So you’re almost done with the manufacturing process, and you’re ready to import your goods. Congratulations! Getting to this stage represents a huge amount of time, patience, energy, and money, and you are to be commended for that.
Do you need prep services?
If you just said “Hm, what’s a prep service?”, then yes, you do.
If you are an FBA seller, you are probably already aware of Amazon’s very specific way of receiving goods. Pallets must be of certain measurements, proper barcodes must be in the proper places, etc. And if you are not yet an FBA seller, but you want to be, you really need to be aware of how stringent their requirements are. It happens all the time: some well-meaning seller sends in a pallet of goods that are not receivable in Amazon’s warehouse, and next thing you know the whole shipment is sidelined. Then the domino effect of storage fees, the merchandise isn’t available for sale, and the shipment has to be taken back and the whole process started all over.
You really, really don’t want any part of that! So please, use a prep service. Now, how do you decide the best way to get your stuff prepped? There are basically 3 options:
- The factory in which you have the item manufactured, likely has prep services you can take advantage of. This is not always the most cost-effective option, but in many cases it is a sound option.
- Send your goods to a 3rd party prep service. The cost is often pennies on the dollar compared to prep work in the States, and once they are done prepping, it’s just a matter of routing it straight to the FC.
I recently worked with one client who realized an $1100 dollar difference on a single shipment. The original quote was going to be $1300, but by using a 3rd party service got it for them for $200!
- Have your prep services done in the States. Really there is nothing wrong with this approach, it’s just very expensive on average and should be thought of as more of a stop gap. A last resort. To put it in perspective, prep services tend to be about 6 times more expensive in US than they are in China, for example.
When I was at Amazon, I set up their prep service (option #2) contracts and SOPs, and this program is still in use by them today. So it must be working!
The overarching message is, once again, to know your “landed costs”. How much will it really cost you to get that product manufactured, imported, and on the shelves for sale? As I’m sure you’re already learning, there are a lot of hidden costs, and a lot of ways that you can really waste money if you’re not careful. Let’s say a product costs $6.00 to manufacture, all in. But then the fees to get that item to market start piling up. What are your import fees? What are your prep fees? If it costs $1.50 to prep and package each product, that is a totally different thing than $3.00-$4.00, right? Profits can be really slim on some products so you want to always be sure you are spending the right amount of money in the right areas, to protect these margins!
Need some help? I want to help you! Please let me know what you need, it can be confusing out there!