Third-party sellers are an integral part of Amazon’s ecommerce business, accounting for 60% of sales on Amazon.com.
Amazon decided to open its store to these sellers back in 1999, and over the years the number of businesses selling on Amazon.com has steadily increased. Today, we have over 1.9 million selling partners worldwide.
Third-party sellers are a critical component of Amazon’s success, and we, in turn, are deeply committed to their success.
Indeed, Amazon provides many different services and solutions to help sellers grow their ecommerce businesses on Amazon.com and also through other ecommerce channels.
One area where many sellers need support is order fulfillment, and Amazon – which has the world’s largest fulfillment network, with over 2,000 facilities (including more than 200 fulfillment centers), 120,000 trucks, vans, and planes, and 1,275,000 associates and partners – is well positioned to help.
Amazon offers two different third-party logistics (3PL) services to help sellers handle their order fulfillment:
- Fulfillment by Amazon (FBA), a service through which sellers can outsource the fulfillment of their Amazon.com orders to Amazon. Nearly half of US Amazon sellers use FBA to pick, pack, and ship their Amazon.com orders.
- Amazon Multi-Channel Fulfillment (MCF), a service through which sellers can outsource the fulfillment of their orders from off-Amazon channels (including their brand websites, other ecommerce marketplaces, and social media stores) to Amazon. Since MCF was launched in 2007, over 450,000 sellers have used this service to pick, pack, and ship their orders from off-Amazon channels.
Many sellers use FBA and MCF, and are well aware of the business benefits that each of these fast, reliable, 3PL fulfillment services can bring, including improved operational efficiency, on-time delivery performance, and customer satisfaction as well as reduced operating costs.
And many sellers already know that using MCF can help them scale their ecommerce business beyond Amazon.com.
What many sellers may not realize is that using MCF together with FBA can actually help to boost their Amazon.com business. In fact, sellers who use both MCF and FBA are able to increase their Amazon.com sales revenue by an average of 38%!
You might wonder: How is it possible to see such a significant spike in Amazon.com sales revenue from using FBA and MCF?
In this blog, we will explain the three main reasons why – by leveraging Amazon’s two 3PL fulfillment services, FBA and MCF – you can see an uplift in your Amazon.com sales and realize a whole host of other business benefits.
Reason #1: Effective inventory consolidation and distribution
The first reason why using MCF along with FBA can increase your Amazon.com sales revenue is that it enables inventory consolidation and distribution.
If you are using MCF and FBA, you send your inventory to an Amazon fulfillment center, and we consolidate it into a single pool, which can be tapped into to fulfill your Amazon.com orders (with FBA) as well as your off-Amazon orders (with MCF).
This ability to utilize the same pool of inventory to satisfy demand from multiple sales channels, on and off Amazon, is hugely beneficial to sellers – and we see that sellers who use both MCF and FBA send 2.5 times more inventory to Amazon than sellers who don’t use both services. By doing this, they reduce the likelihood of overstocking or stockouts on any of their ecommerce channels.
And the more inventory you send to Amazon, the better, because once Amazon receives your inventory, we strategically distribute it across our network of fulfillment centers, so it’s as close as possible to your customer base.
Our machine learning-based inventory management system automatically determines where to position your inventory across our fulfillment network, based on numerous factors including demand forecasts and historical sales data.
With your inventory consolidated into a single pool that can be used for all your orders and distributed optimally across Amazon’s network of fulfillment centers so it’s near your customers, you are ready and able to utilize that stock to meet demand across all your channels and markets.
Reason #2: Improved inventory availability and turnover
The second reason why using MCF and FBA can boost your Amazon.com business is that it enables you to improve your inventory availability and utilization.
Having your inventory consolidated into a single pool that’s distributed strategically across Amazon’s fulfillment network allows you to optimize:
- Inventory availability: You can ensure you have the right amount of the right products in the right places at the right times – so that you can satisfy demand from all your ecommerce channels and help prevent stockouts. In fact, sellers who use both MCF and FBA are able to reduce out-of-stock rates by an average of 13%.
- Inventory turnover: You can expose the same pool of inventory to all your channels – including Amazon.com, other ecommerce marketplaces, your brand websites, and social media stores – thereby increasing the likelihood that it will be sold faster. Sellers who use both MCF and FBA are able to improve inventory turnover by an average of 24%. And improving inventory turnover can free up working capital that you have tied up in your inventory – allowing you to use those funds to unlock opportunities for business growth.
By committing more of your inventory to Amazon and leveraging both MCF and FBA to fulfill your orders, you can maximize the utilization of your stock – dramatically decreasing your out-of-stock risk and increasing your inventory turnover rate.
Reason #3: Faster delivery promises and better chance of having products appear as featured offers
The last reason why using MCF with FBA can help fuel your Amazon.com revenue growth is that it allows you to make faster delivery promises and increasing their chances of having products appear as featured offers on Amazon.com.
Indeed, having your products in stock and strategically positioned across Amazon’s fulfillment network will help you:
- Make faster delivery promises on Amazon.com, because your stock will be located as close as possible to your customers’ doorsteps. Being able to make faster delivery promises can help boost shopper conversion – as, according to recent research, 22% of online shoppers abandon their carts during checkout because the delivery options are too slow.
- Increase your chances of having your products appear as featured offers on Amazon.com.
By sending more of your inventory to Amazon and using both MCF and FBA to fulfill your orders, you can enhance your ability to make faster delivery promises on Amazon.com and improve your odds of having products appear as featured offers – which will ultimately lead to higher sales on Amazon.com.
Conclusion
MCF and FBA are both powerful 3PL services, which allow you to leverage Amazon’s world-class fulfillment network to rapidly and reliably deliver your customer orders and help you to drive your bottom-line growth.
Using MCF can help you grow your off-Amazon ecommerce business, enabling you to delight customers across all your off-Amazon channels by giving them the fast, reliable Amazon fulfillment experience that they know and love.
And – as we’ve discussed in this blog – using MCF together with FBA can actually help you boost your sales on Amazon.com.
With MCF and FBA, sellers – like you – have been able to increase their Amazon.com sales revenue by an average of 38% by:
- Consolidating their inventory into a single pool that can be used across all their channels.
- Distributing their inventory across Amazon’s network of fulfillment centers so it’s as close as possible to customers.
- Reducing out-of-stock rates by an average of 13%.
- Improving inventory turnover rates by an average of 24%.
- Increasing their chances of having products appear as featured offers on Amazon.com.
If you haven’t done so already, take the time to learn more about MCF and FBA and discover how these two 3PL fulfillment services from Amazon can help your ecommerce business thrive.
