Navigating the Fulfillment by Amazon Journey for Omnichannel Startups

So your eCommerce passion project has become a DTC sensation. Now, anyone who has ever worked at a startup is preaching the virtues of B2B, following a path towards retail enlightenment, aka an endcap at Targets nationwide.

No doubt, you’re buzzing with confidence and ambition. Still, you’ve also learned many valuable lessons along the way, like the importance of exercising extreme caution in the face of new ventures, especially when those opportunities land on the heels of recent prosperity.

You also know enough to pursue measured growth - an incremental expansion within your control rather one that forces a steep learning curve. There may be no better example of this than Amazon’s Fulfillment by Amazon program and its role in the lifecycle of digitally native but budding omnichannel startups.

Of course, Fulfillment by Amazon (FBA) is super scalable and a tremendous source of potential revenue in its own right. For some sellers, however, the financial upside is just gravy. The real value is the pseudo-retail environment Amazon has created to manage supply and replenishment for the marketplace platform - perfect for brands hoping to scale their B2B channel.

But before you can leverage FBA as a revenue stream and an experiential education, you must become well-acquainted with how the program works and the potential pitfalls. For instance, the stakes are infinitely lower for FBA since you’re not on the hook with a trading partner. At the same time, though, there are still barriers to entry - namely, the highly specific packing, packaging, and palletization standards for any inventory flowing through the Amazon fulfillment network. Nevertheless, understanding Amazon’s guidelines and implementing necessary changes ahead of your first FBA shipment can expedite active seller status and ensure the long-term success of your brand’s participation.

Defining FBA

Fulfillment by Amazon is a function of the Amazon distribution network, which caters to sellers. Essentially, the service acts like a label and ship third-party-logistics (3pl) for the items and packing configurations designed and made available by brands for listing on Amazon.com.

In the FBA model, sellers move active (often ship-ready) units to Amazon distribution centers. Orders are then processed, packaged,  and shipped out for final-mile delivery. These facilities seemingly provide no production or rework services, and on-hand inventory is very much “just in time.” This is partly how Amazon and its FBA sellers earn the Prime badge.

Understanding Amazon FBA Shipping Requirements

Regarding inbound shipments, Amazon has strict rules that ensure items almost always qualify for free two-day shipping. Here's what you need to know:

a) Box Weight and Dimensions

Your packages should be within Amazon's weight and size limits. The maximum weight per box is typically 50 pounds, and dimensions should not exceed 25 inches on any side. Remember, keeping it within limits prevents mishaps during transit.

b) Poly Bags and Packaging

Certain products can be packaged in poly bags, while others require more sturdy packaging. For items requiring poly bags, ensure they meet Amazon's guidelines to prevent damage during shipping. Choose sturdy and secure materials for products that need box packaging to protect your items adequately.

Packaging Guidelines for Amazon FBA

Now that we've covered the shipping requirements let's delve into Amazon's packaging guidelines:

a) Inner Packaging

‍Protective layers are crucial to safeguard your products during transit. Use bubble wrap, air pillows, or packing paper to provide cushioning and prevent movement within the package. Keep your items safe and snug!

b) Box Sealing

Tape it up! Amazon recommends using high-quality packaging tape to seal your boxes securely. Avoid using string or regular household tape, which may lead to package openings and potential damage.

c) Labeling

Proper labeling is critical to ensuring your packages reach their intended destination. Print and affix the Amazon barcode labels accurately. Avoid covering the barcode with tape or placing labels on the box's seams. Remember, legibility matters!

Additional Considerations

Beyond shipping configurations and material use, additional product-dependent FBA specs should also be considered.

a) Expiration Dates

Amazon mandates that all relevant dates are visible on the packaging of products with expiries. Ensure your items have a good shelf life, and audit every vendor invited into your brand’s supply network for their execution of First in, First out (FIFO).

This is a vital element of operations that companies must get right. Having said that, it is easy for brands to deprioritize the Quality Control (QC) processes that support effective FIFO management, especially when there’s no history of expiry issues. But as FBA increases, so too will the potential for error - all the more reason for expiries to become a recurring item at the top of your to-do list.

Better yet, in working with a company like Ampla, there is an opportunity to address expiration date management in a more comprehensive way. For example, many companies implement a lot tracking system to mitigate expiry errors and increase traceability throughout the supply chain.

LOT tracking is ostensibly a way to tie specific items to the batch with which they were manufactured. When a batch of products is manufactured, it is assigned a lot number. Lot numbers are printed on product packaging or sprayed on master cartons as scannable barcodes. When an inbound shipment arrives at a distribution center, items are scanned into perpetual inventory. System logic then governs the sequence in which lotted items move through fulfillment. This is a hard-programmed automation completely insulated from human error. Warehouse operators quite literally cannot complete an order for which the wrong lot was scanned.

Needless to say - that sort of assurance comes at a price, with costs flowing from three primary categories:

1. Manufacturing - The cost of lot origination and printing
2. Warehousing - Many facilities structure storage and receiving costs on a per SKU/Lot basis
3. Shipping and Fulfillment - 3pls must program job rule automation for lot management

These charges can feel like a burden but are quickly surpassed by chargebacks, lost sales, returns, and refunds that result from expiry mismanagement. Not to mention, if the goal is retail distribution, you will be hard-pressed to find a prominent trading partner that doesn’t require lot control.

By partnering with Ampla, brands are able to purposefully increase working capital in order to fund lot programming. As a catalyst for growth through FBA and beyond, that’s money well spent, and an especially worthy investment in peace of mind.

b) Oversized Products

For items exceeding the standard size limits, additional fees may apply. So take note of the specific requirements for oversized products and plan accordingly. Nobody likes surprises, especially when it comes to fees!

At first glance, FBA’s list of shipping requirements seems exhaustive and daunting. You might think it's been undersold, and the barrier to entry is a bit higher than advertised.

Here is another way to look at it -  FBA packing, package configuration, and routing specs are a clear and decisive set of rules for bulk distribution. Each section header for the information outlined above is effectively a step -  a checkpoint to reach or list item to strike through. But, more importantly, each pertains to an element of bulk distribution that you must internalize before removing the training wheels and joining the retail rat race. So, for now, take it as guidance and a means of building foundational skills for future B2B success.