Fulfillment by Amazon/Flipkart v/s Doing it Yourself - Pros and cons

Posted on March 18th, 2021
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Fulfillment by Amazon/Flipkart v/s Doing it Yourself - Pros and cons

Fulfillment is a vital component for every commerce entity. Essential and difficult at the same time. While a brand may choose managing the storing, managing inventory, packaging, shipping and delivery of orders by the company itself, as a ready made option they collaborate with online marketplaces such as Amazon and Flipkart who perform these tasks exceptionally. Both marketplace giants have massive investments in constructing warehouses and tying up with the top logistics and delivery service partners.


In fact, Fulfilment by Amazon (FBA) & Flipkart Advantage are the best known fulfilment services for sellers in India, with Amazon owning 175 fulfillment centres around the world and Flipkart and its 35 massive warehouses, only in India. Locally, Amazon has warehouses in Maharashtra, Karnataka, Tamil Nadu, New Delhi, Haryana, Gujarat, Rajasthan, Punjab, Telangana and West Benga and adding.


Doing-it-yourself naturally entails taking on the entire responsibility on oneself. But before we get into analysing the benefits and disadvantages of both options, here are more details about Amazon and Flipkart.


Choices with Amazon


You could opt for partial or complete fulfillment by Amazon India in this manner:


  1. Ship it yourself

In this scenario, you may purchase Amazon’s branded and high quality packaging, pack your products in it and utilise the courier services of your choice to ship to your customers.


  1. FBA

FBA stands for complete fulfillment by Amazon. As a seller, all you need to ensure is that your products reach the relevant Amazon warehouses and there is never any scarcity in supply. The company will pack your products, ship them to your buyers and keep track of your inventory and sale.


  1. Seller flex

Large scale production and companies with their own warehouses, may choose this option. In such a case, your products will be picked up from your warehouse by Amazon, packed and shipped to your customers.


  1. Easy ship

Likewise if you are new, have a smaller order fulfillment requirement or sell fresh, easily perishable products, you may pack your orders yourself and get them picked up by Amazon for delivery.


As an FBA seller with Amazon, you are eligible for Free Delivery and One Day Delivery. FBA is also adept at handling customer returns.


Choosing Flipkart


Flipkart completes fulfillment in 2 ways:


  1. Pick up product

Sellers are required to keep their products packed and ready for Flipkart to collect and ship.

  1. Flipkart Advantage

Similar to FBA, under Flipkart Advantage, sellers can stock their products at Flipkart’s warehouses. Once the order is placed, quality checks, packing and shipping will be Flipkart’s responsibility. One is eligible for Same Day Delivery and Next Day Delivery options, along with the 30-day return policy and order tracking capabilities.


Most marketplace fulfilment models have a tiered payment structure that can be scaled up or down according to the seller’s requirements. In a way, the battle between online retail giants is a battle of real estate, because the higher the number of conveniently located marketplace-owned warehouses, the better control it has over the flow of products.


Pros and Cons of Marketplace fulfillment


Pros


  • Better sales

Sellers listed on Amazon have a higher chance of securing orders owing to a massive amount of regular consumers. Your products get a wider exposure and can be more easily found via Google search. Once you become a priority seller, you also get access to special promotions and discounts which can have beneficial effects on your product rankings and subsequently, your sales.

  • Easily scalable

Since businesses are not required to have their own warehouse, they are free to scale their operations according to consumer demand or trends and alter their sale plans.


  • Global reach

As a brand that wishes to expand to international markets, RPA is a good option. It’s an easy and economical way to tap customers in other countries without setting up overseas production, marketing or distribution systems
.

  • Trust and credibility

It takes years for a brand to build trust in the market. Amazon and Flipkart make it easy for potential buyers to trust new brands and products. Positive customer reviews on these marketplaces can further boost your stance.

  • Support

Every online business needs a secure, robust and dependable ecommerce site. As a seller on Amazon or Flipkart, you are assured of this including exceptional technical support, in case there is some problem.


Cons


  • Highly competitive

There are thousands of sellers on the large marketplaces and emerging as a priority seller can be a problem. This creates a highly competitive environment for most sellers.


  • Costly

Since these leading marketplaces perform many functions on your behalf, they tend to charge a fee that may seem steep for some businesses. Also marketplace fees fluctuate according to season, locations, demand and such.

  • Volume restrictions

Most marketplaces pose certain restrictions when it comes to product packages. One cannot change the packaging or exceed a certain weight and size. This could prove to be a deterrent in customised sales.

  • Less control

You have literally no control over any part of the supply chain or delivery process, except the product itself.


Pros and Cons of Self fulfillment


Pros


  • Dedicated space

When a buyer sees your product on your website, you don’t have to worry about other brands, products and marketplaces distracting from your offering. It’s your space and there are no middlemen disrupting the one on one connection between you and your customer.

  • Full control

All aspects of logistics, inventory and delivery are in your jurisdiction. You may find the most economical path by combining various 3rd party companies as you have the freedom to do so.

  • Cost effectiveness

Starting off small is a good idea and self fulfillment may be more economical, especially in the test marketing stage.


  • Personalised packaging

Packaging plays an important role in making the right impression. As a self fulfillment company, you can customise the colours and material to depict your brand personality.


  • Positive word of mouth

Happy customers will talk about your brand and not the marketplace your products were bought off. This encourages brand recall and creates a long lasting identity.


Cons


  • Limited scalability

As a company that has invested according to market forecasts or estimated potential, you may not be able to scale operations to meet unexpected demands that easily. Scaling down or up could cost you extra.


  • Costly

Doing it yourself costs much more, especially if your numbers are high, in products and customers. Warehousing is an expensive matter, followed by maintenance and employee salaries.


  • Limited reach

If there are expansion plans on the horizon, setting up a network of warehouses, logistics partners, and delivery companies can get complicated and expensive. It involves travelling to locations, identifying people, striking good deals and maintaining relations.


Hence, fulfillment via established marketplaces or doing it yourself has its distinct advantages and disadvantages. Some self fulfillment companies choose a hybrid version while others take on complete responsibilities. Either way, there is no wrong or right way.


Your product, brand, investments, target market and growth plans can help you decide which fulfillment system is right for you.


Category:
Best Practices

Posted on:
March 18th, 2021