3PL Cheaper or same cost as Amazon

Most of my customers are east of the Mississippi, so I have a less complex logistics problem than many other sellers.

There just has to be a 3PL that undercuts amazon’s fulfillment fees, and does a better job of triaging returns. I am sick of a customer claiming “ordered in error”, returning an empty container, and Amazon classifying the returned item as “defective”, so I am out the money and the product, AND paid fees associated with the return and the disposal.

Can anyone name one that is reasonable?

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We are not a viable business for FBM but early on (a few years ago), my biz partner did put his feelers out into his vast logistics network.

Nobody could touch Amazon’s $3.86 per unit (pick / pack / packing materials / freight / labor) with a ten foot pole. Not even close. Best we found was 2X Amazon.

This is why Amazon is so successful with FBA. They lose money doing it BTW. It’s the cost of doing business. FBA fees don’t become a profit center for Amazon until the order contains at least 3 items. That’s one of the reasons why we try to order 1 thing at a time in this house. LOL

The real money is made off of PPC / referral fees at Amazon when it comes to the retail portion of their biz model.

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No one else can match Amazon’s current transportation costs.

FEDEX probably comes closest. Get a quote from their fulfillment operation in Memphis but I am not optimistic.

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I think the bulk of Amazon’s money comes from aws if I’m not mistaken

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Yes, that’s the biggest part of it but there is overhead and a lot of people associated with that.

In Q4 2023 - PPC accounted for $14.65B. What overhead is associated with that? It’s just a set of programs / algorithms that get tweaked now and then.

$ gets sucked out of their selling “Partners” pockets and goes right to their bottom line.

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It sure can go into their bottom. I hope it hurts.

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You may be able to find a 3PL that will undercut some of their fees but they will get you somewhere else. What I mean is I’ve gotten quotes with lower pick, pack ship fees, but charge significantly more for storage fees, check in fees for inbound shipments, etc. Many will also have fairly significant setup fees per SKU just to get started with them. You really have to do a deep dive into their total cost, not just the numbers they throw out to get you interested.

After that, remember that you (not the 3PL) are responsible for late shipments, lost shipments, INR claims and everything else that will destroy your metrics. At least with FBA, you don’t take the metrics hits.

Good Luck,

TJB

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