Amazon MCF vs 3PL Fulillment is Cost-Effective: Detailed Guide

May 30, 2024 amazon mcf vs 3pl detailed comparison 2024

Have you ever considered outsourcing your e-commerce fulfillment? 

Chances are, if you’re an online seller, Amazon must have crossed your mind. 

Amazon MCF services are a popular option, leveraging their vast network to handle everything from storage to shipping for your products. 

But is MCF truly the best fit for your business? 

A critical decision looms: selecting the ideal solution for your fulfillment needs. While MCF offers convenience, it might not be the perfect fit for all.

3PL Fulillment companies are like fulfillment superheroes. They handle everything from storing your products safely to getting them into your customers’ hands quickly and, most importantly, at a reasonable expense.

We’ll explore the benefits and considerations of each approach, empowering you to make an informed decision for your business’s specific needs. 

As we dive deeper, we’ll discover how 3PL Fulillment providers like AMZ Prep can offer a flexible, cost-effective, and potentially more customized solution for your fulfillment needs.

Quick Guide

  1. Set your basics: Know Amazon MCF and 3PL Fulillment closely 
  2. Mighty MCF or Friendly 3PL, choose wisely!  
  3. Checklist for your choice: MCF or 3PL? 
  • Own your Inventory and control it
  • Flexibility in Shipping
  • Worried about profits??? Focus on cost!!
  • Know your Numbers
  • Seasonal demand management
  • Customized Packaging and upholding your brand
  • Securing your shopper’s data 
  • Product Restrictions
  1. Final Decision: MCF or 3PL

Set your basics: Know Amazon MCF and Amazon 3PL Fulillment closely 

Amazon Multi-channel Fulfillment (MCF)

What does MCF stand for?  

Multi-channel fulfillment is the answer. Continue reading to know more about it. 

Amazon’s MCF program offers a convenient solution for e-commerce businesses. Online sellers can leverage Amazon’s expansive network of fulfillment centers by storing their inventory within them. 

This simplifies order fulfillment as Amazon takes care of the entire process. Through MCF, Amazon takes responsibility for the entire fulfillment process, including picking and packing orders, shipping them to customers, and handling customer service inquiries and returns associated with those orders.

How does MCF work?

For e-commerce businesses that sell on multiple platforms, Amazon’s Multi-Channel Fulfillment (MCF) service offers a compelling solution.

It allows you to store your inventory within Amazon’s vast network of fulfillment centers. Whenever a customer places an order through any of your sales channels, be it your website, another online marketplace, or even a physical store (if applicable), MCF takes care of the entire fulfillment process. This entails selecting and packing each order, and then expeditiously shipping it to the customer’s specified address. By leveraging MCF, you benefit from Amazon’s well-established logistics network, ensuring reliable and efficient delivery. This frees up valuable resources within your business, allowing you to focus on other strategic initiatives.

What is the difference between Amazon FBA and MCF?

While Amazon’s Fulfillment by Amazon (FBA) program is well-known for handling orders placed directly on their website, Amazon also offers a service called Multi-Channel Fulfillment (MCF). 

The key distinction lies in the sales channels served. Unlike FBA, MCF caters to orders placed across all your sales channels, not just Amazon.

This allows you to leverage Amazon’s fulfillment infrastructure for orders from your own website, other online marketplaces, or even brick-and-mortar stores (if applicable).

E-commerce stores have significantly reclaimed valuable time by entrusting inventory management and fulfillment to third-party logistics (3PL) services. These 3PL Fulillment companies are experts in supply chain management, including logistics, transportation, warehousing, and timely product delivery to customers.

Mighty MCF or Friendly 3PL, choose wisely!

E-commerce businesses face a crucial decision when selecting a fulfillment partner. Both MCF and third-party logistics (3PL) providers offer storage and fulfillment services, but each has its own set of advantages and disadvantages, particularly regarding cost. 

To make an informed decision, it’s essential to explore both options in detail, the mighty MCF or the friendly 3PL. This following analysis states the pros and cons of each approach, empowering you to select the fulfillment solution that best aligns with your specific business needs.

