Should I use commingled inventory or inventory placement services when selling via Amazon FBA?

May 20th, 2014

In today’s post I will be giving my take on a couple of questions that I have been getting fairly often recently.  Those questions relate to whether I am using amazon’s stickerless commingled inventory option, and if I am using their inventory placement service.

Let’s look at the inventory placement service first.  This service allows you to ship all of your standard size items to one warehouse, and all of your oversize items to one warehouse in your FBA shipments.  In return for shipping to only two warehouses (2 assumes you have both oversize and standard size items) you are charged a fee per item.  This fee ranges from $0.30 per item to several dollars per item depending on the item’s weight.  Once your items arrive at the warehouse you sent them to, amazon will then transfer some of them to have them distributed across their warehouses as they see fit.  This transferring of the items can add to how long it takes for items to be checked in and available for sale.

This is compared to using the “distributed inventory placement” setting within your seller account, which is the default option.  The names are close, but what they do are quite different.  With distributed inventory placement you will ship your items to a variety of warehouses for both standard size and oversize items.  If I have a large shipment I am usually shipping to 4 to 6 different warehouses.

I am not using the “inventory placement” service and instead am using the default “distributed inventory placement” option within my seller account.  The reason for this is that I am shipping in large enough quantities that I do not feel the fee is worth it for the added convenience.  In addition, it often takes longer for items to be received if using “inventory placement” and I want my items to be available for sale as quickly as possible.

With that said, I do think inventory placement makes sense for some sellers.  For example, if you are just starting out and have 10 standard size items to send into FBA, using the default distributed inventory placement service could require you to ship to 3 or 4 different warehouses.  This likely wouldn’t be a very efficient use of time or money when you could enable “inventory placement” service and ship all 10 items in one box.  The time savings and shipping cost savings would be well worth the $3 or so that would be charged in per item fees.  HERE is a link to more details on the “inventory placement” service from amazon’s website.

Now, let’s get to the second item on the docket related to stickerless commingled inventory.  This is an optional setting that can be used within your amazon seller account.  Here’s a hypothetical example to illustrate how it works with this option enabled, you have a brand new copy of the game Monopoly, you send the item into FBA without a label, the item gets to amazon and they put it in a stack with all of the other copies of Monopoly, a customer buys “your” copy of Monopoly, amazon grabs a random copy of Monopoly from the stack and sends it to the customer who purchased from you.

There are some inherent risks involved with using the stickerless commingled inventory option.  The main risk is the loss of control of the item that the end customer receives.  In addition to this there is the risk that there are counterfeit products that were sent in by other sellers, or sellers that are trying to pass off items as new that should be listed as used.  The problems arise when one of these counterfeit items or less than new items are sent to a customer that orders from you.

Using this option can greatly speed up the processing time of items, but it does come with some added risks as mentioned previously.  Currently, I am not using the commingled inventory option and I am labeling all of the inventory I am sending to amazon.  I may revisit this in the future, but for now, I label all of my inventory.  HERE is a link to amazon with more info on the stickerless commingled inventory option.

If the amazon link doesn’t provide enough info for you, I have one more resource for you.  Cynthia Stine, author of Make Thousands on Amazon in 10 Hours per Week, had a great post on her blog last week about the commingled inventory option and why she doesn’t use it either.  HERE is a link if you want to check it out.

That’s all I have for today.  If you have any experiences with either of these options, please share in the comments below.  If you have any other questions or comments, please leave them below as well, or send me an email at grant.ryanj@gmail.com.

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11 responses to “Should I use commingled inventory or inventory placement services when selling via Amazon FBA?”

  1. It’s a misconception that all inventory with Inventory Placement will be sent to either the standard-sized warehouse or the oversized warehouse. While that is the way it USUALLY works, the only promise Amazon makes is that all inventory OF THE SAME SKU will go to one warehouse.

    So it is quite conceivable that your inventory will be split between warehouses. Granted: that rarely happens. But just so your readers will know, your inventory CAN be split between skus.

  2. Ron says:

    Ryan, can you explain your 10 item example a little more?
    Are you saying any time you have a few items, Amazon can have you ship to a few different places?
    Do you find this out when you “register” the item with Amazon?
    Can you ever just put everything in a box and ship to one warehouse without the extra fees?

    Thanks

    • Ryan Grant says:

      Hi Ron,

      Yes, anytime you are shipping items to amazon they tell you where to send the item. The way it normally works for me is that if I have 3 of the same item then amazon will have me ship to 3 different warehouses. I am usually shipping around 100 total items with multiples of each when I send to amazon, so this isn’t a big deal for me. Amazon tells you where to ship the items as you create your shipments.

      There is no way that I am aware of to always put everything in one box without an additional fee.

      Best Regards,
      Ryan

  3. Ron says:

    Cleared up. Thanks

  4. Jason says:

    Sometimes I use the $.30 option to be able to ship to Tennessee instead of Arizona. ( I am in Indiana) I have a few of the items in stock ( at Tennessee) in 3 days and let Amazon do whatever they do with the rest ( usually multiples of the item)

    • Ryan Grant says:

      Hey Jason,

      Thanks for sharing! That sounds like a pretty good deal as you pay the $0.30 per item fee but have some of the items available faster and pay a lower shipping cost to send the items to amazon, I had never considered that benefit.

      Best Regards,
      Ryan

  5. Iqbal says:

    Chris Green from Scanpower reckons that co-mingled inventory is on its way out. As there are too many opportunities of mis-use.

    There are stories of people ordering Frozen merchandise direct from Amazon and they received counterfeit products! So the genuine products are getting mixed up with the fake products.

    So to me it seems like its best to always use labelling so you can ensure the quality of your products.

    • Ryan Grant says:

      Hi Iqbal,

      I would tend to agree that it may be on the way out, and definitely agree that labeling everything is a good practice.

      Best Regards,
      Ryan

  6. Punk says:

    There may be a twist to this that I was not aware of. Working through an issue with Amazon, but apparently there is also stickered – commingled. WTF?
    I found some “good” hot wheels cars on sale for 60 cents each, and some were selling for $5.5-$10 on amazon.
    Decided the risk was low, why not.
    FYI, any hot wheels car, Amazon’s Min take is $3.57 and if you price below $5n guaranteed status change to an “add-on” item. Some the. Threshold is $5.29, but pleas all you low-ballers, up it to $5, make it prime and sell quicker. Sorry for the divergent lesson.
    To make a short story long, I had a customer get the wrong car. I stickers every single car myself. They got a car I had NEVER had, sceen, sold.
    I snickered my cars, because I realized Matell reuses UPCs and my cars I picked were prestine cards and I left behind anything without 100% perfect packaging too.
    So Amazon does a review and send me pics and says I absolute f’d up and mislabeled.
    Many back and forth, Amazon admitted, that that might not be my car as it was commingled at the ASIN level!
    Really? Plus, the car in question was not sent in by me, (as Amazon originally claimed) but the customer. So 3 scenarios exist and the first appears to be always true:
    1) Amazon co mingles inventory if you first create the item and are signed up for commingled. The FNSKU will begin with X if stickered, if not, your customer can get the wrong item and you WILL be blamed.
    2) if you label when not required, doesn’t matter. Still commingled.
    3) Customer returns item or swaps label, it is still your fault.

    • Ryan Grant says:

      That is interesting. I wonder if it was just a mistake on amazon’s end when the wrong item was sent to the customer? As my understanding (and from my experience with returns) it has always appeared to be my item that was sent out.

      Best Regards,
      Ryan

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