Amazon FBA and FBM: Your Guide to Amazon Fulfillment

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Amazon’s third-party seller marketplace has grown from its humble beginnings in 2000 to account for nearly three million sellers and more than half of Amazon’s retail sales. One of the biggest enablers of that tremendous growth was Amazon’s launch of Fulfillment by Amazon, or FBA, which today dominates the logistics landscape for third-party sellers.

However, merchants still have the option to fulfill their own Amazon orders using Amazon’s Fulfillment by Merchant (FBM) option. Self-fulfilling merchants have also been given access to the coveted Prime badge in recent years through the Seller-Fulfilled Prime (SFP) program, although the standards to qualify are extremely high and require an elevated level of organization from participating merchants.

Amazon-FBA-vs-FBM-Merchants

Source: Jungle Scout

In 2024, 36% of Amazon sellers used at least some FBM – and that number has fluctuated significantly in recent years as Amazon has rolled out significant changes to the FBA and SFP programs.

In this post, we’ll explore the relative advantages of FBA vs FBM and how you can make the choice that’s right for your business.

What’s the Difference Between Amazon FBA and FBM?

When it comes to selling on Amazon, understanding the differences between Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) is crucial. Amazon FBA allows sellers to outsource their logistics to Amazon entirely. This means that once your products are in Amazon’s fulfillment centers, Amazon takes care of the rest, ensuring fast and reliable delivery to customers. This method is particularly beneficial for sellers who want to leverage Amazon’s vast fulfillment network and focus more on marketing and growing their business.

Amazon’s fulfillment centers are used for storing and shipping products efficiently. Additionally, Amazon’s fulfillment network allows sellers to outsource order packing, shipping, and customer service. It’s a full solution that qualifies products for the coveted Prime badge and covers customer support on the back-end.

On the other hand, Amazon FBM puts the responsibility of storage, packing, and shipping on the seller. This can be done either by the seller themselves or through a third-party logistics provider. While this method requires more hands-on management, it offers greater control over the fulfillment process and can be more cost-effective for certain types of products. Understanding these two fulfillment methods and their respective advantages can help you make an informed decision that aligns with your business goals.

In short, FBM is the description for 3rd party sellers that don’t use FBA for fulfillment. With FBM, the seller (or a third-party logistics company that the seller hires) handles storage, picking & packing, and shipping for products sold on Amazon.

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What are the Relative Advantages of FBA and FBM?

Fulfillment strategy is an underappreciated aspect of ecommerce, and both FBA and FBM bring their own advantages and disadvantages that can make or break a seller. It is crucial to compare FBA costs with other fulfillment options using tools like the FBA Revenue Calculator to make an informed decision. So, what are the most essential differences between the two approaches?

Prime Badge Eligibility

First up: the all-important Prime badge. Simply turning on a Prime badge for a product for the first time can boost sales by up to 50%, so if you can get it, you should.

FBA makes it simple – if your product is in FBA, it gets the badge.

FBM is more complicated, and depends on whether your fulfillment approach qualifies for Seller Fulfilled Prime (SFP). SFP sets rigorous targets for how quickly merchants deliver items to customers, as of course fast & free shipping is the central value proposition of the Prime subscription. Amazon temporarily closed the SFP program to new enrollments in 2021, partly as a result of declining delivery metrics, but reopened it with new guidelines and requirements in late 2023.

What is the FBA Capacity Limit?

Due to the sheer number of sellers using FBA, Amazon can’t always keep up with demand for the program. They’ve responded by establishing rules for what inventory sellers can place in their warehouses, which can leave sellers unable to place all the products they’d like in FBA. These are now called FBA Capacity Limits, and they are adjusted monthly to reflect seller demand and Amazon’s space constraints.

Sellers who need to accommodate significant demand fluctuations can manage their FBA inventory alongside FBM options to maximize profits and maintain customer satisfaction without sacrificing the benefits of FBA fulfillment.

FBM, on the other hand, is only limited by how much warehouse space a seller can rent or purchase on their own or by how much space they can get from a 3PL. 3PL space is essentially limitless from the perspective of an individual Amazon seller, so you’ll never ‘run out’ of space for FBM.

What are Fulfillment Costs for FBA and FBM?

FBA and FBM each have their own unique cost advantages – neither is best 100% of the time.

FBA charges fees based on fulfillment, storage, and optional services like labeling and removal. The fulfillment fee is calculated per unit, based on size and weight, and covers picking, packing, and shipping. Storage fees vary depending on time of year, with higher rates during Q4 due to increased demand. While FBA streamlines logistics and qualifies products for Prime shipping, sellers must account for additional costs like long-term storage and low inventory fees, which can add up for slow-moving products.

On the other hand, FBM sellers avoid Amazon’s fulfillment and storage fees by handling their own shipping and logistics. While they still pay referral fees (a percentage of the item’s selling price, varying by category), they can often save on fulfillment costs for slower-moving products. FBM works well for customized items, low-margin goods, or products with unpredictable demand, where sellers can maintain more control over costs and inventory. However, since FBM products don’t automatically qualify for Prime, they may face lower conversion rates compared to FBA listings.

In summary, for high-demand products with consistent sales velocity, FBA is often the better choice due to fast Prime shipping and reduced logistical hassle. Meanwhile, FBM is preferable for custom, niche, or handmade items, where sellers can optimize shipping costs and avoid high storage fees. The best option depends on a seller’s business model, cost structure, and ability to manage fulfillment independently.

Control of the Customer Experience

If you use FBA, then Amazon controls your customer experience – full stop. Your item will ship in Amazon boxes, with Amazon branding, and issues will be handled (or not) by Amazon’s customer service.

In contrast, with FBM, you’ll own much of the post-purchase experience. That means that you have the opportunity to use the unboxing experience to cross and upsell, for instance, and you’ll also handle issues with fulfillment. However, FBM merchants must take care that any inserts in their shipments comply with Amazon guidelines, or risk their selling privileges being revoked. In general, samples, thank you notes, requests for feedback, QR codes for additional information, and small thank-you gifts are permitted, but offering incentives for reviews or any other tactics to engineer reviews are not allowed. If there is doubt, be sure to check the Amazon guidelines thoroughly when designing inserts and other unboxing extras.

So, FBA makes fulfillment easy, but it can also represent a missed opportunity to upgrade the customer experience. With FBM, you can turn your post-purchase process into value added for the customer, build loyalty, and increase your profit-boosting repeat rate. Additionally, successful resolution of customer issues can actually increase customer loyalty, so with a great customer service team you can turn the challenges presented by FBM into opportunities.

Maximize Your Time with FBM and a 3PL Partner

As a seller, you want to focus on selling, not logistics. FBA handles fulfillment for you, so less of you and your team’s time will have to go into operations. This difference between FBA and FBM is especially apparent if you’re fulfilling orders yourself, in which case you could be buried by a surge in orders.

On the other hand, FBM with a trusted third party logistics (3PL) provider can be just as easy, if not easier, than FBA. Just like FBA, a great 3PL will take fulfillment off of your hands and leave the majority of your time free to focus on growth.

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Enabling Multi-Channel Growth

Amazon FBA and FBM are powerful tools for sellers looking to expand their business across multiple sales channels. By outsourcing fulfillment to Amazon, sellers can concentrate on marketing and selling their products, while Amazon handles the logistics. This is particularly advantageous for those aiming to grow beyond Amazon and sell on other platforms, such as their own website or other marketplaces.

With Amazon FBA, sellers can utilize Amazon’s fulfillment network to ship orders from any sales channel, making inventory management and order fulfillment across multiple channels more streamlined.

Amazon FBA can be used to fulfill orders for select ecommerce shopping carts like Shopify, and when it does so it’s called Amazon Multi Channel Fulfillment (MCF). This integration allows Amazon sellers to maintain a consistent and efficient fulfillment process, regardless of where the sale originates. By leveraging FBA, sellers can ensure that their products are delivered quickly and reliably, enhancing customer satisfaction and driving growth across all their sales channels.

More and more sellers are pursuing a multi-channel sales and fulfillment strategy that diversifies their portfolio and gives them more avenues for growth. Utilizing other sales channels as part of a broader strategy can significantly enhance operational efficiency and sales opportunities.

Amazon MCF uses the exact same infrastructure as FBA, but it also comes with all of the drawbacks associated with FBA fulfillment, and has a more expensive fee structure. As you can see in the below table, MCF is significantly more expensive than FBA. It will deliver your products fairly quickly, but it doesn’t guarantee the same SLAs as FBA. On top of that, your orders for non-Amazon products will ship in Amazon boxes. Not ideal!

FBA vs MCF Fees
(Large Standard Size w/ Expedited 2-Day shipping example)

On the other hand, FBM with a great third party logistics (3PL) provider can also unlock multi-channel growth for you, without the fees associated with MCF. The best 3PLs integrate seamlessly with all major marketplaces and shopping carts, so getting your operations set up with a new channel can be as simple as a few clicks.

Amazon Buy with Prime

FBM is designed for sellers that want to sell on Amazon and handle their own fulfillment, but Amazon has an additional offering for sellers that want to leverage Amazon’s vast logistics network not through any third-party sales channel or marketplace, but from their own direct-to-consumer (DTC) websites.

Amazon’s Buy with Prime program allows ecommerce merchants to offer Prime benefits—such as fast, free shipping and easy returns—from their native websites. One of the biggest advantages of the program is that it boosts conversion rates, as Prime members are more likely to complete purchases when they see the familiar Prime badge, and they already trust Amazon’s fulfillment network. Sellers can benefit from Amazon logistics without being restricted to Amazon’s marketplace, giving them more control over branding and customer relationships while still benefiting from fast, reliable shipping.

However, Buy with Prime comes with added costs and limitations. Sellers must pay fulfillment fees, payment processing fees, and referral fees, which can be higher than handling fulfillment independently. Additionally, while Amazon handles shipping and returns, sellers lose some control over customer data, as Amazon processes payments for Buy with Prime orders. This means sellers may have limited access to valuable customer insights that could otherwise be used for marketing and retargeting. Despite these trade-offs, Buy with Prime can be a strong choice for brands looking to boost trust and conversions while outsourcing fulfillment. That said, it may not be cost-effective for all merchants, especially those with thin margins or specialized shipping needs.

How to choose FBA vs FBM for your business

When considering whether FBA, FBM, or a mix of the two is right for your business, ask yourself a few questions:

  • Do you need the Prime badge to succeed?
  • What size are your products?
  • Do you have plans to sell on channels other than Amazon?
  • Are you comfortable with letting Amazon dictate the customer experience?
  • How accurately can you predict demand?

You only need FBA if you’re selling only on Amazon, you’re comfortable letting Amazon control your customer experience, and you can predict demand fairly easily. FBA will take care of fulfillment for you and qualify you for Prime, enabling you to focus your efforts on growing on the channel.

If you have multi-channel growth ambitions you’re probably going to need to fulfill yourself or an additional fulfillment partner other than Amazon, so the sooner you can consolidate operations under one roof, the better it is for your efficiency. If you want to use the post-purchase experience to improve your customer loyalty and repeat rate, you’ll need FBM as well.

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Using Both FBA and FBM

Many successful Amazon sellers find that a hybrid approach, using both FBA and FBM, can be the most effective strategy. By leveraging the strengths of each fulfillment method, sellers can optimize their operations and maximize profitability. For instance, using FBA for products that are eligible for Prime shipping and have high demand can help boost sales and take advantage of Amazon’s efficient logistics. Meanwhile, FBM can be used for slower-moving items or those with special shipping requirements, providing greater control and potentially lower fulfillment costs.

This dual approach allows sellers to diversify their fulfillment strategy, reducing reliance on a single method and increasing flexibility. It also helps in managing fulfillment costs more effectively, as sellers can choose the most cost-efficient method for each product. Additionally, by using both FBA and FBM, sellers can better handle fluctuations in demand and avoid stockouts, ensuring a more resilient and adaptable business model. This strategy not only enhances operational efficiency but also opens up new opportunities for growth across various sales channels.

Cahoot: Your Best FBM Solution

Cahoot’s FBM fulfillment services will fuel your profitable growth on Amazon and unlock opportunity on all other ecommerce channels at the same time. Unlike most other 3PLs, we’ve built our network to the highest standard, so we enable affordable Seller Fulfilled Prime for many of our FBM clients.

On top of that, our innovative peer-to-peer fulfillment network offers low-cost, fast fulfillment by design. We’re changing the industry by empowering merchants with excess warehouse space and resources to provide high-quality order fulfillment to other merchants. Unlike other 3PLs, we empower merchants to help other merchants, and our community levels the playing field with Amazon. Thanks to our unique model, our pricing is typically lower than what you’ll find from other 3PLs, but we can beat them on fulfillment speed and reliability.

If you’d like to find out how Cahoot can help your business, please get in touch with us. We can’t wait for you to join our community and boost your profitable growth.

Frequently Asked Questions

What are the total costs of using Amazon FBA?

Sellers considering using FBA fulfillment should take all fees into account when considering it as a fulfillment solution. These fees include fulfillment fees, monthly inventory packaging charges, storage fee, referral fee, selling plan charges, advertising fees, and return or repackaging fees. Amazon provides this revenue calculator tool to help sellers make informed decisions about their product fulfillment.

How do I get products ready for Amazon FBA?

Amazon requires that products arriving at FBA fulfillment centers should arrive ready to ship and any products that sell as a single unit must be packaged together on arrival. Products must also must be properly barcoded with a UPC, ISBN, EAN, or FNSKU, depending on the seller’s account settings. Cartons or case packs with multiple units should not have a scannable barcode.

What are the total costs of using Amazon FBM?

Amazon charges a monthly subscription fee to sell on the platform, which depends on the seller plan selected. There are also per-order and referral fees. No fulfillment or storage fees are applicable since the Amazon fulfillment center network is not being used, but sellers must fulfill their own orders or seek a 3PL partner.

Written By:

Indy Pereira

Indy Pereira

Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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What are National Fulfillment Services?

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What are national fulfillment services?

In theory, any fulfillment provider can offer national fulfillment services – after all, carriers like FedEx and UPS will happily ship parcels across the entire United States (and charge a boatload for it). However, fulfilling nationally from one or two locations is costly and slow due to inefficient fulfillment processes and exorbitant shipping costs. So businesses are left with smaller margins and disgruntled customers waiting too long for packages.

A truly nationwide fulfillment solution has warehouses strategically placed across the entire United States, and it will distribute inventory across those multiple locations. With this strategy, there’s inventory close to all customers, so no matter where in the country the order comes from, it ships quickly and cheaply. In this article, we’ll cover when growing ecommerce businesses should switch to a nationwide network and provide advice on how to choose the right provider.

Defining Order Fulfillment

Order fulfillment is the backbone of any successful ecommerce operation. It encompasses the entire process of receiving, processing, and shipping customer orders in a timely and efficient manner. This multifaceted process includes several critical activities: managing inventory to ensure products are in stock, processing orders accurately, packaging items securely, and shipping them promptly. Each step is vital to ensuring that customer orders are fulfilled correctly and on time, which in turn drives customer satisfaction and loyalty. Effective order fulfillment is not just about moving products from point A to point B; it’s about creating a seamless experience that meets or exceeds customer expectations.

Importance of Order Fulfillment in Ecommerce

In the fast-paced world of ecommerce, order fulfillment is a key determinant of customer satisfaction and business success. When orders are fulfilled quickly and accurately, customers are more likely to have a positive experience, leading to repeat business and word-of-mouth referrals. On the other hand, delays, errors, or damaged goods can result in negative reviews and lost customers. Clear customer communication can help mitigate this, but that’s just a delaying action; improving the fulfillment process and increasing prompt delivery is the foundation of success. Therefore, ecommerce businesses must prioritize efficient and reliable order fulfillment processes. Investing in robust order fulfillment systems and partnering with reliable fulfillment centers can significantly enhance customer satisfaction, build a positive reputation, and ultimately drive business growth.

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How National Fulfillment Services Work

National fulfillment services are designed to support a nationwide shipment network; shipping orders same-day to help save on shipping and fulfillment costs while maintaining prompt delivery to American customers no matter where they are.

Here’s an overview of how national fulfillment services work:

Order Receipt and Processing

When a customer places an order on an ecommerce platform, it is sent to the fulfillment center’s system, which then triggers the processing of the order. The order is reviewed for accuracy and any discrepancies or issues are addressed promptly. The fulfillment center’s team then picks and packs the ordered items, ensuring that they are properly packaged and labeled for shipping. This meticulous order fulfillment process ensures that customer orders are handled with care and precision, minimizing errors and enhancing customer satisfaction.

Inventory Management and Storage

National fulfillment services also involve the management and storage of inventory at each warehouse location. The fulfillment center stores the business’s products in a secure and climate-controlled environment, ensuring that they are protected from damage and deterioration. The fulfillment center’s inventory management system tracks the levels of inventory, ensuring that the business is notified when stock levels are low, and reordering should be initiated. This proactive approach to managing inventory helps businesses maintain optimal stock levels and avoid stockouts, which can disrupt the fulfillment process and negatively impact customer satisfaction, while at the same time minimizing costs of storing heaps of items in long-term storage.

Shipping and Delivery

Once the order is processed and packaged, it is shipped to the customer via a reliable shipping carrier. National fulfillment services often have partnerships with multiple shipping carriers, ensuring that the best rates and delivery times are secured. The fulfillment center’s system tracks the shipment, providing real-time updates on the status of the order. This comprehensive shipping service ensures that customer orders are delivered promptly and accurately, further enhancing the overall customer experience.

Warehouse Management System (WMS)

A Warehouse Management System (WMS) is a software application that manages and controls the day-to-day operations of a warehouse or fulfillment center. The WMS tracks inventory levels, monitors order processing, and optimizes warehouse operations. National fulfillment services use a WMS to ensure that orders are processed efficiently and accurately, and that inventory levels are always up-to-date.

The WMS is integrated with the business’s ecommerce platform, ensuring that orders are received and processed in real-time. The WMS also integrates with shipping carriers, ensuring that shipments are tracked and updated in real-time. This integration enables national fulfillment services to provide real-time updates on order status, ensuring that customers are always informed. By leveraging advanced technology and integration, national fulfillment services can provide businesses with a scalable and efficient order fulfillment solution, enabling them to focus on growth and customer satisfaction.

By incorporating these features, national fulfillment services can streamline logistics operations, reduce errors, and enhance overall efficiency. A national fulfillment service is a crucial edge for businesses looking to stay competitive in the fast-paced world of ecommerce.

When Should a Business Upgrade to a National Fulfillment Solution?

Businesses that start out on Amazon usually have a ready-made option for national fulfillment in Fulfillment By Amazon (FBA). Amazon has famously built its fulfillment network to massive proportions, and they have the most ecommerce fulfillment locations across the United States. For all non-FBA orders, the business is likely shipping out of either their own small warehouse, a small single 3PL, or even just a garage. Small, single operations like these don’t have the scale to match larger networks for efficiency.

It’s surprising how easy it is to gain value from a nationwide network – and how soon it can be done. At just a few hundred orders per month, businesses reach the point of enough scale to distribute inventory to multiple locations across the country. The benefits of national fulfillment will far outweigh the small increase in inventory needed to supply multiple locations.

The one caveat to this guidance is that if a business has very high SKU diversity, they’ll benefit most from outsourcing their high volume SKUs only. Low volume, “long tail” SKUs benefit much less from distributed fulfillment.

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Benefits of National Fulfillment Services

National fulfillment services are vital for ecommerce businesses that want to boost revenue growth and protect margins. Fulfillment companies play a crucial role in providing order fulfillment services, especially for international sellers entering the U.S. market.

