There are countless blogs that talk about the obvious benefits of Amazon FBA (the shipping method) without going into detail about the potential problems of one-sided shipping logistics. Amazon FBA is by no means always the best choice, but an assessment of the product range and the competition is required in order to make a clear assessment here.
It does not necessarily have to mean Amazon FBA vs. FBMInstead, a hybrid procedure can be selected without any problems.
The majority of our customers rely on both the Amazon FBA shipping method and in-house shipping. Especially after the experiences in Q1/Q2 2020, everyone should be aware of the advantages of having their own shipping logistics.
Disadvantages of using Amazon FBA exclusively
1. maximum posting quantities per ASIN
In 2020, Amazon began to impose maximum quantities for delivery to the warehouses during the FBA inbound workflow, meaning that only small quantities could be delivered in some cases. As a result, products have to be sent to Amazon much more frequently and regularly, which ultimately leads to a decrease in efficiency and increases the risk of out-of-stock products. The prescribed quantities are based on the item's sales figures in the past, meaning that new items are automatically at a disadvantage and therefore find it more difficult to rank well in the long term.
2. regular occurrence of delivery problems
In Q4 2020 in particular, an increasing number of customer accounts had items declared as missing or undelivered. In some cases, customers were left with the costs of the lost items. If this had been an isolated incident, it would not be worth mentioning, but these incidents have occurred with established Amazon FBA retailers, which ultimately does not reflect well on Amazon's reliability.
3. possible stop of delivery of the goods
At the end of March 2020, the unthinkable happened. Amazon blocked the delivery of non-essential items (groceries, drugstores, pet food, etc.) and suddenly thousands of Amazon retailers were left with empty warehouses. The stop on deliveries particularly affected retailers who had relied exclusively on Amazon FBA. Of course, nobody could have expected this, but it didn't happen to any of our customers with their own shipping logistics. After the experience of 2020, everyone should consider this as a potential risk.
4. non-compliance with shipping logistics can lead to exports
If Amazon FBA is used as shipping logistics, the settings for this should also be viewed and adjusted accordingly. You can find these under Settings → Shipping by Amazon → Shipping settings & export settings.
The shipping programs and export settings are activated by default. This means that customers from over 80 countries can order your products on Amazon.de. These settings should be familiar to every Amazon FBA merchant. These settings also mean that you authorize Amazon to buy up your own stock so that it can be exported and sold to end customers on behalf of Amazon. This means that if Amazon wants to, they can buy your stock and send the goods to Spain to sell them on to end customers at a higher price. This has already happened to our customers several times.
5. problems with commingled stock
If items are sold that are also offered by other sellers on Amazon, your own items can be stored with the items from other sellers as mixed stock. If this is not the case, an additional product label is required for recognition. Unfortunately, there have been problems in the past (lost items), so this option should always be used with caution.
6. difficult controlling of stock levels
Another major disadvantage of Amazon FBA is the difficulty in controlling the current stock level. Amazon does not make it easy to track stock levels and, in particular, to view issues, returns, exports and defective items. Without regular controlling, no major optimization steps can be taken. This can lead to problems, especially with a high number of items that are delivered via FBA.
7. additional delivery route
By using Amazon FBA, the items are usually shipped a second time. Since most sellers have their items in their own warehouse, the items have to be shipped one more time, which ultimately leads to additional costs and a burden on the environment that could be avoided by using your own shipping logistics.
8. different storage locations
Amazon assigns products to specific warehouses, so it is regular practice for similar items to be shipped to different locations in Germany. This naturally leads to lower efficiency, as two trucks now have to drive instead of one. This also increases costs and unnecessarily harms the environment.
Conclusion on the disadvantages of Amazon FBA:
With Fulfillment by Amazon, Amazon offers an incredible logistics solution that has helped a large number of sellers get started in eCommerce. However, every seller should ask themselves whether it wouldn't make more sense to use a solution other than Amazon FBA.
We, the Adsmasters GmbH, are a specialized advertising Amazon Agency and help you implement your Amazon FBA strategy.