It’s 12:49 PM on a sunny Friday afternoon. Checking your phone’s weather app, 76 degrees and clearreads on the screen. You’re readying to slay your weekend outdoor ventures.
Hang on a second. The FedEx truck conveying your most recent order from your supplier is drawing close to your front door. The driver wheels up six boxes, 40 pounds each and full of product. Estimating, it looks like about 300 items, total. The order from your supplier has arrived just when things are about to pop off.
Except they won’t. Your Seller Central account admonishes in no uncertain terms that your sales have been lacking; sales have been down because of a lack of inventory. So you’ll be spending the weekend unboxing, separating, bagging, labeling, and re-boxing all these items. Your Dymo is ready to go with a fresh, full label roll. The polybags are laid out. Inventory Lab is locked and ready to rock. It all sounds like a great time, and to many, it is, but those waves aren’t going to carve themselves. You can’t help but wonder if there’s a more efficient way to do this.
Prep centers to the rescue. Dispersed across the country (and globe if you’re an international seller), prep centers shoulder this burden for you. For a nominal fee–most often per item–a prep center will receive your wares, unbox them, inspect for damages, prep, pack, bundle, and ship it all off without you needing to lift a finger.
So you’re interested in this concept of offloading the grunt work to someone else. How do you go about finding a prep center in the first place andhow do you know if they’re any good?
I use a prep center for the majority of the wares I sell from my Amazon business and have seen more than a handful of folks ask these questions. This post will break down what I look for in a prep center, the kinds of things I’ve found to be most important when choosing between multiple centers, and a few optional considerations that may be worth taking a look at in some scenarios.
The Mental Checkpoint
So you’re on board with the notion of offloading your product prep to a third party. Awesome! Making that decision is a big one. When we first start on our Amazon selling journey, it’s incredibly common for sellers to self-prep or to contract the job out to ~child labor~ their children for a nominal allowance. Maybe you have a friend or a partner that’s willing to help. We take advantage of this for as long as we can but at some point, what started as a cost-saving measure turned into a time suck.
The hardest part of all this is coming to terms with the idea that we need to trade our money for our time, whereas we were initially selling our time in exchange for money saved. At some point, time becomes more valuable than money. For each person, this threshold will be different. I don’t want to say it’ll never come, because the opportunity is always there and will become ever more present in the form of life getting in the way or there is magically no more room in the garage/basement/rooftop deck/dungeon.
How to choose a prep center
Acknowledging you have a problem is the first step, but a big one. Now that we have that out of the way, it’s time to walk the road to the recovery of our time and sanity. I’ve broken down what I find to be most important when selecting a prep center and in a specific order. I’ve sorted these qualifiers based on how they can potentially impact you and your business and their effect on getting products up to The Mothership(Amazon warehouses) quickly.
Decide on a location
Location is in the vast majority of cases the most important criteria. The geographical area in which the prep center resides controls several factors:
- How quickly the product can get into the prep center’s hand from your supplier(s).
- How quickly the product can get into Amazon’s hands from the prep center
- Costs for shipping in both legs
- In some cases, the total cost of the prep services themselves.
The first two items on this list might not seem like they matter too much, but when a shipment maybe already takes several days to over a week to be shipped from your supplier to you, the object is to cut that down as much as possible. When evaluating prep centers, consider their location within the country. If all your suppliers or sources of a product are on the east coast, an east coast prep center is an obvious first choice. If the prep center and supplier are within the same general geographical region (west coast, midwest, east coast), shipping times can drop to 1-3 business days at the most. If the journey is strictly north-south (ex: Atlanta, to Jersey City), that’s a quick two business day delivery window.
When conversing with your prep center, find out where the majority of the shipments end up going, especially if for those that have at least two dozen of the same SKU. Loads of that configuration tend to go to one singular fulfillment center and see redistribution from there, even without inventory placement active; this is number two on the list. If the warehouse is nearby, the potential to cut total transit time down is immense.
Using a real-world example of my own: I have a supplier in Georgia. If I had them send the product to me directly in Seattle, WA, it would take 5-7 business days to travel the roughly 2,600 miles. From there, I would 98/100 times have to send it to a warehouse in Northern California, another 3-to-4-business day, 800-mile journey. In transit time alone, I’d expect to lose 8-11 business days (over two full calendar weekson the long end) just in shipping. If I get my product on a Friday and don’t have it ready until the following Monday, I’ve lost even more time.
Instead, I can have my product sent up the coast to a prep center I contract within New Jersey. The shipping time for that leg is two business days and under 800 miles, and the most common warehouse to which my product is sent is an houraway over the road. That’s a dramatic difference.
Because the journeys are shorter in both time and distance, the shipping costs are much less, too–item number three on the list. Considering prep center placement as it relates to the overall Amazon fulfillment center network, it’s not uncommon to cut total shipping charges in half on bothsides. I’ve sent 100 lbs of product from the prep center to the Amazon warehouse for less than $10. Amazon’s partnered carrier discounts are already crazy; a short trip makes shipments to Amazon mind numbingly inexpensive. Your mileage will vary (pun intended), but you’d be hard pressed not to see monetary gains from a prep center existing closer to your suppliers than yourself.