Utilizing a network of fulfillment centers across various countries allows businesses to reach a worldwide customer base quickly and economically. Global fulfillment enhances shipping efficiency and reduces costs for ecommerce businesses.

1. Nationwide Fulfillment Boosts Revenue Growth

“Fast and free” shipping badges are one of the single most effective growth tools in the ecommerce industry. Amazon metrics show that adding a Prime badge to a product for the first time improves conversion by 50%, and Walmart similarly found that their TwoDay badge drives a 50% lift. Every major marketplace and shopping cart now has their own version of the Prime badge, and each finds a big revenue boost from using the badge.

If a business is shipping out of one or two locations, it can qualify for fast and free shipping badges simply by paying express carrier rates – but what’s the point of revenue growth if shipping costs more than the product itself? Nationwide fulfillment networks unlock profitable revenue growth through fast shipping by placing inventory across the country. By leveraging nationwide fulfillment locations, every order will be fulfilled by a nearby location, so the cheap shipping options still deliver within 1 or 2 days. Turn on those badges across all channels and reap the rewards of better search rankings and higher conversion while still saving money on shipping.

2. Minimize Shipping Costs

Businesses shipping from just one or two locations will often see half or more of their orders shipping to Zone 5 and up. Compared to shipping out of a single location, national fulfillment distributes inventory more efficiently across the country through multiple warehouse locations, so orders are shipped from a starting point much closer to their destination.

Businesses shipping from just one or two locations will often see half or more of their orders shipping to Zone 5 and up.

Placing inventory in 3-5 locations all but eliminates the need to ship above Zone 4, cutting a business’s average zone profile by multiple zones. Every one of those shipping dollars saved goes straight to the bottom line; saving a few shipping zones on every order means saving a few dollars on every order. Imagine $2.00 more profit on every order.

3. Reduce Supply Chain Risk

Capacity is strained at every point of the supply chain, from international shipping to last mile delivery. Capacity isn’t crunched equally across the country though, which means that a nationwide network can significantly reduce the risk that all available inventory will be stuck in the same massive delay.

If there’s a delay in the supply chain affecting a region, inventory located at warehouses in other regions can pick up the slack. With only one or two small warehouses that might not be an option. Inclement weather is another common cause of regional disruption. If the only warehouse is closed due to hurricanes, snow, fire, or other natural cause then fulfillment may be completely frozen.

If that happens then selling because they had no way to fulfill orders. If they had a nationwide network, they would have kept on selling even as one part of the country shut down.

Additionally, a nationwide network allows inventory management across multiple locations through a single dashboard, enhancing operation scaling and improving customer service.

Nationwide fast and free shipping drives significant growth on every major marketplace.

Cahoot National Fulfillment Services

Cahoot’s nationwide network of over a hundred warehouses provides affordable national fulfillment solutions for ecommerce business. Businesses with just one or two locations need to ship express to cover 99% of Americans with 1- and 2-day shipping, so fulfillment across the US is surprisingly expensive with two-coast providers. On the other hand, Cahoot will strategically distribute inventory to a truly national footprint so that a business can ship to 99% of the country in 1- and 2-days but always pay lower cost, ground shipping, rates.

Unlike other providers, Cahoot has the flexibility to upgrade a business’s existing warehousing and fulfillment services. If a business is fulfilling out of one or two warehouses, Cahoot can add a few fulfillment locations to seamlessly extend the network into a nationwide footprint. With this approach, businesses can continue to get value out of existing assets while enjoying the benefits of a nationwide network.

Getting started with Cahoot is surprisingly easy – with pre-built integrations for major ecommerce channels like Amazon, Walmart, Shopify, and BigCommerce, businesses can boost growth with fast shipping badges in under two weeks.

Contact Cahoot today to learn more about how our nationwide fulfillment network can be the key that unlocks profitable ecommerce growth.

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Conclusion

Selecting the right fulfillment company is a critical decision for any ecommerce business. A comprehensive national fulfillment center offers a wide range of services, including warehousing, packaging, and shipping, which can streamline logistics operations and improve overall efficiency. When evaluating potential fulfillment centers, it’s important to consider the breadth of services they provide. A center that can handle everything from inventory management to last-mile delivery can be a valuable partner in ensuring smooth operations and high customer satisfaction.

Location is another crucial factor. A fulfillment center with multiple strategically placed facilities across the USA can significantly reduce transit times and shipping costs. This geographic advantage ensures that customer orders are shipped from the nearest location, leading to faster delivery times and lower shipping expenses. Additionally, a fulfillment center with a robust network of warehouses and distribution centers can offer more flexible and responsive logistics operations, allowing businesses to adapt quickly to changing market conditions.

Advanced technology is also a key consideration. Fulfillment centers equipped with automated sorting and packing systems can enhance efficiency and accuracy, reducing the likelihood of errors and delays. By leveraging technology, fulfillment centers can provide faster and more reliable service, which is essential for maintaining high levels of customer satisfaction.

Ultimately, the right fulfillment center for an ecommerce business will depend on its specific needs and requirements. By carefully evaluating the range of services, locations, and technology offered by different fulfillment centers, businesses can make an informed decision and choose a fulfillment partner that aligns with their goals and helps them achieve operational excellence.

Frequently Asked Questions

What is order fulfillment?

Order Fulfillment is the part of ecommerce relating to shipping products to customers. This starts with inventory management, going through processing orders at shipping locations, until products arrive at the customer’s doorstep.

What are nation-wide fulfillment centers?

Technically a fulfillment center is only a single location, so a fulfillment service needs multiple centers/warehouses to be considered nation-wide.

How many fulfillment centers are needed to provide 2 day ground shipping nation-wide?

This depends on several factors, but with 4+ fulfillment locations, 99% of the US population can be reached in 2 days via ground shipping. Cahoot has over 100 fulfillment locations to help deliver to US customers across the country.

Are nationwide fulfillment centers 3PL or 4PL?

A 3PL can support nationwide fulfillment, but the more locations a 3PL has, the closer they are to becoming a 4PL.

Written By:

Indy Pereira

Indy Pereira

Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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Peer-to-Peer Order Fulfillment for Efficient and Affordable Shipping

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Listen to podcast here.

Podcast: ProShip ParcelCast Episode 23: What is a Peer-to-Peer Order Fulfillment Network?

Cahoot AI founder Manish Chowdhary discusses the need for distributed order fulfillment and the benefits of a peer-to-peer order fulfillment services network on a podcast. The network is a platform where eommerce brands and retailers collaborate to speed up order fulfillment and distribute inventory closer to the customer. The objective is to reduce shipping costs and improve customer experience with better and faster shipping. Distributed order fulfillment is the process of making free and fast shipping feasible and affordable for the retailer by placing inventory closer to the customer so that items can be shipped using affordable and inexpensive ground services rather than long-distance air that can be two to four times more expensive. An ecommerce brand or a retailer just needs four to five strategically located warehouses throughout the US to achieve two-day nationwide delivery guaranteed and nine warehouses to achieve one-day delivery like Amazon. Retailers have the option to build their own warehouses, lease them, sign up with multiple third party logistics (3PL) companies, or join an order fulfillment services network like Cahoot.


Justin Kramer:

Welcome to the 23rd episode of ParcelCast, what is a peer-to-peer order fulfillment services network. I’m your host, Justin Kramer, co-founder of ProShip. And with me is my special guest, Manish Chowdhary, founder of Cahoot AI, a distributed shipping software and peer-to-peer order fulfillment services network. Manish, could you take a second to introduce yourself and your company?

Manish Chowdhary:

Absolutely, Justin. Thank you for having me. First of all, my name is Manish Chowdhary, I’m the founder and CEO of Cahoot. Cahoot is the world’s first peer-to-peer order fulfillment services network. In simple words, it’s a collaboration platform where brands and retailers collaborate to speed up fulfillment and distribute inventory closer to the customer so that we reduce the shipping cost and also improve the customer experience with regards to better and faster shipping for the end consumer.

Justin Kramer:

You know what, let’s take that further. Let’s go ahead and talk about the need for distributed order fulfillment. We hear about it a lot. Can you explain to us what it is, and what our retailers’ options are nowadays?

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Manish Chowdhary:

That’s a great question, Justin. Distributed order fulfillment is nothing but a methodology on making the free and fast shipping feasible and affordable for the retailer. When the consumers order stuff online, especially on sites like Amazon, they are conditioned now to expect free two-day delivery. In fact, Amazon has raised the bar on making it free one day delivery with Prime. Almost one-third of all Amazon Prime items get delivered in one business day, which is astounding. And for Amazon, business day is Monday through Sunday, so it’s not even business day anymore. And that’s the expectation that the consumers have with every ecommerce brand, every retailer. And for the brand or the retailer to make that affordably happen is bring the inventory closer to where the consumer is located so that item can be shipped using affordable, inexpensive ground service. As opposed to the long distance air, which is in on average two to four times more expensive than the economy ground shipping. So distributed order fulfillment is basically placing your inventory smartly closer to your customer so you can achieve one-day, two-day delivery without breaking the bank.

Justin Kramer:

Awesome, awesome. What kind of tools, technologies, and SLAs should we expect from something like this if I’m a mid-size retailer looking to get into something like this?

Manish Chowdhary:

You essentially have three options. One, you can go and build additional warehouses, and these are warehouses that need to exist at strategic locations. Meaning, having a warehouse in Wisconsin, for example, is not going to be very effective because that’s not where the large population lives. Of course, tri-state area, New York, New Jersey, closer to the port, that’s where a lot of the inventory from overseas come in. But also it’s a very densely populated region. And so is Southern California like Los Angeles, Long Beach, Orange County. And then of course the upper Midwest like Chicago and so on. In order to achieve two-day nationwide delivery guaranteed, a brand or a retailer needs four to five strategic warehouses throughout the nation. And if you wish to achieve one-day delivery like Amazon, you need nine warehouses strategically located in the US. And I mean strategic.

If you had a warehouse that is not in a strategic location, you’ll need many more. And so you have options. Your options are you’re going to go build these warehouses, which is very capital intensive, and you don’t know what the market is going to look like. And then also it’s getting the permits, getting all of this takes a very long time. Second option is to lease it. Again, same problem, you’ll need to enter into long-term leases because warehouse spaces in such short supply, which also is a pretty large commitment and investment. The third option is you have to go and sign up with multiple 3PLs. Because two-thirds of the 3PL, or third party logistics companies, the companies that professionally provide order fulfillment services to brands of retailers in the US are mom and pop, two-thirds. The remaining one-third are the largest of the world.

Those are the people that become the landlord to Amazon and Macy’s and others, which are largely out of reach for most mid-sized sellers. So now you need to go and negotiate and acquire these multiple 3PL with different agreements, different contracts, and then you need the technology to glue it all together because there is no [inaudible 00:05:05] to choke, so as to speak, if there’s a problem. And so all of this creates a huge burden, a huge investment for the brand or the retailer to achieve. Or the fourth option, which is really a more newer and emerging option, is to join a contract with an order fulfillment services network such as Cahoot. And there are a few others that has nationwide footprint, that has multi dozen warehouses that can achieve that delivery target, that SLA seamlessly. So that’s another option.

Justin Kramer:

You talk a lot about Amazon. Is Amazon Prime a distributed order fulfillment services network? Is that something that people are looking at at the… Or should I say, is that something that is the high end of what we’re talking about?

Manish Chowdhary:

Amazon FBA, which powers the Amazon Prime program, fulfillment by Amazon, is by far the largest distributed order fulfillment services network in the world. Not only the US. They have over 120 warehouses, not to count the sortation facilities and other cross stock facilities in the US. Amazon invested more during the pandemic in building out their fulfillment services network than they had invested in the previous 18 years. So the amount of money and resources that Amazon poured in 2020 and 2021, and also part of 2022, dwarfs the investment… Almost, they increased their footprint three times, and that’s why we heard some headlines about Amazon over building and they needed to rent out. Those were some headlines. And then trying to optimize their cost, laying off workers, closing down facilities. Amazon, like many of the other brands and retailers had overbuilt. But Amazon is by far the largest distributed order fulfillment services network in the world.

Justin Kramer:

If I’m a growing retailer and I’m looking to get into something, how is all this power that Amazon has, how does that impact me?

Manish Chowdhary:

Absolutely. Suffice to say that nearly every brand, every retailer should have an Amazon strategy. It’s hard to ignore Amazon is a sales channel when 60% of all e-commerce searches begin on Amazon, not on Google. Even whether you like Amazon or you don’t like Amazon, the reality is millions and millions of consumers go to Amazon every single day. And if they can’t find your products there, then that’s a problem, because you may be missing out on a big opportunity. A big, large segment of your target audience and population. Amazon does many things really, really well. And Amazon being the largest order fulfillment services network, but also Amazon Prime is the largest loyalty program in the world. By a long shot, you’ve got over 130 million, I don’t even have the real numbers as of now, but over 100 million subscribers that pay $120 a year to Amazon, and they get a whole host of benefits.

And the biggest benefit of it all is the free one-day, two-day delivery with no minimum. So you could literally order paperclips on Amazon, have it delivered the next day, and not pay anything for delivery because you’ve already paid into the membership program. So that is what consumers love. And while Amazon FBA is great at many things, and I can cover this if you like, I can elaborate on it. It’s not the be all and end all. It is good for many times, however, it has its own set of challenges that the retailers and ecommerce brands must be aware of.

Justin Kramer:

Let’s go ahead and ask one last question. Let’s talk about Buy With Prime. Can you tell me what the larger impact is of this program on e-commerce as a whole?

Manish Chowdhary:

That’s an excellent question, Justin. Buy With Prime launched in April of this year, this is something that has been a long time coming. As you and others listening may be familiar with, Amazon does everything at very large scale. They perfect a service first for themselves, and then they look to monetize that across the entire business ecosystem. And that’s exactly what Buy With Prime is. Buy With Prime is Amazon’s initiative to become even larger third party logistics company where Amazon will extend its Prime membership to other channels other than Amazon. Let’s say you have a website that is hosted on Shopify or on Magenta, or any website, you could install a Buy With Prime logo, a button, and you can send that inventory to Amazon FBA, and the consumer can now check out using the familiar Amazon account and get that product in one or two days.

Buy With Prime essentially extends all of the Prime benefits to websites other than Amazon. And we already seeing many, many sites that have adopted and embraced this because Amazon makes it so easy for the brands and retailers to fulfill their orders. And if brands and retailers that are heavy into FBA that sell a lot on Amazon for them, it’s a no-brainer. And so what the term or the phrase that I like to use here is, gradually and then suddenly. Up until now, consumers have been expecting the Prime benefits or one-day two-day delivery only on Amazon. But now let’s take an example. If you are a shoe retailer, and there are two of them, Acme Inc and ABC Inc. Acme Inc starts providing Buy With Prime on their website, and ABC Inc does not. Now as a consumer, I’m more likely to go check out from here, if all things being equal. So this is going to lead to this massive adoption and even acceleration of delivery expectation among consumers, because they now expect that same Prime-like experience on every channel they shop on.

Justin Kramer:

Interesting, interesting. Okay, let’s go ahead and switch topics here. Let’s talk about this new fulfillment economy and the workshare model. To the average logistics persons, companies like Gap, American Eagle, Quiet Logistics, Airterra, they were offering something very similar to what it sounds like the Cahoot network is offering. Can you talk to us a little bit about the similarities and the differences?

Manish Chowdhary:

Yeah, this is a new development that’s happening in the e-commerce and retail logistics space. Cahoot was of course the pioneer in peer-to-peer collaboration. And essentially, Cahoot acts as a neutral third party where there are plenty of merchants. There are about three million online merchants in the US compared to about 20,000 3PL companies. So these are third party logistics companies that will provide fulfillment as a service. By sheer comparison, and the analogy I’d like to make is Airbnb versus Hilton. There are many more homes with spare bedroom and a spare wing than there are hotel rooms in the US. Rather than building more warehouses where rooms are going empty, or the space is going empty in these millions of warehouses. Cahoot is aiming to bring these surplus capacity into the market so as to reduce the cost and improve utilization. This goes hand in hand with trying to make the most or more of what resources we already have, as opposed to trying to spend more capital expense, which essentially increases the cost one way or the other for the brand or the retailer.

What Cahoot has done is created a network of very highly qualified, highly vetted brands and retailers that do a spectacular job of order fulfillment for themselves, but that have extra capacity, let’s say 5, 10, 50, 20, 100,000 square feet of excess capacity. For the very first time, they can join the Cahoot network and monetize that excess capacity by fulfilling orders for other brands. And Cahoot acts as the independent governing body with the technology, the software, so that it is not a distraction for them. It is simple, it’s easy, and it’s effective. And it also gives the seller, the brand, our customer, the assurance that we are holding everybody accountable. And there is harmony and there’s SLA being delivered. And so it’s very exciting to see other retailers like Gap and American Eagle finally come to embrace the model that we’ve been preaching for a long time.

And the one difference, there’s not a lot we know about these models because there’s not a lot published on them because it’s still a closed system. But one thing, suffice to say that most brands, most retailers would prefer an independent body to audit the service provider. And that’s the advantage that Cahoot provides, because Cahoot is not representing just the buyer or just the warehouse. Cahoot is the independent body that keeps everybody organized and creates a common rule and level playing field for all the participants, and provides the visibility. That’s the one thing that I personally believe that having that independent body is a very crucial, it provides trust, it provides visibility, and it provides the assurance and it provides accountability. We would very much welcome Gap and American Eagle to join Cahoot so that we can give that assurance to small and large size retailers.

Justin Kramer:

And it also sounds like if I’m a Cahoot member I can now more easily expand to those five to nine distribution points so I can have two-day or next day delivery for most of the country.

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Manish Chowdhary:

Absolutely. The whole idea is, how do we create a Prime-like network and Amazon FBA-like network without the challenges that FBA faces? FBA is great at many things, but it does not… Even to this day, many, many sellers could not get their inventory into FBA on time for the holidays. They had limits placed on their account that they could only send so many units, and they rely on other networks like Cahoot to fulfill even their orders on Amazon. While Amazon is growing, they’re launching all these services, it has its own set of challenges. Amazon is not geared for all things to everyone at all time because Amazon only wants fast moving inventory. But from a retailer’s perspective, they also need to fulfill their wholesale orders, they need to fulfill orders from Walmart. Which, you cannot use FBA to fulfill, it’s against Walmart’s rules and policies that you cannot have a Amazon branded box being delivered to the Walmart customer that bought the item on the Walmart marketplace. And rightfully so.

Justin Kramer:

Let’s switch over to some other networks that sound like they’re similar. I know that the carriers, some of the airlines, and other particular merchant groups have some stuff similar to this. Can you talk about that and compare and contrast a little bit for us?

Manish Chowdhary:

Absolutely, Justin. The idea of coopetition has existed for a long time, where seemingly retailers may consider themselves to be competitors, but not necessarily. Because a retailer who has a warehouse in New York is really not competing with the retailer of a different product with a warehouse in California. It is in their interest to collaborate so that both of them win because they are not competing. And so we know of many, many very successful networks of this kind, going back to the, let’s take airline co-share. Not every airline flies to Maui, Hawaii. But if you want to get from Chicago to Maui, you might have to go from Chicago to Dallas, or Chicago to LA, and then LA to Maui, for example. For example, Delta, as part of the Sky team has many other airlines that share the code and so on.

