Skip navigation

Optimising Your Supply Chain for Amazon: Strategies for Efficient Logistics

– Written by Tom Wicky, Co-Founder & CEO of MyFBAPrep

A thriving Amazon business requires agility, strategic insight, and strong management of the logistics that keep it afloat. Understanding and optimising your supply chain can substantially boost your business’s efficiency, profitability and growth potential.

Keep reading as we delve into strategies to help you streamline your logistics on the Amazon marketplace.

Amazon’s Supply Chain Requirements

Thanks to its mammoth presence in the eCommerce industry, Amazon has set the bar high for customers. The “Amazon Effect” has revolutionised the way consumers shop and what they expect in terms of delivery, product quality and overall shopping experience.

Amazon’s Fulfillment Centers

This is where the magic happens. When you ship your products to Amazon, they’re stored in dedicated fulfillment centres. How you prepare your shipments determines whether they enjoy smooth storage and delivery or face rejection from Amazon.

Inventory Management

On Amazon, efficient inventory management is non-negotiable. While overselling can lead to account penalties, understocking may lose you sales opportunities. Learning your inventory numbers, turnover rates and lead times is thus foundational to your optimisation journey.

The Challenges Amazon Sellers Face

Every marketplace has its unique challenges, and Amazon is no exception. For those who sell on the colossal platform, some of the most pressing issues relate to the ebb and flow of demand, inventory management and stringent shipping regulations. 

Fluctuating Demand and Seasonality

Sales on Amazon can be highly unpredictable. While some products might see a consistent demand throughout the year, others experience dramatic fluctuations based on seasons, holidays, global events, or even trends on social media. 

That unpredictability can add complexity to inventory management, cash flow and storage.

Solution

To help you weather the storm, you can: 

Inventory Storage Limits and Fees

FBA has specific rules about how much inventory sellers can store in its warehouses. If products don’t move quickly, Amazon may impose additional storage fees or even limit the quantity you can send in, which hurts your sales, especially during peak demand periods.

Solution

You can avoid these limitations and surcharges by:

Strict Shipment Requirements and Penalties

Amazon maintains stringent requirements for preparing and shipping products to their fulfillment centres. Non-compliance can result in delays, additional costs, or, in some cases, refusal of inventory. This may lead to stockouts and potential lost sales.

Solution

To ensure you meet these requirements consistently, it’s essential to: 

Strategies for Efficient Logistics

Efficient logistics is essential for Amazon sellers to thrive. It helps you fulfil orders promptly, improve customer satisfaction, reduce costs, and maximise profitability.

Below, we’ve outlined six strategies to promote efficient Amazon logistics.

1. Systematic Inventory Management

Today’s shoppers expect to be able to find the products they want, when they want them (and with minimal effort). By maintaining accurate, real-time inventory, you avoid disappointing customers and ensure you’re able to meet demand.

Your inventory balance also has a direct impact on your bottom line: Overstocking can tie up capital and increase storage costs, while understocking can lead to lost sales and damage to your brand reputation.

An accurate inventory status can also provide you with valuable insights into your sales trends and customer preferences. This information can help you make strategic decisions about everything from pricing and promotions to product development and marketing.

To manage your inventory effectively, consider using a third-party software solution that is designed to work with Amazon. These solutions can help you to automate many of the tasks involved in inventory management, such as order fulfillment and stock tracking.

It is also important to regularly reconcile your inventory to account for returns, damages, and other discrepancies. This will help you maintain accurate inventory records.

Finally, make sure to train your team on the importance of inventory management and provide them with the tools and resources they need to be successful. You should also create a culture where customer feedback is used to improve inventory management practices.

2. Cultivate Positive Supplier Relationships

Solid supplier partnerships lay a strong foundation for efficient logistics. Trustworthy suppliers offer preferential pricing, priority during high-demand periods, and flexibility with order modifications or cancellations.

To build and maintain positive supplier relationships, it’s important to engage with them regularly, even when you don’t place orders. Provide constructive feedback, both positive and negative, and recognise their efforts. Be transparent about your concerns and work together to find solutions.

Additionally, schedule regular quality checks, either in-person or via third-party inspection services; product quality and timely deliveries are essential for avoiding listing suspensions and negative reviews. Collaborate with your suppliers on delivery timelines to verify that both parties are aligned on expectations.

3. Optimise Packaging

The packaging you use for your products can have a big impact on their journey from the warehouse to the customer’s doorstep. Complying with Amazon’s packaging guidelines helps ensure faster inbound processing, reduce the risk of product damage, and improve the buyer experience.

