The newest Amazon fulfillment service (Multi-Channel Fulfillment) will be available to all eligible US merchants starting January 31, 2023, after being in beta testing for almost a year.
MCF (Multi-Channel Fulfillment) will allow businesses to fulfill orders placed on multiple sales channels, including Amazon, their own website, and other third-party platforms.
What is Amazon MCF?
On the merchant side, the new service is called Amazon Multi-Channel Fulfillment (MCF), on the consumer side it’s called Buy with Prime (BWP).
Here’s the simple version of how it works for both parties:
- MCF allows merchants to use pooled inventory, stored in Amazon warehouses, to fulfill orders via channels outside of the Amazon platform (e.g., their own website). Multi-Channel Fulfillment is a subset of Amazon’s FBA program.
- BWP allows Amazon Prime members to take advantage of Prime benefits from online stores outside of the Amazon platform. They’ll be able to buy directly from a brand’s site, and still get the get quick and free shipping, simple checkout, and easy returns from Amazon’s logistics and fulfillment.
What are the Differences Between MCF and FBA?
Since the introduction of FBA (Fulfilled by Amazon) in 2006, Amazon has launched a variety of services to help sellers promote, sell, and fulfill their own products. These services include Fulfilled by Amazon (FBA), Amazon Seller Fulfilled Prime (SFP), and Amazon Fulfilled by Merchant (FBM).
The primary difference between Amazon MCF and FBA is that the Amazon MCF program allows sellers to sell their product on non-Amazon marketplaces, primarily through their own websites, but still be fulfilled by an Amazon warehouse. On the flip side, Amazon FBA only fulfills orders from the Amazon marketplace (i.e., Amazon.com).
In 2022, Amazon reported that they have 2 million active Amazon sellers using these services. After almost a year of beta testing MCF, the platform reported BWP has increased shopper conversion by 25% on average.
With so many options to choose from, it may be hard for sellers to understand which Amazon service is right for their brand. Here is how to differentiate these various services:
How Does Amazon MCF Work?
Amazon’s Multi-Channel Fulfillment service works by fulfilling orders from multiple places online from one pool of inventory, stored in Amazon’s warehouses.
When a customer places an order for a product online (on your site, or another site where your products are listed with the Buy with Prime badge) Amazon’s logistics will kick in to get that product to the customers.
- Your products are stored in Amazon fulfillment centers.
- Amazon receives the orders in their warehouses.
- Amazon proceeds to pick, pack, and ship the order to the customer.
Benefits of Amazon MCF
The main advantage of using Amazon Multi-Channel Fulfillment is that it allows businesses to leverage Amazon’s extensive fulfillment network, which can improve the speed and reliability of their order fulfillment. This can be particularly beneficial for businesses that experience high levels of demand, as it can help them to ensure that orders are fulfilled promptly and efficiently.
For brands already selling on Amazon’s platform, using MCF might help brands save time and reduce the complexity of their fulfillment operations. With this service, businesses can manage all their fulfillment needs from a single platform, which can simplify their operations and make them more efficient.
For small to medium-sized sellers, Amazon MCF can offer sellers cost savings on their fulfillment and shipping. Amazon leverages their massive logistics infrastructure to compete with the large shipping carriers, including FedEx, UPS, and USPS, driving down shipping costs and providing an alternative to brands.
Disadvantages of Amazon MCF
Amazon Multi-Channel Fulfillment might not be as cost-efficient as working with a 3PL or other fulfillment provider, especially for sellers with larger volume. Amazon’s storage fees change often, picking, packing, and shipping fees are unpredictable—basically the costs can add up quickly. For merchants new to Amazon fulfillment services, these fees might come as a surprise.
At the beginning of this year, prior to the public launch of MCF Amazon has already increased their MCF pricing by 10-15%.
There are eligibility requirements for businesses wanting to use MCF. Businesses may be required to meet minimum inventory levels in Amazon’s fulfillment centers. This can be challenging for businesses that are just starting out or that have limited resources. Also, sellers lose flexibility by placing a large portion or all their inventory in Amazon’s control. Brands might be subjected to having their inventory moved without any notice. Having very little or no access to your inventory may pose a big challenge for some sellers.
One of the most frequent complaints of Amazon merchants is a lack of customer service. Amazon lays out the rules and criteria for their fulfillment services very clearly, but they provide very little support if merchants need anything else. There is no account representative to help you troubleshoot if any issues arise.
Plus, there is no customization with Amazon fulfillment. Merchants cannot add inserts or branded packaging. For a brand looking to make an impression on their customer, this may be a big deterrent.
Consumer Challenges of Buy With Prime
Not only will merchants face some disadvantages to using MCF, customers may also face challenges with this new service. Here are a few:
- More clicks to purchase. Consumers will have to sign into Amazon and also agree to Amaozn’s privacy and security policies. These are additional pages to the usual checkout process.
- Poor user experience. By adding yet another way consumers can interact with your brand, you may be diluting the pool of options. Customers may be confused by the Buy with Prime before it becomes a customary process.
- Standardized packaging. All products will be fulfilled by Amazon which means they will have Amazon branded packaging. This standardization leaves little room for branding and also more room for potential damages to products.
- No branded customer communication. Since Amazon will be sending out email notifications of order confirmation and shipping details, there will be less room for brands to collect consumers in their own marketing and communications.
- Unclear returns process. If the brand isn’t in high communication with the customer, it may not be clear how to initiate a return. For smaller brands handling returns might be a new and overwhelming endeavor.
Bottom Line
Overall, Amazon Multi-Channel Fulfillment can be a useful tool for businesses that want to improve the efficiency and reliability of their fulfillment operations. However, it is important for businesses to carefully consider the potential costs and requirements associated with the service before deciding whether it is right for them.
If you’re looking for a 3PL who can help support your Amazon business, check out DCL Logistics’ Amazon fulfillment services page or contact us. We look forward to hearing from you! If you are already working with DCL Logistics, contact your account manager to inquire if this the new Amazon MCF service is right for your business.
Tags: Omnichannel Fulfillment, Online Marketplace
