As much as we focus on and rave about selling on Amazon using the FBA program (Fulfillment by Amazon), there are actually times when you should Merchant Fulfill on Amazon.
With FBA, you send the items to Amazon and they process and fulfill the order for you. But with Merchant Fulfilling (MF), you will process and ship the orders directly to the customer yourself.
I want you all to know that even though MF takes a little extra work, there are times when it absolutely makes sense to use merchant fulfillment instead of FBA.
There are actually six specific scenarios where we personally choose to merchant fulfill, and I would recommend that you consider it, too.
But before I explain the six scenarios, I want to make sure that you know how to merchant fulfill products (without losing money on shipping!).
How to Merchant Fulfill on Amazon
One of the big mistakes people make when merchant fulfilling is not calculating the shipping cost before listing the item on Amazon. They end up losing money or not making very much money in the end.
I don't want you to make that costly mistake! So I'm going to briefly cover the basics of MF shipping on Amazon. This isn't step-by-step, but it's enough to keep you from losing money on shipping.
If you make time to watch the video at the end of the post, you'll get to see some of this in action.
Know Your Shipping Costs!
It's important that you know your shipping costs before you list an item MF on Amazon.
Let's say that a customer buys a 2-pound item from you and you're offering Free Shipping. You're excited because you stand to make $12 on this product.
Maybe you thought that you could ship that item for only a few bucks or, like some sellers, you thought that Amazon would cover the cost of shipping.
Well, when you go to Buy Shipping, you learn that it's going to cost you $15 to ship that item to the customer on the other side of the country. There goes your profit!
There are two tools you need to make sure that 1) you know your shipping costs up front and 2) you know that you'll be profitable after shipping costs, Amazon fees, and the cost of your product.
First up, you'll want to use the USPS Postage Price Calculator to estimate your shipping costs. Remember, because you're going to do this before you list, you're not going to know your destination zip code yet.
I like to enter the farthest zip code from me so that I get the highest possible price. I'm in CA so I pick a NY zip code. If you're in FL you could pick WA.
So using the USPS calculator, I know that shipping my 2-pound item from CA all the way to NY should cost about $13.
Now that I have that info, I go over to the Amazon Revenue Calculator and put all my costs in the “Your Fulfillment” column. This is where I can check that I'm still profitable after my shipping costs ($13), Amazon fees, and product cost.
If you've never used the Amazon's profit calculator before, I have a post all about how to use the FBA Revenue Calculator. Of course, that post is about calculating FBA profits, but just use the “Your Fulfillment” column for MF purposes.
Create Multiple Shipping Templates
The other thing that keeps you profitable is creating multiple shipping templates in Amazon Seller Central.
Amazon makes it easy for you to charge different rates based on package weight, customer location, and other factors.
Amazon also allows you to offer different shipping tiers like Standard (the usual 3-7 day shipping), Expedited (maybe 1-3 days), or even Two-Day shipping.
I recommend offering your Standard Shipping option for free. Customers love free shipping and so does Amazon!
This means that the customer won't be paying you any shipping, and that's why you need to know that the cost of your item alone can absorb your shipping costs.
Other than free standard shipping, you can also choose to offer faster shipping at a higher rate.
Honestly, you can set them up however you want. What's important is that you take the time to make your own shipping templates that you understand. Don't just rely on the Default Template and then be surprised if you lose money!
You can take a look at the Shipping Templates page in the video later.
Of course, this is really easier to learn while doing, so you can access the templates in Seller Central by going to Settings and then Shipping Settings.
Save Time with Bulk Shipping
When a customer buys your merchant fulfilled items, it's now your responsibility to process that order and ship it to the customer. Amazon will show you in Seller Central how many “Unshipped” items you have to ship out.
Once upon a time, you had to do Amazon's “Buy Shipping” process just one order at a time. But these days, Amazon offers “Bulk Shipping” which is a real time saver.
This way, you can just wait until you've had a few orders come through and then you can print out all of your packing slips and postage labels at the same time.
When you're shipping MF, you definitely want to use the Buy Shipping option in Seller Central. You'll get good rates and the customer will get accurate order tracking.
And as of May 2018, Amazon has started offering feedback strike-through for qualifying MF orders that use Buy Shipping. Here's the new rule:
In other words, if you buy 2-day shipping through the Buy Shipping service, and then USPS delivers it late, Amazon will review any bad feedback you receive related to the late shipment.
That's a really nice bonus that can take away some of the stress of shipping merchant fulfilled!
Alright, now that you know the basics of MF, let's look at reasons why you might want to use MF instead of FBA. These are the exact 6 scenarios when we choose to use MF instead of FBA.
1. When Amazon Is Temporarily Out Of Stock
Sometimes we scan an item that shows great profit and rank, but upon researching in Camel Camel Camel or Keepa, we realize that Amazon WAS selling the item and JUST ran out. You can see how we use these tools to research our items here.
This explains the great rank and increased price (supply versus demand, right?).
At this time, it doesn’t make much sense for us to send the item into Amazon FBA. By the time that it arrives and gets checked in, it’s likely that Amazon will already have the item back in stock and the price will probably be similar to what we paid for it.
I’m sure you can think of some scenarios where this has happened to you before, right?
So, instead of sending the item to FBA, we will just list it merchant fulfilled and get as many sales as we can before Amazon comes back into stock.
