As a result of the COVID outbreak, 2020 has been a wild year for e-Commerce, similarly, 2021 has been showing similar growth development. However, perhaps the best takeaway from this is that being excessively reliant upon any one fulfillment procedure is risky. Fulfillment by Amazon (FBA) is a go-to place for many sellers but in this blog, we will discuss how over-relying on a single fulfillment strategy can leave brands at risk.
What happens when you only rely on FBA?
Relying only on Fulfillment by Amazon (FBA) means going according to their flow and structure and following their rules and procedures which can be changed or updated instantly. With Amazon being one of the biggest online shopping sites, it should not come as a shock that the demand will seemingly increase at a very fast pace. In March 2020, Amazon confined certain item classes as customer demands surpassed FBAs available capabilities. As a result, Amazon promoted Fulfilment by Merchant (FBM) orders over Fulfillment by Amazon (FBA) orders to help relieve the burden on its overburdened framework. Not only that but also, Amazon further complicated the issue for Fulfillment by Amazon (FBA) dealers by increasing its Inventory Performance Index (IPI) several times over the year. Vendors who neglected to meet the new necessities confronted capacity limits, which implies they needed to either acknowledge the potential for sales loss due to out-of-stocks or amend their inventory network interaction to have the option to dispatch smaller orders more regularly into Amazon’s fulfillment center. That ends up being an intense request for many brands.
With sudden outbreaks such COVID-19 outbreak, it would have never been predicted and so businesses should always have a plan B as a backup to ensure sales, even in times of crisis, so they won’t face any challenges or loss.
Consequences of Being Unable to Fulfill Orders
At the point when sellers cannot satisfy orders, clearly, they are losing out on sales. But out-of-stocks have different ramifications too. Some are narrated below:
1. Marketing Productivity Suffers
At the point when an item is unavailable or out-of-stock, the item rank deteriorates as contenders fill the gap.
2. Impact on Market Share
Since your brand is unavailable, customers will go to contenders for their requirements. This compounds the effect on item rank, with contenders improving position while your rank weakens.
How can one avoid or reduce these risks during times of crisis?
Our answer is risk mitigation through diversified fulfillment. What different arrangements would sellers be able to use outside of Fulfillment by Amazon (FBA)? There are many options, however, here are a portion of the more conspicuous fulfillment techniques.
1. Fulfillment by Merchant (FBM)
Fulfillment by Merchant (FBM) is a model where the seller is liable for storage, put aways, handling, and shipping items to end customers. Some of the main advantages include:
• The absence of outside stockpiling and fulfillment expenses can increase margins
• As the owner of your own fulfillment organization, you are protected from one-sided policy changes and updates like those looked in FBA
• You may likewise appreciate simpler visibility into stock levels
• Sellers can list the same inventory on multiple channels like Noon, Carrefour, SharafDG, etc.
2. Marketplace offerings
Regardless of its huge platform, Amazon isn’t the only lion in the jungle. One effective approach to reduce the risk is to expand your business channels. By listing and selling products on different marketplaces, vendors can reach more customers and catch more deals.
3. Start your own website
Many D2C brands are launching their own websites on the builders like Shopify, Woocommerce, WIX, Magento, PrestaShop, NopCommerce, etc. On own website, D2C brands can reach more targeted customers and focus on creating brand valuations.
In the drop-shipping model, marketplaces are connecting suppliers on their platforms. When the customer places orders, Depoter is splitting them and alerting the suppliers for the respective SKUs and quantities. In such cases, marketplaces do not invest in inventory and warehousing infrastructure but at the same time, there is no shortage of the inventory as it can be procured through dropship model.
Don’t rely only on FBA
Fulfillment by Amazon (FBA) is a vigorous offering, and it would be tremendously silly to dismiss it. In the case of selling on Amazon, you should utilize FBA; it just shouldn’t be your sole method of fulfillment.
Enrolling in Fulfillment by Merchant (FBM) with Depoter will ensure the safety of your business and reduce your risks of potential sales loss during times of crisis as compared to Fulfillment by Amazon (FBA). Similarly, you are protected from unilateral policymaking and have more control over your products and your sales.