Pros

Amazon’s Multi-Channel Fulfillment

Streamlined Logistics

With Amazon MCF, sellers can say goodbye to time-consuming packing and shipping tasks, allowing them to focus on what truly matters. 

Multi-channel

Multi-channel fulfillment allows sellers to fulfill orders from various sales channels, such as their website, and thus expand their customer base.

Opportunity to explore Amazon’s network

Using Amazon’s large fulfillment network helps to process orders reliably and efficiently.

Third-Party Logistics  (3PL)

Flexible  and  Customizable

Third-party logistics (3PL) providers like AMZ Prep prioritize flexibility and customization. It understands that every business has unique needs. It offers tailored solutions designed to perfectly complement your specific fulfillment requirements.

3PL providers are known for their scalability

Their services offer effortless adaptation to businesses’s growth, scaling up or down as needed to seamlessly manage fluctuating order volumes.

Competitive Pricing

It offers more competitive pricing compared to Amazon fulfillment services, particularly for storage and fulfillment fees. This can translate to significant cost savings for your business.

Cons

Amazon’s Multi-Channel Fulfillment

High Cost

Using MCF can be costly due to high storage and fulfillment fees that depend on the size and weight of the products. 

Limited Control on Inventory

Moreover, businesses using MCF have limited control over their inventory and fulfillment processes.

Potential Delays

Please note that fulfillment times may be occasionally extended due to factors such as inventory availability and order volume.

Amazon Dependency

Depending on Amazon for order fulfillment entails a certain level of reliance on the policies and effectiveness of their logistics system.

Third-Party Logistics

Might not be as straightforward as other Amazon fulfillment services 

Amazon’s 3PL services can be more complex compared to other fulfillment solutions. It often involves coordinating with third-party logistics providers, managing inventory across multiple locations, and ensuring seamless order fulfillment. Additionally, navigating the various options and understanding the costs associated with 3PL services can require careful consideration. 

Integration Issues may emerge for different channels

Issues related to integration may arise when dealing with multiple channels in a 3PL setting, leading to potential complications and inefficiencies. It’s important to address and resolve these issues to ensure smooth and seamless operations across all channels

A table comparing Amazon MCF and 3PL fulfillment services for multi-channel e-commerce businesses

FeatureProsCons
Streamlined LogisticsAmazon handles picking, packing, and shipping your products.High Cost
Multi-channelSell across multiple channels like Amazon.com, your website, or in-store.Might not be as straightforward as other Amazon fulfillment services.
Opportunity to explore Amazon’s networkReach millions of Prime members.Limited Control on Inventory
Fast and Reliable ShippingAmazon leverages its vast fulfillment network to deliver products quickly.Potential Delays
Easy IntegrationIntegrate your store with Amazon’s fulfillment system.Integration Issues may emerge for different channels
Easy to uphold your brand faceMaintain control over branding and customer service.Amazon dependencies
No seasonal increase in feesPredictable monthly storage fees.

Checklist for your choice: MCF or 3PL?

Choosing the right fulfillment solution can feel overwhelming. Based on the above pros and cons, should you go with the familiar comfort of Amazon’s in-house service, MCF, or explore the flexibility of a 3PL provider? 

This decision hinges on several important key factors, and we’re here to help you navigate them.

MCF integrates seamlessly within the Amazon ecosystem, making it a breeze for established Amazon sellers. 

But what if you crave more control and the freedom to sell beyond Amazon’s marketplace? That’s where 3PL provider AMZ Prep shines. 

They offer the adaptability to support multiple sales channels, opening doors to a wider customer base.

Ultimately, the best choice depends on your specific needs.

 Do you prioritize control and a broader market reach, or is seamless integration within Amazon your top concern? 

Let’s deeply analyze each important factor that would help you make an informed decision.

Own your Inventory and control it

Deciding where to store your inventory is a key step for any e-commerce business. While Amazon MCF offers the convenience of leveraging its existing fulfillment centers, it might not be the best fit for everyone.

