As you work with multiple 3PLs, your ability to offer consistent order fulfillment may be severely compromised. With these providers, handling the basics of order fulfillment becomes challenging. When it comes to exception management on specific orders, the problem worsens. 

Let’s imagine you’re working with warehouses from two 3PLs, each with their own SLA – the first has a cutoff time of 1PM, the second 12PM. Suppose an order comes in at 12 30 PM – but there’s been an unexpected issue with the first warehouse. You’re unable to reroute the order to the second warehouse because it’s already past the cutoff time there. The problem stems from the fact that each warehouse has its own SLA and none of them are integrated to each other.

If you’re seeking to expand sales channels or achieve nationwide coverage, the number of such fragmented, siloed warehouse nodes increases exponentially – drowning you and your team in process management. You may need to hire dedicated people to babysit and oversee this operation, which negatively hits your costs.

Peer-to-Peer – Unified, Simple and Consistent Across Every Channel

With a Peer-to-peer fulfillment network, you get custom-built, out-of-the-box integrations for all major marketplaces. We pull all the critical information about orders and their delivery due dates into our system, while pushing back updated inventory and carrier tracking information to the respective channel. This extends to our fulfillment operations – we ensure that you stay compliant with the unique requirements that each marketplace has, such as usage of a particular shipping carrier / service, or branded packing slips. 

With Cahoot, you spread your inventory across multiple warehouses, but work with just one partner. This ensures that you can offer a consistent experience on every order. This solid foundation makes exception management much easier to handle. When orders may not make it in time because of issues at one node, we can intelligently reroute it from another location with minimal overhead. We also offer consistent SLAs and every node on the network is tightly connected. 

With a Peer-to-peer fulfillment network, the number of warehouses and sales channels increases, but there’s always only minimal process management needed. You and your team will get back more time to focus on growing the business. 

Environmental Sustainability

Traditional 3PLs – Excess Packaging Waste and Greenhouse Gas Emissions

Customers today expect brands to be sustainable and environmentally responsible in their operations. A traditional 3PL exacerbates problems for brands across 2 different dimensions, packaging, and emissions. 

Traditional 3PLs tend to have a random, haphazard approach to packaging – they have a few boxes of the most popular sizes, and the warehouse staff simply place the item into whichever one might be available on hand. 

When the customer receives the order, they might be annoyed that their item was delivered in an overly large box, generating more waste for the environment. For environmentally-conscious shoppers, such experiences can ruin their relationship with the brand, completely turning them off from future purchases. 

A bigger problem can arise because of the limited number of warehouse locations. Due to this, they’re forced to use air shipments or keep packages in transit for longer on the road. All this increases emissions released, worsening your brand’s carbon footprint and weakening your sustainability credentials.

Peer-to-Peer – Eliminate Packaging Waste and Slash Emissions

While our network of strategically located warehouses, you’ll nearly never use air shipping (unless customers specifically ask for it). You’ll be able to offer fast and economical ground shipping – which is great for your customers and the environment. But we go a step further and help you cut down packaging waste also.

As we mentioned before, our software’s 3D Bin Technology and its Multi-Line, Multi-Quantity Automation features help ensure you always use only the necessary amount of packaging material.

Lastly, environmental sustainability is the core cause that a peer-to-peer network is fighting for – in a world where everyone is using up more resources to build logistics infrastructure for their own private network, we’re aiming to use the Power of Many to build a more sustainable fulfillment network, without compromising on today’s sky-high customer expectations. 

Reliability

Traditional 3PL – Fail to Live up to Their Promises

Most people tend to choose a traditional 3PL because they think a company dedicated to logistics and shipping can do a better job than a fellow merchant fulfilling your orders for you. 

However, as we’ve discussed in the sections above, we think traditional 3PLs are still operating to serve the old paradigm of eCommerce. While you may feel that you are ‘in safe hands’ initially, the reality may be very different and disappointing.

Most traditional 3PLs may promise a lot, but struggle to deliver even the basics. Where does this disconnect come from? Most sellers are extremely busy and cannot afford to spend endless hours vetting their 3PL’s performance and services. Decisions may be taken with limited information and time – unfortunately, this leads to a lot of unpleasant surprises after the inventory has been received and orders start flowing in. 

It’s worth asking – how can merchants rigorously vet their 3PLs to make sure their claims are actually true? With Cahoot, you won’t have to worry about that – because we’ve already taken care of that.

Peer-to-Peer – Only The Best Warehouses Pass Cahoot’s 44 Point Checklist

Some people think that working with a traditional 3PL (with their own warehouse space) is better than operating in a peer-to-peer network. Most people who feel this way share one concern, “How Can I Trust Another Merchant to Deliver My Orders?” 

A similar concern was shared by many people when Uber first rose to popularity, defeating the cabbies in London and New York’s famous Yellow Taxi. In London, people must spend 3 years training to be accepted as a cab driver. With Uber, nearly anyone could start driving taxis instantly. A similar sort of nervousness was prevalent among people, who asked, “How can we trust getting in a car with a stranger?” 

Interestingly, the data challenges the popular perception – according to research conducted at NYU, humans trust authentic sharing economy workers more than their neighbors and colleagues (and nearly as much as their families). The keyword in that sentence is authentic. Authenticity is built by high levels of trust and transparency – such as Uber drivers providing their details and a profile picture on the platform.

Similarly, we recognize that building authenticity is crucial. Order fulfillment is a crucial aspect of business operations, and you don’t want to be handing that task over to someone you can’t trust. 

We foster trust with our sellers by rigorously vetting fulfillment partners. Cahoot has a 44-point checklist that warehouses must pass if they are to become part of our eCommerce order fulfillment network. This ensures that only the best warehouses, with excellent packing practices and order fulfillment standards, make the cut. Cahoot also has zero tolerance for defects and regularly reviews the performance of its fulfillment partners.

We think that a warehouse in the Cahoot network has been through more rigorous vetting than the review that the average seller does on a traditional 3PL. This means that there’s a good chance that a Cahoot warehouse is better than the one at your traditional 3PL. With our vetting and audits, you can rest assured that it’s a safe and trustworthy one, too.

Privacy and Security

Traditional 3PLs – Lax Data Security Measures

With traditional 3PLs, your customer information moves across multiple systems without proper safeguards. They might request for all your order and customer information to be transmitted to whatever technology they are using. If that is different from their shipping software, then your proprietary data enters another system outside your purview. 

While you may have signed contracts with the 3PL, your data still rests on multiple systems that they operate, with minimum visibility. Worse, you are entirely reliant on their information security practices, which may be minimal or even non-existent. 

In the era of Europe’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), no company can afford a data breach. Under a regulatory framework like GDPR, customers have the right to request for deletion of their data. If sensitive details like their name, phone number and address are already on systems that your 3PL controls, it increases exposure and risk to your business.

Peer-to-peer – Robust Data Privacy and Governance Measures

While having confidence in the order fulfillment standards of our warehouses is important, another concern sellers might have is, “How can we trust that other merchants will not see or use our customer data?” 

While Uber built high levels of trust in people, it still could not change the fact that people were indeed getting into a car with a stranger. To safeguard its customers and set their fears at ease, Uber has put in place various safety measures on its app. Some of these include GPS tracking, the ability to transmit location information to emergency services, logs of historical trips as well as the very famous rating system – where both riders and drivers review each other after each ride (a social incentive to behave respectfully). 

With Cahoot’s peer-to-peer fulfillment network, you can sit back and relax knowing that every order will be fulfilled on time. However, we do know that another merchant is responsible for fulfilling your order, and take data privacy extremely seriously. We provide a single platform where you get total control and visibility into your data. When our fulfillment partner prints a label to ship your order, they see the customer’s first name, but only the initial of their surname. Only the absolute essential information needed for order fulfillment is shared with the fulfillment partner, while all other product / brand / customer information remains with the seller.

Community

Traditional 3PL – You Work With a Vendor

Working with a traditional 3PL is often nothing more than a transaction – you pay them a lot of money, and they perform the task of order fulfillment for you. 

While getting your orders out to customers is vital, there’s often little differentiated value addition that you get from the engagement.