So this is very, very common. It makes the airlines be profitable and able to service the needs of the customer. Because ultimately about getting to Maui, not about how many websites and tickets you need to buy separately. Likewise, we also know for examples in the flower delivery space, the FTD. Which is if I want to send flowers, I’m in New York and I need to send flowers to my sister-in-law in Palo Alto in California. Of course the local florist is not going to be the one delivering, but as part of the network, they can easily arrange for someone locally to deliver. And we’ve always known about the workshare model in the carrier space, which we know that USPS has long had workshare programs with UPS, FedEx. Programs like UPS Mail Innovation, FedEx Smart Post. Cahoot is simply extending the same concept to the world of order fulfillment and warehouses. Because ultimately, when there is greater utilization of resources that we have, that leads to a better experience and lower cost for all the participants involved.

Justin Kramer:

Very interesting, very interesting. Manish, can you tell our audience, what is a peer-to-peer order fulfillment services network?

Manish Chowdhary:

A peer-to-peer order fulfillment services network is a large scale nationwide network of warehouses that allows a ecommerce brand or retailer to compete at the level of Amazon Prime, which is one-day, two-day free delivery. Every brand, every retailer should be offering the service on all channels that they serve. And they can easily achieve that by joining Cahoot, because Cahoot has the number of locations and the diversity to place the inventory closer to the customer so that the items can be delivered inexpensively and fast without incurring additional cost. And on the fulfillment provider side, if you are a brand or retailer that has, owns, or operates a warehouse and has spare capacity, be it 5,000 square feet or 50,000 square feet, and you would like to monetize that excess capacity, excess space, please come check out Cahoot.ai and fill out a contact us form so you can apply to become a Cahoot fulfillment partner.

And we would love to speak with you, because we would love to add more warehouses to our network. So you benefit not just by providing faster and cheaper delivery to your customers, but also by monetizing your spare capacity so you make more out of your existing fixed investments.

Justin Kramer:

Excellent. Let’s go ahead and let’s move on to the changing base of reverse logistics. Let’s face it, over the last several years we’ve seen companies try to return everything. We’ve seen companies try to return nothing, just ask the customer to throw it away. But one way or another, we all know that reverse logistics is a huge part of the customer satisfaction story when it comes to e-commerce. Can you tell us a little bit more about it?

Manish Chowdhary:

Yes, Justin, this is of course when e-commerce was only 1% of total retail. Brands and retailers were motivating customers to shop online because it was, so-called it was a channel shift. It was giving customers more self-service option. It is akin to motivating customers in the grocery stores to do self-checkout now, you try to encourage them. And of course consumers got very, very much used to… And in order to do that, they offered free shipping on the way in, and they also offered free returns. Because it was one of those taking away the friction in online shopping that if you didn’t like something you could return it for free and no questions asked. Of course, that was intended to be simply an encouragement for the consumers to shop online, and which quickly changed into the concept of showrooming. It’s essentially consumers, especially in the apparel space, buying three items with the intention of only keeping one.

And because items are free to return, you could simply return it back. This went on for over a decade now, and sites like Amazon, or when the products are rather inexpensive, it costs more to ship them back and process that item that is returned than to let the customer keep the item. However, we are entering a new phase and we can see that with the brands like Zara and Gap and others that are cramping down and they’re saying enough is enough. There have been chronic people that constantly return items that is playing a havoc on the profitability of these companies. Essentially, the movement has already started, and some of the top brands and retailers have taken a lead that now if you want to return the item back to Zara, you’re going to have to pay a return fee, or you have to pay cover the cost of shipping. I think they’re going through a natural leveling of consumer expectations. And I don’t expect free returns to loss for most items in the next couple of years, that’s going to change quite dramatically.

Justin Kramer:

That will be very interesting, no more free returns. I know companies like Zappos, that’s exactly how they made their name in the market was you could bracket, by the size above, the size below, and get to choose what you wanted. Very interesting. Are you seeing this anywhere yet, or is this an expected 2023 trend?

Manish Chowdhary:

No, we heard from folks like Zara and others that they are already beginning to charge for returns. This is already in play now. It’s just not an idea or a thought. And of course, it takes a little bit of the top leaders to take a position and then others will follow. I expect of course, Amazon being the big bellwether, it remains to be seen what Amazon Prime is going to do because I think they constantly set the bar, so we’ll see. But also from a sustainability standpoint, Justin, this is not just about the cost. But if we encourage people to return, we are adding more carbon emissions. I think there will be brands that would take a stance that it is not just good for e-commerce, but it’s good for the planet. I do expect that the scales to be tilting in this direction not too long from now.

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Justin Kramer:

Yeah. And I have to say, I think you’re right. Because you do see even Amazon in their partnership with stores like Kohl’s wanting you to just take it to that store where you’re already going to be, rather than putting it in its own, usually oversized box, sticking a label on it, and having it take up space on a truck or a trailer somewhere. All right, let’s move on to final thoughts. Question for you, is there any takeaways you want to make sure that our listeners have heard today and that they action against?

Manish Chowdhary:

My recommendation to all the listeners is that free and fast delivery, free one-day, two-day delivery is here to stay. And it’s not just on Amazon. Any channel that you’re selling on, you’ve got to embrace distributed order fulfillment. How you do it, there are four options as we covered earlier in the podcast. It is crucial in order to maintain your competitive positioning and also maintaining the consumer expectation, which is changing very rapidly. And especially with Buy With Prime program, which is going to launch, or rather, get rolled out quite aggressively in 2023. You want to get ahead of that. I would very strongly encourage to get a head start in 2023 and test this out, and make sure you have this systems and technology and your fulfillment and your providers figured out. And if you have spare capacity, why not put that to good use? Energy costs are all time high. So if you can make an extra income from your existing investments, that’s good for you, but it’s also good for the planet.

Justin Kramer:

Agreed. The one thing I took away from this, I’m going to try to narrow it down to a sentence. In the past we’ve always had buy, lease, or outsource. Right? But with a peer-to-peer network, we now have a fourth option. We can buy, we can lease, we can outsource two or 3PL, or we can collaborate with other like retailers. Is that correct?

Manish Chowdhary:

That is absolutely correct, Justin. I think we are all in this together, and that’s why our tagline, Cahoot’s tagline is Power of Many. It’s brands of retailers helping each other.

Justin Kramer:

All right. If you’d like to learn more, please visit us at proship.com or cahoot.ai. Thank you for joining us today. If you have any questions, just a reminder, you can reach ProShip at sales@proshipinc.com, or (800)-353-7774. We hope you join us for our next ParcelCast. Thank you for tuning in.

Written By:

Manish Chowdhary

Manish Chowdhary

Manish Chowdhary is the founder and CEO of Cahoot, the most comprehensive post-purchase suite for ecommerce brands. A serial entrepreneur and industry thought leader, Manish has decades of experience building technologies that simplify ecommerce logistics—from order fulfillment to returns. His insights help brands stay ahead of market shifts and operational challenges.

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Ecommerce Fulfillment with Buy With Prime

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Consumer expectations today are higher than they’ve ever been before. Many observers might put this down to rising incomes or things that shoppers visibly see every day, such as great marketing campaigns, innovative products, or competitive pricing. However, sellers have a secret weapon in the competition to acquire happy, loyal customers – fast, free shipping and order fulfillment.

The elevated customer expectations that online retailers face due to fast shipping times have been created by the “Amazon Prime Effect”. What is this effect, and what implications does it have for merchants selling online?

Constantly Increasing Consumer Expectations

Let’s go back to 2005, when Amazon introduced free two-day shipping on orders over $35, a move that many found puzzling – even illogical – at the time. Later in the same year, they introduced Prime, with its annual fee that allowed customers to get as many items as they wanted, with no shipping fees.

By the time of the Covid-19 pandemic, same-day shipping arrived on Prime. While Amazon continuing to raise the fulfillment bar has been great for them and their customers, competitors large and small have been scrambling to catch up. For example, it took Walmart 12 years to catch up and offer free 2-day shipping! As Amazon has gotten faster and faster at shipping, even their biggest competitors have taken a long time to reach the elevated shipping standards that Amazon makes table stakes.

On every channel today, the sellers winning are those offering shipping that can compete with Amazon. For example, Walmart listings (inspired by Amazon’s approach) offering 2-day delivery rank higher in search results, win the buy box more often, and see conversion lifts as high as 50%.

Timeline of Free Shipping Offerings from Major Ecommerce Sellers

While pressures to provide ever-faster free shipping continue to increase, the pressures of intensifying competition are making it harder than ever for sellers to win. Costs at each step of the fulfillment chain (shipping, warehousing, and labor) are on the rise:

  • Shipping: General Rate Increases have surged upward, remaining significantly higher than the prevailing inflation rate, making it harder and harder for merchants to absorb the last-mile costs involved in meeting the expectations of free same-day shipping.
Graph of US inflation rates and UPS/FedEx general rate increases from 2020 to the present
  • Warehousing: To get orders fulfilled faster, you need to distribute your inventory in warehouses closer to the customer. But online merchants face the challenge of dealing with both elevated rent costs and limited vacant space in warehouses.
  • Labor: As they continue to face significant staff turnover at fulfillment centers, Amazon has had to increase the wage they pay their workers several times in recent years. Most recently in 2024, they announced a new 7% increase in base pay for warehouse workers, bringing average base pay for such workers above $22/hr.

With shipping companies raising prices, warehouses becoming tougher to rent, and people becoming more expensive to hire, merchants face the daunting task of overcoming these challenges and meeting customer expectations.

What is Buy with Prime?

In 2022, Amazon raised the stakes yet again, making fast, free shipping available standard for every e-commerce brand and retailer through their Buy with Prime (BWP) program. This program allows any online merchant – not only those with Amazon stores – to offer order fulfillment using the elevated standard set by Prime. The program has already made a splash in a short time, with support from major brands such as Adidas and Fossil.

Amazon Buy with Prime is a program that allows third-party merchants to offer Prime shopping benefits—like fast, free shipping, a seamless checkout experience, and easy returns—on their own e-commerce websites. It integrates with a merchant’s online store, enabling Amazon Prime members to shop with confidence outside of Amazon.com while still receiving the perks they expect.

Any merchant with a Direct-to-Consumer (DTC) website and an Amazon Seller Central or Amazon Supply Chain account can apply for the Buy with Prime program. Merchants simply add the “Buy with Prime” button to their product pages on their own website, and customers then check out using their Amazon credentials, making the process faster and more convenient.

Amazon handles fulfillment and shipping, ensuring fast delivery through its logistics network, and also manages customer service and returns, simplifying post-purchase interactions.

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Benefits of Buy With Prime

Amazon’s Buy with Prime program offers significant advantages for sellers looking to boost sales and improve their customer experience. By enabling merchants to offer the Prime shopping experience directly on their own websites, the program increases trust and boosts consumer spending – by 16% on average according to Amazon! With fast, free shipping and a seamless checkout experience backed by Amazon’s fulfillment network, sellers can attract high-value Prime members who are accustomed to quick delivery and hassle-free returns.

Additionally, Buy with Prime helps sellers leverage Amazon’s logistics expertise without being limited to selling only on Amazon’s marketplace. They maintain control over their branding and customer relationships while benefiting from Amazon’s fulfillment and payment processing capabilities. Merchants can feature reviews from Amazon on their website and place ads on the Amazon Marketplace which link to their own website and drive traffic. The program can also reduce cart abandonment rates, as shoppers are more likely to complete a purchase when they recognize the reliability of Prime.

Limitations and Problems of Buy With Prime

Only SKUs that are fulfilled using FBA (Amazon’s in-house fulfillment) are Buy with Prime eligible. While FBA works well, the Buy with Prime button disappears from the product listing on your website if there is no more inventory available in Amazon warehouses, and standard FBA fees and regulations apply to all inventory in an Amazon fulfillment center. FBA is not ideal for SKUs that do not move quickly – the costs associated with stocking inventory with Amazon that does not turn over frequently can become very large.

The most imposing drawback to the Buy with Prime program, however, is the significant payment processing fees, representing 2.4% of the cart value + $0.30, as well as an additional 3% Prime service fee (min $1.00). Shopify stores can avoid much of the pain associated with these fees, as their payment processing fees are waived and only standard Shopify fees (and the Prime service fee) apply. That being said, sellers should remember that other applicable FBA fees (storage, etc.) will also apply to orders fulfilled from Shopify stores.

Alternatives to Buy with Prime

For sellers seeking to aggressively minimize the costs associated with fulfillment, Amazon’s FBA and Multi-Channel Fulfillment (MCF) programs are, on average, cheaper than utilizing Buy with Prime (although there are specific product types for which Buy with Prime may be more efficient than MCF). But what about merchants who want to meet the modern standard for fast, cost-effective shipping without losing control of their fulfillment processes or submitting to the rigid requirements for which Amazon has become infamous?

Usually, merchants look to 3rd Party Logistics Providers (3PLs) for solutions. However, 3PLs can often come with significant costs and limitations, as fulfillment is their primary revenue stream.

That’s where a solution like Cahoot comes in – we’re unlocking the potential of over 2 million e-commerce retailers in the US that have their own warehouse space, who perform complete order fulfillment.

For the first time ever, merchants, brands, and e-commerce retailers will be able to monetize excess capacity available in their warehouses through Cahoot’s peer-to-peer order fulfillment network, which delivers fast, free 1-2 day shipping while also lowering costs. We offer the industry’s leading Service Level Agreement (SLA) and we help our Amazon sellers by offering Seller Fulfilled Prime (SFP) services. If you’d like us to take over all aspects of order fulfillment, we can do that too!

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Conclusion

In an era where fast, free shipping is no longer a luxury but an expectation, sellers must carefully weigh their fulfillment options. Buy with Prime offers a compelling way to boost conversion rates and leverage Amazon’s logistics, but it comes with added costs and limitations that may not work for every merchant. While some sellers may find Amazon’s fulfillment solutions ideal, others may prefer alternative strategies that provide more control over operations and costs.

As competition intensifies and fulfillment challenges grow, innovative solutions like Cahoot’s peer-to-peer fulfillment network are emerging as viable alternatives. By leveraging existing warehouse capacity and a decentralized fulfillment model, sellers can meet the demand for fast, cost-effective shipping without the constraints of Amazon’s ecosystem. The key to success in today’s e-commerce landscape lies in choosing the right fulfillment strategy—one that balances speed, cost, and control to drive long-term growth.

Frequently Asked Questions

How does Buy with Prime benefit merchants?

Buy with Prime helps sellers leverage Amazon’s logistics expertise without being limited to selling only on Amazon’s marketplace. They maintain control over their branding and customer relationships while benefiting from Amazon’s fulfillment and payment processing capabilities. Merchants can feature reviews from Amazon on their website and place ads on the Amazon Marketplace which link to their own website and drive traffic.

What are the limitations of Buy with Prime?

Only SKUs that are fulfilled using FBA (Amazon’s in-house fulfillment) are Buy with Prime eligible. The Buy with Prime button disappears from the product listing on your website if there is no more inventory available in Amazon warehouses, and standard FBA fees and regulations apply to all inventory in an Amazon fulfillment center. Additionally, significant payment processing fees often apply.

This is why it’s important for sellers seeking to aggressively reduce the costs associated with fulfillment, to research alternatives to Buy with Prime.

Written By:

Manish Chowdhary

Manish Chowdhary

Manish Chowdhary is the founder and CEO of Cahoot, the most comprehensive post-purchase suite for ecommerce brands. A serial entrepreneur and industry thought leader, Manish has decades of experience building technologies that simplify ecommerce logistics—from order fulfillment to returns. His insights help brands stay ahead of market shifts and operational challenges.

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Buy with Prime Extends FBA to DTC Ecommerce

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This past Thursday, April 21st, Amazon launched a new service: Buy with Prime. For a fee, the service will let third-party ecommerce merchants use Amazon’s huge distribution network to fulfill orders on their own sites. It’s Amazon fulfillment for DTC sites.

On top of that, Buy with Prime web sites will be allowed to put the Prime badge on their websites next to items eligible for free 2-day and 3-day shipping (which will be most items), helping boost their conversion.

And finally, Amazon Prime members that purchase from third party sites that use Buy with Prime will have their payment and shipping information pre-loaded in the checkout window, further smoothing the conversion process and decreasing cart abandonment. 

In this article, we’ll share what we know so far about the service and dive into pros, cons, and fulfillment service alternatives for sellers.

Who Benefits from Buy with Prime?

Amazon is targeting Buy with Prime firmly at online sellers with DTC stores. While Amazon previously offered its multi-channel fulfillment service to DTC sellers, this new offer seems in many ways to be a direct replacement, and we anticipate that they’ll slowly phase out Amazon MCF in favor of Buy with Prime.

While Buy with Prime is currently invite-only, Amazon’s new website for the program clearly demonstrates who they think will benefit most from using it. As you can see in the below screenshot, they’re positioning it as a way that DTC sellers can grow their business.

Buy with Prime asserts: if you’re a DTC seller, you can stop worrying about fulfillment and delight customers with fast and free shipping by signing up with us.

Buy with Prime promises to help grow online sellers’ DTC stores.
Source: buywithprime.amazon.com, 4/26/22

It stands to reason that this will become and remain Amazon’s fulfillment solution for direct-to-consumer online sellers, but that it likely won’t grow further. It would be remarkable if other marketplaces like Walmart or Target integrated with Buy with Prime (at least for the time being), and we’ll be very interested to see whether a critical mass of Shopify or BigCommerce sellers jump over to Amazon’s new service.

Shopify fulfillment network recently significantly drew back its ambitions, but in its place, Shopify has quickly pivoted to talks to buy a rival fulfillment service. If Shopify makes such a large investment in a fulfillment network of its own, it likely will want to shut Amazon out of its user base in favor of its own solution. As it stands, it’s an open question as to whether Shopify sellers will be able to use Buy with Prime.

We’ll keep a close eye as the situation develops, because multi-channel sellers know how painful it can be to have to manage multiple fulfillment solutions. Amazon is making a big play to extend FBA across more of the ecommerce landscape, but its competition isn’t standing still.

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What Are the Drawbacks?

Buy with Prime promises to solve checkout and fulfillment for DTC merchants, but convenience will come at a price. Sellers trying to make it on their own or pursuing a multichannel ecommerce strategy enjoy significant benefits from their strategic distance from the big marketplaces, and implementing Buy with Prime will blur those lines and risk losing more than you gain.

Amazon Owns Your Customer

If Amazon gets their logo on your checkout process, and the customer converts because they feel more comfortable with Amazon, who really owns the customer? Or worse, will the customer even stay on your site?

Many DTC sellers have built brands and struck out on their own because they want to get away from Amazon and its questionable business practices. By owning their customer, they build long-term relationships that lead to repeat purchases and realize significant long-term customer value, the basis of sustainable profitability.

Source: buywithprime.amazon.com, 4/26/22

By bringing Amazon back into the mix, DTC sellers risk all of their hard work in developing a unique relationship with their customers. Fast and free shipping does boost conversion, so you may see a boost from new customers – but with Amazon’s logo doing the heavy lifting, you’re also giving customers the idea to head over to Amazon to price check and look at competitive offers. 

Well over half of online product searches already start on Amazon. Do you really want to give shoppers the idea to pop over to the ecommerce giant after you’ve done all the hard work advertising to get them onto your site?

Pay Hefty Amazon Fees

In Q4 2021, Amazon made $30.3 billion from third-party seller services, which includes commissions, fulfillment, and shipping fees. While we don’t yet know the full fee structure of Buy with Prime, all indicators point to the company trying to turn this into the next Amazon Web Services. After all, in recent years Amazon has continued to lose money on its core retail business, while it makes up for it with huge profits from AWS and its advertising business.

AWS famously started as an internal service to run Amazon’s business before they productized it and started selling it to the world at large. Amazon FBA is now following the same exact path: it started as a way for Amazon to fulfill their own orders, then they extended it to third-party sellers, and now they’re expanding to DTC merchants. We anticipate that they’re targeting significant margins with this new business – perhaps they could even rival AWS’ 60%+ operating margin. 

