Fulfillment by Amazon (FBA) – the newest 3PL on the block

Amazon has today announced that its shipment and logistics service, Fulfillment by Amazon (FBA) is now available to Australian businesses.

The American e-commerce giant launched its Fulfillment by Amazon (FBA) service, allowing Australian companies to store products at its 24,000-square-metre warehouse in the south-east Melbourne suburb of Dandenong South,  and have their orders picked, packed and shipped by Amazon.

The head of FBA in Australia, Amit Mahto, says the newly-available service will benefit businesses of all sizes.

“Size doesn’t matter in the digital economy and Amazon Marketplace helps to level the playing field when it comes to starting or growing a business.”

The pay-as-you-go service charges sellers for storage space as well as for the cost of processing the orders that Amazon fulfills.

Amazon storage fees are based on the space (cubic meter) the inventory occupies within the order fulfillment center – interestingly the charge during peak season (October to December) is approximately 50% more per cubic metre than it costs outside of these period.

Whilst the per unit order fulfillment fee includes picking, packing, shipping (the cost of freight) and the costs associated with customer service and processing product returns.

By comparison, a traditional 3PL will typically charge for storage in a similar manner but its order fulfillment fees tend to be based on a combination of fixed and variable costs e.g, a  fixed minimum cost per order to process plus a variable cost per unit picked, The shipping or freight costs are also normally either a fixed minimum cost or a cost per kg once the minimum cost has been exceeded.

Australian businesses also pay a monthly fee to sell their products on Amazon. Amazon also takes a cut of the total sales value – their commission fee varies depending on the product category.

** Please note Amazon Prime is not yet available in Australia but is scheduled to be launched in the middle of 2018 **

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