Pros and Cons of Amazon FBA vs Third-Party Overseas Warehouses

The full name of FBA is Fulfillment By Amazon (note: original typo 'Fullfillment'), which in Chinese means Amazon Logistics. It is an end-to-end logistics service provided by Amazon, including storage, picking and packing, delivery, payment collection, customer service, and return handling. As the world's largest online retailer, Amazon's largest warehouse in Phoenix, USA, is the size of 28 football fields.

Advantages of FBA:

1. Improve Listing ranking, help sellers become featured sellers and win the Buy Box, increase customer trust, and boost sales;

2. Years of rich logistics experience, warehouses around the world, and intelligent management (acquired robot manufacturer Kiva Systems in 2012);

3. Ultra-fast delivery time (most warehouses are near airports);

4. Amazon professional customer service;

5. Eliminate negative review disputes caused by logistics;

6. Waive all FBA logistics fees for products with a unit price over 300 USD.

According to Amazon's terms of service, when a seller uses FBA and a buyer leaves a negative review unfavorable to FBA logistics, Amazon has the full right to remove that negative review. For example, 'delay caused by FBA shipping' or 'crushing damage from FBA packaging'—Amazon has the absolute right to delete such negative reviews immediately. Because Amazon has invested hundreds of millions of dollars in FBA, any review unfavorable to FBA service will be deleted immediately.

Therefore, if you are an Amazon seller, using Amazon FBA is very helpful for improving your store ranking and order volume!

Disadvantages of FBA:

1. Generally, the cost is slightly higher than domestic shipping, but it also depends on product weight (especially for FBA shipments on third-party platforms);

2. Poor flexibility (a common shortcoming of all overseas warehouses, but other third-party overseas warehouses can still have dedicated Chinese customer service to handle some issues, whereas FBA can only communicate with customers in English, and email replies are not as timely as third-party overseas warehouse customer service);

3. If the preliminary work is not done well, label scanning problems will affect warehouse inbound, or even prevent inbound;

4. Return address only supports the USA (if you run a US-site FBA).

When a seller uses FBA and does not apply their own barcode to the product but uses the manufacturer's original barcode, it is very likely that other sellers are also selling the same product and also using FBA. Then all sellers' products with the 'same original barcode' will be stored mixed together in the FBA warehouse (not distinguished by seller). Once a customer places an order, the shipment is randomly picked from the mixed inventory (the shipped product may be yours or another seller's). Rest assured, inventory deductions and sales are still accounted under your account.

Comparison between the two:

Compared with Amazon's FBA, communication on many overseas warehouse issues with customers is more timely, and the price is much cheaper than FBA. Sometimes it feels that Amazon's support is really limited—the website's service and many warehouse matters are left unmanaged—while third-party overseas warehouses offer much stronger support. In addition, current overseas warehouse requirements are not that high; as long as you have goods, no matter the quantity, you can save on logistics costs through a third-party overseas warehouse provider.

[Communication issue] When users email FBA customer service, the fastest reply is the next day and the slowest is one week. At present, many third-party overseas warehouses provide dedicated consultants and have 24-hour customer service centers.

[Customs clearance issue] FBA does not provide destination customs clearance or consignee. Some third-party overseas warehouses can provide a consignee and services such as paying duties on behalf of the customer.

[FBA assigns three addresses] To save domestic shipping costs in the USA, FBA requires users to ship to three different warehouse addresses, wasting First-Leg freight. If you insist on shipping to a single address, an extra $0.3 per unit is charged. In contrast, some third-party overseas warehouses only require shipping to one warehouse for unified management.

[Mixed storage management] FBA uses mixed storage, while third-party overseas warehouses use dedicated storage.

[Return issue] If a user decides to give up, the cost for FBA to ship goods back to China is exorbitant; alternatively, FBA will have you pay to destroy them.

[Storage fee issue] FBA charges a storage fee of 120 RMB per cubic meter per month.