With this model, DTC merchants will feel the crunch in their own profitability. In exchange for increased conversion thanks to the Amazon Prime badge, they’ll realize lower margins. If the extra revenue doesn’t flow through to the bottom line, is the service worth it?

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Competes with Your FBA Inventory Limits

Finally, if you’re a multichannel seller trying to win on Amazon and on a DTC site, you don’t get two separate inventory limits. All of your FBA and Buy with Prime inventory goes into one pool, and where an order is placed doesn’t make a difference. 

While this is helpful in its simplicity, it’s a big potential challenge because Amazon is notorious for imposing too-strict FBA inventory limits and for long receiving delays. With all of your eggs in the FBA basket, you make yourself extremely vulnerable to a self-serving change in inventory limits or one of FBA’s routine weeks or months-long receiving delays.

Amazon FBA’s frequent changes to inventory limits continue to frustrate sellers
Source: Cahoot original analysis

The best fulfillment practice for Amazon-only sellers is to have an FBA alternative for the many times when FBA falls flat, and that will be doubly true for Buy with Prime users. If you’re selling on Amazon and on a DTC site, and a receiving delay knocks your best seller out of stock, that now doesn’t just kill your Amazon sales rank – it also kills your DTC store’s SEO and paid advertising efforts!

Though Amazon is positioning Buy with Prime as a holistic solution for DTC sellers, we assert that relying wholly on Amazon FBA would be a fatal mistake for your business.

The Buy with Amazon Prime Alternative: Cahoot

Cahoot has created a robust 

  • How to Choose the Best 3PL for Your Shopify Store
  • ecommerce order fulfillment network that makes low cost, fast and free shipping a breeze for every eCommerce sales channel.

    If Buy with Prime’s promise of a simple multi-channel answer to fulfillment appeals to you, contact us in addition to sending in your application to Amazon.

    Cahoot is the next generation of tech-enabled fulfillment networks. Unlike other networks that are collections of 3PLs, Cahoot’s innovative approach empowers merchants across the country to fulfill orders for one another. Our peer-to-peer network is a collective of highly vetted eCommerce retailers who offer up excess warehouse space and resources to provide high-quality order fulfillment to other merchants. Since they fulfill their own DTC orders, they know how important top-notch fulfillment is, and they put the same care and energy into your orders as they do for their own.

    As a result, costs are typically lower than what you get with a traditional 3PL fulfillment company, yet service levels are higher. With a P2P network, multi-channel fulfillment with nationwide 1-day and 2-day delivery at economy shipping rates is the norm. Merchants can use the network solely for outsourced fulfillment – similar to FBA, or they can choose to fulfill orders for other merchants and offset some of their own outsourced fulfillment costs.

    Written By:

    Jeremy Stewart

    Jeremy Stewart

    Jeremy Stewart leads customer success at Cahoot, helping merchants achieve high-performance logistics through smart technology and process optimization. With a background in both ecommerce operations and client services, Jeremy ensures that every merchant using Cahoot gets measurable results—whether they’re scaling from one warehouse to many or managing complex returns.

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    eBay Fulfillment: How Fast Shipping Helps You Grow

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    Fulfillment is often an afterthought for sellers – after all, “sellers” want to sell. Your eBay fulfillment strategy, though, has a much bigger impact on sales than you might realize. Utilizing an eBay Fulfillment Center, a comprehensive third-party logistics provider, can streamline order processing, manage inventory, and ensure timely deliveries, significantly enhancing customer satisfaction and business performance. If you’re not offering fast and free shipping, you’re severely limiting your growth. And if you don’t have the right provider, you’ll pay an arm and a leg for that shipping, eating up precious profits.

    In this article, we’ll highlight the importance of fast and free shipping on eBay (if you’re not already convinced) and give a primer on your different options for eBay fulfillment. By the end, you’ll feel much more confident in your ability to turn operations into a growth driver for your business.

    What is eBay Fulfillment?

    eBay Fulfillment is a comprehensive service designed to help sellers outsource their order fulfillment processes to a trusted third-party logistics provider. This service allows sellers to focus on growing their business while leaving the logistics and shipping to a reliable partner. eBay Fulfillment centers offer a range of services, including storage, packing, and shipping, ensuring that orders are fulfilled quickly and efficiently. By leveraging an eBay Fulfillment service, sellers can significantly improve customer satisfaction, reduce shipping costs, and increase their overall profitability. With streamlined fulfillment processes, sellers can ensure that their customers receive their orders on time, every time.

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    Why is Fast and Free Shipping Important for eBay Fulfillment?

    Online Shoppers Want Fast and Free Shipping

    Thanks to Amazon Prime, online shoppers now expect their orders to arrive quickly and for free. In fact, a McKinsey study found that over 90% of customers view 2- to 3-day delivery as the baseline for eCommerce. eBay sellers used to be relatively immune from these rising customer expectations, but those days are over.

    Ignore fast and free shipping at your own risk – US consumers expect free shipping even on orders under $50, and 48% of all cart abandonment is caused by unexpected shipping costs.

    eBay now automatically applies “Free delivery in 2/3/4 days” tags to qualifying products – like the Fast ‘N Free badge that preceded it, this marker gives shoppers exactly what they want. eBay sellers with the tags stand out in search results and convert better, driving higher revenue by leveraging efficient shipping services that enhance order processing and customer satisfaction.

    Improve your Seller Rating

    Fast and free shipping is a key rating factor that can help to boost your eBay seller rating. Shipping time and shipping fees both have their own line item in “Detailed seller ratings” on eBay, and of course, a high seller rating has a huge impact on eBay sales. Having a reliable fulfillment partner is crucial for effectively managing shipping and logistics, ensuring timely delivery and high service standards.

    eBay-Top-Rated-Seller

    Furthermore, qualification for the lucrative Top Rated Seller Program depends in part on fast shipping – so if you want to be in the top echelon of eBay sellers, you’re going to need fast and free shipping.

    Increase Impressions

    Free shipping helps you win more impressions and clicks on the eBay marketplace by providing actionable tips for sellers.

    eBay gives users the ability to filter by “Free shipping”, meaning that if you’re charging for shipping, some buyers are completely excluding you from consideration. Even if they don’t filter out “Free shipping”, many others will sort their search results by “Price + Shipping” – that’s right; eBay’s price sort includes the cost of shipping, so if you undercut your competitor on product price, but have a shipping fee, you’ll still lose out.

    On top of that, eBay prominently writes “Free shipping” for products that don’t charge for shipping, making them stand out against others that come with hefty shipping fees.

    eBay Free Shipping Search Results

    The combination of filters, sorts, and “Free shipping” copy all combine to make it an excellent way to boost your search page results on eBay.

    Lower Cart Abandonment and Boost Conversion Rate

    The impact of fast and free shipping isn’t limited to the product search experience. In truth, it makes the biggest difference once customers are on the product page itself. Consider that unexpected costs at checkout, including shipping, are the number one cause of abandoned carts, causing 48% of all shoppers to abandon.

    Consumer preferences are clear – they convert more often and abandon their shopping cart less frequently when they’re offered free shipping. Effectively managing and fulfilling orders enhances efficiency in eCommerce, ensuring that customers receive their products quickly and reliably.

    Improve Customer Lifetime Value

    Shoppers will often go the extra mile for free shipping, which opens up creative strategies to boost your repeat purchase and retention rates.

    Invesp found that 58% of customers will add items to a cart to qualify for free shipping, 47% will search for an online promo code, and 31% will join a loyalty program.

    If you don’t want to offer free shipping right off the bat, then you can introduce an order value minimum or offer free shipping to people that sign up for a loyalty program. Both of these actions will improve your customer lifetime value – bigger carts are self-explanatory, and loyalty program members repeat shop again and again. An effective fulfillment strategy is essential for operating a profitable business, ensuring customer satisfaction and efficiency.

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    Overview of Options for eBay Fulfillment Services

    So, you’re convinced – you want to offer fast and free shipping on eBay. But how do you do it without breaking the bank? Here are the pros and cons for the different ways you can fulfill orders.

    eBay’s managed delivery service is an efficient logistics solution designed for sellers with high-volume inventory, aiming to provide faster delivery while reducing costs and complexities associated with order fulfillment.

    Self fulfillment

    eBay allows you to ship your items yourself. With in-house fulfillment, you own the process, the profits, and the risks.

    The benefit, of course, is that you have full control over the fulfillment process. You can choose where and how your products are stored, ensuring that they’re in the best condition possible when they get to customers. If there are errors in fulfillment, you have the power to immediately fix issues.

    The main drawbacks of self-fulfillment are that it’s extremely time-consuming and it isn’t cost-effective in the long run. If you’re fulfilling your own orders, your success comes with a price – more and more of your time will be consumed by managing operations.

    If you’d like to learn more about how to go it alone, here’s a more in-depth look at how to offer free shipping and still make a profit.

    Local pickup

    This eBay fulfillment option is ideal if you sell large or bulky items. It allows you to arrange pickup with the buyer so you can avoid shipping costs and price your items even cheaper.

    You’ll need to provide a ZIP code, at least one electronic payment method (in addition to Pay on pickup), customer service, and generate your Proof of pickup to protect yourself in case of “item not received” disputes.

    Of course, local pickup limits your market to your locality or contiguous areas. Sellers with serious growth ambitions will need to combine local pickup with another fulfillment option.

    Drop shipping

    eBay sellers can also use drop shipping to fulfill orders directly from a wholesale supplier. Under this arrangement, your supplier will deliver orders directly to your customers.

    Your supplier handles the entire fulfillment process on your behalf using the buyer information available to them. It’s simple and will dramatically reduce your overhead compared to self fulfillment. However, your customers will still hold you responsible for timely delivery and overall customer satisfaction. If the dropshipper makes a mistake, you’re the one that pays the price.

    For quality, you don’t get to inspect the product before it gets to the customer. You have to rely entirely on the dropshipper, and when things go wrong, you’re left on the outside looking in.

    Just as importantly, your customers won’t be delighted by fulfillment provided by dropshippers. Since they’re almost always shipping from one location, the delivery won’t be fast for customers across the country – and as we explained above, that’s a critical piece of modern eCommerce. Since they’re often shipping long distances, the shipping is more expensive than it needs to be as well.

    If you choose this option, don’t list an item on eBay and then purchase it from another retailer or marketplace that ships directly to your customer. If you do, you’ll face sanctions ranging from listing cancellations to forfeiture of fees paid or payable to your account.

    3PL fulfillment

    If you’re looking for a fulfillment service that offers the benefits of self-fulfillment without all the hassle, then using a third-party provider is your best bet.

    The best 3PLs will give you access to a nationwide network of warehouses and carriers, so shipping products will take less time than if you were going it alone – in most cases within one or two days. Furthermore, if a 3PL places your inventory across the country strategically, you’ll always pay ground rates for shipping, so fast delivery will come at low prices.

    Like dropshipping, trusting a third party means giving up some control over your product before it gets to the customer. This challenge can become apparent with 3PLs that aren’t built for eCommerce, as products get damaged in their rush to fulfill orders. Modern 3PL networks that specialize in eCommerce, though, have very low defect rates and may even improve on your own delivery record. Multi channel fulfillment is also crucial, as it allows integration with multiple sales channels for efficient order management.

    This can introduce complexity and increase your handling fees. A 3PL Request for Proposal can help you to weigh your options.

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    Choosing the Right Fulfillment Service

    Choosing the right fulfillment service is crucial for eBay sellers who want to ensure that their orders are fulfilled efficiently and effectively. When selecting a fulfillment service, sellers should consider several key factors. First, evaluate the service’s reputation and reliability to ensure that it can consistently meet your fulfillment needs. Cost is another important consideration; look for a service that offers competitive pricing without compromising on quality. Additionally, seek out a fulfillment service that provides real-time inventory management, automated order tracking, and flexible shipping options. It’s also essential to consider the service’s ability to handle international shipping and its integration with the eBay platform. By choosing the right fulfillment service, sellers can enhance customer satisfaction, reduce shipping costs, and boost their overall profitability.

    International Shipping and eBay Fulfillment

    International shipping is a critical aspect of eBay fulfillment, as many sellers cater to customers around the globe. When choosing a fulfillment service, it’s important to find a provider that offers reliable and cost-effective international shipping options. A good fulfillment service should be capable of handling customs clearance, duties, and taxes, while also providing tracking and insurance options for international shipments. Additionally, the service should offer real-time updates on the status of international shipments, allowing sellers to keep their customers informed every step of the way. By using a fulfillment service that excels in international shipping, sellers can expand their customer base and increase their sales, all while ensuring a smooth and reliable delivery experience.

    Inventory Management and eBay Fulfillment

    Effective inventory management is a cornerstone of successful eBay fulfillment, ensuring that sellers have the right products in stock to meet customer demand. A top-notch fulfillment service should offer real-time inventory management, allowing sellers to track their stock levels accurately and avoid issues like overselling or underselling. The service should also provide automated alerts when stock levels are low, enabling sellers to replenish their inventory promptly. Additionally, a good fulfillment service will handle inventory storage, receiving, and picking, freeing up sellers to focus on growing their business. By utilizing a fulfillment service with robust inventory management capabilities, sellers can enhance customer satisfaction and reduce shipping costs, ultimately driving their business’s success.

    Why Cahoot Is the Best Option for eBay Fulfillment

    Cahoot’s eBay fulfillment service will power affordable fast and free shipping for your listings, increasing revenue and margin. Our best-in-class fulfillment network partners with eBay sellers to make fulfillment a breeze – we can get you up-and-running with an improved delivery experience in as little time as it takes you to send us inventory.

    With Cahoot, your eBay store can integrate various fulfillment services directly, automating order processing, inventory management, and shipping logistics. Your listings will automatically get eBay 2-day, 3-day, and 4-day fast shipping tags (formerly Fast N’ Free Shipping), boosting conversion.

    eBay Free and Fast Shipping Offer

    If you’d like to find out how Cahoot can help your business, please get in touch with us. We can’t wait to show you how fulfillment can power your growth on eBay.

    Frequently Asked Questions

    What is eBay fulfillment?

    eBay Fulfillment refers to eBay’s logistics solutions that help sellers store, pack, and ship their products efficiently. Unlike Amazon’s Fulfillment by Amazon (FBA), eBay does not directly handle fulfillment but partners with third-party logistics providers to offer these services. One of the main programs currently available is eBay Fulfillment by Orange Connex, which provides warehousing, order fulfillment, and fast shipping options for eBay sellers.

    Is selling on eBay worth it?

    Selling on eBay can be worth it, but it depends on your business model, product type, and goals. eBay offers access to a massive global customer base, and (unlike Amazon) allows for both fixed-price listings and auction-style sales, which can help sellers move inventory quickly or get the best price for rare items. Fees are generally lower than Amazon’s, and there are fewer restrictions on the types of products you can sell.

    However, there are challenges. eBay is highly competitive, with many sellers offering similar products, often at low margins. The platform has strict policies on seller performance, and negative feedback can impact sales. If you’re selling high-demand products and can manage fulfillment efficiently, eBay can be a profitable marketplace. However, if you’re looking for a fully automated fulfillment solution like Amazon FBA, eBay may require more hands-on effort.

    How much does eBay make on each sale? (eBay fees)

    Selling on eBay involves several fees that sellers should be aware of to manage their costs effectively. The primary fees include insertion fees and final value fees.

    Insertion Fees: eBay allows sellers to list up to 250 items per month without incurring insertion fees. Beyond this allowance, each additional listing typically costs $0.35. However, certain categories may have different fee structures or exceptions.

    Final Value Fees: When an item sells, eBay charges a final value fee, which is a percentage of the total sale amount, including shipping and handling. For most categories, this fee is 13.25% of the sale price up to $7,500 per item, and 2.35% on the portion of the sale over $7,500.

    Can I sell on both Amazon and eBay?

    Yes, you can sell on both Amazon and eBay at the same time. Many e-commerce sellers choose to list their products on both platforms to expand their reach and maximize sales. However, managing inventory, pricing, and fulfillment across two marketplaces requires strategic planning.

    What is the best way to fulfill eBay orders?

    The best way to fulfill eBay orders depends on your business size, volume, and resources. Options include self-fulfillment, local pickup, drop shipping, and using a third-party logistics (3PL) provider. Each method has its pros and cons, and the right choice will depend on your specific needs and goals.

    How can I improve my eBay seller rating?

    Improving your eBay seller rating involves several key factors, including providing fast and free shipping, maintaining accurate listings, offering excellent customer service, and promptly addressing any issues or disputes. Utilizing a reliable fulfillment service can help ensure timely deliveries and enhance customer satisfaction, which in turn can boost your seller rating.

    What are the benefits of using a 3PL for eBay fulfillment?

    Using a third-party logistics (3PL) provider for eBay fulfillment offers several benefits, including access to a nationwide network of warehouses and carriers, reduced shipping times and costs, and the ability to scale your operations without the need for significant investment in infrastructure. A 3PL can also handle inventory management, order processing, and shipping logistics, allowing you to focus on growing your business.

    Written By:

    Indy Pereira

    Indy Pereira

    Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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    3PL Fulfillment Pricing Comparison: Ecommerce Order Fulfillment: Peer-to-Peer Network vs Traditional 3PL

    In this article

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    In the era of online marketplaces, most eCommerce merchants and brands find themselves at the mercy of order fulfillment solutions operated by the powerful corporations who act as gatekeepers for these platforms – for example, Fulfillment By Amazon and Walmart Fulfillment Services. Each platform requires merchants to send inventory to their warehouses and follow their unique policies and requirements. All of them also come with their respective fees and surcharges.

    Sellers seeking a better deal have often turned to Third Party Logistics Providers (3PLs). They do so with the ambition of not just regaining control and autonomy over their logistics, but also boosting their profits. Fulfillment companies often adjust their pricing models based on order volume, storage, and shipping factors, which can include volume discounts, providing additional savings to the seller.

    The problem, however, is that the vast majority of 3PLs operate from an extremely limited number of locations – hampering the seller from being able to offer customers the free, fast shipping experience that they now expect and demand. To solve this problem, a disruptive, radically different strategy is needed – a peer-to-peer order fulfillment network.

    While merchants have worked with traditional 3PLs, a peer-to-peer network is an entirely new idea. Those merchants who have used traditional 3PLs are often unaware of their pros and cons. Far fewer are aware of how they compare to a peer-to-peer network. In this article, we take a deep dive, looking at every factor that influences a seller’s choice of fulfillment partner, and compare traditional 3PLs to peer-to-peer networks on each of them. We highlight how a Peer-to-Peer network can offer significant advantages compared to working with legacy 3PLs.

    Cost

    Traditional 3PL Fulfillment Services – What Do They Have in Common With Traditional Hotels?

    Think of a time when you stayed at a boutique, traditional hotel – are you struggling to find or remember when you last did that? In the era of Airbnb, these single-location hotels have lost significant market share.

    Why is that?

    The reason is not competition – that there is a segment of travelers looking for a more economical, boutique experience compared to staying at a large hotel chain like Marriott or Hilton. The reason is that these traditional hotels are asset-heavy businesses that have no economies of scale. Because they primarily operate from a single location that they rent or own, they are significantly prone to cost pressures driven by land availability, rental rates, and staffing.

    All this has meant that a marketplace model with a vast network, such as Airbnb (almost anyone can rent out a space), offers significant advantages to travelers that traditional hotels cannot hope to match.

    What if we told you a traditional 3PL is exactly like these hotels?

