Why Amazon FBA Prep Should Be Done In China (Not The West)

Michael Michelini wrote about Amazon packaging, and he mentioned the FBA prep services. I discovered a whole industry popped up and is probably growing fast.

What do they do? In Mike’s words:

Basically, a third-party prep service does everything on your behalf, including:

1. Inspect your items to ensure there is no damage, especially if you’re selling “new” products.

2. Carefully remove any stickers from the products, if there are any.

3. Prepare the inventory according to Amazon’s requirements.

4. Pack and provide box content information.

5. Get the package ready for dispatch.

6. Inform you through email when the package was shipped.

7. Track your packages as they are in transit to the designated Amazon fulfilment center. 

And, I was thinking, most (probably 80%+) of the goods that go through these prep centers are made in China! 

Some might not have been packed the right way (e.g. multipacks, bubble wrap, etc.) by the manufacturer and mistakes might have been detected too late. Yes, I am sure that happens. 

But I’d guess some FBA sellers plan to import the goods from China and then use one of these prep service centers in, say, the USA to prepare their products, packaging, and orders for shipping. Wow…what a waste!

All of this can be done in China, before shipment, for a lower cost.

Why using an FBA prep service in the West is a waste of money!

If you’re using a local FBA prep provider, quite simply, they’re doing something that can be done in China at a lower cost. Here are 2 China-based alternatives that will save money:

1. Your supplier can be requested to prepare the proper packing and labeling before they even ship the products to you

Your supplier likely has the ability to handle the packaging and labelling for your products in-house. The costs of them using their local Chinese staff to do so are also going to be far lower than for a similar Western staff member to do the same! In addition, they should be able to keep the proportion of defective products down to a level acceptable on Amazon (and consistent with the product category and positioning).

I wrote about this before in How Amazon FBA Sellers Should Control Quality in China and in Quality Control of Products Shipped Directly to Amazon.

Second, if this is not realistic, you need to take another route.

2. Use a small Western-owned contract manufacturer located in China to act as your FBA prep service

A number of contract manufacturers in China have the ability to provide packaging, labeling, fulfillment, assembly, rework and even quality inspections. Better still, despite being in China, a number of them are Western-owned and managed, therefore using one  comes with four very important benefits over local providers in your country:

1. Cost of labor is lower.
2. The cost of developing and making labeling and packing elements is lower.
3. In case some defective products are found, they can be sent back to the factory for re-work. Or simply you can negotiate a rebate on the order (reworked products often come with lower quality, anyway, so why take them?).
4. As the factory gets the rejects, they learn about what is acceptable and what is not.

Now, one issue with this setup is, the Chinese supplier probably won’t agree to deliver the goods to another location without having been paid in full. They might agree to extend a rebate for the defective goods they receive, but that only works when it is only 2% of the order quantity… If it is 50%, they are not likely to honor their word.

However, this happens when their customer is an overseas company. They are more prone to extend credit when their direct customer is another China-based manufacturer (who won’t disappear overnight). In many cases, we have been able to negotiate with suppliers and pay them 15 or even 30 days after the products are delivered in our facility.

In that situation, if it turns out that 30% of the goods have a serious issue, they can simply all be returned to the supplier, and payment can be done for the good pieces only. This a much better setup than finding out about quality issues in Los Angeles or New York City!

Can Sofeast help FBA vendors?

Yes, we have a lot of experience of working with FBA vendors with Chinese suppliers.

You may find these solutions helpful:

• Amazon FBA Seller Support – one of our experienced production managers assists you by helping to manage your supply chain, quality, and logistics using proven systems and templates to assure that your FBA business runs like clockwork.
• Repair and rework – Sofeast’s 3PL facility receives your defective products. Your supplier may send staff to us to do the repair, or our operators can do so. We oversee the operation to make sure repair and rework occur correctly. We check, pack, and ship good products to you.
• Agilian Technology – our Western-owned contract manufacturing subsidiary provides warehousing, 100% inspection and repacking, kitting, and assembly. (Better for smaller orders being sent from China to you and/or dropshipping to multiple customers).

*****

Have I got it wrong? Does a Western FBA prep service do a stellar job for you that you find invaluable? Perhaps your Chinese supplier is supporting you already? Let me know about your experiences in the comments.

Editor’s note: This post is based on an earlier post from QualityInspeion.org, but has been modified for Sofeast readers.

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