For businesses seeking more control and customization, a 3PL provider like AMZ Prep can be a better option. We provide dedicated warehouse space, allowing you to manage your inventory precisely and tailor fulfillment to your specific needs. This can be particularly beneficial if you sell on multiple platforms or have unique storage requirements.

Does Amazon charge a referral fee on MCF?

One significant advantage of using Amazon’s Multi-Channel Fulfillment (MCF) service is that you bypass Amazon’s standard 15% referral fee.

This fee typically applies to sales made directly through the Amazon marketplace. Since MCF fulfills orders across all your sales channels, not just Amazon, you avoid this commission, potentially increasing your profit margins. Additionally, MCF streamlines the fulfillment process for off-Amazon sales.

You simply store your inventory within Amazon’s network, and they handle picking, packing, and shipping for orders placed through your other sales channels. This allows you to focus on growing your business across various platforms while leveraging Amazon’s established fulfillment infrastructure.

Flexibility in Shipping

When it comes to shipping, both MCF and 3PL providers offer advantages but cater to different needs.

Amazon MCF boasts convenient options like Prime membership benefits and free shipping for qualifying orders within their ecosystem. However, for businesses seeking more flexibility, 3PL providers are the way to go. It can offer a wider range of shipping options to suit your specific needs, including expedited shipping for urgent deliveries and international shipping to expand your customer reach beyond domestic borders.

Worried about profits? Focus on cost!!

When it comes to shipping costs, 3PL providers offer a significant advantage over Amazon MCF. Unlike MCF, which restricts sellers to Amazon Logistics (often at a premium), 3PLs allow you to “rate shop” among various domestic and regional carriers. 

This competition translates to more competitive shipping rates for your business. 

Amazon MCF charges are based on the dimensions and weight of your inventory within their fulfillment centers. This can be a double-edged sword. For fast-moving products, it’s efficient. However, for slow-selling items, storage fees can accumulate quickly, eating into your profits. Careful inventory management is crucial to avoid unnecessary storage costs with MCF.

Additionally, some 3PLs utilize sophisticated tools to compare rates in real time and create customized shipping strategies based on your order history. This empowers you to find the perfect balance between cost-effectiveness and meeting your customers’ expectations for fast delivery. 

Ultimately, 3PL providers give you more control and potentially significant savings on your shipping costs.

What is a MCF subscription?

MCF is not a subscription-based service. 
It is a fulfillment program that Amazon offers where you can store your inventory in their warehouses, and they take care of order fulfillment (picking, packing, and shipping) for your orders across various sales channels, not just Amazon. 
So, instead of subscribing to a monthly plan, you pay for MCF based on the services you use.

How much is MCF shipping?

The standard shipping cost for MCF depends on the size and weight of your product. For items under 2 lbs, expect to pay between $5.85 and $5.95. Anything exceeding 2 lbs incurs an additional $0.39 per pound.
The good news is that there are also volume discounts available for orders with multiple units. In essence, the more you ship, the less you pay per item.

Know your Numbers

Understanding your sales data is crucial for making informed business decisions. 

While both Amazon MCF and 3PL providers offer data on fulfilled orders, 3PLs can take it a step further. Amazon MCF provides sales data specific to orders fulfilled through their service, which can be helpful. 

However, 3PL providers often go beyond basic sales figures. They offer more in-depth sales data and analytics, encompassing a wider range of metrics. This comprehensive data can empower you to identify trends, optimize your product offerings, and make strategic decisions that propel your business forward.

Seasonal demand management

The holiday season can be a make-or-break time for e-commerce businesses. While Amazon MCF offers a seemingly convenient option for increased order volume, it might not be the most adaptable solution.

Here’s where 3PL providers like AMZ Prep come in. These entities understand that every business has unique needs, especially during peak seasons. That’s why they offer personalized and scalable fulfillment solutions. They tailor their services to seamlessly integrate with your warehousing, distribution, inventory management, and even reverse logistics—all crucial aspects during the busy holiday rush.

