Merchant Fulfilled Amazon Selling: Boost Profits and Inventory Control

Introduction to Merchant Fulfilled Selling on Amazon

Amazon sellers are always looking for ways to optimize their business and increase profits. One strategy that's gaining traction is merchant fulfilled selling. This approach allows sellers to store and ship products directly to customers, rather than relying on Amazon's Fulfillment by Amazon (FBA) service. In this article, we'll explore the benefits and challenges of merchant fulfilled selling, and how it can potentially boost your Amazon business.

What is Merchant Fulfilled Selling?

Merchant fulfilled selling, also known as Fulfilled by Merchant (FBM), is a method where sellers handle storage, packaging, and shipping of products themselves. This is in contrast to FBA, where Amazon takes care of these aspects. With merchant fulfilled selling, you have more control over your inventory and can potentially save on fees associated with FBA.

Why Consider Merchant Fulfilled Selling?

There are several reasons why Amazon sellers might choose to use the merchant fulfilled model:

1. Lower fees
2. More control over inventory
3. Ability to sell items that may not be suitable for FBA
4. Potential for higher profit margins
5. Faster listing of new products

The Catalyst: Amazon's Inventory Clear-Out Opportunity

Many sellers, including the one in our example, stumbled upon the benefits of merchant fulfilled selling due to a unique opportunity presented by Amazon. In October, Amazon sent out emails to many sellers offering free return shipping or disposal for old inventory nearing the one-year mark in their warehouses.

This initiative was designed to help sellers clear out slow-moving stock and improve their Inventory Performance Index (IPI) scores. The IPI is a metric used by Amazon to assess how efficiently sellers manage their inventory, with scores ranging from 0 to 1000.

Turning Returned Inventory into a New Opportunity

When faced with a large amount of returned inventory, our example seller had to decide what to do with these items. Rather than disposing of them or trying to send them back to Amazon (which wasn't allowed until January 31st), they chose to list them as merchant fulfilled.

Surprisingly, many of these books sold quickly, even without Prime shipping. This success led to a realization: there's a market for merchant fulfilled items, particularly books, that might not be profitable under the FBA model.

The Advantages of Merchant Fulfilled Selling

1. Immediate Availability

One of the biggest advantages of merchant fulfilled selling is the speed at which items become available for sale. As soon as you list an item, it's ready to be purchased. This is in stark contrast to FBA, where items need to be shipped to Amazon's fulfillment centers and may be subject to transfer delays.

2. Better Profit Margins

Merchant fulfilled selling often allows for better profit margins. With FBA, sellers have to account for various fees, including storage, fulfillment, and selling fees. These can eat into profits, especially for lower-priced items. By handling fulfillment themselves, sellers can potentially keep a larger portion of the sale price.

3. Control Over Inventory

With merchant fulfilled selling, you have complete control over your inventory. You don't have to worry about long-term storage fees or Amazon's inventory limits. This can be particularly beneficial for items that may not sell quickly or have unpredictable demand.

4. Flexibility in Pricing

Merchant fulfilled selling allows for more flexibility in pricing. Without FBA fees to consider, sellers can price their items more competitively while still maintaining profitability.

Tools for Efficient Merchant Fulfilled Selling

To make merchant fulfilled selling efficient and profitable, sellers can use various tools:

1. Scanning Apps

Apps like Scout IQ can be set up with specific triggers for merchant fulfilled items. This allows sellers to quickly identify profitable books or other items while sourcing.

2. Listing Software

Programs like Scanlister can streamline the listing process. These tools allow for quick scanning and listing of multiple items, saving time and reducing errors.

3. Barcode Scanners

Dedicated barcode scanners, like the YoYo 1D, can significantly speed up the scanning process compared to using a smartphone camera.

The Listing Process

The process of listing merchant fulfilled items can be quite efficient with the right tools. Here's a basic overview:

1. Set up your listing software with the correct SKU prefix and default condition.
2. Scan the barcode of each item.
3. Review and adjust any details as needed.
4. Submit the listings.