Peer-to-Peer – Work With a Partner To Cut Costs and Generate Revenue

With Cahoot’s peer-to-peer network, you can have ultrafast eCommerce order fulfillment by partnering with us. But it doesn’t have to end there. If you have excess capacity in your own warehouse, you can actually double up as a Fulfillment Partner on the network to monetize that and bring in additional revenue. Order Fulfillment is a growth driver, not a cost center – with us, those words definitely ring true. This is similar to how Uber drivers in their home city become riders when they’re traveling! 

Whatever your needs, Cahoot can deliver differentiated value to your business. Reach out to us today to get started!  

Offer 1-day and 2-day shipping at ground rates or less.

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Hola, Amazon Sellers! We’ve got some news for you. It is predicted that the 2021 holiday season is going to witness eCommerce sales of $206.88 billion with a rise of 11.3% in the US.

With the holiday season knocking at our doors, Amazon sellers are putting their best foot forward in optimizing their listings for grand traffic, massive sales, and greater profits.

If you want to reap the benefits of this holiday shopping season, then there is no better time than this! But how can you stand out in such a fiercely competitive environment? 

For Amazon sellers, a winning holiday keyword strategy is one of the best ways to improve their listings’ discoverability. By investing early in seasonal keyword optimization, you can acquire high positions in SERPs ahead of the competition and increase traffic and sales exponentially. 

So, are you ready for the revolutionary 2021 Amazon holiday shopping sales? Let’s make the seasonal keyword optimization magic happen with some powerful seller moves. But before we unveil some of the best Amazon keyword practices, let’s understand the fundamentals of Amazon SEO and how it works.

What is Amazon SEO?

The first page of Amazon’s SERP is one of the most coveted pieces for every seller. It has the power to convert one-time page visitors to buyers and bring about a stunning increase in overall profits.  

Like Google, Amazon analyzes the search results through its algorithm, which again includes several factors like –

• Product Title with high-converting keywords
• Product Description with relevant keywords
• Product Features with clear bullet points
• Appealing Product Images
• Good Ratings and Reviews
• Competitive Product Price

The underlying search engine is known as A9. The algorithm deploys several parameters to engineer the relevancy of millions of listings stored in its database with the search terms used by the shoppers.

Behind closed doors, Amazon’s search engine algorithm – A9 is constantly being renewed and refined. Although no one really knows its formula or how exactly it works, there are some widely known factors that influence it.

What is A9?

A9 is Amazon’s product ranking algorithm which provides the results depending on the terms or keywords or queries added by users in Amazon’s search box. The results displayed are catalyzed by the shopper’s preferences, past orders, and keyword matches.

How does A9 work?

The A9 algorithm selects the product listings to be displayed to potential buyers and their rankings based on some criteria like:

• Relevant keywords added in listings that match with customer search queries
• Previous customer preferences and behavior
• Customers’ past purchases

While customer preferences and their past purchases aren’t in your hands, what you can influence is your product’s organic ranking by optimizing your listings and making them SEO-friendly.

Why Should You Optimize Amazon Keywords for This Holiday Season?

The goal of Amazon’s search engine is to provide customers with the most relevant product results in relation to the search queries they insert. When it comes to product listings, Amazon looks at keywords present in various fields of the listing like title, description, and bullet points. To display products for every time they are searched, Amazon “indexes” these keywords in its database, i.e., collecting, parsing, and storing the search terms. 

Therefore, a crucial portion of your Amazon marketing strategy is to ensure that your listings have an optimized Amazon product title, descriptions, and bullet points with high-converting and relevant keywords. This is even more significant to the holiday season as it brings about an exponential increase in traffic as compared to other times.

Your listing should be optimized in a way that A9 can locate it, and it should also be compelling for customers to pay enough attention to your products and brand.

It is recommended that during the holiday season, holiday-based search terms like “gift pop-up cards”, “Christmas gifts”, etc. should be added to your listing content.  

Note: When you craft your listing content, make sure it flows naturally. Avoid keyword stuffing, as this diminishes the credibility of your product listing, and drives away potential buyers from your product page to your competitors’ pages.

Tips on Optimizing your Amazon Product Listing with Seasonal Keywords

Here are a few tips and tricks that will help you tackle Amazon’s A9 ranking factors and make your listings holiday season ready in no time:

Step 1: Perform Relevant Keyword Research

Before you begin with keyword research, you should pause and set your goals for your products and brand and why would you want to leverage keywords for your listings.

Do you wish to improve your listing’s search rankings? Are you launching a new product this holiday season? Are you trying to compete with existing sellers selling seasonal products?  

Once you define your goals, your keyword research task gets way easier than it actually is.

Generally, you want to add those keywords to your listings that are more specific and searched for the most by shoppers. For instance, listing Christmas bells as “bells” in your product title will likely have a negative impact on where your product appears in the SERPs as it will attract a lot of irrelevant traffic who aren’t even searching for Christmas bells.

Since long-tail search terms are considered more effective, you must incorporate long-tail keywords into your product listings to optimize for Amazon’s SERPs.

Another efficient strategy is to implement the next-to-highest ranking Amazon keywords for your listings. Small-scale third-party Amazon sellers launching new holiday/seasonal products can face overwhelming competition for the top keywords.

In such cases, optimizing a listing for the keyword “Christmas bell” and expecting to land at the top of Amazon’s SERP is not favorable. Therefore, it’s a good idea to opt for a more specific long-tail keyword like “Christmas Tree Decoration Bells”.

Top Seasonal Keywords

Here is a list of the best seasonal keywords collected by us that you may use for your product listing content –

• Gifts for Men
• Gifts for Women
• Christmas Decorations
• Christmas Socks
• Kids Halloween gifts
• Jazz Christmas
• Halloween Gifts Adults
• Thanksgiving Candies
• Cyber Monday Deals
• Toys Black Friday Deals
• Christmas Gifts
• Classical Christmas

How to Perform Keyword Research?

There are several third-party Amazon seller tools for performing keyword research that uses AI and ML technology to provide the most accurate data.

One such tool is SellerApp’s keyword research tool that analyzes thousands of data points to offer high-converting keywords for every seller type. The following are the SellerApp features that analyze keywords in a more innovative way –

• Product Keyword: Get the best keywords, their relevance score, monthly search volumes and cost-per-click, to increase your listing desirability and discoverability.
• Reverse ASIN lookup: Compare your product to the competition and learn from their keyword strategies. Search any ASIN and see which keywords are ranking for that listing.
• Index checker: Check if your backend search terms entered in Seller Central are indexed or not. Optimize your product discoverability as per Amazon’s best practices.
• Keyword Tracker: View real-time keyword ranking position, change in their position, indexed products, and data-driven recommendations to improve Amazon listing SEO.
• Keyword Booster: This tool will show you all the optimal keywords for your product. Here, you can find and sort keywords based on their frequency. Copy and paste your keyword list into the Keyword Booster. Filter your keyword results by the variety of duplication filters, remove unwanted words and characters. Copy the cleaned keyword list from the Keyword Booster with the copy button and paste the optimized keyword list on your Amazon product info page.

Step 2: Make Your Product Title SEO-Friendly

Product Title is one of the most crucial factors that have the power to exponentially boost your product’s visibility and rankings. Make sure that you add all the relevant information in your title and craft a catchy product title.

According to Amazon, a product title should include the following:

• Brand
• Product
• Material
• Quantity
• Color

Note: A product title in the Amazon search is limited to 100 characters only. Therefore, use the space in a rightful manner – do not overstuff it with keywords, keep it appealing and simple.

Amazon has provided guidelines on how to craft good product titles. Your product title should include product information such as brand, product line, color, size, material or key feature, and packaging or quantity. Here, you must also include 1-2 relevant keywords that can influence product conversion and click-through rates.

If you are selling seasonal products, make sure to include holiday special keywords in your product title to get more visibility.

Ensure that the initial 5-6 words of the title are clear, crisp, and intelligible. These simple techniques make the title eye-catching as well as optimize it for the Amazon search.

Step 3: Optimize the Bullet Points

Amazon provides slots for adding bullet points that explain your products in a clear and concise manner to shoppers. Bullet points are found under any parent/child ASINs on the listing page.

They are usually paid more attention than the actual product description. Therefore, you should leverage this space to explain all the compelling features and benefits your product has.

