Comparing FBA, 3PL and FBM For eCommerce

Comparing FBA, 3PL and FBM For eCommerce

How to use the different cross-border e-commerce logistics modes of FBA, 3PL and FBM to complete the optimization of product sales channels and supply chain solutions for online and offline sales.

From the perspective of international trade, the pain points of Chinese sellers selling on the AMAZON platform are:

1. There is no official legal person in the United States. If there is a problem, consumers will not get any protection and compensation except for the product being removed from the shelves.

2. For Chinese sellers, all brands and fans belong to Amazon. Inability to accumulate own customers and brands.

3. No reverse logistics and secondary sales! The seller's resources cannot be fully utilized.

4. Relying entirely on the marketing of the Amazon platform, other sales channels are lacking, and local marketing is weak!

5. The vicious competition of similar products, in addition to the price is the price.

Detailed explanation of the three major cross-border e-commerce logistics modes of FBA/FBM/3PL

Amazon FBA Business Model

What is FBA?

The full name of FBA is Fullfillment By Amazon, which is a drop shipping business provided by Amazon, including one-stop logistics services such as warehousing, picking, packaging, distribution, collection, customer service and return processing. The seller prepares the goods to the Amazon warehouse in advance, and after the customer places the order, the Amazon warehouse directly ships the goods to the customer.

Pros of FBA Amazon:

Higher product exposure

Using FBA for delivery can help improve the ranking of products and increase exposure, and Amazon's prime members will give priority to listings delivered by Amazon's FBA when purchasing products. According to statistics, it can increase sales by 40%.

Open store review green channel

Amazon reduces store verification for sellers who ship with FBA. Because the seller's goods have been stored in the Amazon warehouse, the risk of store operation is relatively reduced. The Amazon review system will open a green channel for these sellers.

Save some labor and logistics costs

After a buyer places an order, Amazon FBA will give priority to helping sellers pack and deliver, including one-day delivery and next-day delivery services launched by Amazon. Sellers use FBA for delivery, and sellers can be partially responsible for the labor costs of packaging and delivery. Moreover, the cost of FBA first-way delivery is generally lower than some postal parcels and other logistics costs.

Improve profit margins

For self-delivery sellers, the price of products delivered by FBA is generally high. However, after deducting various costs of FBA, the profit of the same product delivered by FBA will be higher than that of self-delivery.

More opportunities for event promotions

Amazon has many promotions every year. Sellers can increase product sales by participating in these activities, but they need to meet the conditions of [FBA payment is required].

Increased satisfaction and repurchase rates

The products shipped by FBA are directly handled by Amazon, so the general customer will receive the goods within 3 days, the timeliness is more guaranteed, and the customer satisfaction will be higher.

Cons of FBA Amazon

1. Amazon is not responsible for customs clearance and settlement. The seller needs to prepare the goods to the warehouse designated by Amazon in advance, and the seller needs to solve the problem of the first journey.

2. The comprehensive cost is high. Compared with the cumulative cost of self-delivery and overseas warehouses, the cost of FBA will be higher.

3. Poor flexibility. FBA can only communicate with customer service in English, and because of the time difference and different work habits.

4. Label issues affect shipments. When shipping to the FBA warehouse, you need to affix Amazon's product label, so that Amazon can scan it and put it on the shelf after receiving it!

5. The handling of return and exchange issues is biased towards the customer. Amazon supports customers to return and exchange products unconditionally, but the FBA warehouse will no longer conduct any appraisal of the returned products.

6. Strict commodity restrictions and packaging requirements. Amazon has strict product restrictions and packaging requirements for FBA products!

Third-Party Logistics Partner

What is 3PL?

Third-Party Logistics (3PL): The third-party overseas warehousing service. It refers to the one-stop control and management service of goods warehousing, sorting, packaging and delivery provided by logistics service providers independently or jointly for sellers in the sales destination. The seller stores the goods in the local warehouse. When the buyer has a demand, they will respond quickly and carry out the sorting, packaging and distribution of the goods in time.