Train your team on Amazon’s FBA product preparation guidelines and schedule periodic reviews to ensure compliance. You should also regularly evaluate your packaging processes to make sure they’re efficient and effective: Over-packaging increases costs and environmental concerns, while under-packaging can lead to product damage. So, it’s important to find a balance between the two.

Use eco-friendly, minimalist packaging that still provides adequate protection for your items. There are a number of sustainable materials available, such as recycled cardboard and compostable packing peanuts. You may also consider conducting drop tests to ensure your packaging can withstand the rigours of shipping and handling.

Here are some additional tips for optimizing packaging:

By following these tips, you can optimise your packaging to protect your shipments and improve the customer experience.

4. Efficient Shipment Planning

Effective shipment planning can drastically reduce costs and expand product availability. By shipping during off-peak hours or days, you can take advantage of faster processing times at Amazon’s fulfillment centres.

You can adopt a variety of tools and strategies to optimise your shipment planning. One is to analyse your past shipment data to identify quieter times so you can schedule your shipments accordingly. If possible, negotiate specific delivery slots with carriers as well.

Another approach is to leverage Amazon’s Partnered Carrier Program. This program offers discounted rates, reliable service and easier shipment creation within Amazon’s system. Before integrating their services into your logistics strategy, though, evaluate the cost and service efficiency of Partnered Carriers versus other options.

Here are some additional tips for efficient shipment planning:

With this knowledge, you can develop an efficient shipment strategy that’ll help you lower costs, improve product availability and provide a better customer experience.

5. Consider Multi-channel Fulfillment

Amazon is just one of many online sales channels. Although it corners a significant share of the market, depending solely on the platform can be risky. Diversifying your sales channels instead helps you increase sales and reduces channel-specific risks. 

So, explore other eCommerce platforms, such as Shopify, WooCommerce and eBay. You can also sell on your own website if you aren’t already.

Once you’ve selected your sales channels, you need to adjust your fulfillment strategy accordingly, as each platform has unique requirements for fulfillment. For example, some may require you to ship orders within a certain time frame.

Amazon Multi-Channel Fulfillment (MCF) can be a convenient option for fulfilling orders on other platforms. However, it’s important to weigh the program’s benefits and drawbacks before making a decision. MCF can be a cost-effective solution, especially if you have a high volume of orders. However, it may not be the best option for those who sell high-value or fragile items or who want to control their branding and customer experience.

If you’re considering using MCF, be sure to assess the fees associated with the program and compare them against other third-party logistics providers. You should also estimate the impact on your brand presentation and customer experience.

6. Use Prep Centers to Streamline Logistics

Amazon prep centres are a great way to streamline your logistics, especially if you sell on multiple platforms or at high volumes. They handle all of the tasks involved in preparing your products for shipment, including labelling, packaging and shipping. This frees up some time so you can focus on other aspects of your business.

When choosing a prep centre, consider the following factors:

Once you’ve selected a prep service, you can begin sending them your products. They’ll prepare your items for shipment according to your instructions. Then, you can ship your prepared products to the dedicated Amazon fulfillment centre of your choosing.

Future-Proof Your Supply Chain

When selling on Amazon, the efficiency of your supply chain is a defining factor in your brand’s credibility, customer satisfaction, and overall profitability. From the moment a product is sourced until it reaches your customer’s hands, every step has an impact — and an associated cost.

An optimised supply chain streamlines this journey, ensuring consistency, reliability and excellence. It smoothly guides sellers through the complexities of fluctuating demands, stringent Amazon standards, and constantly evolving consumer expectations.

If you haven’t evaluated your current logistics strategy recently, pencil it in your schedule. Analyse each stage, identify potential bottlenecks and find entry points to integrate the strategies discussed in this post to build a well-oiled process.

About the Author

Tom Wicky, Co-Founder / CEO of MyFBAPrep

Tom is an entrepreneur, startup advisor, and management consultant with over 20 years of senior management experience. He is the Co-Founder and CEO of MyFBAPrep, the largest worldwide 3PL eCommerce warehouse network. He managed the digital assets of local media companies across Europe as part of a $2 billion private equity investment led by Macquarie Bank.

At the beginning of the Amazon FBA Marketplace, Tom built a data automation platform used to programmatically generate, manage and optimise over 1 million product listings on Amazon. He is a Boston sports fanatic and a recovering hot sauce junkie. Tom speaks Spanish and German and lives in Florida with his wife and three children.