Once your shipments get large enough and you're shipping full containers you may start to consider shipping full containers into Amazon FBA. If you're shipping LCL you may want to ship to Amazon FBA as well.
One of the things I strive for as much as possible with my new company is having as lean and quick shipping and logistics as possible, and shipping direct solves a lot of that. In this article, I'll describe exactly how you can ship containers direct to Amazon.
Related Podcast: Episode 26: Sourcing Inventory From China and the US, Part Three
Related Article: FCL Freight vs. LCL Freight
Pros and Cons of Shipping Direct to Amazon
- Quicker shipping time than shipping to a middle man and then to FBA
- Save on the cost of a 3PL (or your own warehouse)
- Less time required to prepare the shipments
- Less handling of your items
- Can be difficult to get freight appointments with Amazon
- Higher Amazon storage costs
- No domestic inspection before it hits Amazon
- No partnered carriers
The big advantage to shipping direct to Amazon is you save on shipping time. It is almost always going to be quicker to ship a container directly into Amazon than have it stop off at a 3PL in between (not to mention you save all the freight costs of delivering it there and the 3PL costs). I'll go into the full-time considerations below. After a time though, you will save significantly on 3PL costs (or your own warehouse costs), somewhere between $500-2000 per shipment in my estimation. Finally, shipping direct into Amazon in a sealed container eliminates a significant amount of handling (3PL, partnered carriers, etc) of your products. The more products are handled, the more chances for breakage, loss, etc.
The big disadvantage of shipping direct to Amazon is that you have no chance to inspect your products before they hit Amazon. You have to have complete trust in your supplier (that they won't screw anything up) and your products (that they won't have any catastrophic issues) to ship this amount of volume directly into Amazon. If there is a catastrophic issue like your supplier getting your bar codes mixed up, you could lose a lot of money retrieving your inventory from Amazon and fixing the problem.
Money Considerations – Is It Worth It?
The big question is, is it cheaper to ship a full container direct to Amazon?
In my experience, where you save the most money is through 3PL costs. My first time doing a full container I thought I would save a lot of money by shipping my container directly from Seattle (also the location of my 3PL) and then put directly on rail to Illinois, the location of the Amazon FBA warehouse I was shipping to. In reality, the additional rail costs of going from the Port of Seattle to Illinois compared to the cost of partnered carrier from my Seattle 3PL to Illinois were nearly the same probably because of the deep discounts you get with Amazon partnered carriers. The conclusion is that there are very little financial benefits on overland freight from shipping a full container directly to Amazon if the container is going to a non-West Coast fulfillment center.
Where you will save a lot of money on overland costs is if you are shipping to a West Coast Amazon warehouse like ONT8 in California in which case you will save a lot on overland freight due to the proximity of the Amazon warehouse to the port.
Where you really save money is on the cost of a 3PL or your own warehouse. If you have your own warehouse your costs are probably cheaper than a 3PL but not by much. When using a 3PL or your own warehouse you get the advantage of using Amazon partnered carriers but you lose on the container unloading charge, palletization charges, and any pick/labeling fees. I've put together an interactive spreadsheet below that you can use to figure out how much money you can save by shipping directly to Amazon. In most cases, I think you will save anywhere from $500-$2000.
Time Factors – Is It Worth It?
There's one important other consideration when shipping into Amazon aside from money: time, both your time and the time it takes to receive a container into Amazon.
Time Receiving by Amazon
When you ship a container directly into Amazon you are saving many days in time as opposed to shipping to a middle man first in between. If you ship to a middle man first you will lose time on the following:
- Trucking the container from the port to your middle man location
- Unloading the container
- Palletizing, labeling, etc.
- Partnered carrier pickup and transit time to Amazon FBA distribution center
My biggest bottleneck in the past has been my 3PL being overworked and not being able to prepare my shipment for a few days. Normally my 3PL wants at least 2 or 3 days' notice before having the Amazon partnered carrier pick up the pallets. In my experience, you'll save 3-10 days in transit time by shipping directly to Amazon.
Time Preparing Shipments
How often do you feel like your job as an ecommerce business is simply preparing Amazon FBA shipments? By shipping all your inventory in one big shot to Amazon you save all of the time that goes with preparing Amazon shipments.
Full Container Loads Requirements
- Everything needs a carton label
- Amazon prefers items to be palletized but doesn't require it (i.e. the container can be floor stacked)
- An appointment with Amazon
When shipping into Amazon everything technically still requires a carton label. The good news is that if you're shipping a floor stacked container you don't need pallet labels.
Amazon will allow you to floor stack a container, although they say they prefer a container to be palletized as it reduces delays. In my opinion, any delay will be negligible and there's no need to palletize a shipment.