With practice, this process can be very quick, allowing sellers to list multiple items in just a few minutes.

Challenges of Merchant Fulfilled Selling

While merchant fulfilled selling offers many advantages, it's not without its challenges:

1. Time Commitment

Merchant fulfilled selling requires more hands-on time than FBA. Sellers need to handle packaging and shipping themselves, which can be time-consuming, especially as order volume increases.

2. Strict Shipping Requirements

Amazon has high expectations for merchant fulfilled sellers. Orders need to be shipped quickly, often within 12-18 hours of purchase. Failing to meet these standards can result in penalties, including the removal of cheaper shipping options.

3. Storage Space

Sellers need to have adequate space to store their inventory. This can be challenging for those operating from home or with limited storage capacity.

4. Shipping Costs

While merchant fulfilled selling can save on FBA fees, sellers need to factor in their own shipping costs. This can eat into profits, especially for heavier items or when expedited shipping is required.

Is Merchant Fulfilled Selling Right for You?

Merchant fulfilled selling isn't suitable for everyone. It's best suited for sellers who:

1. Have control over their schedule
2. Can dedicate time to processing and shipping orders quickly
3. Have adequate storage space for inventory
4. Are looking to maximize profits on items that may not be suitable for FBA

If you have a full-time job or limited control over your schedule, sticking with FBA might be a better option.

Maximizing Profits with Merchant Fulfilled Selling

To make the most of merchant fulfilled selling, consider these strategies:

1. Focus on Items with Good Margins

Look for items that offer a good profit margin after accounting for your shipping and handling costs. Books can be a good starting point, as they're often easy to source and ship.

2. Use Repricing Tools

Repricing tools can help you stay competitive without constantly monitoring prices manually. This can be particularly useful for merchant fulfilled items, where pricing flexibility is one of the key advantages.

3. Optimize Your Shipping Process

Develop an efficient system for packaging and shipping orders. This might include having shipping supplies readily available and setting aside specific times each day for order processing.

4. Leverage Fast Payment Services

Services like Payability can provide faster access to your funds, allowing you to reinvest in inventory more quickly. This can be a significant advantage in scaling your business.

Balancing FBA and Merchant Fulfilled Selling

Many successful Amazon sellers use a combination of FBA and merchant fulfilled selling. This hybrid approach allows them to leverage the benefits of both methods. For example:

• Use FBA for fast-moving, lightweight items where Prime shipping is a significant advantage.
• Use merchant fulfilled selling for slower-moving items, heavy items, or products with slim margins under FBA.

Conclusion

Merchant fulfilled selling on Amazon offers a unique opportunity for sellers to increase their profits and have more control over their inventory. While it requires more hands-on management than FBA, the potential benefits in terms of profitability and flexibility make it an attractive option for many sellers.

However, it's important to carefully consider your own circumstances, including your available time, storage space, and business goals, before diving into merchant fulfilled selling. For some sellers, a combination of FBA and merchant fulfilled methods might provide the best balance.

Ultimately, the key to success on Amazon is continual optimization and adaptation. By understanding and leveraging different fulfillment methods, you can position your business for long-term success in the ever-evolving world of e-commerce.

Getting Started with Merchant Fulfilled Selling

If you're interested in trying merchant fulfilled selling, here are some steps to get started:

1. Review your current inventory for items that might be more profitable as merchant fulfilled.
2. Set up your Amazon seller account for merchant fulfilled selling.
3. Invest in necessary tools like scanning apps and listing software.
4. Start with a small number of items to test the process and your ability to meet Amazon's shipping requirements.
5. Monitor your results and adjust your strategy as needed.

Remember, success in any selling method on Amazon requires patience, adaptability, and a willingness to learn. Whether you choose FBA, merchant fulfilled selling, or a combination of both, the key is to continually optimize your approach based on your unique circumstances and the ever-changing Amazon marketplace.

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