No matter where you listen, everyone who has to deliver goods from A to B can’t stop moaning: transports take much longer, agreed collection or delivery dates are not kept, deliveries are returned because of full warehouses, and the prices… well you know yourself…

Only very few believe that these issues will return to normal in the near future.

Most Amazon Vendors we know can also sing a song about this (a loud song, in chorus, in multiple voices).

Basically, Amazon suppliers can bring their products to Amazon fulfillment centers in two different ways: using WePay or TheyPay. These simple American word creations express who pays the delivery costs. With WePay it is Amazon, with TheyPay it is the supplier. Of course, with WePay Amazon also recovers the delivery costs from the vendor, more about that later.

But there is also a third way, Amazon calls it Vendor Flex. This is a small Amazon fulfillment center (FC) at the supplier’s site. The goods are sent directly from the manufacturer to the end customer, but in contrast to dropshipping, the vendor receives normal POs and Amazon takes care of the shipping to the end customer, just not from their own FCs but from the supplier’s warehouse.
This allows transport costs to be significantly reduced, since a complete delivery route, namely from the manufacturer to Amazon, is eliminated.

In the following, we explain the three paths in more detail.

 

TheyPay – the classic:

This is the most common and well-known way of moving goods from A to B.

Amazon places an order, the supplier ships its goods to the appropriate Amazon warehouse by freight forwarder or parcel service and pays the freight charges.

WePay – Amazon picks up:

In the WePay program, the supplier only notifies Amazon that the goods are ready for pickup, Amazon commissions a carrier to pick up the goods and bears the freight costs itself.

Now you will ask yourself – how, they bear the freight costs themselves? I don’t believe it!

And you are right. Of course, these costs are passed on to the supplier via a baking condition. However, the whole thing can still pay off, it always depends on the type of product and the associated logistical effort. 20 liter water canisters are more expensive to transport than SD memory cards.

Vendor-Flex – Amazon builds its warehouse with you:

With the Vendor Flex program, Amazon builds a mini-fulfillment center in your warehouse. This means that the complete technology is delivered by Amazon, including cardboard boxes and packing tape. The operation of the warehouse is organized by an Amazon employee at your location.

You as the supplier provide the space and support with personnel. The size of the space and the number of employees required are calculated in advance together with Amazon.

In the projects that we have accompanied as an agency, the calculation was always positive for both sides, the saving of the transport route to Amazon, the higher flexibility and the direct contact to the Amazon FC and the associated reduction of shortage claims and charge backs, clearly outweighed the expenses.

In the final stage, 80% of all orders went from the Vendor Flex warehouse and 20% from the normal Amazon FCs (for example, to cover weekend deliveries or peak demand).

However, we have also seen implementation fail at companies with a larger legacy. This was mainly due to demarcation and security issues; i.e., how can the warehouses be neatly separated, as well as compliance issues, for example, providing your own warehouse staff for Amazon FC could be interpreted as employee leasing.

 

Conclusion: Vendor Flex is a very good solution especially for suppliers who have logistically rather difficult products, but also requires a certain flexibility on the supplier side, which is not always given in larger groups.

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