Direct shipping, unlike drop shipping, bypasses standard distribution channels. Essentially, the product owner or business sends products directly to the consumer sans any wholesaler or retailer having to deliver the goods.
This service can be a boon for consumers as they are able to potentially receive an unlimited number of freebies directly to their door, giving them the chance to try out a variety of new products they may never have come across without this service.
But how does direct shipping help the sellers?
In this guide we’ll explore everything you need to know about Amazon Direct Shipping, including how it works, why your business should consider taking up this practice, and common Amazon seller mistakes to avoid. Read on.
Amazon Shipping 101
Amazon has more than 1.5 million active sellers located around the globe and over 100 million consumers worldwide.1 With that wide of a reach, sellers are right to be wary of how shipping cost could eat into their bottom line.
These sellers would be remiss to rely on shipping their own products overseas to U.S. consumers—packages could take weeks to deliver, and the delivery fee would be astronomical.
Sellers have a few options when it comes to shipping their products:2
Understanding Fulfillment by Amazon
Around the world, Amazon boasts more than 150 million square feet of storage space. Independent sellers who sign up for Amazon’s Fulfillment By Amazon (FBA) service get access to these shelves in addition to Amazon’s customer service, returns, and automatic Prime eligibility.
Sellers who use FBA can act like a big corporation without having to take on the cost responsibility of a big corporation. As Entrepreneur writes:3
There are a number of different ways to leverage the FBA model, but the most popular way is private labeling. The idea is to establish a brand or label, apply it to your product and sell it on Amazon … If you take the time to find a popular product category, do competitive analysis, study product reviews and identify a product that you can improve upon or sell at a better price, you’ll have found the sweet spot.
Key Details of FBA
On the fence about Amazon FBA? Here are some stats about :2
Merchant-Fulfilled Orders
The alternative to FBA is choosing merchant-fulfilled orders. This simply means you are storing and shipping your products yourself.
Here’s how it works:
Depending on the size and scale of your business and what products you specialize in, the merchant-fulfilled or the FBA model may better suit your company’s goals.
If you choose the FBA model you’ll want to be able to cover the cost of the service with revenue to make it worth your whale.
What is Amazon Direct Shipping?
Amazon Direct Shipping exists because of FBA.
Remember those different fees associated with the FBA service? That long-term storage fee can be a real thorn in the side of independent sellers, especially when they have a product that isn’t selling well or fast enough.
If a business’ items are stored in an Amazon warehouse for a certain amount of time, the long term storage fee will kick in. According to Amazon:4
Inventory that has been in a fulfillment center for more than 365 days is charged monthly long-term storage fee in addition to the monthly inventory storage fee[…]Inventory that has been in a fulfillment center for more than 365 days will be charged a monthly long-term storage fee of $6.90 per cubic foot or $0.15 per unit, whichever is greater.
Those monthly plus long-term storage fees add up quickly, meaning sellers will want to clear out their inventory ASAP before they hit this critical point.
Using Amazon Direct Shipping, sellers can get this unsold, increasingly-expensive-to-store inventory out of the warehouse and into the hands of customers that have signed up to receive direct shipping freebies.
How Does Amazon Direct Shipping Work?
Although Amazon the brand isn’t involved in direct shipping, Amazon warehouses are. Freebies are shipped directly from Amazon’s fulfillment centers to consumers who have signed up for the direct shipping service.
You may be wondering, Why do the fulfillment centers participate? Because sellers have already paid for FBA services, Amazon is still responsible for shipping their stored products. In order to fulfill direct shipping requests, the seller just has to let Amazon know about free orders and where to ship them.
Sellers will typically try to hold off as long as possible before unloading their inventory in case they see an uptick in sales, therefore eliminating the need to send out free items.
How Do Consumers Sign up for Direct Shipping?
So who is receiving this extra inventory? Savvy shoppers in the know who have done their due diligence and researched which sellers offer direct shipping services.
Because Amazon Direct Shipping is not actually affiliated with Amazon, consumers cannot just pop onto their Prime account and fill out a form.
To find which sellers offer freebies, they’ll need to investigate the following online sources:5
Once a consumer has found what they believe to be a legitimate site, they’ll fill out a Direct Ship form that asks for name, address, email, and phone number.
Why Should Businesses Use Amazon Direct Shipping?
If a business chooses to use the Fulfillment by Amazon service, they’ll need to consider whether they also want to use Amazon Direct Shipping.
When making any business decision, a seller will want to understand what the consumer experience is like.
If the experience of Amazon Direct Shipping is overwhelmingly positive for those who receive free items, then chances are it could increase vendor-to-shopper engagement and also help a small business build a new audience.
Pros of Amazon Direct Shipping for consumers include:5
The greatest benefit for sellers who use Amazon Direct Ship is that they are able to connect with a variety of consumers who may have never discovered their product otherwise. The hope is that they would receive a freebie they loved, then log on to Amazon and purchase more items from this brand.
As exciting as Amazon Direct Shipping is for customers, there are some cons to consider:
If you choose to use Amazon Direct Shipping instead of paying a long-term FBA fee, you’ll want to stay on top of the sites listed above, making sure your company’s name is not associated with any illegal activity or negative word-of-mouth.
Master Amazon Direct Shipping, Advertising, and More with Power Digital Marketing
Standing out on Amazon as an independent seller is no easy feat. Competition is fierce (hello, Jeff Bezos-produced goods and services) and sellers must remain constantly vigilant in order to keep up with Amazon’s ever-changing algorithms.
If you’re new to Amazon marketplace or want to improve your status within the system, it may be in your best interest to hire a professional Amazon marketing management team to streamline your ecommerce offerings.
Power Digital Marketing possesses a fundamental understanding of how Amazon operates and can help you expand your brand by reaching new customers and creating loyal fans, all while getting you more for your money.6
The PDM team can help your business better understand the pros and cons of Amazon services like Amazon moments or getting you familiar with what is Prime wardrobe to help you make the best decisions for your company.
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