In this section, add secondary keywords that are important but may not fit in the title, for example, keywords that are seasonal and resonate with the upcoming holiday/festivities. There is no need to repeat keywords from the title or other sections.

Simply use high-converting keywords throughout your product listings that you have gathered from your keyword research.

It is estimated that Amazon will index the first 1,000 bytes for your bullet points. Therefore, you must make sure that your bullet points should be 200 bytes max for them to be indexed.

Step 4: Craft a Product Description that Converts

Amazon’s A9 algorithm will prioritize those listings that have the power to convert and have made a considerable amount of sales in the past. Therefore, your product description should be crafted in a way that adds value to your listing and unveils its lucrative benefits, rather than just being informational.  

Add in only the most relevant keywords that pertain to your product’s unique features, its type and texture, and overall utility.

The product description is also an ideal way to portray your brand and its vision, attract the target audience, and focus on the problem-solution framework. The character length of your description should be 2,000 characters, including spaces. Remember to make it short and crisp and not a huge chunk of complex texts.

Step 5: Do Not Forget the Backend Keywords

Amazon also offers sellers the opportunity to add hidden search terms, which are called “backend keywords.”

Although not visible, these keywords constitute the backbone of your listing’s rankings on Amazon SERP.

You can get up to 249 bytes for adding other very relevant keywords for your product that weren’t fit to be added into your listing content visible to customers like title, description, and bullet points. The best part about this section is that here, you can include –

• other high-ranking long-tail keywords,
• holiday-related keywords like “gift ideas”, “gift pop up cards”,
• misspellings that are searched the most by customers,
• synonyms that shoppers might look for,
• translation words of your products in Spanish or French or any other language.

Here, you don’t need to add product identifiers, like your brand or product name, or content that is irrelevant or repetitive.

Final Thoughts

If you stay proactive and prepare well for the 2021 holiday season, nobody can cease your progress. For even the most advanced Amazon sellers, optimizing keywords takes immense effort, time, and analyzing capabilities. Even though it all seems too overwhelming in the beginning, it can be streamlined with the right AI-powered Amazon keyword tool.

The truth is the more you can streamline the seasonal touch points across your Amazon business, the easier it will be to attract relevant traffic and scale-up.

We hope that this step-by-step guide benefits your Amazon business and fuels your seller journey to success. If you have any more questions, get in touch with us!

Offer 1-day and 2-day shipping at ground rates or less.

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The One-Stop-Shop is a new VAT scheme that was introduced in July 2021 across the European Union. It offers an alternative for online entrepreneurs and Amazon sellers who, until then, had to register for VAT in a variety of countries if they wanted to expand their business across the EU.

The One-Stop-Shop was accompanied by changes concerning the delivery thresholds in the EU, the taxation of goods sold to end customers across borders, and the VAT registration and filing duties.

In this article, we will dive into the specifics of the One-Stop-Shop program and discuss what opportunities the OSS offers to Amazon sellers and FBA users.

Threshold Changes that Came With the Introduction of the One-Stop-Shop

Until July 2021 online sellers had to register for VAT in their home country and in all EU countries to which sales exceeded the delivery thresholds. The thresholds were set by each European country individually and were usually set at 35,000€ or 100,000€. 

In all countries in which sellers were registered for VAT, they also had to submit VAT returns. Following the filing of returns, VAT needed to be paid separately to each tax authority, following differing deadlines and formats. Furthermore, all sales prior to the crossing of the threshold limit were taxed with a domestic VAT rate and the VAT had to be paid to the domestic tax office. This meant that sellers had to continuously monitor several threshold limits and payment deadlines at once.  

The country-specific thresholds were replaced by an EU-wide threshold of only 10,000€ when the One-Stop-Shop was introduced. This new, lower threshold is reached by all cross-border sales to European countries combined and, therefore, crossed much earlier. This also means that sellers often have to register in several countries at once. A solution to this is the voluntary registration for the One-Stop-Shop scheme.

The One-Stop-Shop for Amazon Sellers

For business-to-consumer cross-border sales, a One-Stop-Shop registration replaces foreign VAT registrations. Additionally, the EU-wide delivery threshold is no longer applicable. This means that all sales – even the first – are subject to country-specific foreign VAT rates. Thresholds do no longer need to be monitored and no further VAT registrations are necessary – as long as goods are only stored in the home country.

Since no further VAT registrations are necessary, neither are regular foreign VAT returns. Instead, a regular OSS report needs to be prepared and submitted to the tax authorities in the country of OSS registration, the sellers’ home country in the European Union or their country of choice if they are not based in the EU.

Of course, a VAT registration in the home country and the submission of domestic VAT returns are still necessary, as the One-Stop-Shop only applies to cross-border transactions. For the same reason, the usability for the One-Stop-Shop is greater for basic Amazon sellers than for sellers making use of Fulfillment-Programs such as Amazon FBA. Amazon sellers generally only store their products in their home country and the goods are then delivered from there to customers EU-wide. FBA programs, on the other hand, enable sellers to store their products in a variety of foreign European countries.

The One-Stop-Shop and Amazon FBA Sellers

Within the PAN-EU FBA program for example, sellers’ products might be stored in England, France, Germany, Italy, Spain, Poland and the Czech Republic. As soon as products are stored in a country, VAT registrations are mandatory. Therefore, sellers participating in the PAN-EU program need to register for VAT in all countries mentioned above. However, participation in the One-Stop-Shop is still possible.

Deliveries from the home country to foreign countries are taxed with foreign VAT rates and appear in the OSS report, as detailed above. Deliveries from foreign warehouses to customers in the same country are settled in a foreign VAT return, while cross-border deliveries to third countries are again appearing in the OSS report filed in the home country. Lastly, deliveries from foreign warehouses to customers in the seller’s home country appear in the domestic VAT return.

As evidenced, the usability of the One-Stop-Shop for Amazon sellers using FBA is smaller than the advantages of the OSS for basic Amazon sellers storing only in their home country. However, the new scheme can still be advantageous. This depends on the delivery volume, the chosen FBA program, and the customer base and is best decided on a case-by-case basis.

Technical Solutions for the One-Stop-Shop

If you want to or have to use the OSS to fulfill your VAT duties in Europe as an Amazon seller another challenge facing you are the different VAT rates. This is especially true if you sell products from several niches or Amazon product categories to which country-specific reduced VAT rates apply. A solution comes in the form of the hellotax OSS full-service package.

This VAT service provider specialized on the Amazon and FBA E-Commerce business offers their proprietary OSS software in combination with an OSS registration. The software automatically calculates VAT rates and compiles reports which aid in the creation of OSS reports. The hellotax team of local tax accountants then regularly files your OSS returns.

The OSS service can also be used in conjunction with the regular VAT services, which include VAT registrations EU-wide and the submission of regular VAT returns. All your VAT duties are therefore taken care of by one service provider and you can concentrate on scaling your Amazon business while staying worry-free and VAT compliant across the European Union.

Offer 1-day and 2-day shipping at ground rates or less.

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As sellers and Amazon arrive at the conclusion of Prime Day 2023, all eyes have shifted to the fall and Q4 holiday shopping season that lies ahead. The online retailer wants sellers to start planning, and it has already announced the Lightning Deal submission deadlines for the rest of its major 2023 deal events – the Fall Prime Deal Event and Black Friday / Cyber Monday.

What Events / Weeks do These Include?

The company has announced Lightning Deal Submission deadlines for 2 events: 

• Fall Prime Deal Event (known informally as the 2nd Prime Day)

Amazon announced this event, available exclusively to its Prime members for the first time in October 2022. While many speculate the company introduced it to force another wave of shopping from its customers in the lull between Prime Day and Q4, it is still a great opportunity for sellers to capitalize on. 

• Black Friday / Cyber Monday week

Amazon, like every other retailer, aims to capitalize on the surge in sales during this festive time of the year, as the holidays approach. 

When do I Need to Get my Deals in?

• For the Fall Prime Deal Event, you must get your Lightning Deals in by August 11, 2023. 
• For Black Friday / Cyber Monday, you must get your deals in by September 1, 2023 

Note: Amazon has only announced deadlines for Lightning Deals so far. You can also submit Coupons and Prime Exclusive Discounts for these events. The company will announce the deadline for these later.

