Most Amazon Vendors manage their supply chains on Amazon using the standard process. Simply put, this process looks as follows:
- Amazon places a Purchase Order (PO) with the Vendor
- The Vendor confirms the quantities of the PO
- The Vendor creates an ASN for delivery to an Amazon fulfillment center
- The Vendor ships the order
- Amazon receives the order and books the inventory into the system
In this case, Amazon ships the goods to the end customer upon order.
Another supply chain solution for Amazon Vendors is the Dropshipping program "Direct Fulfillment".
Similar to FBM orders in Seller Central, a Vendor can ship directly to the end customer through the Dropshipping program without having to deliver the goods to an Amazon warehouse first.
The process is simplified as follows:
- The customer orders a product offered by the Vendor on Amazon
- The Vendor receives the order via Vendor Central
- The Vendor ships the order with Amazon's carrier service
- The order is delivered directly to the customer
Direct Fulfillment Process
To use the Dropshipping program as a Vendor, a Vendor must register with Amazon. You can open a case via "Contact Us". You will then receive an email with a link through which you can complete the registration process. The following data is required:
- Company information (business address, contact details, etc.)
- Financial data (bank account, tax ID, payee address)
- Warehouse information (warehouse address, contact details, business hours, order deadlines, pickup times, holiday schedules)
Inventory Management
You can manage the inventory for your products in a single tab (Items – Direct Fulfillment Inventory) in Vendor Central.
The main difference between regular inventory management and direct fulfillment inventory management is that with regular management, you don't need to inform Amazon about the number of items in stock. With Direct Fulfillment, the Vendor must inform Amazon per ASIN how many items are still in stock.
Creating and Updating Inventory
If your catalog has not been created yet, do so by navigating to Items – Add Products. To create items, you need your Direct Fulfillment vendor code.
You update inventory via the Direct Fulfillment Inventory page. Here you can view all items and inventory levels. To update inventory, there are the following options:
- To manually update a single item, change the number in the Available column and click Save
- To manually update multiple products, select the desired products with a checkmark on the left side and click Download Inventory and save the CSV file to your PC.
Now update the inventory for your products in column G and then upload this CSV file again to Vendor Central (Upload Inventory).
- Alternatively, you can synchronize your inventory with Vendor Central using an EDI connection
If orders cannot be fulfilled, you should set the inventory levels to 0 to prevent further orders from being generated. ATTENTION: If you cannot fulfill orders, this can lead to compensation payments and a higher cancellation rate.
Order Management
For Direct Fulfillment, items must be packaged and picked. Labels must be used for these shipments, which are printed per order.
When a customer orders a product, this order is available in Vendor Central. To begin fulfilling the order, navigate to Orders – Direct Fulfillment Orders in Vendor Central.
Unshipped orders are displayed by default. You can additionally filter for shipped or cancelled orders in the left column. Your order will show the latest deadline (date and time) for shipping. Adhere to these specifications as best as possible. For effective order processing, several tasks must be performed:
- Change invoice number: To avoid problems with your accounting, you can change the invoice number.
- Change number of packages to deliver: If you are shipping large items in more than one box, you can change the number of packages
- Prepare shipment: The following steps must be performed:
- Print shipping label
- Pack securely and attach shipping label
- Wait for pickup by the carrier service
- Confirm delivery within 30 minutes after handover to the carrier service
Amazon automatically creates an invoice for an order marked as "shipped". The Vendor must review and submit this invoice before Amazon can process it. To do this, navigate to Payments – Direct Fulfillment Invoices.
Order management and invoice submission can also be linked to your system via EDI and API integration to automate the process.
Conclusion
The Dropshipping program in Vendor Central is an option for an additional supply chain solution with Amazon. The following advantages can result:
- The program can increase product selection. For example, for very large and complex products that repeatedly have problems with deliveries to Amazon warehouses.
- It represents a great alternative solution when your items are no longer available in Amazon fulfillment centers
- New products can be made available immediately
Of course, your logistics must be able to process B2C orders. We would be happy to advise you on further advantages and disadvantages in a joint conversation. You can book a phone appointment directly via the website.