    DHL

    A traditional 3PL usually operates from an extremely limited number of locations (2-3 at the most). This provides them with little to no economies of scale. They are also asset-heavy businesses that rent or own their properties. This is compounded by the fact that staff in the warehouse now expect to be paid $19 / hr. With multiple players, such as Walmart and Target, setting up fulfillment centers to deliver their eCommerce orders, traditional 3PLs must pay people more if they are to staff their warehouses. This is also a cost pressure that has to be ultimately absorbed by the merchants who work with them.

    Additionally, the surge in e-commerce has significantly increased warehousing costs. The demand for warehouse space and labor has skyrocketed, leading to higher prices and intensified competition within the third-party logistics industry. Traditional 3PLs are particularly affected by these rising warehousing costs, which further strain their ability to offer competitive pricing.

    Peer-to-Peer – What do Cahoot and Airbnb Have in Common?

    Airbnb’s business model is asset-light – their idea is simple but powerful – anyone that has a spare room at their house that they don’t use can monetize it.

    This two-sided marketplace model generates network effects, with millions of customers (property owners and travelers) interacting to ensure the platform offers competitive prices constantly. We have a similar idea for the future of eCommerce – rather than everyone building more warehouses as part of their own private, isolated networks, what if we optimized what’s already available?

    Cahoot’s peer-to-peer network aims to unlock the potential of over 2 million retailers with their own warehouses. Any merchant with excess capacity in their warehouses can monetize it by becoming a fulfillment partner for Cahoot.

    Our two-sided marketplace model generates network effects, with numerous businesses (sellers and fulfillment partners) interacting to drive prices downward. Just like Airbnb has a massive spread of listings, our model provides us with a vast network of strategically located warehouses across the country. And just like them, we’re more economical than the previous solutions customers used.

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    Quality

    Traditional 3PL – “Fast Shipping or Low Shipping Costs? Pick One”

    With the limited number of locations these traditional 3PLs operate from, it becomes near impossible for them to cover the country through economical ground shipping in under two days.

    warehouse coverage

    Based on our research, inventory needs to be spread across at least 4 strategic locations if a merchant is aiming for 2-day delivery to the entire contiguous United States (the lower 48 states). If the brand aims for 1-day delivery, it requires nine strategic locations.

    When we talk about ‘strategic’ location, we mean it – a location is only strategic if it is located near a major population center. Suppose you’re a brand in the Midwest. In that case, it makes no sense to get excited about saving costs on inbounds by working with a traditional 3PL in Chicago, IL, when most of your orders might be coming from Southern California! Great candidates for strategic locations include New York, Chicago, and Southern California, as examples.

    Most traditional 3PLs do not have warehouses at strategic locations – forcing their customers to decide whether to use economic ground services (but not meet the customer expectation for fast delivery) or incur extremely high costs by providing fast delivery through air shipping.

    Peer-to-Peer – “Fast Shipping and Low Shipping Costs – Get Them Both.”

    A Peer-to-Peer Fulfillment Network has a vast network of strategically located warehouses nationwide. With such a network, it is possible to cover the entire country through ground shipping in under two days. This makes it possible to meet the customer’s expectation for fast shipping while using economical services.

    Many sellers might face hefty fees with platform-specific fulfillment services, such as Fulfillment By Amazon (FBA) for Amazon and Walmart Fulfillment Services (WFS) for Walmart. Merchants have no viable alternative because the only way traditional 3PLs can hope to offer the delivery speeds customers are used to is by using expensive air shipping. As no seller is willing to take a margin hit that deep, they are stuck with fulfillment services run by the marketplaces themselves.

    With a Peer-to-Peer network, you do not have to make an either-or decision – you get the best of both worlds – providing both your business and your customers with benefits. Our network offers cost savings that boost your bottom line while also improving the experience your customers have.

    Service Levels

    Traditional 3PLs – Struggle to Offer The Bare Minimum

    Traditional 3PLs just about get the basics done (with a lot of huffing and puffing and seller pain) – receiving your inbounds, picking, packing, and shipping your orders out the door on time. If you’re trying to handle additional requirements – such as operating the warehouse, arranging for carrier pickups, or fulfilling orders on the weekends, you’re likely out of luck.

    The problem is that these ‘additional’ requirements are now becoming table stakes as this is what programs like Amazon Seller Fulfilled Prime expect. Additionally, customers expect their orders faster and faster, meaning that doing the basics alone may no longer be enough even to stay afloat.

    Those aiming to compete with Amazon, including large retailers like Walmart, are realizing they must offer customers Prime-like experiences. Walmart’s shipping standards are also challenging – products with 2 and 3 day delivery speeds are ranked higher in search results, win the buy box more often, and see higher conversion rates. Sellers are also expected to ensure that they deliver 95% or more of orders within the promised time to customers.

    Many of these 3PLs may also be unable to offer late cut-off times. Late cut-off times allow for carrier pickups and scans to occur the same day, meaning more of your customers will receive their orders in 1 or 2 days.

    Perhaps most worryingly of all, customer support can often be erratic, unreliable, or slow to respond. Shipping and order fulfillment is a crucial part of your business operations. Lengthy resolution items can mean significant outages and downtime for your company.

    Peer-to-Peer – Meet and Exceed the Gold Standard for Order Fulfillment

    With Cahoot’s peer-to-peer network, you don’t just have to settle for the basics. We help sellers on Amazon meet and surpass the demanding criteria of the Seller Fulfilled Prime (SFP) program. The SFP program’s requirements are arguably the most challenging in the industry. Any merchant who can meet and surpass them has an excellent order fulfillment strategy in place.

    fulfillment network

    We support warehouse operations, carrier pickups, and delivery on the weekends. We also offer late cut-off times, ensuring that you can increase the proportion of customers whom you service with 1- and 2-day delivery.

    Our US-based customer support team is also ready and responsive to any of your questions. We know that eCommerce order fulfillment is complex, and things don’t always go as planned. What’s crucial is ensuring that those issues are addressed quickly, getting your business back on track. With our team, you can count on minimum downtime.

    Technology

    Traditional 3PL Fulfillment Providers Try to Handle Fulfillment Without Tailormade Tools

    Many traditional 3PLs solve just one piece of the problem – the task of order fulfillment itself. Most of them fail to provide customers or their employees with the shipping software technology needed to speed up order fulfillment at scale.

    The technology that most traditional 3PLs deploy is not much more advanced than what a micro-shipper fulfilling their orders on their own might be using.

    Even if traditional 3PLs deploy technology, it tends to be legacy software, like ShipStation. Such tools require constant human intervention and oversight. For example, for every single customer order that is received, a tool like ShipStation requires staff to compare rates across different fulfillment locations and carrier services, manually identifying the cheapest option to pick.

    Such systems mean that an enormous amount of time is wasted every single day by employees simply rate-shopping for shipping labels when they could be engaged in higher-order work.

    For other workflows like keeping track of inventory, traditional 3PLs deploy similarly clunky, inflexible software incapable of meeting today’s needs. This runs the risk of accepting customer orders on SKUs that are out of stock, leading to canceled orders and unhappy customers. Unfortunately, your customers aren’t going to blame your 3PL’s poor technology when there are issues with their deliveries – they’re going to point the finger at you.

    Peer-To-Peer – Scale Order Fulfillment with Purpose-Built Software

    While our peer-to-peer network provides nationwide coverage, our next-generation shipping software supercharges productivity and accelerates order fulfillment.

    For every order received, Cahoot’s software can intelligently compare multiple warehouse locations and shipping services, instantly determining the most economical shipping label that meets customer delivery promises.

    Our software is designed and purpose-built from the ground up to excel at scale. When your order volumes surge, manually printing shipping labels can be a massive source of inefficiency. With Cahoot, all your shipping labels are ready to print in one click – dramatically speeding up fulfillment and freeing up staff to concentrate on higher-order work.

    Our technology comes with other intelligent features – such as optimizing packaging choices for Multi-Line, Multi-Quantity (MLMQ) orders, as well as intelligently keeping track of inventory decrements. Color-coded alerts on our dashboard provide merchants with real-time visibility into dipping inventory levels. This allows for proactive decision making to accelerate sales, rather than scrambling to react too late.

    Redundancy and Backup

    Traditional 3PL – Highly Vulnerable to Single Point Failures

    eCommerce order fulfillment is not an easy thing, and there are potentially many things that can go wrong – such as 3PL delays with receiving your inventory, damages to inventory in transit, misplaced inventory, or carrier errors.

    There are also things for which it is difficult to account for – such as unexpected, extreme weather events that disrupt carrier operations.

    While you can strategize to minimize or avoid some issues, others are simply out of your control. Unfortunately, this is where a traditional 3PL is highly vulnerable. When you operate from a single location, an outage in that location can be catastrophic. Your entire order fulfillment operations come to a grinding halt, putting your sales on pause. Worse, customer complaints will surge, resulting in lots of negative reviews and refund requests.

    Customers today may not be forgiving even of circumstances outside your control, such as weather events – they ask a pertinent question, “Why weren’t you prepared with an alternative strategy?”

    One minor issue at your 3PL can quickly snowball into a disaster for your brand reputation and customer loyalty. The only option sellers have is to find fulfillment partners whose solutions come with excellent risk mitigation, ensuring that orders reach customers no matter what.

    Peer-To-Peer – Always Lights On For Your Business

    A network of warehouses in different locations ensures that you’re inherently much more likely to keep your business operations constantly running smoothly.

    You’re de-risked on multiple dimensions – if there’s terrible weather in 1 location, you can still fulfill orders from another warehouse. If there are issues with a carrier over there, you can ship from another location. If there’s an outage there….you get the idea.

    This ensures that you’re constantly selling and customers are constantly getting their orders. They may also really appreciate how your business is always ready to serve them, no matter the circumstances. Unexpected, adverse circumstances don’t result in angry customers and negative reviews when working with Peer-to-peer fulfillment networks, they’re just another opportunity to continue selling and keep providing your customers a great experience.

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    Scalability

    Traditional 3PL – Works Initially, But Stumbles at Scale

    Going back to our earlier example, let’s say you’re a brand starting out in the Midwest, and you found a great traditional 3PL in Chicago, IL. You’re thrilled because your geographical proximity to them means that you’ll be saving a lot on inbound freight costs (sending your inventory to their warehouse on a truck).

    In your first few days, most of your customers are your friends, who spread the word about your brand to their circles. Most of your orders tend to come from the Chicago area and Michigan – things are working well with the traditional 3PL. You can service your customers with fast delivery while using economical ground shipping.

    At some point, your brand surges in popularity, and you start receiving orders nationwide – you’re thrilled and can already imagine the cash registers ringing! However, after an initial surge, you soon see very few orders coming in. After doing some investigation, you discover that your 3PL’s inefficiencies are costing you – customers in Southern California are receiving their orders far too slowly. Worst of all, knock-off listings on the Amazon marketplace have seized on your idea, and are now winning against you because they’re offering customers faster shipping. You also see a surge of refund requests, from customers who are unhappy with the time it’s taking for their orders to arrive.

    Traditional 3PLs are ill-equipped to deal with spikes in order volume that happen naturally as you scale. These companies don’t become an enabler of your growth; they can be just the opposite – a bottleneck that slows you down.

    The problems with traditional 3PLs mount at the worst possible time – once you start seeing orders come in from Southern California, let’s say you identify another fulfillment partner in Los Angeles. Now you have two contracts, each with its own pricing structure. There are 2 different SLAs for order fulfillment and you have to pick which location each of your orders is routed to, all on your own. Managing these two 3PLs can completely consume your bandwidth, overtaking your focus on the activities that actually matter – selling and taking care of your customers.

    Other problems emerge as you scale – let’s say you’ve somehow figured things out, and have made DTC fulfillment work with these two traditional 3PLs. As you grow further, you start sending pallets to retailers all over the US, such as Target, Nordstrom, or Macy’s. Suddenly, your 3PL has no space for your containers and struggles to handle B2B fulfillment. Additionally, many of these traditional 3PLs may lack the EDI technology which is a prerequisite to work with many retailers and brands.

    Peer-to-Peer – Accelerates Growth By Scaling Alongside You

    Let’s imagine you’re the Midwest brand again. This time, you’re working with Cahoot’s peer-to-peer network. When you start out, you ship orders from one of our Midwest fulfillment centers, providing customers with free, fast shipping.

    When your brand surges in popularity, things don’t fall apart – you simply add more nodes on the Cahoot network to fulfill orders from. You use our fulfillment centers in Southern California to ensure you deliver a high-quality experience to your customers on the West Coast.

    You also work only with 1 vendor, offering you 1 contract. This ensures you can scale nationwide fulfillment, with none of the process management overhead that working with traditional 3PLs brings.

    fulfillment needs

    We also have experience and expertise in handling B2B fulfillment, in addition to DTC fulfillment. Whatever the spike in order volume you see, we’ll make sure that you actually celebrate your success. You won’t be spending your time thinking, “Can our fulfillment keep up with all this growth?”

    Traditional 3PL – Great for Regional Shipping

    Traditional 3PLs do a reasonably good job of servicing the specific parts of the country that they are located in. For example, a traditional 3PL on the West Coast might be great for orders in all states in that part of the country.

    Because of the restrictions on the number of locations they have, these 3PLs find offering nationwide coverage at affordable rates extremely difficult.

    While these models may work for brands with a strongly regional customer base, the problem is that nearly every seller dreams of scaling nationally and globally at some point – these 3PLs can often become a hindrance when the sellers do decide to start expanding.

    Peer-to-Peer – Great For National Programs Like Amazon SFP

    Previously, Amazon’s Seller Fulfilled Prime (SFP) program had a regional component – brands could fulfill orders just in their region of the country on their own while still featuring the Prime badge on their product listings on the Amazon marketplace. However, Amazon now expects fast shipping across the entire contiguous U.S. on the program – products across every size category must be delivered in 3-5 days, while approximately 70% of orders on standard-sized products must be delivered in 2 days or less.

    Traditional 3PLs will find it nearly impossible to meet this requirement using ground shipping because of their location constraints. Using air shipping is not an option for sellers in most cases because that erodes any cost savings they were hoping to see over FBA.

    Analytics and Reporting

    Traditional 3PLs – Decisions Made on Instinct

    Traditional 3PLs tend to make most decisions using a combination of intuition and guessing. Some of the most crucial pieces of the eCommerce order fulfillment workflow are – Which warehouse to dispatch an order from, and which box to pack the items in?

    Most traditional 3PLs do not have the purpose-built technology needed to determine the warehouse each order should be sent from. At best, a rudimentary heuristic based on the customer’s ZIP code might be deployed. The problem is that you could be losing money on every shipment. Until you invest in the right technology, you’ll never actually know the full extent of your losses.

    The second crucial factor is the choice of box to use. Traditional 3PLs have a limited number of boxes of the most popular sizes. They randomly throw products into any box that fits. In the best case, an ad-hoc heuristic might be defined to map each SKU to a box, by eyeballing the box and product sizes. This creates problems on multiple dimensions. The first is that the overall cost of packaging materials continued to increase at a pace faster than inflation, while the cost of paper and cardboard increased by as much as 9% in 2024. This means that if you’re selecting larger sized boxes on each order, your costs surge. More crucially, the shipping carriers set their prices in tiers, based on the dimensional weight of items. This means that the wrong choice of box for a lightweight item can tip it over into a higher pricing tier than is actually needed. Sellers can bleed money on both avenues – cost of supplies, and the fees they pay to the shipping carriers. Today, there is also a growing consumer demand for environmentally responsible, sustainable packaging. When items reach environmentally conscious consumers in oversized boxes, it can negatively impact the experience they have with your brand.

    Lastly, most traditional 3PLs do not offer enough variety of warehouse locations to actually place your inventory close to where most of your customers live – even in cases where they have multiple warehouse locations, they could still place your products in the wrong fulfillment center!

    The only way to eliminate ambiguity and make the optimal selection each time is to ensure decisions are guided by past data and real-time technology automation – unfortunately, most 3PLs do not offer that.

    Peer-to-Peer – Decisions Informed by Data

    With Cahoot’s Peer-to-peer network, we let data and technology make the most critical decisions.

    data image

    For order routing, our next-generation software intelligently compares multiple warehouse locations, carriers and shipping services before picking the most optimal location and service that can meet the delivery promise committed to the customer.

    We use advanced 3D bin technology to evaluate the fit of items in boxes, ensuring that each SKU goes into the best-sized box. Our software also comes with intelligent automation for Multi-Line, Multi-Quantity (MLMQ) orders, where our system learns from box and SKU dimensions, as well as past packaging choices to optimize box selection.

    Lastly, while warehouses on our network are located near major population centers, it still means nothing if we don’t place your inventory in the location closest to where most of your customers live. We go deep and sweat the details to identify geographic trends in your historical orders, ensuring that we set you up to see maximum savings.

    Flexibility and Agility

    Traditional 3PL – High Switching Costs, Hidden Fees, Painful Migration

    Traditional 3PLs often do not operate with flexible, merchant-centric models where you can build from what you have. Like we mentioned earlier, each of them comes with limited geographic coverage of the country, and offers their own pricing contract and SLA.

    Let’s say you’re working with a traditional 3PL that gives you coverage on the East Coast. While their services are good, you’re trying to find out if there’s a way for you to expand to the West Coast. Traditional 3PLs do well when they have as much of your inventory tied to their warehouses as possible. You may be hit by high fees on both fronts – the removal fees from the East Coast 3PL, and the inbound fees with the West Coast provider.

    Worst of all, once you do manage to migrate your inventory over, you’ll still have to deal with the process management overhead that comes from working with two fulfillment partners.

    While this does not sound like an easy process, we’ve put together a step-by-step guide on how to migrate from one fulfillment partner to another.

    Peer-to-Peer – Seamless, Painless Migration

    A Peer-to-Peer Network is the most merchant-centric, merchant-inclusive platform for Order Fulfillment. Cahoot’s Peer-to-Peer network is not a ‘winner takes all’ arrangement. We’re not only an option for merchants looking for ultrafast eCommerce order fulfillment, but also an option for 3PLs looking to serve their customers better.

    When our customers are happy with using their existing 3PL to serve a particular part of the country, say the West Coast, we can flexibly scale nationwide coverage on top of their current setup. They can bring their 3PL to our network, where we provide them with an economical way to cover the East Coast.

    In fact, one of the biggest features of the peer-to-peer model is that it can be a way through which traditional 3PLs can overcome their geographical constraints while helping merchants achieve free, fast nationwide shipping.

    Integration and Consistency

    Traditional 3PL – Extremely Fragmented, Increased Overhead

    Many traditional 3PLs were designed for the older, pre-Amazon Prime era of eCommerce when merchants fulfilled orders from just one or two channels. In today’s world of online marketplaces, traditional 3PLs may not support all of the different marketplaces. You may have to work with one 3PL for your Walmart orders, while handling Shopify fulfillment through another. The depth of integration also matters – for example, does the technology these 3PLs use transmit inventory count information back to the sales channel so that you avoid receiving orders on out-of-stock items? Can they transmit tracking information back to the channel? And does your order fulfillment help you meet the unique expectations customers have on each marketplace?

    As you work with multiple 3PLs, your ability to offer consistent order fulfillment may be severely compromised. With these providers, handling the basics of order fulfillment becomes challenging. When it comes to exception management on specific orders, the problem worsens.

    Let’s imagine you’re working with warehouses from two 3PLs, each with their own SLA – the first has a cutoff time of 1PM, the second 12PM. Suppose an order comes in at 12 30 PM – but there’s been an unexpected issue with the first warehouse. You’re unable to reroute the order to the second warehouse because it’s already past the cutoff time there. The problem stems from the fact that each warehouse has its own SLA and none of them are integrated to each other.

    If you’re seeking to expand sales channels or achieve nationwide coverage, the number of such fragmented, siloed warehouse nodes increases exponentially – drowning you and your team in process management. You may need to hire dedicated people to babysit and oversee this operation, which negatively hits your costs.

