March 31, 2020
What is Multi-Channel Fulfillment?

What is Multi-Channel Fulfillment?

Question for the group. Hey welcome back to another episode of The
Bootstrap Boutique where beginners build businesses. I’m glad you’re here because today we’re going
to talk about something that I’m doing, that I didn’t know I was doing, but it’s good,
but I…I learned something new. You guys know that I am selling my first product
on Amazon and it is exciting, every time I make a sale I’m like “yay!” but I also am
selling the same product on eBay because I have the product here in my house that I did
not go ahead and ship into the FBA ware houses and I thought, well, I’ll just throw it up
there and see if something happens. I also thought about opening an etsy shop
to sell this product but ultimately I decided maybe later, not right now, I just don’t need
another thing to manage. But it’s definitely something that I could
do if I wanted to in the future. I didn’t know that’s a thing that has a name. But guess what I found out? That’s a thing, it has a name, it’s called
Multi-Channel Fulfillment. And as I’ve been kind of looking around I
realized there’s really two ways you can do multi-channel fulfillment. There’s the way I’m doing it which is kind
of a DIY approach and then, this should not be surprising to anyone. Amazon has a service that will allow you to
do multi-channel fulfillment through them. So what is multi-channel fulfillment? Well, you’ve probably already figured it out
just from hearing me talk about it, but its taking one product and selling it in multiple
different areas. So I’ve already listed a few of the ways that
you can do multi-channel fulfillment. You can sell on Amazon FBA or Merchant Fulfilled,
you can have an ebay listing, you can open an etsy store, you can have a BigCommerce
or Shopify store or any kind of ecommerce platform that you sell on. It could also be things that are offline,
in a brick and mortar retail store, a craft fair, a makers market, lots of different ways
that you can do multi-channel fulfillment and expose your one product to many different
buyers. A lot of different people in the private label
space talk about multi-channel fulfillment but they are really only talking about FBA
and an ecommerce store. But as I just laid out, there’s many other
ways that you can sell your product. This can also be very low tech, the way I’m
doing it is that I have my Amazon stuff that I shipped in and I have just an ebay listing
that I threw up kind of just to see if something would happen with it, there’s no complicated
software running in the background, its just that I go check ebay every day or so to see
if I have any sales. But looking around on the Amazon website I
found that they will also allow you do to multi-channel fulfillment. So what you do is you send in a product, just
like if you are doing FBA but somewhere in Seller Central you would mark that it’s multi-channel
and you would set it up there. From what I can tell this is going to be something
that people with larger inventory and more product line are going to use because it talks
about integrating your inventory management software and using your API keys and all that
stuff that us just normal FBA sellers with 4 or 5 products at market, we don’t have all
that. Or need it. But if you have an ecommerce site or if you
have an etsy store that’s already very successful then this is something that may be of interest
to you. Because you let Amazon handle all the prep,
all the shipping, you don’t have to buy boxes or tape or any of that stuff, it’s for a fee
of course, they’re not doing it for free, but that can free up so much time for you
if you are spending time packing, shipping, and mailing. Here’s what I’d like to know today. Are you selling your product on multiple channels,
or are you just starting with Amazon FBA and sticking to it there? And why did you make the decision to go that
way? Leave it down in the comments, I’ll look forward
to hearing what you’re doing, and I will talk to you next time. Take care!

5 thoughts on “What is Multi-Channel Fulfillment?

  1. it is incredible the things that we can do, although sometimes the problem is just knowing what is what, Thank you for the info !

  2. Amazon multi-channel fulfillment is the worst idea in the world. One of the big problems with an Amazon FBA business is that you are tied to Amazon. And this company is no angel, it's mega corporation with very questionable business ethics, a company that exploits its workers and bullies its suppliers and that's not even mentioning how they by-pass laws or regulations and destroy brick and mortar businesses by running at a loss (which is illegal in most jurisdictions but you often get what you want if you can afford to have enough lawyers) in order to establish a monopolistic position.

    Amazon can shut you down tomorrow for any reason, with no recourse possible. You can potentially build a multi-million dollar business and have it shut down from one day to the next. Now a multi-million dollar FBA business wouldn't quite be worthless if you got kicked out Amazon, you still have something of value in the business (products, knowledge of the market, relationship with suppliers, your workforce, non-Amazon FBA sales channels etc…) but the bulk of the value is the fact that you are allowed to sell on Amazon. If that goes away, the bulk of the value of your business goes away also. Almost every FBA business making less than a quarter of a million in sales is nearly worthless if it is all FBA and they shut you down.

    Amazon owns your ass, they are the masters of the universe and no amount of complaining, lobbying or voting for Bernie Sanders will change that. Think about it. This is a dangerous world to be a small fish in a big pond and that's exactly what you are. And if you grow your business 1000-fold, and I wanna see it (that would be fun, the bootstrap boutique reaching 10 million in sales, all live on YouTube), you'll still be a bug that Amazon could squash in one administrative decision. Free market capitalism is like nature, it creates widespread biodiversity |(entrepreneurs) but it's the law of the jungle (the elephant that squashes a bug on the floor does not even know he caused any harm).

    Which bring me to multi-channel fulfillment. If you need to have your orders fulfilled by someone else, you really want to have an anything but Amazon strategy. That allows you to diversify your sales channels and avoid being dependent on Amazon. So for instance, use 3rd party fulfillment companies like Red Stag and Shipwire or fulfillment centers linked to other marketplaces like Rakuten Super Logistics or eBay's fulfillment service (I'm in Europe, Paris to be precise, but I believe these are even more developed in the US than in Europe). Amazon allows you to launch products quickly because of the organic traffic they control. But you DO NOT want anymore of your business to be linked to Amazon because if they drop or drop you, your business in gone. Amazon uses sellers to grow their profits. You should therefore use Amazon to grow your business and nothing more. An entrepreneur builds his/her own business, it should not be about setting up an Amazon subsidiary and that's basically what FBA businesses are.

    In business or in systems engineering, this is called a "single point of failure". If one thing fails (in this case, your ability to sell on Amazon), the whole system fails (your whole business goes down the drain). A good example are servers at the office: the server fails, every workstation linked to it fails regardless of how well it performs.

    This is a huge weakness built into FBA businesses. Now, just to be clear: I understand you're too small to be worrying about this right now but you must keep this in the back of your mind every step of the way. I would rather make 10% or 20% less in profit on a proportion of my business and have it under my control (meaning outside of the control of the Amazon or in the broader sense, the GAFAs) than 100% on Amazon at higher profit margins.

    Don't take my word for it, contact an investment banker or best, Empire Flipper, a company specialised in the sale of FBA businesses, they will all tell you that businesses with a single point of failure are worth less that more diversified structure.

    This has been a long message so I'll end with my opinion on how to protect yourself against that. For products are sold outside of Amazon, always choose a 3rd party fulfillment centers (if you have enough volume). Generally, they're cheaper (though not always, Amazon operates economies of scale) and it allows you to lessen that single point of failure aspect of modern eCommerce businesses, centered around Amazon.

    Also, every few years, a good strategy is to sell your Amazon business and rebuild it from scratch. I know you're not at that stage but it helps to think in terms of how can you build a salable asset rather than simply developing a cash flow machine. And one of the things that buyers look at is risk. "Amazon risk" is certainly something you should consider as you build business up.

    Oh and as far as my credentials are concerned, I'm an eCommerce microbe but I have a background in economics and the above certainly should make sense purely from an economics standpoint.

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