Overview of 2-Step / 3PL Dropshipping

2-Step Dropshipping Process

Step 1: Sourcing and Storage
Sellers source products from manufacturers, wholesalers, or suppliers and ship them to a 3PL warehouse for storage and inventory management.

Step 2: Order Fulfillment
When a customer places an order on Amazon, the 3PL partner picks, packs, and ships the product directly to the buyer, ensuring timely delivery.

Role of 3PL in Dropshipping
A 3PL (Third-Party Logistics) provider offers services like warehousing, order processing, inventory management, and shipping, allowing sellers to outsource logistics tasks while focusing on sales and customer service.

Benefits

Cost Efficiency: Using a 3PL eliminates the need for personal storage or direct management of inventory, reducing overhead costs.

Scalability: Sellers can handle higher order volumes without needing to expand personal storage or hiring additional staff.

Improved Delivery: Leveraging 3PL providers ensures faster and more reliable shipping to meet Amazon’s performance standards.

Focus on Core Activities: Sellers can prioritize marketing, product sourcing, and customer engagement while logistics are handled by the 3PL partner.

Challenges

Coordination: Managing multiple entities (suppliers, 3PLs, and customers) can be complex.

Compliance with Amazon Policies: Amazon requires clear communication about who is responsible for customer service and prohibits direct supplier shipments to customers without proper branding and invoicing.

Upfront Costs: Partnering with a reliable 3PL often involves initial fees for storage and setup.

Key Considerations for Success

Choose the Right 3PL: Select a provider with experience in Amazon compliance, fast shipping, and seamless technology integration.

Inventory Accuracy: Monitor stock levels closely to prevent overselling or stockouts.

Compliance with Amazon’s Guidelines: Ensure packaging, branding, and invoicing meet Amazon’s strict requirements to avoid account suspension.

By leveraging the 2-step / 3PL dropshipping model, Amazon FBM sellers can create a more efficient and scalable business, provided they maintain strong communication with their partners and adhere to Amazon’s standards.