Let’s break down Amazon OTIF requirements
If you’re an Amazon shipper, you’re well aware of the fine line you must walk to ensure that your shipment reaches the distribution center in compliance with Amazon’s strict delivery requirements. This is particularly true for on-time, in-full (OTIF) performance.
OTIF performance has become increasingly important for ecommerce businesses’ reputations as online shopping has skyrocketed during the COVID-19 pandemic. Due to the pandemic, people rely on e-commerce and food-delivery services more than ever to deliver their essential goods. This means that these platforms must provide quick and high-quality service, now more than ever.
If you’re new to the distribution game, you may not be familiar with the ins and outs of Amazon LTL shipping. Here’s a brief overview of Amazon’s OTIF requirements and how their model could work for your business.
Fulfillment by Amazon 101
Fulfillment by Amazon (FBA) is a program in which you ship your goods to one of Amazon’s fulfillment centers. Your job is to get your FBA products to Amazon’s warehouse in time. Amazon handles the rest of the order fulfillment process through a process called multi-channel fulfillment. This means that once a customer purchases one of your products, Amazon is responsible for packing, labeling, shipping and tracking. Amazon takes care of inventory management and other warehouse-related duties. Amazon also provides customers with step-by-step updates about the location of their purchase (and with lots of customer support). According to the company, most Amazon FBA sellers use a combination of FBA service and direct shipping (in which they take complete responsibility for the shipping process themselves, without going through the FBA program).
Benefits of shipping through Amazon
There are many reasons why becoming an Amazon shipper could benefit your business. Products fulfilled through the Amazon FBA freight forwarder are eligible for Amazon’s coveted Prime shipping, making them even more attractive to a large swath of Amazon customers. Additionally, Amazon’s business model and wide sourcing has given it a solid reputation. This means potentially higher sales for you and a greater profit margin (so long as you avoid FBA fees). Other benefits of becoming an Amazon FBA shipper include:
- Wide exposure to a massive customer base in the Amazon marketplace
- Top product placement
- Built-in bulk listing and reporting tools
- External support for customer shipping and service
- Customized shipping costs
- Higher search engine results page (SERP) rankings
Keep in mind that Amazon charges a small fulfillment fee, which you should factor into your decision to become an Amazon shipper. Depending on the delivery model you choose, you’ll either pay a small fee per item sold through Amazon (currently around $1), or a monthly subscription of $40 to sell unlimited goods. Additionally, you’ll need to factor in other costs such as inventory storage fees, return processing fees, and more. If your goods stay at the Amazon fulfillment center for more than 365 days, you may also incur long-term storage fees.
If you want to do your own calculations, Amazon provides information for new sellers via their website’s seller central. This includes an FBA calculator that will help you calculate potential profit. All you have to do is to make an Amazon seller account (which is free) to find out more.
Responsibilities as an Amazon shipper
As an Amazon shipper, you’ll also be responsible for meeting Amazon’s OTIF requirements. Let’s break those down.
Why on-time, in-full?
Today’s customers have high expectations for their e-commerce experience, especially from a huge company like Amazon that handles a multitude of third-party sellers. For this reason, Amazon has stepped up its shipping game in the last few years. For example, the company often gives its Amazon Prime customers the option to get two-day, one-day or even same-day shipping for free. When customers place an order through Amazon, they expect Amazon to keep them informed. For example, customers have come to expect product listings to include an estimated arrival date and that this arrival date is accurate.
All of this is to say that Amazon needs to get its goods to customers on time. This means that Amazon relies on the cooperation of all parties: Amazon sellers, shippers, retailers, and its own workers to meet its customers’ needs and meet its own performance metrics.
Amazon’s essential goods delivery program is one example of how seriously the platform takes on-time delivery. In order to overcome the delivery delays that plagued many distributors at the start of the pandemic, Amazon limited its shippers’ ability to ship non-essentials. This enabled Amazon to focus all its efforts on getting essential products to customers as quickly as possible and to maintain fair pricing on its website.
As a result, this places a lot of responsibility on you, the shipper, to get your goods to Amazon on time so that Amazon can fulfill its promises to its customers
Amazon expects to receive your shipment on time and in full. “In full” means that all components of the shipment arrive simultaneously. Unlike other distributors (like Walmart), Amazon may still ship your freight if some pallets are missing. However, this varies depending on distribution center, and you could face a fee if you fail to meet OTIF.
Amazon also has a strict delivery appointment policy. Amazon won’t accept shipments that arrive without a delivery appointment, and if your carrier misses the delivery window by more than 30 minutes, Amazon may refuse the shipment entirely. If this happens, your carrier must request a new delivery appointment and attempt re-delivery.
Failing to meet OTIF requirements results in a huge headache. Therefore, working with a carrier that can ensure on-time arrival is crucial to becoming a successful Amazon shipper.
The solution: shared truckload
How do you meet Amazon’s strict criteria? As a shipper, your best option is to pick a reliable shipping method that caters to your specific shipping needs.
Flock Freight’s shared truckload (STL) solution is ideal for meeting OTIF requirements. With STL shipping, we use proprietary algorithms to combine your LTL goods with freight from other shippers into one multi-stop truckload. Because shipments travel on one truck, they’re much easier to keep track of than standard LTL shipments (which typically move from truck to truck during transit). Plus, shared truckload shipping gives shippers total control over pickup and delivery dates so you can stop worrying about paying for missed delivery appointments. On top of these benefits, shared truckload is a more environmentally friendly shipping option because it reduces the number of trucks needed to transport your LTL load.