    Peer-to-Peer – Unified, Simple and Consistent Across Every Channel

    With a Peer-to-peer fulfillment network, you get custom-built, out-of-the-box integrations for all major marketplaces. We pull all the critical information about orders and their delivery due dates into our system, while pushing back updated inventory and carrier tracking information to the respective channel. This extends to our fulfillment operations – we ensure that you stay compliant with the unique requirements that each marketplace has, such as usage of a particular shipping carrier / service, or branded packing slips.

    With Cahoot, you spread your inventory across multiple warehouses, but work with just one partner. This ensures that you can offer a consistent experience on every order. This solid foundation makes exception management much easier to handle. When orders may not make it in time because of issues at one node, we can intelligently reroute it from another location with minimal overhead. We also offer consistent SLAs and every node on the network is tightly connected.

    With a Peer-to-peer fulfillment network, the number of warehouses and sales channels increases, but there’s always only minimal process management needed. You and your team will get back more time to focus on growing the business.

    Environmental Sustainability

    Traditional 3PLs – Excess Packaging Waste and Greenhouse Gas Emissions

    Customers today expect brands to be sustainable and environmentally responsible in their operations. A traditional 3PL exacerbates problems for brands across 2 different dimensions, packaging, and emissions.

    Traditional 3PLs tend to have a random, haphazard approach to packaging – they have a few boxes of the most popular sizes, and the warehouse staff simply place the item into whichever one might be available on hand.

    When the customer receives the order, they might be annoyed that their item was delivered in an overly large box, generating more waste for the environment. For environmentally-conscious shoppers, such experiences can ruin their relationship with the brand, completely turning them off from future purchases.

    A bigger problem can arise because of the limited number of warehouse locations. Due to this, they’re forced to use air shipments or keep packages in transit for longer on the road. All this increases emissions released, worsening your brand’s carbon footprint and weakening your sustainability credentials.

    Peer-to-Peer – Eliminate Packaging Waste and Slash Emissions

    While our network of strategically located warehouses, you’ll nearly never use air shipping (unless customers specifically ask for it). You’ll be able to offer fast and economical ground shipping – which is great for your customers and the environment. But we go a step further and help you cut down packaging waste also.

    As we mentioned before, our software’s 3D Bin Technology and its Multi-Line, Multi-Quantity Automation features help ensure you always use only the necessary amount of packaging material.

    smarter packaging

    Lastly, environmental sustainability is the core cause that a peer-to-peer network is fighting for – in a world where everyone is using up more resources to build logistics infrastructure for their own private network, we’re aiming to use the Power of Many to build a more sustainable fulfillment network, without compromising on today’s sky-high customer expectations.

    Reliability

    Traditional 3PL – Fail to Live up to Their Promises

    Most people tend to choose a traditional 3PL because they think a company dedicated to logistics and shipping can do a better job than a fellow merchant fulfilling your orders for you.

    However, as we’ve discussed in the sections above, we think traditional 3PLs are still operating to serve the old paradigm of eCommerce. While you may feel that you are ‘in safe hands’ initially, the reality may be very different and disappointing.

    Most traditional 3PLs may promise a lot, but struggle to deliver even the basics. Where does this disconnect come from? Most sellers are extremely busy and cannot afford to spend endless hours vetting their 3PL’s performance and services. Decisions may be taken with limited information and time – unfortunately, this leads to a lot of unpleasant surprises after the inventory has been received and orders start flowing in.

    It’s worth asking – how can merchants rigorously vet their 3PLs to make sure their claims are actually true? With Cahoot, you won’t have to worry about that – because we’ve already taken care of that.

    Peer-to-Peer – Only The Best Warehouses Pass Cahoot’s 44 Point Checklist

    Some people think that working with a traditional 3PL (with their own warehouse space) is better than operating in a peer-to-peer network. Most people who feel this way share one concern, “How Can I Trust Another Merchant to Deliver My Orders?” A similar concern was shared by many people when Uber first rose to popularity, defeating the cabbies in London and New York’s famous Yellow Taxi. In London, people must spend 3 years training to be accepted as a cab driver. With Uber, nearly anyone could start driving taxis instantly. A similar sort of nervousness was prevalent among people, who asked, “How can we trust getting in a car with a stranger?” Interestingly, the data challenges the popular perception – according to research conducted at NYU, humans trust authentic sharing economy workers more than their neighbors and colleagues (and nearly as much as their families). The keyword in that sentence is authentic. Authenticity is built by high levels of trust and transparency – such as Uber drivers providing their details and a profile picture on the platform.

    Similarly, we recognize that building authenticity is crucial. Order fulfillment is a crucial aspect of business operations, and you don’t want to be handing that task over to someone you can’t trust. We foster trust with our sellers by rigorously vetting fulfillment partners. Cahoot has a 44-point checklist that warehouses must pass if they are to become part of our eCommerce order fulfillment network. This ensures that only the best warehouses, with excellent packing practices and order fulfillment standards, make the cut. Cahoot also has zero tolerance for defects and regularly reviews the performance of its fulfillment partners. We think that a warehouse in the Cahoot network has been through more rigorous vetting than the review that the average seller does on a traditional 3PL. This means that there’s a good chance that a Cahoot warehouse is better than the one at your traditional 3PL. With our vetting and audits, you can rest assured that it’s a safe and trustworthy one, too.

    Privacy and Security

    Traditional 3PLs – Lax Data Security Measures

    With traditional 3PLs, your customer information moves across multiple systems without proper safeguards. They might request for all your order and customer information to be transmitted to whatever technology they are using. If that is different from their shipping software, then your proprietary data enters another system outside your purview.

    While you may have signed contracts with the 3PL, your data still rests on multiple systems that they operate, with minimum visibility. Worse, you are entirely reliant on their information security practices, which may be minimal or even non-existent.

    In the era of Europe’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), no company can afford a data breach. Under a regulatory framework like GDPR, customers have the right to request for deletion of their data. If sensitive details like their name, phone number and address are already on systems that your 3PL controls, it increases exposure and risk to your business.

    Peer-to-peer – Robust Data Privacy and Governance Measures

    While having confidence in the order fulfillment standards of our warehouses is important, another concern sellers might have is, “How can we trust that other merchants will not see or use our customer data?” While Uber built high levels of trust in people, it still could not change the fact that people were indeed getting into a car with a stranger. To safeguard its customers and set their fears at ease, Uber has put in place various safety measures on its app. Some of these include GPS tracking, the ability to transmit location information to emergency services, logs of historical trips as well as the very famous rating system – where both riders and drivers review each other after each ride (a social incentive to behave respectfully).

    With Cahoot’s peer-to-peer fulfillment network, you can sit back and relax knowing that every order will be fulfilled on time. However, we do know that another merchant is responsible for fulfilling your order, and take data privacy extremely seriously. We provide a single platform where you get total control and visibility into your data. When our fulfillment partner prints a label to ship your order, they see the customer’s first name, but only the initial of their surname. Only the absolute essential information needed for order fulfillment is shared with the fulfillment partner, while all other product / brand / customer information remains with the seller.

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    Community

    Traditional 3PL – You Work With a Vendor

    Working with a traditional 3PL is often nothing more than a transaction – you pay them a lot of money, and they perform the task of order fulfillment for you. While getting your orders out to customers is vital, there’s often little differentiated value addition that you get from the engagement.

    Peer-to-Peer – Work With a Partner Reduce Costs and Generate Revenue

    With Cahoot’s peer-to-peer network, you can have ultrafast eCommerce order fulfillment by partnering with us. But it doesn’t have to end there. If you have excess capacity in your own warehouse, you can actually double up as a Fulfillment Partner on the network to monetize that and bring in additional revenue. Order Fulfillment is a growth driver, not a cost center – with us, those words definitely ring true. This is similar to Uber drivers in their home city becoming riders when they’re traveling!

    Summary

    While traditional 3PL companies are useful for the things they do well, they have limitations that can put pressure on sellers trying to succeed in the rapidly changing environment of modern ecommerce. For sellers trying to achieve Prime delivery standards without using FBA, or those that simply require nationwide reach for their fast delivery options, a traditional 3PL on its own is not sufficient.

    Cahoot’s innovative fulfillment network combines the benefits of a traditional 3PL, but adapted to the needs of a modern online merchant. Ambitious sellers can no longer afford to limit their fast delivery options to certain regions, and they must submit numerous fees and conditions to get the reach.

    Whatever your needs, Cahoot can deliver differentiated value to your business. Reach out to us today to get started!

    Written By:

    Manish Chowdhary

    Manish Chowdhary

    Manish Chowdhary is the founder and CEO of Cahoot, the most comprehensive post-purchase suite for ecommerce brands. A serial entrepreneur and industry thought leader, Manish has decades of experience building technologies that simplify ecommerce logistics—from order fulfillment to returns. His insights help brands stay ahead of market shifts and operational challenges.

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    October 2023 Seller Fulfilled Prime Guidelines – What’s New, What’s Changed, What’s Important?

    In this article

    19 minutes

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    On August 8, 2023, Amazon announced a wide range of changes to the criteria it expects sellers to meet on its Seller Fulfilled Prime program. The company introduced new requirements, while updating its expectations from merchants across other metrics. These include on-time delivery, valid tracking, nationwide delivery, delivery speed, free returns and program fees. Amazon has also removed the use of the On-Time Shipment metric and no longer requires the use of its Buy Shipping services.





    No time to read? No problem! Watch this quick video summary instead.

    In this article, we breakdown each criteria – explaining the old requirements and the new ones that will go into effect on October 1, 2023. We also explain the impact we expect sellers to face from each of these changes.

    changes to Amazon SFP requirements

    Program Requirements and Criteria

    On-Time Shipment (OTS)

    The On-Time Shipment Rate is defined by Amazon as the number of units that shipped on or before the Promised Ship Date / Total No. of Shipped SFP Units.

    Amazon tracks this metric based on when the carrier scan occurs. 

    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    > 99% OTS rate expected.
    Amazon is no longer going to track this metric on Seller Fulfilled Prime. The company claims that it is doing this to provide greater flexibility of shipping services and carrier options.
    Positive (but only if you have the right technology in place!).

    Previous Expectations

    If an order is received before the cut-off time Mon-Fri and Sat/Sun (whichever the seller prefers to enable), carrier scan must occur the same day.

    A carrier scan must occur the next day if an order is received after the cut-off time.

    This is the most important metric in the current Seller Fulfilled Prime requirements.

    New Expectations

    Sellers will no longer be judged on this metric.

    You don’t have to ship the same day if shipping tomorrow is optimal

    Under the current Seller Fulfilled Prime guidelines, Amazon requires sellers to ensure a carrier scan is conducted the same day for all orders received before the cut-off time. 

    There are situations where this rule forces sellers to unnecessarily use expensive air shipping, at the expense of more economical services. It’s best to understand this with an example: 

    Let’s imagine you’re a seller with 2 warehouse locations – one in Los Angeles and the other in New York. Imagine that you receive an order from a customer in Connecticut at 3PM ET on a Monday:

    same-day carrier scans

    Ideally, you would like to use an economical ground service which can reach the customer in time by fulfilling the order from your New York warehouse. However, because it is past the cutoff time in New York, but before the cutoff time in Los Angeles, Amazon will expect a carrier scan that same day.  The only way for you to ship from Los Angeles and deliver to the customer by the promised date is through an expensive air shipping service. 

    However, with carrier scans no longer required on the same day, you can now choose to ship the next day from your New York warehouse through a service like UPS ground – which is 3.5X cheaper than the air service. Such cost savings can only be achieved, however, if you have the right technology in place. Your shipping software needs to intelligently compare warehouse locations, carriers and shipping services to determine the most economical option to use, which still satisfies the customer expectation.

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    On-Time Delivery (OTD)

    The On-Time Delivery Rate is defined as Number of Units delivered on or before the Promise Date (which the customer sees at the time of checkout) / Total No. of SFP Units Shipped. 

    Amazon tracks this metric based on 2 parameters – the delivery date committed to the customer when they checkout, and when the package is actually delivered at their address.

    on-time delivery metrics

    Previous Expectations

    Under the old program, Amazon heavily pushed the use of its Buy Shipping Service. Amazon might also believe that only the services on Buy Shipping are capable of meeting the delivery promises made to customers. 

    Therefore, it was only in cases when labels were bought off of Buy Shipping that sellers were held to the high bar of 97% on-time delivery.

    New Expectations

    This becomes the most important metric under the new Seller Fulfilled Prime requirements.

    Amazon is also going to minimize the provision of “Promise Extensions” (in some cases, the customer is shown a later delivery date because Amazon factors in buffer time due to logistical challenges at the seller’s end).

    They encourage sellers to begin by looking at their On-Time Delivery Rate for orders without Promise Extensions (to get a sense of their ‘true’ order fulfillment levels).

    No More Protection Through Buy Shipping Usage Available

    While the 93.5% on-time expectation is a reduced one, which is more favorable for sellers (they don’t have to be perfect every time), this metric could still work against them.  The major reason for this is that sellers now lose the protection that the previous program afforded – so long as they bought the label on Amazon Buy Shipping, and performed the carrier scan in time, they could not be held accountable for any delays in order delivery due to carrier issues. Now, it no longer matters whether the label was bought through Buy Shipping or if a carrier scan occurred in time – sellers must meet the 93.5% benchmark. The biggest contributor to making it happen are the shipping carriers. The biggest criteria by which Amazon measures success on the program is now in the hands of a factor that the seller cannot entirely control – the ability of the shipping carriers to execute operations smoothly and without disruption.

    Buy Shipping Usage

    Amazon Buy Shipping is Amazon’s system through which sellers and merchants can purchase shipping labels to fulfill their orders. 

    The Buy Shipping Usage % is defined as the Number of Units for which labels were bought with Buy Shipping / Total No. of SFP Units Shipped 

    Amazon Buy Shipping is now Optional
    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    >99% Buy Shipping usage
    No longer tracked
    Positive

    Previous Expectations

    Buy Shipping usage is extremely important. Sellers must print nearly every label on Buy Shipping. Complying with program requirements boiled down to printing labels on Buy Shipping, and then ensuring carrier scans occurred on the same day.

    New Expectations

    Sellers will not be judged any longer by this metric – this is the biggest step Amazon claims it is taking to provide sellers and merchants “greater flexibility of shipping services and carriers”.

    In return for being able to pick services off of Buy Shipping, a timely carrier scan will not suffice – the orders need to actually reach the customer within the Promised Delivery Date >93.5% of the time.

    More flexibility in picking carriers and services

    Amazon Buy Shipping has one major issue that numerous sellers have reported anecdotally. The platform does not do a good job of estimating the delivery speeds of USPS services.  Buy Shipping sometimes excludes USPS services that are actually capable of meeting the delivery date, forcing the seller to pick a more expensive shipping label that it does believe is capable of reaching the customer in time. Buy Shipping also occasionally runs into errors, where it does not return a particular carrier for no particular reason. In all these cases, merchants are forced to buy labels off Buy Shipping, which reduces their usage less than the 99% bar.  

    With this requirement gone, sellers are now free to pick the ‘truly’ cheapest service. However, you can see the benefits of this only if you have an intelligent multi-carrier shipping software in place that rate-shops multiple carriers and shipping services to identify the truly cheapest label on each order.

    Valid Tracking Rate (VTR)

    Amazon provides its customers tracking numbers for them to be able to see where their order is at. 

    An order has valid tracking if it receives a first carrier scan (the scan that is performed by the carrier to indicate that the order is in transit). 

    Amazon defines the Valid Tracking Rate as Number of Prime packages with a Valid Tracking ID / Number of Prime packages for which shipment has been confirmed.

    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    Not tracked currently
    >99% – Amazon requires that the scan be made by an Amazon – integrated carrier.
    Neutral

    Previous Expectations

    Sellers were not assessed on this metric.

    New Expectations

    Sellers are responsible for updating shipping carrier, shipping service and tracking number information on Amazon for each order, to enable customers to track the status of their packages.

    Less Hassle for Merchants in Meeting This Metric

    Amazon expects each package to have at least one carrier scan. This scan must occur before the customer receives their order, so that they can use the tracking number to see where their order is on Amazon. The fact that the carrier scan does not have to occur the same day is a positive for sellers. Many sellers have reported issues with carrier operations on the weekends – their packages are picked up, but no scans are actually conducted on a Saturday. Under the current program, this leads to violations of the OTS metric.  

    Under the new program, sellers should not face too many hurdles with getting packages scanned once before they reach customers.

    Nationwide Delivery Coverage

    This refers to the ability for products to be made available with fast shipping across the contiguous United States (the lower 48 states). 

    This expectation is based on the size tier that the item falls into (Standard Sized / Oversized / Extra Large). 

    oversized SKUs must now ship nationwide
    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    Only for Standard-sized Products
    Expected for every SFP SKU, across all size tiers
    Has Positives and Negatives

    Previous Expectations

    Standard-sized products must be made available within the entire contiguous U.S. on fast shipping.

    Oversized items can be serviced within specific regions (also known as Regional SFP) – nationwide fast shipping is not required for them.

    New Expectations

    Products across all 3 of Amazon’s size tiers – Standard Sized, Oversized and Extra Large – must be made available in the contiguous U.S. on fast shipping.

    Any product (regardless of size tier) that is configured with a Prime shipping template has a minimum delivery speed of 3-5 calendar days – sellers cannot edit this.

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    Prime Badge Available Nationwide For all SKUs, but with the Caveat of Higher Shipping Fees

    Amazon is now willing to provide sellers the Prime badge nationwide on oversized and extra large SKUs, whereas previously it was restricted to just the specific regional part of the country the seller operated from. The metrics for 1- and 2-day delivery are not yet extremely high. This is on the whole a positive for sellers because the Prime badge boosts search rank, conversion and sales on these SKUs. 

    The negative is that the minimum delivery speed across every size tier is 3-5 days. This is a calendar-day based metric, which includes Sundays and Holidays. Therefore, it may not be possible to always use discount services capable of meeting the delivery timeline, such as USPS Priority Mail, FedEx Home or UPS Ground. In some cases, the seller might still be forced to use expensive air shipping.

    Delivery Speed Metrics

    Amazon tracks this based on the % of Product Detail page views that promise same-, 1- or 2-day delivery to customers. 

    This percentage will be calculated based on pageviews from customers across the entire contiguous United States, not just those in your defined regions for Same-, 1- or 2-day deliveries.

    faster delivery expected

    Previous Expectations

    Amazon introduced the delivery speed metric as a percentage of product detail pageviews that promise customers same-, 1- or 2-day delivery. 

    The calculation is based on calendar days, and includes Sundays and holidays.

    New Expectations

    The delivery speed metrics across all size tiers have increased. They will now be based on pageviews from customers all over the lower 48 states, in addition to those in your defined regions for same-, 1- and 2-day deliveries.

    Amazon has said that it does not have targets for Same-Day Deliveries initially.

    However, as Amazon focuses on same-day deliveries for its inhouse FBA logistics network, there might be revisions to this in the coming months.

    Delivery Speed Expectations Increase Across Every SKU

    delivery speed expectations
    • This is how delivery promises will be displayed to customers (assuming a cut-off time of 2PM, and that you deliver every order within 1 day after it ships). 
    • These metrics have always been the most crucial and challenging for sellers to meet. Sometimes, they’ve been unfairly penalized for them also. Let’s say you’re based in New York, and a customer in Connecticut is browsing your product detail page at 6 PM ET. Even though you may be capable of delivering the package to them the next day, Amazon will still show only a 2-day delivery promise. 


