When you first started your e-commerce business, everything was running like a well-oiled machine. You had your own storage area for your inventory and a swift process for packing and shipping orders. Then your business grew. Suddenly, your fulfillment became too much for one person to manage.
Whether you’re still struggling to keep up or you’ve outsourced your fulfillment to someone else in the meantime, there’s another option: fulfillment through your e-commerce provider. Today, both Amazon and Shopify are offering their own fulfillment services. Both of these will store, pick, pack, and ship your products from their networks of fulfillment centers.
The question is, which option is the best fit for you: Fulfilled by Amazon (Amazon FBA) or Shopify Fulfillment Network?
Shopify Fulfillment Network vs. Fulfillment by Amazon: Top Facts to Consider
As with most business decisions, there’s not necessarily a clear-cut winner between Amazon FBA and Shopify Fulfillment Network. It comes down to your business model, your needs, and your preferences. Let’s take a closer look at some of the factors every e-commerce entrepreneur should weigh.
Control Over Your Platform
Primarily, Shopify Fulfillment Network and Amazon FBA are designed for two different types of e-commerce stores. Shopify Fulfillment Network is meant to serve e-commerce businesses who sell on their own Shopify sites. Amazon FBA is meant for those who sell on Amazon.
There is a key difference between selling on those two platforms: branding. With a Shopify store, you can customize the store in any way you want, allowing you to truly build a well-rounded brand. On Amazon, you look like just another seller and don’t have many options for customization.
With that in mind, Amazon later added a service called multi-channel fulfillment. This is where Amazon can store, pack, and ship products for orders you sell on your own store. This allows you to access Amazon’s extensive network of fulfillment centers but still maintain your own branded store. Of course, it’s important to keep in mind that this wasn’t Amazon FBA’s original purpose so the process may not run as smoothly as it does for traditional Amazon FBA.
Your fulfillment service has a big job to do. It holds your company’s reputation in its hands because if the fulfillers make mistakes and customers don’t get their orders on time (or at all), it reflects on you. For that reason, you need to place a lot of trust in your fulfillment service.
Amazon FBA has been around for a long time, launching as early as 2006. That means they’ve had time to perfect their processes and work out the kinks in the hose. Shopify Fulfillment Network, however, was just launched in 2019. While Shopify Fulfillment Network hasn’t had much time to prove itself, it’s worth noting that in this short time, the feedback has been very positive.
Shopify Fulfillment vs FBA Cost
If you’re weighing whether or not to use a fulfillment service, it comes down to a cost-benefit analysis. Is the cost worth freeing up more of your time so you can focus on business growth?
You also need to compare it to your existing fulfillment costs. This might include warehouse or storage space as well as paying staff members to process the orders.
Both Amazon FBA and Shopify Fulfillment Network have similar pricing structures. You pay a monthly inventory fee to store your item as well as per-item fees for the orders fulfilled in that month.
Amazon FBA’s prices are publicly available. Per-item fulfillment costs depend on the size of the package, ranging from around $2.50 to about $5.25 per item, with higher rates for oversized items. Their storage rates vary based on the time of year. They currently charge $2.40 per cubic foot during the holiday season and $.69 per cubic foot throughout the rest of the year. For oversized storage, the per-foot price drops.
Here’s the challenge in price-comparing, though: Shopify Fulfillment Network customizes their prices for each customer. The only way to truly compare pricing for your business is to apply for the Shopify Fulfillment Network. Go through the process of learning what your pricing would be.
It’s worth noting, though, that a top priority for Shopify has been to keep their prices low. This could be a good sign, though it’s likely that their prices are higher than Amazon for some customers and lower for others.
A core benefit to third-party fulfillment is that they can store your items across a variety of fulfillment centers. This way, when a customer 2,000 miles away from you places an order, you don’t have to ship the 2,000 miles away because it’s stored in a warehouse 200 miles away and the customer gets their order quickly.
This means that the more fulfillment centers your fulfillment provider has, the better results your customers will get. In this category, Amazon FBA is the clear winner
As of 2020, Amazon has over 185 fulfillment centers around the globe, including locations in 35 US states and over ten different countries. While Shopify doesn’t state the exact number of fulfillment centers they have, we do know they have locations in seven states as well as Canada.
While the number of fulfillment centers is important, the top factor is actually the location diversity. The more locations you have inventory in around the world, the more customers there are who can receive your product within a few days.
As we noted above, your fulfillment provider holds your professional reputation in their hands. To customers, if they make a mistake, you make a mistake. This is why accuracy is so important.
Unlike many other topics, in this subject, Shopify is actually the one with more clear data. Shopify Fulfillment Network boasts a 99.5% accuracy rate for fulfillment, meaning that 99.5% of the time, the customers receive the correct order to the correct address.
Amazon doesn’t publish its accuracy rate. However, it’s worth noting that accuracy complaints are common among sellers who use Amazon FBA. Sellers on forums worldwide saying they’ve experienced inaccuracies in order fulfillment.
Amazon FBA sellers also note accuracy problems with received shipments. Many complaints say Amazon frequently logs incorrect inventory numbers for the shipments they receive. Of course, without Amazon’s exact statistics, we’re only getting one side of the story, although it seems to be a story many sellers are telling.
Ease of Use
The entire purpose of using a fulfillment service is to make your life easier and free up your time to build your business. With order fulfillment, it isn’t only the packing and shipping that take time. It’s the order and inventory tracking too.
This is an area in which both Amazon FBA and Shopify Fulfillment Network deserve kudos. Both of these platforms have feature-filled dashboards for each seller. You can track all your orders and inventory, view customer data, track returns, and more from one centralized place.
With matters of user experience, though, it ultimately comes down to opinion. Some sellers may like the way Amazon FBA’s dashboard functions while others prefer Shopify Fulfillment Network. It helps to experiment with each and see which one fits your workflow best. Or, if neither one fits your needs, opt for a more specialized inventory management program instead. Find one that integrates with e-commerce platforms including Amazon FBA, Shopify Fulfillment Network, and many others.
Choosing Your Shopify Fulfillment Provider
In the era of technology and busy lives, e-commerce is truly exploding. This is especially true now that COVID-19 is added to the mix. It’s an industry with tremendous income potential, but only if you can scale your business well. A fulfillment service is a critical part of that scaling process.
Weigh the pros and cons above for Amazon FBA and Shopify Fulfillment Network to find the best fit for you. In the meantime, learn more about our inventory management software.