If you’re an Amazon FBA seller… one of the last things you want to worry about is Amazon’s packaging & labeling requirements. You’re busy focused on your products, driving sales and growing your FBA business – except there’s one problem:
Prepping your FBA inventory is a HUGE bottleneck!
As it turns out – Amazon has strict compliance rules for how your products are packaged + labeled, and without FBA prep, your inventory is almost always unprepared before it needs to ship off. Whether it’s an overseas manufacturer that struggles (or isn’t willing) to prep your inventory according to Amazon’s strict guidelines… or you simply don’t have the time & resources to handle it yourself… it’s clear that every FBA seller needs a process and strategy to handle FBA prep – otherwise you’re dealing with shipping delays, low inventory, massive fees and potentially major cash flow setbacks.
In this article, we’ll dive into everything you need to know about getting started with FBA prep – and how to go about choosing the best service to use. Use the outline below to skip to any section of this guide:
- What is FBA prep?
- Why is FBA prep so important?
- Your options for FBA prep
- What’s the best FBA prep service?
- More factors to consider for FBA prep
- Final points
What is FBA prep?
Simply put, FBA prep is the process of packaging, labeling & organizing your inventory (according to Amazon’s guidelines) – so that Amazon can properly accept your shipments, store it in their warehouse, and ship your products out to customers.
The process requires extremely strict and precise standards to make sure inventory is successfully received, stored and shipped out to customers – otherwise you can probably guess the wide range of issues that occur when it’s done wrong.
In fact, FBA prep is a major step in the process for growing and scaling an Amazon business. Unfortunately, going straight from your manufacturer’s warehouse to Amazon’s distribution center often doesn’t work for most FBA sellers (more on that below) – but the good news is, you can still take care of FBA prep without it causing a huge bottleneck in your business. Keep reading below to get the full scoop on how to best prepare your Amazon inventory.
Simply put, FBA prep is the process of packaging, labeling & organizing your inventory (according to Amazon’s guidelines) – so that Amazon can properly accept your shipments, store it in their warehouse, and ship your products out to customers.
Why is FBA prep so important?
Since you’re reading this article, you’ve probably heard from Amazon sellers & retail experts regarding how crucial FBA prep is (and they’re not wrong). Many Amazon sellers will spend thousands every month, just to shore up their FBA prep needs – and they gladly do it every single month, because many of them experienced what happens when you ignore and treat it like a small cog in the machine!
So… why exactly is FBA prep so important? And what happens if it’s overlooked and neglected?
Well, a few things to consider here:
1. Penalty fees can rack-up & eat into your margins
At a basic level, the first thing you’ll notice is that Amazon will charge you hefty fees for inventory that isn’t properly packaged and labeled according to their guidelines. As we touched on before – their compliance rules are strict and precise, which means the small details matter and will begin to eat into your costs if they’re ignored (and when that happens, it requires more work on Amazon’s end to shift gears and either prep it themselves, dispose of it, or prepare to ship it back to you – this is the reason they charge extra fees).
2. Portions of your inventory may be rejected (risking out-of-stock issues)
If Amazon receives your inventory without clear identification… you can imagine how much of a nightmare that can turn into. Now you’re dealing with unknown stock in their distribution center – and often no way for Amazon to sort it correctly and ship it to customers with confidence (which means they might have to send it back to you, or completely dispose of it).
Now your inventory counts are lower than expected and delays begin to occur, which can cause a whirlwind of headaches for your FBA business. In specific circumstances, Amazon may be able to sort through and prep it correctly… but in these cases, you can certainly expect to pay high fees.
3. Some FBA prep services can inspect and find product quality issues before they reach Amazon’s warehouses (and then your customer)
As we all know… manufacturers often drop the ball on product quality, and they often won’t check the entire batch before it’s shipped off.
And even if they DO find quality issues, they sometimes STILL ship it off – since it’s now costly for them to produce again (which means they’re essentially betting you won’t notice the quality issues – therefore passing the cost off to you, once the customer receives it and opens a return).