Offer 1-day and 2-day shipping at ground rates or less.

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Watch On-Demand Webinar: Amazon SFP – How To Sell and Win in 2023

In June 2023, Amazon announced they would reopen enrollment for their Seller Fulfilled Prime (SFP) program. Like most things in the Amazon world, the news was received with mixed reactions by sellers. For those familiar with the Amazon ecosystem, they know that this program is challenging. Many feel the list of requirements is daunting and that Amazon holds them to higher standards than the ones it sets for its in-house Fulfilled By Amazon (FBA) logistics network.

Most people are familiar with the requirements that Amazon expects sellers to meet, but far fewer are aware of the roadblocks that make success hard to achieve. An even smaller number are aware of the strategies they can deploy to meet Amazon’s criteria and surpass them. We’ve outlined all of that and more in our Ultimate Guide: 

• We start by helping you understand what the program actually is. 
• We then examine how the issues FBA is facing make SFP relevant for sellers. With the headwinds confronting FBA, customers are getting their deliveries slower, and costs are rising for sellers. 
• As Amazon continues to face business pressures in its eCommerce division, the problems with FBA are only likely to increase for sellers, making diversification of order fulfillment operations beyond it essential. 
• We then explore why Amazon, despite its skepticism, is reinstating the program. 

• Despite the daunting SFP requirements, the reward can be immense – we highlight the value success in the program can deliver to your business. 
• However, SFP success is not easy, and many sellers find the program extremely challenging – we do a deep dive into the most common stumbling blocks that trip up even experienced Amazon merchants. 
• Finally, we give you an essential cheat sheet needed to start selling and winning on Amazon Seller Fulfilled Prime!

What is Seller Fulfilled Prime?

Why is SFP More Relevant Now Than Ever Before For Sellers?

• The “Prime Effect”: Everybody Wants Fast Shipping
• FBA Deliveries Become Slower, And Customers Feel The Pain
• Amazon Prime Is Expensive, But Is It Worth It?
• Why Are FBA Deliveries Late? – Severe Staffing Problems Create Prime “Snail Zones”
• FBA Challenges Increasing

FBA – Expensive, Difficult To Manage, Full of Tricky Issues

• Inventory Threshold Restrictions
• Margins Erode Further Amid Peak Season Surcharges
• Storage Fees Rise as Amazon Runs Out of Space
• Demand Forecasting Crucial as Removal and Disposal Fees Surge
• Why Can Amazon Raise Prices, But FBA Sellers Can’t?
• It’s All Likely To Get Worse With Amazon’s Cost Cuts
• Business Pressures in Amazon’s eCommerce Division
• Aggressive Cost-Cutting Likely To Slow FBA Even Further
• What Can You Do As A Seller? – Diversify Beyond FBA
• Sellers Have Traditionally Relied on FBA
• Seller Fulfilled Prime – The Essential Alternative Strategy to FBA

Why is Amazon Reopening SFP? – It’s The Government!

What Are The Seller Fulfilled Prime Requirements?

What Competitive Advantage Does SFP Provide Your Business?

Why is Succeeding at Amazon SFP hard?

• Nationwide 2-Day Delivery Forces Most Sellers to Use Expensive Air Shipping
• Amazon Expects Delivery in 2 Calendar Days, While Carriers Operate on Business Days
• The Misleading Pageviews Metric
• The Juggling Act Between Cut-off Times, Economical Shipping, and Meeting SLAs
• Operational Excellence Needed
• Challenging to Staff And Operate Warehouses on Weekends
• Arranging for Carrier Pickups on Weekends
• Managing Weekend Operations Can Overwhelm Sellers
• Unnecessary Surcharges From Amazon Buy Shipping

What’s the Cheat Sheet to Sell And Win on SFP?

What is Seller Fulfilled Prime?

Before we do a deep dive, it’s essential to understand – what is Seller Fulfilled Prime?

For those unfamiliar, Amazon Seller Fulfilled Prime is a program that enables sellers to pick, pack and ship their orders on their own – using either an in-house logistics operation, a traditional 3rd party logistics provider (3PL), or order fulfillment networks. SFP can provide sellers with many benefits, such as: 

• Tight control over their inventory 

• Ownership of their logistics and order fulfillment operations 

• Freedom from the high fees associated with Amazon FBA 

• The ability to provide unique experiences for customers, such as custom packaging

• The ability to meet the consumer expectation for free and fast shipping even on slow-moving, seasonal, larger-sized, and heavier SKUs 

While all these are great, the biggest one for any seller is that the program allows your product listings on the Amazon Marketplace to feature the coveted Prime badge. With around 148 million subscribers in the United States, Amazon’s loyalty program has a great promise for the end customer – pay $139 (plus taxes) annually, and Amazon will deliver you stuff for free in under two days. 

The program has far more profound implications for sellers – their ranking on Amazon search results and ability to feature in the “Buy Box” is heavily and positively influenced by ensuring their products are Prime eligible. It’s also no secret that most shoppers on Amazon toggle the filter when browsing the store just to see products that qualify for Prime. All this means that an Amazon merchant’s survival, let alone success, largely depends on ensuring each SKU is Prime-eligible. 

Seller Fulfilled Prime offers sellers the best of both worlds – the Prime badge and autonomy over order fulfillment. However, it isn’t all smooth sailing, and sellers have tended to shy away from the program because of its exacting standards. However, there are indications that the present time is a good one to begin seriously considering enrolling in the program. 

SFP – More Relevant Now Than Ever Before For Sellers

Several reasons have combined to make Seller Fulfilled Prime more relevant than ever before to sellers, some of Amazon’s own making and others that are not as palatable to the company: 

The “Prime Effect”: Everybody Wants Fast Shipping

When Amazon first introduced Prime in 2005, it announced that it would ship customer orders over $35 for free in 2 days. At the time, people in the industry thought that the company had lost the plot and that this strategy would surely fail. It took competitors over a decade to offer free 2-day shipping – retailers like eBay and Walmart introduced their competing services only in 2017. 

However, when Prime moved from its 2-day timeline to free 1-day shipping in 2019, Walmart and BestBuy responded almost immediately, offering customers the same experience. That captures just how much Amazon has raised the bar and redefined customer expectations – the Prime effect means that all of us expect everything delivered in under two days for free. 

The stakes are high for eCommerce merchants across every channel – it does not matter whether you serve customers through a Shopify storefront, eBay, Amazon, or Walmart – you have to meet the consumer expectation for fast order fulfillment. 

Shipping is no longer a back-office operation; it has become the defining element of the customer experience. 

The company that created the Prime Effect is arguably the most customer-obsessed organization in the world. For years, Amazon has focused relentlessly on creating value for its customers – often at the expense of sellers on its platforms. At every turn, the company has weaponized the size of its customer base and the network effects of its marketplace model to squeeze sellers while delighting customers. 

People, regulators, and governments aiming to call out the company on some of these practices have been met with a frequent refrain, “As long as the end customer is happy, how does it matter?” But why are customers so happy with Amazon, and how does the company have so many of them (most of whom are Prime members)? The most important reason is Amazon’s ability to ship products in under two days, nearly always on time. 

A few years ago, people would laugh at you if you suggested that FBA was missing delivery timelines or that Prime was not consistently two days or faster. However, recent developments indicate that the end customer is also beginning to suffer. A decline in the customer experience is worrying for both sellers and Amazon itself. After all, if Amazon fails to deliver FBA orders quickly and accurately, the company breaks the promise at the heart of all its success.

FBA Deliveries Become Slower, And Customers Feel The Pain

Amazon Prime Is Expensive, But Is It Worth It?

While everyone pays $139 (plus taxes) for their Prime membership, the service is not uniform across all customers. In a story that Vox published, the publication explains how research conducted by a former Amazon employee revealed that an astonishing 1/3rd of the counties in Washington State had a delivery time as high as five business days on Prime qualifying orders. For many customers, an issue with Prime is no longer a rarity – it is increasingly common. We (just like the rest of you) were busy shopping this Prime Day! Here’s an example of our experience with the slow Amazon Prime: 

For a checkout on Wednesday, the latest it should take a Prime order is Friday – however, Amazon commits to delivery only as later as Monday of the coming week! When angry customers in some of these “slow zones” ask Amazon why they’re missing their promise of delivering every Prime qualifying order in 2 days or less, the company says that the clock does not start ticking from when the customer places their order, but when the shipment goes out the door from their warehouse:

While Amazon may make the Terms of Service around Prime hard to understand, the fine print explanation is little consolation for frustrated customers. After all, you still pay full price on products despite shelling out $139 upfront as a Prime member; you’ve paid that only for free and fast shipping. Is Amazon Prime even worth it if most orders take longer than two days to fulfill?

