Amazon is the world’s largest online retailer, with a reported net income of $33.36bn in 2021.
Fulfilment by Amazon (FBA) was introduced in 2006, a move that created more opportunities for sellers and even more revenue for the company. FBA is a popular fulfilment service, but that doesn’t mean it’s the best choice for every business.
This article examines how your eCommerce business can compete with Amazon fulfilment.
We will look at some of the ways in which FBA puts independent retailers at a disadvantage, as well as strategies you can use to compete with—and indeed outperform—Amazon sellers.
Why you should run your store without FBA
Here are some of the major disadvantages of using FBA for your eCommerce store:
1. Restrictions on custom branding
Amazon imposes strict limitations on sellers when it comes to branding. While it is true that FBA gives merchants access to a global marketplace, it also essentially removes their brand identity and any trace of individuality from the equation.
Brands are overshadowed to the point that people often don’t even know who they are buying from.
2. Dependence on Amazon
Retailers that use FBA are completely dependent on Amazon’s rules and regulations, which change frequently and often without warning.
For example, in May 2021 sellers woke up to find that their maximum inventory capacity had been reduced, and further changes to fulfilment fees and storage limits were announced in February 2022. Sellers have no choice but to accept these changes or stop using the service.
3. Extreme competition
The sheer volume of sellers and products available on Amazon is mind-blowing, with 3700 new sellers reportedly joining the platform every day.
Due to low brand visibility, buyers frequently make decisions based purely on the price of an item, and this is where European sellers can lose out. They often cannot compete with sellers in Asia, who can offer similar products at a much lower price point.
4. No inventory control
Partnering with FBA means that your inventory is stored in one of Amazon’s fulfilment centres, which you do not have access to or control over.
In a practice known as ‘commingling’, Amazon groups products together by kind, which means that there is no guarantee that your customer will receive your products. They could just as easily receive a similar product from another seller, and you have no control over this aspect of the process.
5. Ever-increasing prices
In the last few months, FBA fees have gone up by an average of 5.2%. Monthly storage fees increased, as did removal and disposal order fees.
Overall, Amazon’s fulfilment costs have gone up by 20% in the past 18 months, and sellers can expect FBA fees to continue to rise each year.
How to run your own eCommerce store without FBA
Now that we’ve explored some of the disadvantages of using FBA, let’s look at some tips for running a successful eCommerce business without it:
Be an expert in your niche
As an independent retailer, you have the advantage of being able to position yourself as an expert in your niche. You can confidently market your product’s USP and tell your customers exactly why they should buy from you instead of your competitors.
Capitalise on your branding
Consumers are exposed to countless new brands every day via social media, and only those that stand out will succeed. With so many sellers offering similar products on Amazon, it can be hard to distinguish what sets one apart from its competitors. Their products are shipped in generic packaging and the individual retailers are usually invisible to the buyer.
Custom branding is a crucial factor in making your business instantly recognisable, and it helps you to build a base of loyal customers who are happy to spend a little extra for the high-quality items they know they’ll receive from you.
Packaging: Attention to detail and the unboxing experience
Packaging is incredibly important, from the colours and design to how it feels in the customer’s hands. High-quality packaging conveys a high-quality product, contributing to the customer’s overall perception of your brand.
Unboxing videos have become hugely popular on social media, but Amazon sellers are missing out on this trend because everything is shipped in the same plain brown boxes. You can leverage it to your advantage by using high-quality, custom branded packaging and including thoughtful details such as a handwritten ‘Thank You’ note.
Attention to detail ensures that the unboxing experience is enjoyable and memorable, and can result in organic growth for your business if the customer decides to share it on social media.
FBA prioritises efficiency and speed, and areas such as customer support (for end customers as well as sellers) are often seen as less important.
When you are in control of your own customer support, you can make sure that you are meeting — and exceeding — your customers’ expectations, building your reputation as a reliable, trustworthy business.
The rise of sustainable eCommerce is one of the most important trends of recent years, particularly since the start of the pandemic. Consumers want to know whether or not a company is doing their bit for the environment, and will often factor this into their purchasing decisions.
You can highlight your company’s sustainability commitment and eco-friendly practices on your website and social media, and even include a note about it in your packaging.
Your eCommerce business may be a small fish in a big pond, but you can still have the upper hand when it comes to providing an excellent experience for your customers.
When you partner up with an order fulfilment service like ParcelPlanet, it gives you the power to compete with giants like Amazon and establish your own distinct and effective eCommerce presence.
From custom branding and packaging to customer support and everything in between, ParcelPlanet gives you the platform to build a loyal customer base that will keep coming back to you because they know, like, and trust your brand.
Get in touch with us today to discuss all of your eCommerce fulfilment needs and give your business the competitive edge it needs and deserves.