    Achieving a high % of 1- and 2-day delivery pageviews nationwide is not easy, and relies largely on ensuring that your inventory is strategically distributed in a network of USA fulfillment centers so that customers from everywhere see fast shipping promises.

    Trial Period

    Sellers hoping to be a part of the SFP program must go through a trial period where they can prove to Amazon that they are capable of meeting the rigorous criteria of the program. 

    During this trial period, when customers shop their products, they will not see the Prime badge on the listings. On successfully completing the trial period and meeting the SFP criteria, Amazon will enable the Prime badge for the listings.

    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    A short pre-trial process, followed by a 90 day trial where 200 orders have to be shipped, while meting all SFP criteria.
    A 90 day pre-qualification process, followed by a 30 day trial where 100 orders have to be shipped, while meeting all SFP criteria.
    Positive for Some, Negative for Others

    Previous Expectations

    Before the trial:

    Have a Professional seller account, and activate Premium Shipping. Fulfill 30 Premium orders in 1 month. 

    During the trial: 

    Fulfill 200 orders in 90 days. Do so while meeting all requirements of the SFP program. 

    New Expectations

    Products across all 3 of Amazon’s size tiers – Standard Sized, Oversized and Extra Large – must be made available in the contiguous U.S. on fast shipping.

    Any product (regardless of size tier) that is configured with a Prime shipping template has a minimum delivery speed of 3-5 calendar days – sellers cannot edit this.

    Time to Enrollment Shortens for Some Sellers, While Others May No Longer Be Eligible

    Previously, the trial period was longer in length and order volumes – having to fulfill 200 orders in 90 days while meeting the program criteria. Now, if you’ve self-fulfilled 100 packages in the last 90 days (or under, say 60 days) – you can get on the shorter trial of 30 days.  The overall time to Seller Fulfilled Prime enrollment is potentially shorter (if a merchant can move past pre-qualification quickly).

    However, when comparing 200 packages in 90 days to 100 deliveries in 30 days, sellers are expected to ship nearly 50% more orders per month – this can exclude sellers with small monthly volumes who were previously eligible to participate in the program. 

    Performance Evaluation

    Amazon periodically assesses how its SFP sellers are faring, and to check whether they are meeting the expectations set for them.

    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    Tracked every 7 days, and every 30 days
    Tracked every 7 days
    No change

    The evaluations that Amazon conducts on sellers continues to occur at the same cadence that it always has – sellers will not face anything new.

    Amazon will begin tracking sellers against the new set of metrics beginning October 1, 2023. 

    Resolving Disputes

    Needless to say, order fulfillment is complex and mistakes can occur. While merchants face no penalties for mistakes that FBA makes, sellers on Amazon SFP face severe penalties for issues with orders. 

    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    If a requirement is missed, Amazon will suspend SFP for you and require you to submit a Plan of Action.
    If a requirement is missed 3 times, you lose SFP eligibility.
    Positive (if your SFP Fulfillment Partner has responsive support)

    Previous Expectations

    The Plan of Action needs to explain why you slipped up, what specific steps you’re taking to fix the current situation and measures that will be put in place to ensure it does not repeat.

    New Expectations

    An email will be sent the first time a requirement is missed. The Prime badge will be “paused” the 2nd time you miss the same requirement. If you are sure the issue is fixed, you can restart the Prime badge. If you make it through four weeks without violating the same requirement after you restart the Prime badge, your account will be reset. If you do miss the same requirement the 3rd time, you will lose the Prime badge. If you go through the pre-qualification process, you can start an SFP trial again.

    Amazon Gives Sellers More Chances, but the Road Back is Extremely Tough

    Under the previous Seller Fulfilled Prime requirements, when Amazon found sellers missing a certain metric, it would suspend them from the program and require submission of a Plan of Action. This was harsh – a single mistake could lead to suspension of the Prime badge. This was exacerbated by the resolution process – it can take a long time for Amazon to get back, and if they deemed the Plan of Action not good enough, they could delay reinstatement on the program.

     Now, sellers have 3 strikes per program requirement. Additionally, this gives a chance to sellers to dig into why they missed a metric and work with their fulfillment partner to ensure it does not repeat again. Sellers that have an SFP fulfillment partner with responsive, reliable customer support should not face too much trouble in ironing out their errors and continuing their participation in the program. However, if the 3 strikes do occur, then it is a long, long way back – sellers must begin all over again – right from the pre-qualification process.

    Free Returns

    When a customer wishes to return a Return-eligible Prime item, the sellers are in most cases required to pay for the cost of the return shipping label, and to provide the customer a full refund. In a small number of cases, the customer might be required to bear the cost of the shipping label – in these cases, a refund is provided after deducting the price of the label.

    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    Sellers are required to bear the cost of the return shipping labels in all cases, EXCEPT certain Buyer reason codes.
    For any return eligible item under 50 lb, the Seller must provide free returns – irrespective of the buyer / seller reason code.
    Negative

    Previous Expectations

    When the return had these Buyer codes, sellers were exempt from bearing the cost of the return label: 

    • Accidental order
    • Better price available
    • No longer needed or wanted
    • Performance or quality not adequate
    • Incompatible or not useful for intended purpose
    • Part not compatible with existing system
    • Excessive installation or did not install

    New Expectations

    Sellers must bear the cost of the return shipping label even in the cases of the above-mentioned buyer reason codes.

    Return Costs Rise for Sellers – Even When the Onus is on the Buyer

    Previously, in certain cases, sellers could provide refunds after deducting the cost of the shipping label. Now, even in cases where the onus may lie on the buyer’s side, the seller must bear the cost of the return shipping label. This is an additional expense that they must bear, which was not the case previously.

    Program Fees

    Old SFP Requirements
    New SFP Requirements
    Impact on Sellers
    Does not exist
    No Fee (a charge was originally planned by Amazon and subsequently withdrawn)
    No Impact

    Amazon originally announced that they would charge sellers 2% of the unit price for every item shipped via Seller Fulfilled Prime, or a minimum of $0.25. 

    Amid growing scrutiny from regulators over anti-competitive practises, the company withdrew this fee for concerns over how sellers and officials would perceive such behavior. Amazon withdrew the fee a few days before September 26, 2023 when the Federal Trade Commission and 17 US states sued the company for anti-competitive behavior.

    Amazon Resources

    We hope you found our breakdown helpful and informative!

    To read more about the old requirements that the program wanted sellers to meet, visit this page on Amazon Seller Central: https://sellercentral.amazon.com/help/hub/reference/external/G202072550 

    To read about the new requirements that Seller Fulfilled Prime will enforce starting October 1, 2023, visit this page on Seller Central:

    https://sellercentral.amazon.com/help/hub/reference/external/GXCRLXHNJNPE2DHM

    You can also read our guide to selling and winning on Amazon Seller fulfilled Prime to learn everything there is to know about SFP before you start the process in October 2023. 

    Written By:

    Jeremy Stewart

    Jeremy Stewart

    Jeremy Stewart leads customer success at Cahoot, helping merchants achieve high-performance logistics through smart technology and process optimization. With a background in both ecommerce operations and client services, Jeremy ensures that every merchant using Cahoot gets measurable results—whether they’re scaling from one warehouse to many or managing complex returns.

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    Fulfilled By Walmart Meaning: Understanding Walmart Fulfillment Services (WFS) – Pros & Cons | Cahoot

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    Walmart doesn’t just want to be the biggest brick-and-mortar seller in the world – they know that eCommerce is the way of the future. According to Webretailer.com, Walmart.com is a relatively distant 3rd in online US visitors behind Amazon and eBay, but it’s closing the gap with a huge growth rate. In their efforts to catch up, Walmart is launching programs aimed at ensuring that their delivery experience can match the vaunted standard set by Amazon Prime. Last year, they launched Walmart Fulfillment Services, a new program that enables sellers to store inventory in a Walmart fulfillment center where it is processed and shipped.

    In this article, we’ll cover how WFS works, its strengths and weaknesses, and alternative solutions for sellers who want to deliver fast and free on Walmart.com.

    Overview of Walmart Fulfillment Services

    Walmart Fulfillment Services (WFS) is a program designed to help ecommerce sellers streamline their order fulfillment process. By leveraging Walmart’s extensive network of fulfillment centers, sellers can offer fast and free shipping to their customers, increasing customer satisfaction and loyalty. WFS is a cost-effective solution for ecommerce sellers looking to outsource their fulfillment operations and focus on growing their business.

    With WFS, sellers can store their inventory in Walmart’s fulfillment centers, where Walmart takes care of picking, packing, and shipping orders. This not only ensures timely delivery but also enhances the overall customer experience. Additionally, Walmart handles returns and customer service, allowing sellers to concentrate on other aspects of their business. By using WFS, sellers can benefit from Walmart’s logistics expertise and robust infrastructure, making it easier to scale their operations and reach a broader audience.

    How does Walmart Fulfillment Services work?

    At its core, Walmart Fulfillment Services is a competitive answer to Amazon Prime. The single most important element of competing with Amazon is earning parity on fast and free shipping. Without fast and free shipping, Walmart knows that customers will continue to turn to Amazon. The faster Walmart can grow WFS and get its sellers to use the network, the better its 2-day shipping coverage will be.

    nationwide coverage

    Sellers that use Walmart Fulfillment Services for their Walmart listings go through a relatively simple and hands-off process. Once a seller has an account and listings and the seller is approved for Walmart Fulfillment Services, then they send inventory to Walmart fulfillment centers and convert their products to Fulfilled by Walmart listings.

    If they don’t have it already, they will then get the Walmart TwoDay badge, boosting impressions and conversion rates. Then, when a customer places an order, Walmart will pick, pack, and ship customer orders – no intervention is needed from the seller. Moreover, Walmart also manages the returns process and provides customer service.

    Walmart Fulfillment Centers

    Walmart’s fulfillment centers are strategically located across the United States, allowing for fast and efficient shipping to customers. These centers are equipped with state-of-the-art technology and staffed by experienced professionals who handle everything from inventory storage to order packing and shipping. By using Walmart’s fulfillment centers, sellers can take advantage of the company’s expertise in logistics and supply chain management.

    Each fulfillment center is designed to optimize the fulfillment process, ensuring that orders are processed quickly and accurately. The advanced technology used in these centers includes automated systems for sorting and packing, which helps to minimize errors and speed up the shipping process. This level of efficiency is crucial for meeting the high expectations of today’s ecommerce customers, who demand fast and reliable delivery.

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    Multiple Fulfillment Centers

    One of the key benefits of WFS is the ability to use multiple fulfillment centers. This allows sellers to store their inventory in different locations, reducing shipping times and costs. This strategic placement of inventory not only enhances the customer experience but also helps sellers save on shipping costs.

    With multiple fulfillment centers, sellers can also increase their product visibility and reach a wider audience. Walmart’s network of fulfillment centers is constantly expanding, providing sellers with even more opportunities to grow their business. As Walmart continues to expand its network of fulfillment centers, sellers can take advantage of new locations to further optimize their fulfillment strategy and improve their market reach.

    Eligibility and Requirements for WFS

    To be eligible for WFS, sellers must meet certain requirements. These include:

    • Being a registered seller on Walmart Marketplace
    • Having a valid business tax ID and EIN Verification Letter from the IRS
    • Meeting Walmart’s quality and safety standards for products
    • Agreeing to Walmart’s terms and conditions for WFS
    • Meeting the product size, ship-from location, and category requirements set by Walmart

    Sellers must also ensure that their products are compliant with Walmart’s policies and guidelines, including providing accurate and up-to-date product information. By adhering to these requirements, sellers can maintain a high level of trust and reliability with their customers, which is essential for long-term success on the Walmart Marketplace.

    Costs and Fees for Using WFS

    The costs and fees associated with using WFS vary depending on the seller’s specific needs and requirements. These costs include:

    • A monthly storage fee based on the volume of the product and the length of time it is stored
    • A fulfillment fee based on the item’s weight and product category
    • Additional fees for hazmat items and storage during peak season (October 1 – December 31)
    • Return shipping fees
    • Removal/disposal fees
    • Inventory handling fees for inbound shipments and prep services
    • Additional fees for special projects

    Sellers can estimate their storage and fulfillment fees using Walmart’s online calculator. It’s essential to note that fees are subject to change, and sellers should regularly review Walmart’s website for updates on fees and pricing.

    By understanding the costs and fees associated with WFS, sellers can make informed decisions about their fulfillment operations and optimize their business for success. Properly managing these expenses is crucial for maintaining profitability while taking advantage of the benefits that WFS offers.

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    Benefits of Walmart Fulfillment Services

    A Straightforward Solution For Walmart Orders

    Simply put, sellers that use Walmart Fulfillment Services for their Walmart orders have a low-complexity solution. There aren’t complicated integrations to worry about, and management tools are available through the seller’s account with Walmart.

    Enables Fast Shipping

    Since Amazon introduced its Prime program, 2-day shipping has quickly evolved from a “nice benefit” to a “must have.” In fact, a 2024 Statista report indicated that almost two-thirds of global consumers expect to receive their order within 24 hours. If these expectations aren’t met, your offer will see high cart abandonment as shoppers select it and then realize that it doesn’t come with the delivery service they require.

    Walmart Fulfillment Services powers fast and free delivery by automatically enrolling products into the Walmart TwoDay program. Walmart’s studies have shown the program to boost conversion by 30-50% – a massive revenue increase.

    2Day conversion

    Handles Customer Service

    Walmart handles all customer inquiries, refunds, and returns for products sold through WFS. In addition to the TwoDay tag, in fact, WFS products get “Free & Easy Returns” and “Fulfilled by Walmart” tags, which further increase visibility and conversion.

    WFS saves you a lot of time by handling customer service responsibilities on your behalf. As we’ll see in the next section, though, there’s a drawback to the “Free & Easy Returns” tag.

    Drawbacks of Walmart Fulfillment Services

    A Point Solution That Doesn’t Work Elsewhere

    Just like Amazon FBA and other marketplace solutions, Walmart Fulfillment Services works only for Walmart. You likely know already that the best sellers don’t put all their eggs in one basket – they list across multiple marketplaces and often have their own webstore as well. If you’re one of those top sellers, WFS is only a partial fulfillment solution.

    The benefits of Walmart Fulfillment Services as a simple solution for selling on Walmart fade away when you have to manage alternate fulfillment platforms for other selling channels.

    Increased Returns

    Amazon FBA sellers already are well acquainted with the flipside of easy returns – you may not have to worry about it when a customer calls in a return, but you’ll definitely be worrying about it when you realize how big of a hit your margin is taking. A 5% return rate already sounds like a big issue – but it gets that much worse when you realize that a 5% return rate usually comes out to about a 20% negative effect on net profit.

    In its quest to chase Amazon, Walmart has adopted a similar return policy for WFS that enables its customers to process a full refund for almost any reason. Beware – this benefit will boost revenue, but it comes with a big hit to profitability.

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    Alternatives to Walmart Fulfillment Services

    The most cost-effective way to offer nationwide 1-day and 2-day delivery is to adopt a distributed fulfillment strategy. Of course, Walmart Fulfillment Services will achieve this for you, but it’s far from a complete solution. If you want a more flexible fulfillment approach that can support your multi-channel sales, here are your four best options.

    1. Open Multiple Fulfillment Centers: Merchants can take it upon themselves to open multiple US fulfillment centers and control fulfillment. The benefits of total control, though, are offset by challenging market dynamics. Warehouse space has never been more limited or expensive, and hiring frontline fulfillment workers is so competitive that Amazon is paying as much as $22.50 per hour for new employees. On top of that, opening one’s own centers for Walmart fulfillment ties up significant capital and is risky. Pick the wrong location, and you’ll be left footing the bill.

    2. Third-Party Logistics Companies (3PLs): Another option is to outsource fulfillment to multiple 3PLs. Since the majority of 3PLs are smaller operations with just a few locations, you’ll have to work with a few to get nationwide 1-day and 2-day coverage. Fulfillment costs vary between 3PLs, so be sure to use something like a 3PL request for proposal (RFP) template to get an apples-to-apples comparison.

    3. Flexport: Flexport uses a network of 3PLs to provide nationwide fast and free shipping to Walmart sellers, and if you use it to fulfill your Walmart orders, you’ll automatically qualify for the Walmart TwoDay badge. Like Walmart Fulfillment Services and other 3PLs, Flexport does the heavy lifting of fulfillment for their clients. Also like Walmart Fulfillment Services, though, Flexport is limited in scope. The service focuses on small packages and their fulfillment cost balloons as product size rises. They also avoid the elephant in the room, Amazon, and shy away from doing fulfillment for orders on the largest eCommerce channel. If you use their service, be prepared to add the complexity of other fulfillment solutions as you grow.

    4. Peer-to-Peer (P2P) Fulfillment Network: A modern and affordable alternative to working with 3PLs is to use a peer-to-peer e-commerce order fulfillment network. A P2P network is a collective of highly vetted eCommerce retailers who offer up excess warehouse space and resources to provide high-quality Walmart fulfillment to other merchants. As a result, costs are typically lower than what you get with a traditional 3PL fulfillment company, and service levels are higher. With a P2P network, flexible multi-channel fulfillment with nationwide 1-day and 2-day delivery is the norm. The diverse set of merchants ensures that each customer gets a solution customized to their needs, while innovative technology ensures the highest quality fulfillment.

    Frequently Asked Questions

    What does fulfilled by Walmart mean?

    Fulfilled by Walmart (FBW) is a fulfillment service where Walmart handles the storage, picking, packing, and shipping of products on behalf of third-party sellers who list their items on Walmart Marketplace. Similar to Amazon’s FBA (Fulfilled by Amazon), FBW allows sellers to leverage Walmart’s extensive supply chain and logistics network to streamline order fulfillment and improve delivery speed.

    How do I enable WFS?

    To enable WFS, you must sign up for WFS services in your Walmart marketplace. A US bank account is required for WFS fees. Once signup is complete, you can enable WFS for your Walmart sales channel in the Walmart portal.

    How much does WFS charge for fulfillment?

    WFS shipping fees are determined by the size and category of the product in question. Apparel, oversize items, hazardous materials, and those with a retail value below $10 per item incur additional fulfillment fees. Use this calculator from Walmart to estimate the cost of fulfilling your products using WFS.

    Written By:

    Rinaldi Juwono

    Rinaldi Juwono

    Rinaldi Juwono leads content and SEO strategy at Cahoot, crafting data-driven insights that help ecommerce brands navigate logistics challenges. He works closely with the product, sales, and operations teams to translate Cahoot’s innovations into actionable strategies merchants can use to grow smarter and leaner.

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    How to Grow Sales on Walmart With Two Day and Three Day Delivery

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    For many sellers in ecommerce, Amazon has long been the platform that they simply could not ignore. However, in recent times, another channel has emerged. Walmart is arguably America’s most well known retailer – the company has a sprawling footprint of around 4,615 physical locations in the US alone. Recent developments, including the rise of Amazon and the Covid-19 pandemic have pushed the Arkansas-based retailer into investing more in ecommerce.

    Walmart’s ecommerce accounts for 18% of its total sales volume and expects its ecommerce business to continue to grow significantly, as it has grown over 10% year over year for the last 4 years. The company’s Chief Financial Officer John David Rainey acknowledged that the majority of the company’s profits come from its physical stores. However, he expects ecommerce to continue to grow significantly in the coming years, outpacing Amazon growth. To that end, the company has invested $7.2 billion in supply chain, omnichannel and technology infrastructure. Early results from the company are promising – in the second fiscal quarter of 2024, ecommerce sales grew 24% (compared to 6.4%) for comparable in-store sales. The company also reported that active digital users grew 20% in the quarter. 95% of American consumers visit Walmart stores at least twice a year. While Walmart crossed 150,000 third party sellers on its marketplace as of May 2022, that number pales in comparison to the 1.9 million that Amazon has. However, one thing is certain – Walmart is likely to continue growing investments in ecommerce, and take advantage of the enormous shopper base their physical locations attract. This represents a growing base for ecommerce brands and merchants to sell to.