Some FBA prep companies (like our FBA prep service at ZonPrep) can thoroughly inspect your inventory before it proceeds to Amazon warehouses. This allows you to prevent devastating bulk order defects, customer returns and chargebacks… which can destroy your bottom line on certain batches of inventory.
FBA prep options
When it comes to evaluating your FBA prep options, you have three choices: you can run it in-house, let Amazon handle it themselves, or outsource to a dedicated FBA prep company.
In-House
This is where most FBA sellers run into problems, since it often throws a wrench into their operation and substantially hampers their growth – preventing them from scaling and achieving long-term business goals. Sure, it’s definitely possible to handle FBA prep yourself… but keep in mind, these aren’t high-leverage tasks that contribute to the growth you’re likely aiming for. You’re stuck spending a lot of time in the weeds, when you could be streamlining the process for relatively cheap to an FBA prep service (which already has fully-optimized & dedicated processes for FBA prep).
However, this doesn’t mean that EVERY prep service is better than in-house. You’ll occasionally find FBA prep companies that aren’t able to fully meet your demands and operate consistently – so like we mentioned above, always make sure to properly vet an FBA prep service before committing.
Amazon Prep
While Amazon itself has their own FBA prep services, their costs and turnaround times are often subpar. In fact, the vast majority of FBA sellers prefer to avoid this option, since it almost never scales out better than running it in-house or using an FBA prep service.
And you might be wondering – can I use Amazon’s prep services on-demand, after my inventory arrives at their warehouse and we discover my products need prepping? It depends on your specific situation, but even if they can… the problem is not only does it lead to high penalty fees, but you also risk increasing your late shipment rate. If you’re already prepped beforehand (meaning you strategically planned & forecasted your inventory flow), you won’t have to worry about running into these issues to begin with.
3rd-Party FBA Prep Services
Last but not least, you have the most common scenario for FBA sellers: outsourcing to a dedicated FBA prep service. These services almost exclusively focus on receiving, storing, packaging, labeling, and arranging shipments to FBA warehouses – ensuring your inventory avoids packaging & labeling penalty fees (or even getting completely rejected and sent back – causing potential low stock issues, cash flow problems and hurting profitability).
Many FBA prep companies also offer additional services – such as inspection, storage, and distribution/logistics support as well. Some prep services cater to both FBA-exclusive sellers, or retail companies with multi-channel distribution (including FBA).
What’s the best FBA prep service?
Among the three options of 1) running FBA prep in-house, 2) outsourcing to a FBA prep company, and 3) using Amazon itself… the vast majority of sellers overwhelmingly prefer a dedicated FBA prep service. There’s rare exceptions, but generally speaking… FBA prep services are going to be the optimal choice for streamlining FBA prep at acceptable prices that don’t eat into your margins – helping you immediately take the guesswork out of the process.
The only reason you might want to go in-house is if you already have the FBA prep process down to a T.
However, this often takes 100’s of hours of planning, setup, and adjustments as you begin to learn the process and optimize it yourself. It’s a brand new learning experience that takes rigorous dedication, and it ultimately doesn’t yield the returns you’re probably looking for.
In other words, it likely isn’t worth your time anyway – since you have far better opportunities to scale your business by focusing on product and marketing. FBA prep services can save you enormous amounts of time, and the costs aren’t significantly higher than choosing to go in-house anyway.
Factors to consider for FBA prep
So, when it comes to choosing an FBA prep service… there’s several factors you’ll want to consider (and they’re all equally important, with their own tradeoffs). Let’s start with #1 on your mind – price.
Price
In the most ideal world, you want relatively-low FBA prep costs with trustworthy, reliable service. Many FBA prep services are notorious for mishandling and botching your inventory – so making sure to meticulously vet your FBA prep service beforehand is crucial.
Unlike branding and customer service (which typically don’t need huge investments to run a successful FBA business)… you probably don’t want to go cheap on FBA prep. At ZonPrep, we typically offer a sizable FBA prep promotion to get started – which can help ease your costs up-front and take the perceived risk off your shoulders.