Finally, Amazon requires your carrier to make a booking appointment with Amazon. Most carriers are now familiar with doing this. The big problem is lack of appointments with Amazon. Your carrier may be waiting days to get an appointment and each day of storage for a container is around $100 – those delays can quickly cut out your savings on shipping containers direct.
The Multiple Warehouse Conundrum: At this point, some of you may be thinking, “But Amazon requires us to ship to multiple FCs” and most of you probably do not want to turn on inventory placement. The good news is that Amazon does appear to be relaxing how many FCs they require you to send shipments to and often now you will, by default, have your inventory directed to only one FC (especially if you avoid mixing different size tiers of items). There are other white hat and grey hat ways to get around the multiple FC issue but I won't cover it here.
How to Ship a Full Container
Prepare Your Shipment within Seller Central
The first step is to prepare your shipment in Amazon Seller Central. I'll assume you know the basics of this and only cover the intricacies here.
Ship from Location: You can put anything in here from your supplier's address in China to your home address. You're not using a partnered carrier so it doesn't appear to change anything.
Shipping Service: Here you want to select “Less than truckload (LTL)” and “Other carrier: other”. You use this option for LCL or FCL (despite it only saying LCL).
Next, you specify the number of cartons and items as normal, print the labels, and provide them to your supplier in China.
Provide Your Supplier the Labels
Your supplier will need to apply carton labels to every master carton. Moreover, if you're being nice to Amazon and palletizing your container you should stick pallet labels on your pallets, although I know people who do not apply pallet labels and in reality, it should cause you no problems.
Arranging the Sea Shipment
The easiest way to prepare the actual shipment of your goods is to have your freight forwarder arrange door-to-door service, meaning they pick up the container in China (whether at the port or at your supplier's factory) and arrange for shipment to the Amazon warehouse. If you're shipping to an inland Amazon distribution center like Illinois (and you probably will be unless it's in California) your forwarder will probably ship to a West Coast seaport and then put your container on rail.
Shipping from the U.S. Port to Amazon Distribution Center
Completing the FBA Booking Form
When shipping into an Amazon Distribution Center the biggest difference between using an Amazon partnered carrier is that you will need to complete an Amazon FBA Booking Form that you will give to your forwarder. This form is very simple and you simply need the Amazon FBA reference number (see below). It's the same form if you have ever shipped via LTL without an Amazon partnered carrier. Your merchant name is just your display name.
Getting an appointment at Amazon is potentially the biggest problem with shipping direct into Amazon as Amazon is notoriously stingy about not giving convenient appointments. Making the appointment is the responsibility of your freight forwarder, but if they cannot get an appointment quickly you'll face $100+ per day in storage charges from your forwarder. Amazon appears to be getting better about giving out appointment times though so hopefully you do not have any problems.
Ultimate Consignee Information
When you give your customs broker your shipment information they will also likely need Amazon's tax ID in order to list them as the ultimate consignee. Your customs broker can email email@example.com and get this ID (Amazon Seller Support actually gave this to me directly although they state they only give it to registered customs brokers). Don't listen to anywhere that says Amazon will not allow you to list them as the Ultimate Consignee as they will (they will not, however, allow you to list them as the Importer of Record).
Palletized Containers with Partnered Carriers – A Hybrid Approach
There is a hybrid approach I have been experimenting with: having my Chinese suppliers palletize and label FBA shipments, shipping them to a 3PL and then into Amazon FBA with a partnered carrier, either immediately or in the future.
There are some advantages to doing this:
- You can use partnered carriers
- You can inspect your shipment in America
- Cheaper unloading from 3PL and no labeling costs
- Delay shipments into FBA to avoid unnecessary storage fees
- Can ship to multiple Amazon FCs
By palletizing your shipments you will reduce your 3PL costs (most charge less money for unloading of palletized containers). Also, if Amazon divides your shipments into multiple warehouses this is no problem and you can use partnered carriers. You can also save money by storing pallets at a 3PL instead of Amazon (Amazon FBA storage is 2-5x more expensive than most 3PLs). As of now (or at least as far as I know) Amazon has no restriction on how quickly you need to ship a shipment into Amazon after you create the shipment. This means you can create a few shipments in January and ship them into Amazon in November if you want.
The big downsides are you will lose container space and you will have 3PL costs. The good news is that you will actually only lose around 4% storage space if you ship stackable pallets in a container if your supplier packs efficiently. Assuming sea costs of around $1500, this means you only lose around $60 on lost space. Make sure your supplier uses heat-treated export-ready pallets (and they will likely charge you for these).
This should give you everything you need to know about shipping full containers into Amazon. This article should also help you to determine if you should ship full containers into Amazon in the first place.
Do you have any questions about shipping into Amazon? Or do you have any experiences of your own? Comment below.