Today, “multi-channel fulfillment” is largely associated with the most dominant player in ecommerce: Amazon.
Multi-Channel Fulfillment (MCF) is a program in which Amazon handles the storage, packaging and shipping of products that are sold on various online channels. It’s one of many attractive solutions that sellers consider today to lighten the load of multichannel ecommerce.
But here’s what you should consider before you hire Amazon as your main delivery arm. It’s possible that you’ll want to evaluate other options before pulling the trigger.
For starters, Amazon MCF is a subprogram of Fulfillment by Amazon (FBA). Whereas FBA is intended for items that are strictly sold on Amazon, MCF is open to products that are sold on channels outside of Amazon.
This biggest perk of MCF is, unsurprisingly, convenience. It’s especially convenient for sellers who already use FBA. Rather than having to send inventory to various fulfillment centers, they can simply send MCF and FBA items to Amazon all at the same time.
MCF is popular among Amazon-dependent sellers who choose to launch their own website for the first time. But make no mistake, the program comes with different pricing and services than FBA. Hence why defaulting to Amazon MCF isn’t necessarily a best practice for everyone.
To avoid encountering any unpleasant surprises, you’ll want to keep in mind the limitations and potential risks of using Amazon MCF. Below are ones that sellers have reported in the past.
Over-reliance on Amazon, let alone any one channel, is never a good thing. The recent COVID-19 pandemic serves as a reminder of that; thousands of sellers were thrown into disarray overnight when Amazon decided to temporarily ban non-essential items from FBA without warning. (Needless to say, MCF products were put on the back burner at this time, as Amazon turned its full attention to fulfilling orders from its own channel.)
For months afterwards, FBA sellers took a hit in sales. Meanwhile, FBM sellers saw a jump in sales and buy box win rates, as Amazon FBA struggled to keep up with the surge of demand.
“By leaning on Amazon to take care of all of your online orders, you run the risk of letting a third-party player dictate the health of your operations and sales,” says Daniel Sugarman, CEO of ecommerce operations platform, Zentail. “Unfortunately, we see this a lot with Amazon FBA sellers. Their entire business ‘strategy’ rides on Amazon working perfectly—which can be catastrophic if Amazon decides to flip the switch on them one day.”
Walmart Marketplace explicitly forbids the use of FBA MCF, while other channels like eBay strongly discourage it. Many of these channels won’t acknowledge Amazon Logistics codes as valid traffic numbers. As a consequence, both sellers and buyers lose visibility over the location of their packages, leading to a poor customer experience.
Not to mention, every MCF order is currently shipped in an Amazon-branded box. This lends to a confusing experience when a customer orders from your website or Walmart (as examples) and receives an Amazon package instead.
Aside from the obvious conflict of interest between two competing marketplaces, there’s friction from a logistics standpoint too. Think: Walmart and its newly minted Walmart Fulfillment Services (WFS). As a seller, it’s best to avoid ruffling any feathers and risking possible suspension by finding a more neutral fulfillment partner.
As mentioned above, the branding of your packages are out of your control when you fulfill through MCF. Though Amazon used to offer brand-neutral packaging, this option has since been removed.
You lose valuable marketing real estate because of this. Not only do you lose the option of adding custom branding (which is an option through other third-party services), but you also let Amazon take more credit for your item than is probably deserved.
Buyers may be more likely to return to Amazon.com for a second purchase instead of navigating to your site. Eye appeal is buy appeal—or in this case, the company with the biggest logo on your box may be the one that your customer remembers most.
Not all orders are created equal, especially in the case of FBA MCF. While with FBA, Amazon would typically handle returns on your behalf, it will not do the same with MCF order. You have to process returns manually and handle all aspects of customer service yourself.
(That being said, some sellers prefer not to handle returns through Amazon because they retain greater control. They can wait to see the condition of a returned item before issuing a refund, and/or avoid any inventory removal or disposal fees enforced by Amazon.)
In addition to this, there are limitations as to what MCF will fulfill. The program doesn't support international shipping and has strict product restrictions that apply to both FBA and MCF orders, regardless of where the product is sold.
The price of fulfilling an MCF order is higher than on FBA. Though Amazon lowered MCF fees in April of 2020, the same items you ship through FBA can still cost dollars more per unit if shipped through MCF.
Other fees related to long-term storage, removal orders and more are largely consistent between MCF and FBA. But remember that the base fees you pay for MCF cover a smaller amount of services than with FBA, so the unit economics may not make sense.
Fortunately, there are other third-party logistics solutions (3PLs) that can provide FBA-like services at a lower cost. Aside from simpler pricing, these alternatives can offer perks like:
We recommend looking into Deliverr, ShipBob and ShipStation for starters. There are a plethora of other options, each with their own advantages. Make sure to find the one that supports the type of branding, service levels and integrations that you need to stay in full control of your business from end to end.
While Amazon MCF may be an easy option, it’s not always the best option. Keep in mind that Amazon is in the business of selling as much as it is shipping; your business translates into free market research for them as they build up their own brands and ecosystem. Think long term when weighing all of your options, and find a fulfillment partner that works for you and on your terms.