Should you hire a FBA Prep Center?
As your Amazon business grows, you’ll find yourself spending a lot of time preparing items to send to amazon. For those of you selling 100s or 1000s of units every month, you know exactly what I’m talking about.
At this point, you usually have 2 options:
- Hire Staff
- Hire a Prep Center
Hiring staff might seem like an easy option but it’s not as simple as that. You also have to find warehouse space to ship products from and there’s a lot of overhead cost that comes along with that. You’ll often find the time you saved hiring staff is now being spent on managing staff and you end up exactly where you started.
Don’t get me wrong, hiring staff isn’t a bad option but it’s important to know what you’re diving into.
If you’re looking to truly automate your FBA business, Prep Centers are a much better option. They offer the flexibility and ease of scale. Sales aren’t always consistent and with Amazon changing policies often, you have to be prepared for the worse.
All Prep Centers aren’t made equal so it’s crucial to do proper research before moving forward. I’ve listed some of the things you should look for when searching for a fulfillment center.
This is the most important one. You want to search for a Prep Center in the country of the amazon website you wish to sell on. If you’re selling on Amazon.com, you want to look for Prep Centers in the United States. If you’re selling on Amazon.ca, you want to find Prep Centers in Canada.
Outside of that, the city within the country is also pretty important. After you’ve sent a few shipments to Amazon, you’ll also know which fulfillment center they want to ship your items to.
This isn’t a big deal if you’re shipping parcels but if you’re sending your items in pallets, you want to be as close as possible to Amazon to save on freight costs.
The turnaround is the time the prep center takes to prepare your items for Amazon from the moment you provide them instructions. Most prep centers advertise 24 hours but there are some that take 48 hours or longer.
This is really important. You’ll see all kinds of ranges and price models people are using. Some charge by the piece and some charge by the hour. Some provide free receiving and others provide free storage. Some provide nothing for free.
Other prep centers also charge a monthly fee in which they’ll include a set amount of items.
This can be quite confusing and the solution to this is to calculate.
I recommend creating a price table in excel/google sheets and run some scenarios on how much it would cost for a shipment. You want to try this at 100 units and also at 1000 units to get a real comparison.
It’s important to know if there’s any minimum charge you will also have to pay for. Some prep centers have minimum storage fees and others have minimum pick and pack fees. A lot of prep centers don’t have any minimums. Best thing is to pick up the phone, call and ask.
Depending on your business, you might not need all the services the prep center offers.
Prep centers usually bundle their services together and charge a flat rate. This might work for someone who needs all the services but if you just require the prep center to forward packages, a prep center with more flexibility will work better.
There’s some prep centers that won’t do anything outside the normal counting, labeling etc.
If you need returns handling or FBA Removal services, make sure to ask to ensure the prep center can handle that.
When signing up with a prep center, it’s important to know if there is a minimum time commitment. Besides asking the prep center, it’s also important to ask yourself if you’re okay with that? Most likely not.
Most prep centers don’t have a minimum contract which is great.
But keep in mind that contracts are not always a bad option. Depending on your business, you might even prefer being in a contract. If they’re offering you better rates for a longer commitment, that might be something that appeals to you.
With the current landscape, a lot of prep centers are overwhelmed and most are at full capacity. You’ll have to call around to see if they’re even accepting new customers.
As the market changes, a lot of sellers are now looking into Seller Fulfilled Prime services. Some prep centers are also Third Party Logistics providers meaning they can ship orders to your customers directly. It’s convenient if the prep center you’re using can facilitate both FBA and FBM services for you.
When it comes to prep centers, communication is key. When using a prep center, you’re entrusting a third party with your goods. If someone has your goods and they’re hard to get in touch with, that’s trouble.
You can’t fully know how good a company’s customer service is until you have real problems but there’s some easy ways to check.
You can start by filling out quote forms on their websites or sending them an email. See how long they take to respond. If it’s anything more than 1-2 business days, that could be alarming.
Also, you can try calling them to see if they’re picking up the phone.
Note: Btw, just because someone didn’t pick up the phone the first time you called them doesn’t mean they won’t pick it up at another time.
Like we said in the last point, communication is key. With every prep center, you should ask them how you’ll be submitting orders to them. Most prep centers take instructions over email and surprisingly some only over the phone (when I say some I mean very few). Nothing wrong with that as some sellers might prefer that.
The most advanced prep centers have a dashboard where you can login and track your inventory. You’ll be able to provide instructions and select services you need. As those services are completed.
The good part about dashboards is that you can also see your past orders all in one screen.
But keep in mind that all dashboards are not equal. Some are really good and some are really bad. Every company is different and their software is also different.
Bonus = Storage Options
Depending on the number of unique SKUs you carry, the size of your items and the quantity you keep in stock of each, you’ll require different storage options..
Most prep centers only offer pallet storage and others will have bin and shelf storage. If you’re selling small items, you might never need a pallet so you could find yourself overpaying.
These are the main things to look for when choosing a FBA Prep Center. You should be able to find most of this information on their website and if you can’t, just call them and ask.