Number four on the list is a bit more nuanced. We’re talking about sales tax. Every state handles sales taxes differently (except Alaska, Delaware, Montana, New Hampshire, and Oregon; these are tax-free states). Most states have some taxation structure for services, but they’re not all equal. To be on the safe side, factor the state’s sales tax into the cost of services provided.
You have a few prep centers in mind in regions that make the most sense. Excellent. Now we need to think about their workflows. It’s imperative that you get a complete picture of how they prefer to handle your product. Some have proprietary systems in place that require your input; some use Supply Chain Connect and email; some use neither. Get an idea of how your workflow would have to change to accommodate theirs. There’s no one right answer here, as everyone’s workflow is different. I have a soft spot for prep centers that use Supply Chain Connect because it allows me to share created FBA shipments with them, and that’s all to which they have access. The prep center can create the labels and ship off the product without any intervention on my part.
One bit of caution: no prep center should need access to your entire Seller Central account. You can grant secondary users limited access, but never be okay with a request to have the whole enchilada. With options like the Marketplace Web Services API (how many tools integrate with your Seller Central account), Supply Chain Connect, and categorical permissions structures for secondary users, there’s little need for full access.
How long a prep center needs to process your shipment is critical. We’ve spent effort in finding a location that reduced complexity and time in the logistics chain, but if they take two weeks to process, we’re practically at a net loss.
Aim for a turnaround time of three business days. If larger orders take longer and smaller orders less, that’s fine, so long as the median doesn’t drift any farther away. A prep center that needs a significant amount of time to process any order, regardless of the size, is a prep center that’s overloaded and prone to mistakes.
If an option to rush the order is present, only consider it if said rush turns your three-day turnaround into 24 hours. With a reduction like that, it may be worth factoring that cost into your COGS, depending on the order size.
After working the first three considerations out, you probably have a good idea of what the level and style of communication is like with the facility. Quick responses via email or callbacks via phone are a good sign. If you’ve requested information and it took two weeks for an initial response, your business isn’t significant enough to them. We’re firmly in a traditional sales scenario, now. They’ve been leaving an impression on you. Evaluate it soundly; this will set the tone for the entire relationship. The last thing you need is an order to arrive at an Amazon fulfillment center with issues and be left with unresponsive points of contact at the prep center.
I left cost for last because prices are so variable and have outside influences that we can’t control. Plus, the cheapest solution isn’t always the best, either. The prep center that can process your 1,000 units per week but only charges a fraction of the competition is a massive red flag. Saving this for last means you’re able to take all the information and experience you’ve collected and decide if it’s worth the per-unit price.
Though we’ve kept this until the end, costs have their nuances worth considering, too. Some prep centers will price out the cost to prep an item based exclusively on what it needs. Center A could charge $.30 for the label, $.50 for the polybag, and $.20 to pack it, for a total of $1.00 per item, whereas center B could charge a flat $1.25 regardless of what it needs doing. Center A might make more sense except for perhaps bubble wrap costs extra by the foot, and now that item costs $2.00 to prep because it’s on the larger end of the scale. I’ll touch a bit on a consideration that might make this a non-issue in the next section.
Another significant consideration with regards to cost is whether there’s a monthly service fee. I’d put any prep center that requires a service fee–like a retainer of sorts–to have an account with them, before any product is ever sent, on the bottom half of my list. If their justification is that it’s for setup, ask what that means. “Putting you in the system” shouldn’t cost money. If it does, this could be an indicator their systems are involved (and perhaps overly so). If the fee is monthly, considering all the other factors we’ve discussed is super important. If there’s a monthly fee, but they turn around quick, it might be worth it.
A couple of extra considerations come to mind that may be useful in your discussions with prep centers.
- Have multiple prep centers that cover their specific region only: This is super helpful in ~building your logistics empire~ squeezing out more efficiencies in your ordering and shipping process. Suppliers on the west coast send to a west coast prep center and east coast and east coast prep center. You get it.
- Utilize the prep center for cross-docking: Let us not forget that Amazon does prep, too. In cases where the entire journey for the product is short, it might make more sense to have the prep center act as a cross-dock provider. The center would receive the shipment, possibly repack, and ship the product back out to an Amazon warehouse. If you’re co-mingling or the product only needs labels andthe prep center charges a flat fee for cross-docking, this might make more sense.
- Ship directly to Amazon: If your supplier supports this and you trust the effort the supplier puts into shipping the product, sending directly to Amazon could save money and time as well. If the supplier is close to an Amazon warehouse that would receive the goods, this could cut as much as a week off the total transit time, too. Some suppliers charge a fee for this, so work that into your COGS to decide if it makes financial sense to trade in a bit more money for more time.
If I had to wrap this all up into one sentence, this is what I’d say: find a responsive prep center positioned close to your supplier(s) that makes sense from a cost perspective. By freeing yourself to chase more profits or have extra time to spend with family and friends, you’re doing yourself a favor now and support for your sanity later.
Afterthought: I’ve tried to cover everything I could think of when I was choosing my prep centers and if I was going to decide again. I’m sure others have come across different hurdles while in their travels, and if so, I’d love to hear about them for a future update to this post. Drop a comment below or shoot me an email.Last Updated: February, 7th, 2021 at 07:19 pm UTC