Management & Finance

Amazon Exec On Outsourcing Fulfillment

Every ecommerce merchant must address, at least in some capacity, the issues of fulfillment. One merchant who does this in a big way is Amazon.com. Amazon now offers its fulfillment and warehousing expertise to any ecommerce merchant via its “Fulfillment by Amazon” service. To explain this service, and how it could help smaller ecommerce merchants, Practical eCommerce recently spoke with Tom Taylor, vice president of Fulfillment by Amazon.

PeC: Can any merchant outsource his fulfillment and/or warehousing to Amazon’s fulfillment services?

TomTaylorAmazonTaylor: “Absolutely, yes. We originally started with the idea of Fulfillment by Amazon soliciting to our customers who really wanted to have a better shopping experience, but we realized that the sellers, ecommerce merchants, they sell on many different channels, maybe Amazon, maybe other channels and we knew that to make Fulfillment by Amazon compelling, we have enabled fulfillment for any channel.”

PeC: Does a merchant have to use Amazon’s other services to use your fulfillment services?

Taylor: “No, they don’t, although . . . we certainly find that once you’re already using Fulfillment by Amazon, perhaps you might as well sell on Amazon, but it’s not required.”

PeC: Walk us through the operational issues. A merchant has a shopping cart. How does order information go from the merchant (when a customer places an order) to your fulfillment services?

Taylor: “We have three different ways that an ecommerce site could communicate with us. They could get an order and process payment on their system and then come into what we call seller central, which is a user interface that a merchant could use sort of one by one orders. In addition, we also have feed support as well as APIs for some larger sellers that may want to integrate automatically with us.”

PeC: Many merchants have third party order management software and/or accounting packages. Do you automatically sync with some of those?

Taylor: “Through APIs or feeds, depending on the packages that they have, they can give us the request for the shipment. Also, we’re working with some integrators to provide that support for some of the more popular packages.”

PeC: You have a number of warehouses around the country and around the world. How do you determine which warehouse a merchant’s products will reside?

Taylor: “It’s a fairly simple algorithm. We really look to reduce the cost to the merchant for their inbound transportation to us.”

PeC: How does your pricing system work?

Taylor: “Our pricing is always available publicly at Fba.amazon.com. It’s there. It’s driven around a weight and shipping speed. We don’t have any setup cost. We don’t have any receiving cost. So, it’s in a very scalable pricing mechanism. I’ll just give you an example. If you were selling, say, a 2-pound, $200 camera, it would cost you about $2 to do the fulfillment and if we were doing the shipping on your behalf, it would be $4.75 for standard shipping. So, if you look it up on the table, it’s very predictable and very simple and easy to use.”

PeC: With Amazon’s volume of shipping, will a merchant save shipping costs?

Taylor: “It depends on the situation. We certainly feel our pricing is competitive. It’s not just the size of our organization or size of our shipping. You mentioned about the different fulfillment centers, which we have around the US and around the world. If Amazon can get your inventory very close to a customer, I can save on shipping and this is another big advantage of Amazon.”

PeC: Anything else on your mind as it relates to fulfillment and ecommerce?

Taylor: “There are two things. The first is . . . international growth. Fulfillment by Amazon works in Japan, Germany, U.K., and France where we have websites and fulfillment centers there and we’re starting to see a number of merchants who are saying, ‘Wow. I never would have thought that I could have been going into the Japanese market and yet I can if I use Fulfillment by Amazon.’ Lastly, we are growing Fulfillment by Amazon and we have thousands of merchants today, we’re going to continue to grow that, but it is available for merchants to try out for free after a rebate, at Fba.amazon.com.”

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