Worst of all, Prime has no recourse for customers who receive delayed orders. Amazon says it may reimburse customers the shipping fees of delayed orders. But what does it look like for Prime orders with no shipping charges? Customers on social media have various stories – after calling Amazon customer support, some got a free month of Prime. Others report getting a discount on Prime membership or gift cards to redeem on future purchases. 

The real question is – what has led Prime to this scenario, where certain regions of the country get their orders much more slowly than others? 

Why Are FBA Deliveries Late? – Severe Staffing Problems Create Prime “Snail Zones”

Amazon worked aggressively during the pandemic, nearly doubling the footprint of its logistics network. According to the company, hiring staff to work in their warehouses was one of the biggest challenges they worked through to make the expansion possible. With staff in the warehouse now expecting to be paid $19 / hr, this is no longer a minimum wage occupation. 

While no one operating warehouses find staffing them easy, Amazon faces a uniquely challenging set of circumstances. Another  Vox story reports that the company is at risk of exhausting the entire available labor pool for warehouse staff in the US by 2024. With nearly every major retailer, including Walmart and Target, getting into the e-commerce order fulfillment game, workers are no longer constrained by the wages Amazon may offer them – they are free to pick from any employer who can provide them a better wage and benefits. Vox mentions that the company is most at risk of running out of people to hire in some areas of the country – Phoenix, Arizona; California; Memphis, Tennessee; and Wilmington, Delaware. This extreme labor shortage in certain regions creates “Prime Snail Zones,” where customers may experience significant delays in receiving orders. 

It isn’t surprising that Amazon is facing these severe challenges – the company has churned through warehouse staff at twice the rate of the broader retail and warehousing industry. Its aggressive practices around how it hires and retains warehouse staff may have begun catching up on it. After all, a job at a fulfillment center is grueling and challenging work – Amazon’s questionable practices might have exacerbated quit rates in a profession with extremely high turnover rates. (If you’re interested in learning more about how challenging working in USA fulfillment centers can be and some of Amazon’s practices, watch this fun, funny, and informative John Oliver episode!).

While they could find people at low wages when they were the only game in town, the company might be looking at raising wages for workers to make itself attractive in an increasingly crowded market. Those increased wages mean increased costs for Amazon. And given the well-documented business pressures on the company’s e-commerce division, the company may pass them on as surcharges to its sellers rather than absorb them as a hit to its bottom line. Perhaps raising wages is a lever that the company does not want to pull to solve its staffing problems – which might provide some rationale for launching its “Hub Delivery network,” which aims to enlist the help of small businesses in its last-mile delivery operations. Businesses with a secure storage facility can sign up with the program and handle the delivery of around 30 packages for the company daily. 

Regardless of all the issues Amazon may face, customers do not care – they have tasted the free, 1-2 day shipping experience for almost 20 years and expect it everywhere. Amazon is at risk of becoming a victim of its success. When customers do not receive their orders on time, it does not just impact the customer’s experience with Amazon – it impacts their experience with your brand and the reputation they have for your service quality. 

With customers beginning to face pains, sellers must begin exploring alternative FBA strategies to keep delighting their customers with free, fast order fulfillment without becoming beholden to Amazon to make that possible. After all, if FBA takes as long as five days, while you fulfill your orders in under two days as an SFP seller, you can deliver a superior customer experience, which gives you a significant competitive advantage.

FBA Challenges Increasing

While the interests of FBA sellers are rarely aligned with Amazon’s own, recent times have been particularly complicated for them. A slew of restrictions and surcharges have all combined to erode seller margins and make the search for an alternative order fulfillment strategy essential. 

Amazon has always focused on keeping its customers happy, mainly at the expense of its sellers. While customer experience has begun to take a hit, sellers have faced challenges for years, with recent times proving particularly difficult.

FBA – Expensive, Difficult To Manage, Full of Tricky Issues

In the last year alone, FBA sellers have seen it all – from restrictions on inventory to peak season surcharges. The program has become challenging to manage simply because sellers do not have visibility or transparency into what Amazon’s future changes to the program may entail. A single change that Amazon makes to FBA can completely disrupt sellers’ plans for Q4 and the holiday season, making business planning and predictability in operations very difficult to achieve. 

FBA sellers facing challenges is not new – merchants have been playing catch up for years to Amazon. However, the impact of recent changes has been brutal to absorb for sellers: 

Inventory Threshold Restrictions

• In the peak holiday season of 2022, around 5% of sellers (many forums claim a much higher percentage) were hit with inventory threshold restrictions, impacting their ability to restock products. These limits left sellers to make difficult decisions between multiple bad choices – for example, removing some items to free up space to restock faster-moving ones or investing extra marketing dollars with Amazon to turn over their stock quickly. 

• Such experiences have left a bad taste in the mouth of sellers – after all, if Amazon restricts your restock limits and the product goes out of stock, your listing becomes inactive through no fault of your own. (Seller Fulfilled Prime allows sellers to avoid such scenarios – however, the onus is on the seller to ensure replenishments and inventory distribution are taken care of!)

• The most difficult pill for sellers to swallow was that these revisions to their restock limits happened during the peak Q4 season for 2022. Merchants were not amused, and this comment from Amazon’s Seller Forums captures the prevailing sentiment well:

Margins Erode Further Amid Peak Season Surcharges

• Sellers were also hit with a peak season surcharge for the first time in 2022. While Amazon revised its fees in 2023 to one fulfillment fee that does not distinguish between peak and non-peak seasons, there is always an element of unpredictability around the company and updates they may announce to their pricing.

• On average, the peak season surcharge was $0.35 for every item sold using FBA. 

• FBA is most frequently used by sellers with small and lightweight items – for these SKUs, the margins can often be wafer thin, with the potential for a $0.35 hike to tip the merchant into loss-making territory.

Storage Fees Rise as Amazon Runs Out of Space

• In an announcement from Amazon, Dharmesh Mehta, the Vice President for Worldwide Selling Partner Services, said, “This year, we saw some sellers use more of our storage than we expected or believe was needed to serve customers well, and that constrained how much product from other sellers could be sent into FBA.” 

• While they may not refer to it directly, it is clear the company is constrained for space in its warehouses and chose to increase long-term storage fees for sellers in 2023 – Amazon has introduced its Storage Utilization Ratio metric, using which it now levies a surcharge on sellers that have inventory sitting in the company’s fulfillment centers for more than 180 days. Previously, long-term storage fees only applied on items sitting in their warehouses for more than 365 days.

Demand Forecasting Crucial as Removal and Disposal Fees Surge

• With Amazon now introducing significant surcharges for the removal and disposal of inventory in its warehouses, it makes demand planning and forecasting more crucial for merchants. Unfortunately, with the economic and macro uncertainties, this has come at the worst possible time. Despite being an incredibly challenging time to forecast demand predictably, sellers must attempt to do so with as much accuracy as possible to avoid being impacted by these fees.

• Depending on the weight tier the item falls into for standard-sized products, your removal and disposal fees can increase anywhere from $0.45 to $1.06. 

• Depending on the weight tier the item falls into for oversized products, the increases in removal and disposal fees range from $1.62 to $4.38.

Amazon Can Raise Prices, But FBA Sellers Can’t!

The most apparent solution for sellers to absorb all these surcharges might be – to pass the extra cost onto the end customer. However, on Amazon, the solution is more complex than simply raising your price to reflect these increased costs. You would think sellers have one major worry – “How will my customers react to the price hike?” They have something far more significant to worry about – having their listing suppressed entirely. 

