Handling the logistics of an Amazon business is not an easy task, from sourcing to sale, every step has its own challenges.
About two years into our Amazon journey, we decided to outsource 100% of our prep, this is a critical decision and turning point of your business.
What is an Amazon FBA prep service?
Simply put, this is a third party warehouse that will receive products from your suppliers, prepare them, add labels, build multi-packs or bundles and send it all to Amazon on your behalf.
When should you look for an FBA prep center?
Obviously, if you are overseas and can’t handle any in-house prep then you have no choice, you need to outsource from the very beginning, however, this post is more for people who are local and started doing their own prep to start. The following can give you a hint that outsourcing (or renting your own warehouse) needs to happen:
- Not enough through put at home, making your space too tight.
- Not enough time to do in-house prep
- Want to travel the world while your Amazon business runs in (almost) auto-pilot
- Too much volume. I would say, in general, if you are selling over $50K a month, then you are probably in need to make a decision.
How much does an Amazon FBA prep center charge?
Most preps charge different fees based on volume, the higher the volume you run through them, the cheaper the cost per unit.
In general, you should expect to pay from $0.75 to $2 per item, this is basically to receive the products from your supplier, attached an FNSKU label and ship it to Amazon.
If you need more sophisticated services like bundles, multipacks, bubble wrap, etc. You will likely have to pay extra. For bundles and multipacks you can easily pay an extra $0.25 to $0.50 per item added, so for instance, if you want to build a three pack, you will pay, let’s say $1.50 base fee+ 2 extra items at $0.25 each so in total you will pay $2.00 for this multipack.
Remember these numbers are an estimate based on our experience with many different prep centers, you might pay more or less but this will give you a good idea.
What are the best FBA prep centers in Canada?
Unfortunately, there are not many third party companies that work as prep centers, however, there are a few really good ones that are very professional and do a great job.
Remember that the quality of your prep center will have a big influence in your shipment metrics with Amazon so you want someone who is pretty accurate, know how to pack items so that they don’t break and stay on top of the always changing Amazon requirements.
Best FBA prep centers in Canada (these are the ones we have used ourselves)
Are there any additional fees related to a prep center?
Each third party warehouse is different, some will charge a minimum fee per month, some will also charge for pretty everything single task on top of the prep fee per item, these include:
- Receiving boxes or pallets
- Pallet disposal fee
- Boxes disposal fee
- Packaging disposal fee
- Outgoing shipment fee
The list is long, just make sure to ask your prep center if there is any additional fee, you don’t want to start a business relationship that will just eat all your profits, so be careful and ask before you sign any agreements.
What is a typical turn around for my shipments to be sent to Amazon?
This really depends on the systems your chosen prep company has but also it is very dependent on volume.
During regular months, the best prep companies can receive and ship products on the same day, however, the normal is more like 24-48 hours after receiving your items.
During peak season, think Christmas, Chinese New Year, Black Friday, you should expect and plan for delays. I normally assume that during Q4 all my prep people will take in average 4-5 days and plan my replenishments accordingly.
How do I choose the best prep center?
I look at few things even before digging into costs:
Does this prep company cater to my business model?
Make sure you explain to them what is it you need, it’s very different to get prep done for Retail Arbitrage than it is for Wholesale for example.
Also ask them specifically, what is the process they want you to follow when sending products to them, in a few cases I have found that prep companies that cater private label or ecomm fulfillment have way too many internal processes for my wholesale model.
Do they sound professional and friendly when I interview them over the phone?
Always talk to them over the phone at least once, do not skip this step! there are too many variables to ask all you have to ask via email, plus you will never know if they are professional or friendly until you actually talk to them.
TIP: when you talk to them, they should be familiar with the Amazon jargon, FNSKU, FBA, Bundles, etc..If they ask you what these are, run the other way!
Can they give me volume breaks?
Make sure to negotiate better rates, specially if you are bringing decent volume, say over 1,000 units per month, you should definitely ask!.