It’s important to consider that Amazon, as a business itself, adjusts its fee structures throughout the year. This can mean fluctuating fulfillment, storage, and warehousing costs for sellers, particularly during the crucial fourth quarter (Q4). 

While these adjustments might seem like a “hike” in MCF and FBA fees, they’re often implemented to ensure smooth operations and efficient service for both sellers and consumers during the busiest shopping season. 

However, a Amazon 3PL provider can offer more predictable pricing structures, potentially saving you money while still providing the personalized service you need to thrive during the holidays.

Customized Packaging and upholding your Brand

For e-commerce businesses, a customer’s first physical interaction with your brand often happens during unboxing. 3PL providers can elevate this experience by offering fully customizable packaging solutions. This empowers you to design packaging that reflects your unique brand identity, from colors and logos to messaging.

While MCF allows limited customization, 3PLs often provide greater flexibility. This translates to more control over the entire customer journey, ensuring your brand presence remains consistent across all touchpoints, not just within the Amazon marketplace. This cohesive brand experience can leave a lasting positive impression and foster customer loyalty.

Note: Does Amazon MCF handle returns, or how do I process MCF returns?

When it comes to returns with Amazon MCF, you have some control over the process. You can choose to manage returns yourself. This would involve the customer returning the item to your designated warehouse, using a returns solution you’ve set up. Alternatively, you can opt to leverage Amazon’s fulfillment centers for returns. In this scenario, the customer would return the item directly to them. The choice depends on your preferences and resources. Handling returns yourself might offer more control, but it requires additional logistics setup. Utilizing Amazon’s fulfillment centers for returns can be simpler, but it might take longer for you to receive the returned merchandise.

Securing your shopper’s data

While Amazon MCF offers sales data for fulfilled orders, it comes at a cost, a potential loss of control over your broader sales information. Since MCF integrates with your entire Amazon seller account, it grants Amazon access to your sales data across all channels, not just those fulfilled through MCF. This can be a red flag for businesses prioritizing data privacy and customer information security.

3PL providers, on the other hand, typically focus solely on fulfillment. They access only the data necessary to process and ship your orders. This ensures your valuable sales data remains under your control, allowing you to leverage it for strategic decision-making with trusted analytics partners.

Furthermore, 3PL providers can often offer even more detailed sales data specifically related to fulfillment operations. This can include insights into order fulfillment speed, packaging performance, and potential areas for optimization. With a 3PL, you gain valuable information to improve your fulfillment process without compromising the privacy of your broader sales data.

Product Restrictions

Not all products are created equal, and that applies to fulfillment options as well. While Amazon MCF enforces strict eligibility requirements based on size, weight, hazardous materials, and other criteria, 3PL providers can offer a more flexible solution.

Many 3PLs are equipped to handle a broader range of products, including oversized items, those with specific storage requirements, or even products classified as hazardous materials (with proper protocols in place). This wider acceptance means you can streamline fulfillment for nearly all your inventory with a single 3PL provider, eliminating the need for multiple fulfillment partners or the hassle of product restrictions imposed by MCF.

Final Decision: MCF or 3PL

Choosing the right fulfillment solution is a critical decision for e-commerce businesses. 

While Amazon Multi-Channel Fulfillment MCF offers a convenient option for established Amazon sellers, it may not be the most suitable fit for all businesses.

Third-party logistics (3PL) providers can provide a compelling alternative, particularly for businesses that prioritize control, customization, and data privacy. 3PLs, like AMZ Prep, offer a wider range of fulfillment options, greater flexibility in storage and shipping solutions, and the ability to manage a broader variety of products. 

Additionally, 3PLs can potentially offer more competitive pricing structures compared to MCF.

Ultimately, the ideal fulfillment solution depends on your specific needs and priorities. Carefully consider your business’s growth trajectory, product range, and budget to make an informed decision. 

By carefully weighing the advantages and limitations of both MCF and 3PL providers, you can select the fulfillment partner that best empowers your e-commerce business to flourish.

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