Why Vendors Should Invest in Amazon Direct Fulfillment Now
As vendors prepare for the second wave of COVID-19, the space in Amazon’s fulfillment centers is becoming sparse. Amazon is now reaching out to vendors to ensure they understand the benefits of using their Direct Fulfillment program.
According to our experts, with the potential upswing in COVID-19 cases (combined with Prime Day and Q4) this may cause capacity restraints for the amount of inventory Amazon will hold.
What is Amazon Direct Fulfillment?
Also known as Dropship, the Direct Fulfillment program is available to select Vendors to participate in. A Direct Fulfillment connection allows Vendors to provide real-time inventory via EDI (electronic data interchange) feed for an entire catalog.
The purchase flow looks like this:
Amazon Customer purchases Product X > Amazon tells Vendor Product X has been sold > Vendor packs and ships Product X direct to customer
Why is it important to leverage Amazon dropship fulfillment during COVID-19?
According to Amazon, without backup Direct Fulfillment, when Amazon warehouses are out of stock, customers cannot order your product and you could potentially miss sales during the lead time to get inventory to Amazon.
With Direct Fulfillment as back up, customers can continue to order your product during this lead time and eliminate missed sales opportunities.
“For vendors that are capable of direct fulfillment, we recommend that your Direct Fulfillment connection is set up correctly and you are ready to utilize this program in Q4. If you are not currently using Amazon’s Direct Fulfillment program, you can get started by following the instructions within your Warehouse Settings in Vendor Central.”
– Emily Leung, Marketplace Operations Associate at Tinuiti
Amazon has limited capacity to carry inventory, (especially during a pandemic) customer demand can be unpredictable, and it takes time for Amazon’s buying systems to determine appropriate inventory levels. In the event you run out of stock in Amazon’s warehouses and your own warehouse, Amazon will not accept orders and the product page will have out of stock messaging.
What are the Benefits of Direct Fulfillment?
- Trusted brand – Your products are displayed as “Ships and Sold by Amazon.”
- Increased number of ASINs – Make your entire catalog available to customers.
- Selection added instantly – You don’t have to wait for a purchase order to start selling products. When your products are placed within Direct Fulfillment it will pull in the inventory directly from EDI and show to consumers that the product is available for purchase.
- Out of stock protection – You always have an offer available to the customer. Adding these products to your Direct Fulfillment catalog will provide out of stock protection. This will not impact your current purchase orders.
- Hassle-free returns – Amazon handles all customer service and returns for you.
- No outbound shipping costs – Amazon pays all shipping fees.
How Do I Sign Up For Direct Fulfillment?
The Direct fulfillment program is offered to select Vendors.
To begin the process, go to the Warehouse Settings in your Vendor Central account and follow the on-screen instructions to set up a Direct Fulfillment warehouse or if not available, request participation through a Contact Us case.
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