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Is Amazon’s Inventory Placement Service the Right Option for Sellers?

eCommerce Fulfilment Solutions
4 min read

In the fast-paced world of ecommerce, selecting the right fulfilment strategy is vital to ensuring efficient operations, timely deliveries, and happy customers. For sellers on Amazon, especially those using the Fulfilled by Amazon (FBA) programme, the Inventory Placement Service offers a streamlined way to manage warehousing and shipping. But is it the best choice for your business? Let’s examine how it stacks up against traditional logistics solutions, including 3PL warehousing and fulfilment services in the UK.

What is Amazon’s Inventory Placement Service?

Amazon’s Inventory Placement Service (IPS) enables sellers to send their products to a single Amazon fulfilment centre, rather than distributing stock across multiple locations, which is typically required by Amazon. After receiving the stock, Amazon redistributes it to other fulfilment centres as necessary.
This service simplifies logistics by consolidating shipments, but it comes with an additional fee. For sellers who prefer the convenience of shipping to a single destination, especially if they don’t have a 3PL warehouse management system in place, it might seem like an attractive option. However, there are pros and cons to consider.

Benefits of Amazon’s Inventory Placement Service

  1. Simplified Logistics: Sellers only need to ship their stock to one location, reducing the complexity of managing multiple deliveries to various Amazon fulfilment centres.
  2. Improved Inventory Tracking: Centralising stock in one place can make it easier to track inventory levels and manage operations, especially if you lack advanced 3PL warehouse solutions.
  3. Time Savings: Shipping to a single fulfilment centre saves time on packaging, labelling, and dealing with multiple carriers. For some businesses, this streamlined approach is a big advantage.
  4. Optimised for FBA: Amazon’s IPS is integrated with the Fulfilled by Amazon UK service, making it easier for sellers who rely on FBA for ecommerce fulfilment.

Downsides of Amazon’s Inventory Placement Service

  1. Additional Costs: While shipping to one location seems convenient, Amazon charges a fee for redistributing inventory across its network. For cost-conscious sellers, a traditional 3PL logistics warehouse or pick and pack warehouse solution could be more economical.
  2. Limited Control: Once your stock is with Amazon, you lose control over where it’s sent. If you’re used to working with a 3PL warehouse UK or warehouse picking and packing service, this might feel restrictive. 3PL fulfilment services usually give you more visibility and control over your stock.
  3. Complexities with Large Inventories: For sellers with a diverse range of products, the redistribution process could delay when items become available for sale. Sellers relying on platforms like TikTok global shipping or Shopify fulfilment might find these delays harmful to their business.
  4. Less Ideal for International Sellers: For international shipping, working with a 3PL UK service or a 4PL logistics provider might be more beneficial for managing global shipping regulations and customs. 4PL logistics services manage multiple layers of logistics (including warehouse pallet storage racks, labelling, and packaging) and may offer more comprehensive solutions than Amazon’s IPS.

When Should Sellers Consider 3PL Fulfilment Services?

For businesses operating outside of Amazon, 3PL warehousing or 4PL logistics services may be a better fit, particularly in the UK. These services provide more flexibility and control over your logistics processes. Here’s why using a 3PL warehouse management system or 4PL logistics companies could be beneficial:

  1. Customised Warehousing and Logistics: Whether you need a pallet storage system for bulk goods or specialised packaging boxes, 3PL providers offer tailored solutions to fit your business needs.
  2. End-to-End Control: From pick and pack services to custom packaging and labelling, working with a logistics company gives you full oversight of your supply chain. This is especially important for businesses that prioritise packaging design or need bespoke solutions like decent packaging for branding purposes.
  3. Cost Efficiency: Depending on your business size, 3PL logistics may offer more competitive pricing compared to Amazon’s fees. Working with a UK fulfilment service or 4PL logistics companies can also reduce costs related to warehousing, packaging, and delivery.
  4. Scalability: If your business is growing, partnering with a 3PL warehouse or 4PL fourth party logistics provider can be more flexible and scalable than using Amazon’s fulfilment system. Warehouse 3PL providers can easily accommodate increased demand without the extra costs Amazon charges for its Inventory Placement Service.

Conclusion

While Amazon’s Inventory Placement Service can be convenient for some sellers, it’s important to balance its benefits against alternative logistics options. For businesses that prioritise flexibility, control, and cost-efficiency, working with a 3PL logistics warehouse or a 4PL logistics provider in the UK could be a better choice.
Consider the unique needs of your business—whether it’s packaging UK, pick to pack services, or an advanced warehouse management system. If your business requires a more personalised approach to warehousing and ecommerce fulfilment, a 3PL or 4PL provider may offer the best long-term value.