Inspections
As we touched on before, inspections are highly critical for many FBA businesses (during the FBA prep process). And even if your products and manufacturer(s) seem reliable enough to skip inspections… what are the chances you begin selling new products in the future? Will you need FBA prep inspections for them? There’s a decent chance you might – and it would be a costly hassle to switch FBA prep services later on. Go with a team that includes inspections from the start.
Processing Times (inventory ready in 48-72 hours with 2 hour response times)
Always make sure to check turnaround times with an FBA prep service, before committing to them. You’ll generally want a team that can prep your inventory within 48-72 hours (especially to avoid increasing your late shipment rate, which will have further consequences).
Also try getting a feel for response times with customer support – ideally you want a dedicated account manager that can respond within a few hours, since you’ll (occasionally) have situations where you need to coordinate with your prep service in a short amount of time. For example, if a receiving is expected to arrive tomorrow and you need to give your account manager a heads up regarding your inventory,
Warehouse & Climate
Pay close attention to the warehouse and facility specs, before committing to an FBA prep service. There’s a few things to consider here:
- Can your products become defective at extreme temperatures? Do you need a climate-controlled warehouse to prevent this risk – or might you eventually begin selling new products that need climate control? Most sellers prefer to stick with a climate-controlled warehouse from the start, regardless if they need it right away.
- What’s the warehouse size? Is your FBA prep service able to handle significantly more business during peak seasons (in order to prevent running out of space)? You generally want at least 80,000 square feet.
- Does the warehouse have multiple docks and forklifts to handle pallets, even on busy days with several receivings coming in? (Especially if you have wholesale inventory.)
Many FBA prep services don’t offer these crucial features – always make sure to check beforehand. You’ll either see it listed right on their website, or you can include these questions during your initial inquiry.
Location
Is the FBA prep warehouse strategically located to minimize inbound shipping times and costs? Ideally it’s located near the port and Amazon’s warehouses. This can have a major impact on your cash flow situation (especially as you begin to grow and scale your FBA business). Our warehouse at ZonPrep is located in McDonough, GA – which many FBA sellers find highly preferable to other locations that aren’t optimized (when it comes to inbound shipping from the port & being close to Amazon warehouses on the East Coast).
Systems & Software
Ideally, you want to get a feel for the internal systems to manage your FBA prep status and requests. Does your FBA prep service send you timely updates on your inventory, receivings and shipments? Are you able to see a bird’s eye view on your updates and requests? This might not be a huge factor if your prep service is fast and timely anyway, but you should make sure there’s at least something available to monitor your prep situation at any moment.
Final Points
Outsourcing FBA prep helps relieve substantial pressure on your FBA business – and for some Amazon sellers, it’s the reason they were finally able to catapult and scale their business into 7 and 8 figures in yearly revenue (since they were able to avoid Amazon compliance fees, cash flow nightmares, defective product returns & being forced to run FBA prep in-house).
When it comes to choosing the best FBA prep service, it’s important to remember your decision process shouldn’t be a quick one. It’s similar to finding a manufacturer – some offer extremely reliable service, and some are inconsistent. Always start off with intro dialogue: see how they respond to you, how they answer questions, how much effort they put into nurturing a relationship, and how they can ease your worries and objections.
Also, make sure to get a full list of services they offer – since there may come a time when you need special projects, freight forwarding, FBA removal order support, and other prep / logistics / distribution services as well. Being prepared for the complexities that arise as an FBA seller is what keeps you afloat as you grow your business – and you’ll be surprised how much a stellar FBA prep service can assist you in scaling to new levels.
As always, if you have questions about anything related to FBA prep, don’t hesitate to reach out! As 20 year veterans of Amazon FBA ourselves, we understand the procedures that go into both 1) running a successful FBA business, 2) simplifying the FBA prep process at relatively low costs, and 3) optimizing retail supply chains across both Amazon and multi-channel.