    However, just like Amazon, free and fast shipping is almost a prerequisite for success. On Amazon, customers apply the Prime filter when shopping just to see products that come with fast delivery. In many ways, shipping is no longer a back office operation, it has become central to today’s customer experience. Walmart allows sellers to gain competitive advantages by offering TwoDay and ThreeDay delivery.

    In this article, we’ll take a look at what benefits TwoDay and ThreeDay delivery offers on the marketplace, what it takes to earn the TwoDay fast shipping badge, how to ensure you’re compliant with the seller performance standards and some options available to merchants to offer fast Walmart fulfillment.

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    What is TwoDay and ThreeDay Delivery?

    As their names suggest, TwoDay and ThreeDay delivery tags are applied to offers on Walmart which feature free delivery to customers in two or three business days.

    In a world where customers are constantly comparison shopping across brands, listings and marketplaces, free and fast shipping provides strong competitive advantages. In many cases, customers choose knockoff or imitation products over superior alternatives simply because of faster delivery.

    The Delivery Tags are a great way to gain prominence on the marketplace, distinguish yourself from competitors and to build customer lifetime value through repeat purchases.

    What Benefits do the Two Day and ThreeDay Tags Give?

    The important thing to understand is that the two day and three day delivery options are slightly different from each other in a few, significant ways. In each section, we’ll examine the difference between them and what benefits sellers get from each.

    Feature
    ThreeDay
    TwoDay
    Increased conversion
    As high as 30%
    As high as 50%
    Buy Box Prominence
    Yes
    Yes
    Increased Search Ranking
    No
    Yes
    Filter Inclusion
    No
    Yes
    Fast Delivery Tag
    No
    Yes

    High Conversion Lift

    The single biggest advantage sellers get from offering customers TwoDay or ThreeDay delivery is the increased conversion. In Walmart’s words, these are the conversion lifts that sellers can expect to see with these delivery offerings:

    Boosts Search Rank and Discoverability

    Many sellers are already familiar with Amazon’s A9 algorithm. For those not aware, the A9 algorithm factors in a variety of criteria to rank listings on search results in the Amazon marketplace. In a similar fashion, Walmart has what it calls a “Listing Quality Score”. The algorithm applies weights to different criteria (such as price and shipping speed) before ranking listings on search results.

    Offering two day or three delivery, and earning fast delivery tags go a long way toward improving your Listing Quality Score, improving metrics such as Buy Box win rates and search rankings. Here’s the difference according to Walmart:

    The filter inclusion is similar to the filter Prime shoppers apply when browsing the Amazon marketplace just to see Prime eligible listings.

    Fast Shipping Badges

    On marketplaces like Walmart, customers have almost infinite choice – fast shipping badges are a great way to stand out and quickly become the preferred listing for customers.

    Here’s what you get with TwoDay and ThreeDay:

    How To Qualify for TwoDay and ThreeDay Delivery

    Now that we’ve taken a look at all the benefits that the two badges offer, let’s examine what actually needs to be done to qualify for these options.

    ThreeDay Delivery

    For ThreeDay Delivery, sellers need to perform no extra work! They can simply configure a shipping template with “Standard” shipping method and then pick a transit time of 3 days.

    Sellers can configure their shipping template in the Walmart Seller Center.

    TwoDay Delivery

    Sellers aiming to achieve two day speeds on their Walmart fulfillment (and earn the fast shipping badge that comes with it) have 3 different options available to them:

    • Use Walmart Fulfillment Services
    • Work with Walmart’s partners – ShipBob or Flexport
    • Ship yourself (using your own warehouses or 3PL).

    If you’re choosing to use your own fulfillment, you will need to meet these requirements:

    • Have been a seller on Walmart for 90 days or fulfilled at least 100 orders
    • Maintain an on-time shipping and delivery rate greater than 95%
    • Maintain a valid tracking rate greater than 95%
    • Have a cancelation rate lesser than 1.5%
    • Offer free returns

    Let’s assume you do what it takes and you’re now selling more with your fast delivery tags – great! But as sellers know, it’s crucial to stay on top of the requirements of the marketplace to ensure you retain your fast shipping badges and keep your listings active. Here’s what sellers need to do on Walmart:

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    Walmart Seller Performance Standards

    As per Walmart’s seller help documentation, these are the requirements that merchants on its platform must adhere to; sellers must ensure their products are delivered on time and in good condition. This includes providing accurate tracking information and maintaining a low rate of order cancellations and returns. Additionally, sellers using freight services must ensure timely delivery to maintain performance standards. Let’s look at these points in detail:

    On-Time Delivery Rate

    On-Time Delivery Rate

    Sellers must maintain an On-Time Delivery Rate greater than or equal to 95%. To give this some perspective, let’s compare this against a program like Seller Fulfilled Prime.

    While SFP has more demanding speed metrics (expecting roughly 30% of orders on standard sized SKUs to be delivered within 1 calendar day), Walmart has higher on-time delivery expectations. SFP expects only 93.5%, while Walmart expects 95% on-time delivery.

    This means that you need to find partners with order fulfillment networks that have warehouses at multiple strategic locations, so that you can shorten the distance to your customers and make your Walmart fulfillment faster.

    The only downside is that this leaves sellers at the mercy of the carriers, such as USPS, UPS and FedEx. Their ability to deliver products accurately and on time becomes important.

    Valid Tracking Information

    Sellers must maintain a Valid Tracking Rate greater than 99%. This requires strong technology and integrations between your fulfillment platform and Walmart. Whenever you receive orders, your systems must write back tracking information automatically to Walmart.

    Make sure that you check your fulfillment partner has solid technology and 2-way integrations (such as Cahoot’s with Walmart) that fetch and push important information.

    Refund Rate

    Sellers must maintain a refund rate less than 6%. This applies to reasons that the seller is responsible for, such as items being damaged or incorrect items being received.

    It is essential that you identify fulfillment partners with checks, balances and procedures to prevent such issues. For example, Cahoot has scan-verification technology to nearly eliminate the possibility of incorrect items being picked and packed. Additionally, you need to ensure that your fulfillment partner has excellent pick-pack and order fulfillment practices to package items well, following all relevant guidelines and procedures. Warehouses on the Cahoot network must pass a 44 point checklist before they can begin fulfilling orders for sellers – ensuring industry leading fulfillment standards.

    Cancel Rate

    Brands must maintain a seller-initiated cancel rate of less than 2%. Such events can commonly occur when orders are received on items that are actually out-of-stock.

    Cahoot has a powerful integration with Walmart that pushes back inventory count information. Additionally, the system also comes with dashboards that provide color-coded alerts about your inventory levels (yellow to indicate it’s time for replenishment, and red to indicate that it needs to be done in a hurry!) This ensures you can minimize stock-outs.

    Additionally, if you’re fulfilling from multiple locations, make sure that your software has intelligent exception management capabilities to handle problems at one node. If stock-outs or bad weather occur, you can still keep your promise to customers if your shipping software intelligently reroutes orders to other locations.

    Seller Response Rate

    Sellers must respond to customer inquiries that they receive within 48 hours, more than 95% of the time. The reason for this is obvious – Walmart is positioning itself as a serious challenger to Amazon, which has built a reputation for stellar customer experience. Walmart expects its sellers to offer customers a similar quality of service.

    Offering TwoDay Delivery: Walmart Fulfillment Services

    Walmart Fulfillment Services is the retailer’s inhouse logistics network, using which you can make your listings eligible for TwoDay Delivery. Let’s take a look at its pros and cons.

    Pros of using WFS


  • Automatic eligibility for TwoDay delivery

    Just like using Fulfillment By Amazon makes your listings eligible for Prime automatically, using WFS earns you TwoDay Delivery. There is no requirement to meet the qualification criteria.

  • Nationwide Network of Warehouses

    As Walmart invests in growing its ecommerce capabilities, supply chain infrastructure building will be a key focus area. With 31 fulfillment centers dedicated to ecommerce as of June 2022, the company’s warehouse footprint ensures that it is possible to achieve nationwide two day delivery.

  • Competitive Pricing (Depends on SKU mix)

    According to comparisons between Amazon FBA and Walmart WFS, the two programs are relatively level with each other on fulfillment fees. Sellers already used to working with FBA might see savings on some SKUs with WFS, while others might be cheaper on FBA.

    The broad implications for sellers are similar to those with Amazon. For fast moving SKUs with minimum storage times that are small or lightweight, WFS will offer great rates. For big and bulky items, you may be able to find better alternatives offering more competitive rates. The real pain with programs like FBA and WFS is seen on long-tail or slow moving SKUs. When items don’t leave a Walmart Fulfillment center quickly, storage fees can rapidly eat into your margins.

    Sellers must choose whether to work with WFS or look for alternative providers based on careful analysis of their specific product catalog.

  • Cons of using WFS


  • Restricted to Walmart

    Possibly the biggest limitation of WFS is that it is restricted to just your Walmart orders. This means you’ll probably need to continue using FBA for Amazon, while you seek out another partner for your Fulfillment By Merchant (FBM) or Seller Fulfilled Prime (SFP) orders. You’ll also have to check if this partner supports other sales channels, such as Shopify (DTC), eBay or Target. Finding such a partner becomes harder if you’re selling to other retailers like Nordstrom or Macy’s, and require B2B replenishments as well.

  • Poor Fit for Certain SKUs

    WFS does not offer competitive pricing for big and bulky items. Additionally, their storage fees make the service impractical for slow-moving or long tail SKUs.

    For a seller with a SKU mix that features these types of items, WFS may not make a lot of sense.

  • Too Much Redundant Inventory for You to Manage

    You’re already used to sending your inventory to FBA warehouses. That has caused sellers significant headaches with inventory receiving delays and damages in transit. If you use WFS to handle Walmart, you’ll have to repeat all your inbounding processes that you did for FBA – if you sent your items to an Amazon warehouse in California to handle West Coast orders, you’ll have to do it again to a Walmart Fulfillment Center. You’ll have to learn Walmart’s guidelines and processes for receiving inventory and get used to working with another partner.

  • Peak Season Storage Fees

    While Walmart’s warehouse network is smaller compared to Amazon, they also face similar problems – a large number of sellers vying for limited spaces. This means you’ll face peak season surcharges for storage.

  • Walmart Fulfillment Services pricing

    image courtesy: Walmart Fulfillment Services

    This illustrates the problem – if you don’t have a SKU that is fast moving, you’re in trouble. This means storage fees triple on SKUs that have been sitting in Walmart Fulfillment Centers for more than just 30 days! For SKUs that have been sitting for more than a year in their warehouses, the rates can be even more expensive.

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    Offering TwoDay Delivery: ShipBob

    Pros of Using ShipBob

    Pros:
  • Automatic eligibility for TwoDay Delivery

    As ShipBob is one of Walmart’s approved partners, brands that use them can instantly activate TwoDay delivery.

  • Nationwide network of warehouses

    ShipBob has a global network of warehouses. This allows them to spread inventory across multiple locations to reach customers within the two day window.

  • Cons of Using ShipBob

    Cons:
  • Rates May Not be The Best

    ShipBob operates their own warehouses. While this may provide them control, it also places significant fixed costs and assets on their bottom line. With leasing rates, warehouse worker wages and carrier rate increases all going up, they may have no choice but to pass on the increased costs to their customers.

    On the other hand, asset-light, powerful models like Cahoot’s fulfillment network are designed from the ground up to save customers more. In our experience, 9 out of 10 ShipBob customers see savings when they switch to Cahoot.

  • Customer Service Can be Inconsistent

    As this article explains, ShipBob customers have complained about times when they’ve found it difficult to get hold of someone from the company to fix their issues. Walmart does not hold 3PLs accountable for issues with deliveries, it holds you, the merchant, directly responsible.

  • Offering TwoDay Delivery: Flexport (Deliverr)

    Pros of Using Flexport (Deliverr)

    Pros:
  • Automatic Eligibility For TwoDay Delivery

    As one of Walmart’s official providers, you get instant access to TwoDay delivery.

  • Nationwide Network of Warehouses

    With over 80 Warehouses, Flexport’s DTC offering (formerly Deliverr) has the scale required to support nationwide 2 day delivery.

  • Cons of Using Flexport (Deliverr)

    Cons:
  • Expensive For Oversized Items

    Deliverr’s rates are not competitive for big and bulky or oversized items. If a lot of your SKUs are in this category, you might need to evaluate other options.

  • Uncertainty Around Service Due to Business Challenges

    Since the exit of Dave Clark from Flexport, the company has been facing significant challenges internally. With recent reports that the company plans to lay off as much as 20% of their workforce, prospective customers might be nervous about the ability of the company to keep up its service levels and customer experience.

  • “The real difference-maker for us with Cahoot was [that Cahoot works] across the board and that regardless of where a consumer is, they can get their product in two days. The Cahoot full-service solution simplifies our operations and upgrades our delivery experience at the same time.”

    ~ Cali’s Books (switched from Flexport to Cahoot)

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    Offering TwoDay Delivery: Your Own Warehouses

    Fulfillment Warehouse

    Pros of Using Your Own Warehouses

    Pros:
  • Full Autonomy Over Logistics

    You make the rules, you play by them! Having your own fulfillment operations frees you from having to rely on anyone else for fulfillment.

  • Centralized Inventory Management

    If you can manage your fulfillment for WFS, that allows you to scale the same for your other sales channels and online marketplaces. You don’t need to inbound inventory multiple times. It allows you to become leaner and manage your inventory much more efficiently.

  • Cons of Using Your Own Warehouses

    Cons:
  • Prohibitively Expensive

    With warehouse lease rates, worker wages and carrier GRIs all on the rise, it has rarely been more difficult to absorb the last-mile costs associated with making deliveries.

    A brand aiming to cover the continental US with 2 day shipping requires at least 4 strategically located warehouses (a strategically located warehouse is one that is close to a major population center of the US – such as the Northeast, Southern California, Chicago Midwest region and Texas). This can be a significant drain on your resources. Even for very large brands, the economics are proving hard to justify.

  • Can Consume Your Time and Energy

    When you bring fulfillment operations in-house, the complexity of running your own logistics can overtake your focus on the activities that actually matter – selling and taking care of your customers.

    Running your own fulfillment operations can leave you drowning in busy work and process management.

  • Offering TwoDay Delivery: Cahoot

    Pros of Working with Cahoot

    Pros:
  • Nationwide Warehouse Network

    Cahoot has one of the largest warehouse networks in the US. We have 100+ warehouses, rivaling Amazon’s 110 fulfillment centers. Other providers, including Walmart themselves and ShipBob do not have as many warehouses.

    Such a huge network offers certain advantages.

    The first is that we have warehouse locations that work for nearly any brand. Different brands see orders coming from different regions. Brands selling well-established, commodity-style products might see most of their orders come from the major population centers, such as the Northeast and Southern California. On the other hand, someone selling surfing gear might see most orders come in from Florida and California. Similarly, someone selling skiing and winter sports equipment might see most of their orders come from Colorado or Vermont.

    Whatever the geographic spread of your customer base, we’ve got warehouses that can deliver products to your customers in 1 or 2 days using economical ground shipping.

    The second is that our vast network allows us to scale to meet the requirements of extremely challenging programs, such as Amazon Seller Fulfilled Prime. What’s challenging for other providers isn’t for us.

  • Great Rates Across All SKUs

    While other providers may not have the best rates across all SKU sizes, we have competitive pricing for all types of items – small, fast-moving, big and bulky, long-tail and seasonal.

    While the likes of WFS and Flexport may become more expensive for oversized items, Cahoot offers competitive rates across the size spectrum. We also have a good track record of offering ShipBob customers meaningful savings on their current shipping fees.

    This ensures that you’ll keep fulfillment costs under control and get back more savings to focus on growing your business.

    “We onboarded with Cahoot at the beginning of Q4 with the single goal of reducing our 3PL costs. We have been happy to see considerable savings on SPD costs instantly. The team continue to work with us to ensure we distribute our inventory to the right locations across the US to reduce our SPD label costs. Rather than buying an app or a service, it feels like we have begun a great partnership with the Cahoot team who have a genuine interest in helping our business to succeed.”

    ~ QUICKPLAY Sport

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  • Centralized Inventory Management with Fulfillment Across All Channels

    With WFS, you’ll have to work with multiple partners to handle your fulfillment across different sales channels. Cahoot is out-of-the-box integrated with all leading online marketplaces and shopping cart platforms. We also support B2B replenishments. You can use Cahoot as a one-stop shop for fulfillment, ensuring that you can run lean on inventory and streamline your operations.

    Lastly, working with a partner like Cahoot cuts down the number of relationships you need to manage, freeing your team from process management and busy work. Working with a trusted full-service partner is also better than running your own fulfillment operations. You’ll reclaim time, resources and bandwidth to focus on activities that grow your brand, rather than get caught in the complexity of managing logistics.

  • Responsive personal support
  • Responsive, Personal Support

    When comparing providers like ShipBob, Flexport and Cahoot, the quality of customer support matters. There are many advantages to working with a partner rather than Walmart directly, because of their ability to handle fulfillment on other channels. But the key thing to remember is that Walmart holds brands directly responsible for any issues with shipping. And while fulfillment is crucial to business operations, things don’t always go as planned. That’s why it’s important to quickly get help when you need it. Cahoot’s US based team is always ready to offer assistance when you need it, ensuring minimal downtime for your business.

  • Cons of Working with Cahoot

    Cons:
  • Not the Best Fit for Those Just Starting Out

    cahoot offers the most benefits to merchants with some degree of traction, who are currently shipping at least 250 orders a month (roughly 10 packages a day).

    Once merchants cross the initial phase, we can help them scale operations with our powerful network and technology.

  • Conclusion

    Like with Amazon, offering free and fast shipping is critical to succeeding on the Walmart marketplace. Offering TwoDay and ThreeDay delivery has a number of advantages – including improving buy box win rates, rankings in search results and most importantly, conversion lift. Merchants have a number of options available to offer two and three day deliveries, including using Walmart Fulfillment Services, their inhouse logistics, ShipBob, Flexport or Cahoot. It’s important for merchants to identify partners with both a large warehouse network, as well as competitive rates across the size spectrum. It’s also important to look for providers that bring full-service capabilities beyond just the Walmart channel, so that sellers can cut down the number of providers they have to work with to manage their logistics. This has the added benefit of streamlining inventory management. Lastly, sellers should make sure to pick a fulfillment partner that offers reliable, responsive support. After all, you’re accountable to Walmart, not your 3PL!

    With the nation’s largest retailer now aggressively investing in ecommerce, it’s a perfect time for all sellers and brands to bring their products to Walmart. The key is doing so in a way that keeps complexity and costs low, while growing sales with free two and three day deliveries on every order.

    Frequently Asked Questions

    Can I charge customers a shipping fee with TwoDay Shipping?

    No, Sellers cannot charge shipping fees while using TwoDay Shipping.

    Do I need to apply TwoDay Shipping to all my products?

    No. Once approved for TwoDay Shipping, Walmart does not require sellers to apply it on all products.

    Does Two Day Shipping include weekends?

    No. Weekends and holidays are not included in Walmart TwoDay Shipping.

    Written By:

    Indy Pereira

    Indy Pereira

    Indy Pereira helps ecommerce brands optimize their shipping and fulfillment with Cahoot’s technology. With a background in both sales and people operations, she bridges customer needs with strategic solutions that drive growth. Indy works closely with merchants every day and brings real-world insight into what makes logistics efficient and scalable.

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