Although FBA has solved many problems for sellers, due to Amazon's restrictions and requirements on products, as well as problems such as high cost and poor flexibility, these problems can be solved through third-party overseas warehouses. Compared with FBA, 3PL has some unique advantages.

Pros of 3PL

1: Reduce logistics costs. The overseas warehouse first journey is to convert scattered international small packages into bulk transportation, and then ship from overseas warehouses, the logistics cost of cross-border sellers will be greatly reduced. Overseas warehousing is to put the goods in the overseas warehouse in advance, and then deliver the goods from the local overseas warehouse. The logistics cost will be equivalent to the domestic express delivery.

2: Speed up the logistics timeliness. Cross-border sellers prepare goods in advance from overseas warehouses, which can save the time required for customs declaration and customs clearance. The overseas warehouse mode can transform traditional international delivery into local delivery, ensuring that goods reach consumers faster, safer and more accurately. Shorten the time for parcel delivery, thereby speeding up the timeliness of logistics. This is very applicable during the peak season of foreign trade.

3: Improve customer satisfaction. After foreign buyers place an order, they can sort, pack, and deliver in overseas warehouses, which greatly speeds up the delivery time, avoids logistics shortcomings caused by special reasons such as holidays, and truly enables cross-border e-commerce to achieve localized services, thereby improving cross-border e-commerce. overseas competitiveness of domestic e-commerce.

In addition, after placing an order, customers are most concerned about after-sales service, including aging, return of goods, replacement and so on. When customers encounter these problems, sellers can use overseas warehouses for after-sales service, which greatly saves logistics time and solves customers' worries, thereby improving store satisfaction, and saving sellers transportation costs, thereby reducing losses.

4: Increase product exposure. If the platform or store has its own warehouse overseas, local customers will generally give priority to local delivery when they choose to shop, because this can greatly shorten the delivery time for buyers. The advantages of overseas warehouses can also allow sellers to have their own unique advantages, thereby increasing product exposure and increasing store sales.

5: Conducive to developing the market. If sellers focus on marketing word of mouth, their products can be recognized by customers locally, which will help sellers to accumulate more customer resources and expand the market.

For sellers with large volume, they can choose a combination of FBA warehouse and overseas warehouse.

FBM - Self-built Website & Self-delivery

In addition to the two delivery modes of FBA and 3PL, there is another delivery mode that is FBM. Compared with FBA and 3PL, self-delivery inventory control is stronger.

What is FBM?

FBM means that sellers directly deliver goods from domestic suppliers or warehouses to foreign customers after receiving customer orders, that is, sellers are responsible for a series of activities such as warehousing, sorting, packaging, delivery and customer service.

Pros of FBM:

1. The FBM model does not require sellers to stock up, and there is no need to worry about the risk of unsalable goods

2. It saves a lot of storage costs, which is good for novices who are under great financial pressure in the early stage.

3. The operating cost is low, and the seller saves a lot of labor costs, such as no need for a large number of customer service specialists or design. Moreover, the Amazon platform has no product and quantity restrictions for stores without sources of supply. It only needs to list a large number of products in the store. The more products on the shelves, the higher the purchase rate of customers. After getting used to it, it is no problem for one person to manage multiple stores at the same time.

---

STU Supply Chain is a comprehensive import and export e-commerce cross-border logistics platform and a professional overseas warehouse service platform provider. Provide solutions for local customs clearance and last-mile delivery in North America.

With years of experience in sea and air freight and cross-border logistics services, we provide China and USA e-commerce and importers with full logistics solutions such as overseas warehouse platform management, cross-border transportation, customs clearance and delivery, and Amazon FBA.

If you want to consult or learn more about cross-border e-commerce and warehousing and truck warehouses, etc. Please feel free to contact us!