•  When a seller attempts to revise the price of their product upward to keep pace with these surcharges, they may run into an error that looks like this: 

• Amazon is a company that prioritizes the customer at every turn over the seller – and this is one of the best examples. Their algorithms constantly look at the prices of various products, comparing them across various sellers on and off their marketplace. The algorithms do this to ensure that Amazon always maintains the best price compared to any other competing marketplace. Your listing gets deactivated if the company’s automatic algorithms report a false positive and flag your products as priced too high.  It is well known to sellers that Amazon is a different game – while associates take care of the products on the shelves of brick-and-mortar stores, AI and automation take care of Amazon’s enormous marketplace. The most frustration for the seller comes from the fact that Amazon chooses to act as a self-appointed pricing regulator – it ensures the customers always get the best prices on the Amazon marketplace compared to any other platform but impacts the ability of the seller to absorb FBA costs isolated to Amazon. These issues are complicated and cumbersome to resolve for sellers on their own, but there is no other choice – it is nearly impossible to get on the phone with someone from Amazon. 

It’s All Likely To Get Worse With Amazon’s Cost Cuts

Setting aside the declining customer experience and mounting challenges for sellers, the party at the center of everything is Amazon – the company witnessed skyrocketing demand during Covid which drove a boom in e-commerce. However, the company faces numerous challenges amid the resumption of in-person life, the present inflationary environment, and a slowdown in consumer demand. Faced with an urgent need to restore growth, profits, and the confidence of its investors, the company has scaled back its aggressive investments in FBA – which could make the times to come even more challenging for sellers.

Business Pressures in Amazon’s eCommerce Division

• Amazon worked overtime to keep up with the boom in consumer demand that e-commerce witnessed during the Covid-19 pandemic, doubling the size of its already enormous logistics network. 

• The company found hiring warehouse workers to expand its network a drag on its bottom line. It isn’t surprising, given that the average wage for warehouse staff is now $19 / hr. Working in warehouses is no longer a minimum wage occupation and is one of many factors affecting Amazon. 

• In its first quarter results for 2023, the company reported complete flatness in sales from its e-commerce division, while the cost of fulfillment surged by 21% year on year. 

• With the pressures on its business, the company can no longer afford to continue aggressively investing in building its network – in fact, it’s seeking to do the opposite.

Aggressive Cost-Cutting Likely To Slow FBA Even Further

• CEO Andy Jassy has identified FBA as an area where the company can improve its bottom line by cutting costs. 

• The cuts have been aggressive, with the company canceling plans for as many as 99 warehouses that it planned to set up. 

• It has also begun consolidating its network from a national model to a regional one, featuring eight major, interconnected hubs.

• All this means that delayed deliveries may become ever more frequent on FBA.

With all these events swirling around sellers, some quick and decisive strategy pivots in order fulfillment may be essential to meeting customer expectations in the times ahead. 

What Can You Do As A Seller? – Diversify Beyond FBA

For sellers operating on Amazon, the approach has often been relatively straightforward – let Amazon FBA take care of it all, with Fulfilled By Merchant (FBM) or SFP as a backup in the rare event of an emergency. However, given the present challenges, a backup may no longer suffice – sellers may need to devise an entirely new order fulfillment strategy.

Sellers Have Traditionally Relied on FBA

• According to Statista, 64% of Amazon sellers use Fulfilled By Amazon exclusively to deliver their orders, with only 15% choosing to completely cut ties with FBA and handle everything independently. 

• There are good reasons for this – the algorithm determining whether a product listing will win the Buy Box uses fast order fulfillment as a leading criterion. The fact that FBA listings are automatically Prime eligible is attractive for many sellers (SFP listings also have a great chance to win the Buy Box, while merchant-fulfilled non-Prime orders trail well behind).

• The well-known A9 algorithm, which ranks products in search results on Amazon, also prefers listings with fast order fulfillment, which has led sellers to lean in heavily on FBA (again, a Seller Fulfilled Prime order can show up favorably, subject to the merchant doing other things right – such as optimizing for the right keywords in their product detail page copy). 

The question sellers might ask is – why to do all the extra work with SFP when it is easier to win the buy box and rank well with FBA itself? This question meant that FBA was the de-facto choice for many years, with SFP / FBM listings being backups for rare emergencies. But with those emergencies becoming more frequent and the operational excellence of FBA under serious question, it is time for sellers to identify an alternative strategy.

Seller Fulfilled Prime – The Essential Alternative Strategy to FBA

While Amazon may be working through numerous challenges, the reality of the situation is apparent for all players in e-commerce – free and fast shipping is here to stay. When the 150 Million Prime members apply the Prime-only filter when browsing for products on Amazon, they do it for no other reason than fast and free delivery. 

Customers simply do not care about the issues plaguing Amazon – their only expectation is free and fast order delivery. Therefore, issues with FBA do not simply affect Amazon – late orders ruin the customer experience and, by extension, the relationship people have not just with Amazon but with your company. 

The imperative becomes clear – Seller Fulfilled Prime is no longer a backup to be used in the rare event of an FBA emergency; it is an essential alternative strategy to customer delight and business growth.

However, while we’ve outlined all the issues confronting Amazon, this company bends to no one – sellers, investors, the government, or even regulators. The only stakeholder the company is genuinely interested in is its customers. So why would the company re-introduce Seller Fulfilled Prime when Amazon’s style has always been to keep steamrolling its domination upon the e-commerce world?

Why is Amazon Reopening SFP? – It’s The Government!

Amazon themselves are not particularly enthused about the program. In an interview at the Code 2022 conference, CEO Andy Jassy remarked that he did not believe that 3rd party sellers could meet the timelines that Amazon does and that outsourcing Prime order fulfillment had the potential to “significantly degrade” or even “eradicate” the quality of the experience on the program. That is a strong opinion – which begs the question, why reopen it now? 

Aside from the issues with FBA and Prime that Amazon may be working through, it may have had its hand forced by several external problems it is facing now – from governments and regulators in multiple markets:

• In the European Union, the company faced allegations that its Buy Box algorithm favored FBA and that it used non-public data on its 3rd party sellers to develop competing brands and private-label products. 

• Faced with the prospect of being fined a staggering $47 Billion, the company made several concessions – including agreeing to let Prime sellers have their pick of carriers for delivery operations and to shut down the use of non-public data on its sellers for brand and product development.
  
• Now, these issues have begun to confront the company closer to home. The Federal Trade Commission, headed by Commissioner Lina Khan, alleges that Amazon equates the sale of 3rd party products on its marketplace to using its FBA network. The FTC is preparing “The Big One,” a lawsuit centered around the preferential treatment that Amazon affords FBA – which it intends to file before August.

• The American Innovation and Online Choice Act (S.2992) is a bipartisan piece of legislation gathering momentum in the US Senate focused on opening up more choices for the American consumer online – including loosening the chokehold that Amazon has over the logistics piece of Prime. 

Faced with all these challenges, Amazon may be looking at reintroducing the program as a way for it to get ready for its day in court – what better way to prepare for its day in court than by showing to regulators that by reopening Seller Fulfilled Prime, it is not stifling competition on order fulfillment – rather, it is doing just the opposite, while at the same time, providing the end-customer a high-quality experience through the Prime promise of free and fast shipping. 

So now that we’ve explained all of this, it’s time to get into the details – what is the list of requirements that Amazon expects its sellers to meet for Seller Fulfilled Prime? 

Seller Fulfilled Prime Requirements

On August 8, 2023, Amazon announced wide ranging changes to the criteria it expects sellers to meet on the SFP program. The list remains lengthy and as challenging as ever. Here are the latest SFP requirements, which will go into effect October 1, 2023: 

• Maintain an On-Time Delivery Rate greater than 93.5% (A delivery is on-time if it is delivered on or before the delivery date promised to the customer when they checkout).
• Maintain a Valid Tracking Rate (VTR) higher than 99% – a package has Valid Tracking if it has atleast one carrier scan. This scan must occur before the package is delivered, to ensure it provides a tracking number that can be used by the customer to track their order on Amazon.
• Any product linked with a Prime shipping template must offer a minimum shipping speed of 3-5 days to the contiguous United States (the lower 48 states), across all 3 size tiers – Standard, Oversized and Extra Large.
• 30% of product detail page views on standard sized products must promise 1-day delivery to customers. The requirement for 2-day delivery is 70%. For oversized products, these metrics are 10% and 45% respectively. For Extra Large products, 15% of product detail page views must promise 2-day delivery (there is no 1-day expectation for these SKUs as of now).
• Merchants must now first go through a pre-qualification process before starting their SFP trial. In the 90 days leading up to their trial, they must self-fulfill at least 100 packages, with a cancelation rate <2.5%, valid tracking rate >95% and late shipment rate <4%. Once they are on the trial, they must ship at least 100 packages in 30 days, while meeting all the SFP program requirements. During this entire period, the Prime badge will not be visible on listings to customers. After successful completion of the pre-qualification and trial period, Amazon will enable the Prime badge for your listings.
• Sellers must provide free returns for all eligible items weighing less than 50 lb, for any seller or buyer related reason.