This can work really well at any time of the year, and especially well during Q4! Q4 is a time when Amazon is constantly coming in and out of stock on items.
2. When There Are No Other Sellers
There are times where we come across items and not only is Amazon not selling the item, but there are NO sellers at all. Man, what a goldmine!
Sometimes these items have really good ranks still which means that they sold recently. Other times, the rank may have gone up above 200,000 because there are no offers. If Keepa shows that this will sell, we want to jump on it!
When this happens, we will often list some units merchant fulfilled so that we can get some quick sales while the rest of the units are on their way to Amazon.
If we only have a few units available, then we will list them merchant fulfilled to see if they sell quickly. After a few days if we still have some in stock, then we will send some (or the rest) of them into Amazon for FBA.
We like to have them listed as soon as possible so if people are looking for them they can get them right away. Instead of waiting 10 or so days for them to arrive at Amazon and go up for sale.
When we have a lot of stock of the item, we will list some merchant fulfilled and then once the rest arrive at Amazon we will pull the merchant fulfilled ones and send those into Amazon as well.
We would rather them sell FBA in this case because we don’t have to process them or keep them at the house.
So in this case, we get the best of both worlds, quick sales and then FBA.
3. During Q4
We tend to do most of our merchant fulfilling in the Fourth Quarter (Q4) when there are so many items that are really hot and will sell RIGHT NOW if we just list them.
Plus, they usually fall into one of the two categories mentioned above (Amazon is just out of stock, or everyone is out of stock).
With Q4, we are also up against some deadlines and merchant fulfilling helps us to get the sales quickly and make sure that our stuff sells before the holidays are over.
Lately, shipments are taking longer and longer to arrive at Amazon and be checked in and ready to ship. If it takes 10 days to go from my house to Amazon and ready to sell, I can’t send anything in past December 5 or so.
If you want to know more about selling on Amazon during Q4, make sure to check out our Q4 Profits Training, which comes with an ebook and multiple videos to teach you the skills of being super profitable in Q4!
4. For Items with Expiration Dates (Health, Beauty & Grocery)
Selling items with expiration dates can be tricky sometimes.
If you're sending expiration dated inventory to an FBA Warehouse, it has to arrive at the warehouse with at least 105 days of shelf life remaining.
So, if we miss the deadline for them arriving at FBA, we can still merchant fulfill them with ample time and have them sell before the cutoff.
For more details about selling items with expiration dates, check out this post!
5. For Hazmat Items
When an item is listed as Hazmat (Hazardous Material) inside of Amazon, we are not able to sell it FBA.
This usually means that there is an ingredient that is considered dangerous or flammable.
But it doesn’t mean that they can’t be sold at all on Amazon, or that you can’t ship them at all.
When an item is deemed Hazardous, it can not be shipped using AIR shipping. But, they can be shipped ground!
Go ahead and list these MF when it's profitable because you'll rarely be competing against FBA offers. Some sellers don't bother with Hazmat items at all, so you may end up being the only seller!
6. During FBA Restricted Periods
In 2016, Amazon threw a slight wrench into the selling game. They said that any new seller who had not completed a shipment prior to October 10th would not be able to sell using the Fulfillment By Amazon (FBA) program at all, until December 19th, 2016.
Then in 2017, Amazon did not impose that limitation.
Amazon is always changing and it's good for sellers to be able to respond and adapt quickly.
If you're a new seller and Amazon decided to enforce that policy again, would you be able to sell MF?
I think it's good to be prepared and know your options. If you go ahead and learn how to merchant fulfill now, you'll always have that as an option to keep making money.
Because Amazon did this during Q4 in 2016, there were still lots of opportunities to sell on Amazon, you just had to do a little more of the work yourself 🙂
Keep in mind that Amazon does often place restrictions on MF Toys for new sellers. You can check Seller Central Headlines for the latest Q4 news and updates. Even if you can't MF toys, there are plenty of other great seasonal and year-round items worth selling!
Bonus Video: MF Live Training with Special Guest Eleanor Prior
Eleanor is the founder of the BoloMart Facebook Group. She recently shared with the group that in Q4 of 2017, she did $39,000 in sales just on Merchant Fulfilled items.
That's on top of the FBA sales she got during that same period!
This certainly got the attention of many of our BoloMart Group participants! They wanted to know more about how they could use MF to boost their Q4 sales in a major way!
Eleanor and I decided that we should offer a Facebook Live training all about Merchant Fulfillment. And today, I've decided to share that video with all of my blog readers 🙂
It's a pretty long video that covers:
- The reasons we both love MF for certain scenarios
- Our favorite boxes and shipping supplies
- Screenshares of Shipping Templates and the Bulk Shipping process
- How easy it is to list MF items in Seller Central (or even in the Amazon Seller App while you're still at the store!)
- How likely you are to get customer returns
- Tips for having a profitable Q4 with MF shipping!
If you're looking for the inspiration you need to try MF shipping this year, then you need to watch this video!
I'm certain that you'll feel confident and motivated to start merchant fulfilling after you watch!!
So there you have it!
I hope you enjoyed the video and also the six reasons why we use Fulfilled by Merchant on Amazon.
Now I want to hear about your MF experience in the comments below!
Have you ever used MF to make some fast cash or seize a golden opportunity? I want to hear about it!
If you've never tried it before (because you're new or just nervous), let me know if you want to merchant fulfill on Amazon this year!