Amazon originally announced that they would charge a fee of 2% of the unit price for every item shipped via Seller Fulfilled Prime, or a minimum of $0.25. Amid growing pressure from regulators, the company waived this fee to avoid negative reactions from sellers and officials. The company removed the fee a few days before September 26, 2023, when the Federal Trade Commission and 17 US states sued Amazon for anti-competitive behavior.

The critical thing to remember (which is the kick in the teeth for sellers) is that Amazon FBA does not face any penalties for missing any of these – whereas, in SFP, the onus is on the merchant to diligently track these metrics and ensure you never fall below the standard. 

If this list appears daunting, you’re not alone – many sellers feel these criteria are tough to meet. So before even looking at where the challenges and roadblocks lie, it’s worth asking – why is it worth being part of the program, and what value can it deliver to your business?

The Competitive Advantage SFP Provides Your Business

• Profitability: The most significant advantage SFP can give your business (after you’re unshackled from all the FBA fees) is profitability. While FBA offers great rates for small, lightweight and fast-moving SKUs, it may not be the best option for big and bulky SKUs. For these SKUs, you can improve margins and profits significantly through SFP.
• Superior inventory management: When you work with FBA alone, you face problems when trying to expand to other sales channels. Let’s say you’re trying to expand to Walmart. Now you’ll have no choice but to inbound them some of your inventory as well to cover the same geographic regions, creating redundancies. By participating in SFP, you can utilize the same pool of inventory and warehouse infrastructure to fulfill orders across Walmart, Shopify and all your other sales channels. This reduces the buildup of redundant inventory and makes your operations leaner and more efficient.
• Potential to surpass FBA delivery times: With all the cost cuts, business pressures, and staffing shortages at Amazon, it’s probably true that an SFP seller with an excellent operation beats FBA on order fulfillment timelines (simply because the adherence to the 93.5% on time delivery criteria is likely to match or exceed what Amazon does on average). 
• Accelerate sales with Prime on every SKU – FBA is optimized for lightweight, fast-moving SKUs. However, the consumer expectation today is for free and fast shipping on every e-commerce order. FBA does not make economic or practical sense for some larger-sized and heavier SKUs. With SFP, you can finally have the Prime badge for these products, which will significantly boost their sales rank and buy box win probabilities. With this, you can drive increased sales of these SKUs, growing revenues.
• Freedom from Q4 restrictions and surcharges: For long-tail, slow-moving or seasonal SKUs, FBA’s long term storage fees can become a drag on margins and profits. With the right SFP fulfillment partner, you can eliminate high storage fees and peak-season surcharges, which improve your margins for these classes of SKUs.

• Improved predictability and planning: Freedom from all these Q4 surcharges means you can clearly plan your operations for the rest of the year. Free from the threat of sudden surprises, you can plan your goals for the close of the year with more confidence and certainty. 

• Potential to Scale Beyond Amazon: Many merchants are already consumed by the busy work of working with FBA to handle their Amazon operations and all their other platform-captive fulfillment partners (for example, Walmart Fulfillment Services for Walmart). An excellent SFP operation can serve as a template through which you can achieve fast shipping across every platform without being beholden to the constraints of each marketplace. Additionally, you will be able to do so more cost-effectively than Amazon’s Multi-Channel Fulfillment (where Amazon fulfills orders for merchants across other platforms). You will also be free from the constraints that using MCF brings (such as being unable to use it to fulfill Walmart orders).On Walmart for example, listings offering 2-day delivery rank higher in search results, win the buy box more often and see conversion lifts as high as 50%. Sound familiar? But once you’ve figured out a strategy for Seller Fulfilled Prime, you’re in a great position to extend that to Walmart, without having to work with Walmart Fulfillment Services. This means you’re free from the headache of having to learn their processes and guidelines. With SFP, it will cost you the same to ship orders across every sales channel. This is unlike MCF, where shipping orders originating outside Amazon is significantly more expensive.
• Savings in time and money: While moving away from FBA can provide significant cost savings, working with a partner like Cahoot means fewer things to worry about and more time back on your plate. Rather than constantly reaching out to Seller Forums for help or reading FBA documentation to understand how the latest changes affect your business, you can put that time into the things that matter – ideating great new products, coming up with creative marketing campaigns, and delighting your customers every moment of every day.

While these are all great benefits for sellers and provide their businesses with significant competitive advantages, making a success of the SFP program is highly challenging. Most merchants know that the requirements list is rigorous and demanding, but few are aware of the exact stumbling blocks that trip up people. Fewer are aware of solutions available to overcome these roadblocks and win at SFP.

Succeeding at SFP is hard – here’s why

While the list of criteria is long and rigorous, we’ve identified the most challenging aspects of the program that trips up most sellers: 

Nationwide Fast Delivery Forces Most Sellers to Use Expensive Air Shipping

• In the past, Amazon had “regional Seller Fulfilled Prime” – which allowed sellers to manage order fulfillment in certain geographical parts of the country while still having the Prime badge on their product listings. 
• The Regional SFP program allowed merchants who owned a single warehouse or worked with a traditional 3PL with a single warehouse location to meet the program’s requirements through economical ground shipping.
• However, Amazon now expects sellers to make products across every size tier available within 3-5 days (at the most) across the entire continental U.S. – additionally, approximately 70% of standard sized item orders must be delivered in under 2 days across the nation.
• The new requirements eliminate the possibility of regional models working any longer – having your inventory stationed in just one location means that shipments to certain parts of the country cross multiple shipping zones. The only way to deliver orders on time in such “single-node” operations is by using expensive air shipments. Making expensive shipments by air completely nullifies any cost savings merchants hoped to achieve when leaving FBA – in fact, it could worsen things.
• It becomes vital in such a scenario to use an SFP fulfillment partner with a strategically located network of fulfillment centers, such as Cahoot, whereby it is possible to cover the entire country in 2 days while still using economical ground shipping rather than express air shipments. Such a network is one of the very few ways it is still possible to both have nationwide coverage and significant cost savings over FBA. 
• Lastly, sellers must ensure that their product listings are classified correctly by Amazon. The metric for % of product detail pageviews that must promise a certain delivery speed is based on the size tier the item falls into (if an oversized or extra large item is classified as standard sized by mistake, you will be under pressure to get a large number of orders of those items delivered in under 2 days). 

Amazon Expects Delivery in 2 Calendar Days, While Carriers Operate on Business Days

Amazon now expects sellers to make Prime deliveries in 2 calendar days (necessitating the need to work with carriers that support weekend pickup and delivery). This requirement has caused sellers a lot of pain and grief, and here’s why: 

The Misleading Pageviews Metric

In its latest round of revisions to the program criteria, Amazon has increased the percentage of product detail pageviews that must promise 1 calendar day and 2 calendar day delivery. 

Now, 30% of product detail pageviews for standard sized products must promise  1 day delivery, while 70% must promise 2 day delivery. But when does your listing promise 1-day delivery, and when does it promise 2-day delivery? 

Let’s understand this with a few examples:

Let’s imagine every order is delivered the very next day after it ships. If a customer views your order on a Monday and places their order before the cutoff time, you will ship it that same day, and it reaches the customer the next day. In this case, Amazon displays a 1-day delivery promise and this pageview counts towards your 1-day metrics. 

In this second case, when a customer looks at the product detail page after the cutoff time, you ship the order the next day after it is placed, and it reaches the customer the day after. This therefore fails to meet the 1-day promise, but meets the 2-day delivery promise. 

In this last case, it gets really bad. If a customer views your listing on a Saturday evening, the item is expected to ship only on Monday (assuming you don’t ship Sundays) and it will be delivered to them on Tuesday – a full 3 days later. 

In this case, such a pageview counts toward neither the 1-day nor 2-day metrics. The implication is clear – your listings will display 2-day and even 3-day delivery promises for significant periods of time. The mapping between the number of warehouses you have, the percentage of the US population you can service with 1-day delivery, and the % pageviews that actually promise 1-day delivery is not linear. This graphic illustrates that:

If you have warehouse locations, you can cover 42% of the US population with 1-day delivery. But different customers look at your product detail pages at different times of the day, and see different delivery speed promises. 

As per our research, in reality, only 21% of pageviews may actually promise 1 calendar day delivery. To meet the new Seller Fulfilled Prime delivery requirements, it could take as many as six to nine strategically located warehouses.

These demanding metrics mean that traditional 3PLs will find it nearly impossible to help Seller Fulfilled Prime merchants (learn more about why traditional 3PLs are failing, and how peer-to-peer order fulfillment networks are designed to help you find success on SFP here). It becomes crucial for merchants to partner with order fulfillment networks that have warehouses at different strategic locations across the country, ensuring customers from anywhere see fast delivery promises.

While merchants may want to upgrade to a better fulfillment partner who is better positioned to meet these requirements, it’s easier said than done to leave your current 3PL for better alternatives. Many merchants don’t know how to evaluate and find the perfect fulfillment partner for them. If you’re looking for a step-by-step guide on migrating fulfillment partners, check out our guide here!

The Juggling Act Between Cut-off Times, Economical Shipping, and Meeting SLAs

• With Seller Fulfilled Prime, a late cut-off time can potentially increase the number of orders your carrier picks up that same day, boosting your 1- and 2-day delivery metrics.
• If FBA faces any issues or does not meet the delivery promise shown to the customer on the product listing, there are no penalties for Amazon – but a seller must meet the 93.5% on time delivery criteria set for them. 
• Here’s a graphic we’ve created for how delivery timelines look like when operating with a 2 PM cutoff time (based on our discussion of the pageviews metric):

• Sellers must carefully make the tradeoff between increasing their cutoff times (if they can schedule a late pickup with their carriers) versus also ensuring that those orders reach the customer the next day. Increasing the cutoff times increases the % of pageviews that promise 1 and 2 day delivery, but you must ensure that you can actually get the product to the customer’s doorstep within the time you’re promising.
• Here also, sellers need to strategically place their inventory in a network of warehouses to avoid shipping orders placed close to cut-off times through expensive overnight air shipments. Placing inventory in different strategically located warehouses will enable nationwide coverage through economical ground shipping, all while meeting the customer’s expectations. 

The shift to calendar days has had the most significant impact on the operational side of things – sellers now have to plan a whole different way of running their business and schedules, which have also become challenges: 

Operational Excellence Needed

Challenging to Staff And Operate Warehouses on Weekends

• As we’ve mentioned before, staffing is often the biggest bottleneck towards finding success with order fulfillment. 

• With weekend pickup and delivery expected to meet the calendar day-based SLA, most merchants with a single warehouse or those working with 3PLs face difficulties succeeding in the program. 

• If you own and operate your warehouses, paying your staff to work on the weekends or hiring additional people may eat into your margins to unfeasible extents. 

• Traditional 3PLs, which are asset-heavy, also face cost pressures around labor – which they may be forced to pass onto sellers. 

• While these options erode any cost savings that sellers see over FBA, you are not without alternatives – consider platforms like Cahoot, where each of our fulfillment centers is vetted for operational excellence and meets this challenging requirement.

Arranging for Carrier Pickups on Weekends:

• In addition to warehousing, your carriers are another critical element in making your logistics work. 

• Not all carriers offer weekend pickup and delivery – some may require you to be a large shipper and maintain minimum order volumes. 

• All this means you may have to contact your account manager at the various carriers and enquire about possible options. 

However, while all this can be done, the biggest reason sellers shy away from SFP is the heavy amount of process management, collaboration, and busy work needed to keep this operation running. 

Managing Weekend Operations Can Overwhelm Sellers

• It becomes easier to understand why so many sellers shy away from Seller Fulfilled Prime – between working with multiple 3PLs to ensure your inventory covers the country, to operating and staffing your warehouses on the weekend as well as coordinating with your shipping carriers to arrange for weekend pickups, it can seem incredibly overwhelming. 

• As a seller, the SFP program can drain your bandwidth, time, and resources. 

• You might often wonder whether managing so many stakeholders and sifting through so much busy work is worth it when FBA offers you only one party to work with – even if that party is Amazon, whose interests often tend to be misaligned with yours. 

• It does not have to be this way – sellers must spend time identifying partners who provide a unified experience where they get to work with just one vendor. Platforms like Cahoot help sellers meet and surpass the SFP program while ensuring you deal with only one company rather than coordinating between multiple 3PLs and carriers, preserving precious time and resources for you and your business. 

Unnecessary Surcharges From Amazon Buy Shipping

• In its latest round of revisions, Amazon no longer mandates the use of its Buy Shipping platform to print shipping labels.

• This is a major relief for sellers, because Amazon Buy Shipping comes with one major issue that they have reported anecdotally – the platform is not great at estimating the delivery timelines for USPS services (the comment below from Amazon’s Seller Central forums highlights the issue): 

• In many situations, Buy Shipping does not accurately estimate the delivery timeline within which a USPS service can make orders.

• In such cases, sellers are faced with a choice to pick from two bad alternatives: fail to show the customer a fast delivery promise (not an option for SFP sellers) or buy a more expensive label from the choices that Buy Shipping does believe are capable of meeting the SLA: 

• This can be tough for sellers to swallow – as order volumes increase, the extra costs paid on each shipping label begin to mount, eroding margins and profitability. Thankfully, Amazon no longer requires the mandatory use of the service. 
• However, this does not automatically mean that you will see increased savings. You still need to make sure that you’re picking the most economical label on every order! This requires technology like Cahoot’s next generation shipping software, which intelligently rate shops across warehouse locations, carriers and shipping services to always print the cheapest label that will meet the delivery promise committed to the customer.

So while a lot can potentially go wrong, sellers can also make the program work for them and find success – by following specific vital strategies. 

To round off our ultimate guide to Seller Fulfilled Prime, we want to help you start finding success in the program by giving you a few top tricks and recommendations to succeed through our handy dandy cheat sheet!

The Cheat-sheet to Winning at Seller Fulfilled Prime

• Achieve Nationwide Coverage With a Warehouse Network – Making orders nationwide in under two days is no easy task. You need to distribute inventory strategically in different locations to cover 100% of the country in this window. Operating from a single warehouse or 3PL fulfillment center will simply not cut it – you need to spread your product placement across a network to meet the program requirements. 
• Use Data to Guide Inventory Placement And Avoid Air Shipping – Even with a network model, it is crucial to analyze where most of your orders are coming from – placing your inventory close to those “order hubs” becomes a vital part of ensuring you will meet and exceed the one and two-day delivery requirements. This also ensures that you can reach all of your customers through economical ground shipping rather than being forced to make expensive air shipments.
• Consolidate Relationships And Eliminate Busywork – SFP can lead you down the rabbit hole of investing in multiple 3PLs and coordinating with numerous carriers to make the program work for you. Sellers need to conduct research and identify a platform that provides a single relationship for you to manage – otherwise, logistics can overtake your focus on the activities that matter – selling and taking care of your customers. 
• Save Every Dollar Across Every Shipment – The whole point of moving away from FBA towards a program like SFP is to extract cost savings. It is essential to align your technology towards automation, whereby you’re automatically generating the lowest price shipping labels on every single order.

• Monitor Metrics Like a Hawk – Amazon provides you with dashboards on Seller Central that provide all the SFP metrics needed. It is crucial to constantly stay on top of these and keep adjusting your strategy to ensure you’re meeting their expectations.

Succeeding in this program is challenging, but we think these tips are a great place to start. As Q4 and the holiday season approach, now is the time for sellers looking to diversify their order fulfillment beyond FBA and offer fast, profitable free shipping across every SKU to identify a partner who can help you win at Amazon Seller Fulfilled Prime. If you’d like to understand how Cahoot can be with you every step of the way, just fill out this form, and we’ll be in touch!

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