We have received a lot of inquiries about commingling and fulfilment by Amazon (FBA) based on an article that ran recently in the Wall Street Journal. Selling on Amazon requires learning a whole new language. In case you don’t have your Amazon dictionary handy — or if you haven’t given it a thorough read — one of the terms you should be familiar with is an Amazon practice called “commingling.” (And no, this isn’t referring to your domestic status.) Commingling refers to “stickerless” inventory warehoused through the FBA program.
There are two ways to send products to FBA: stickered and stickerless.
Stickered inventory refers to the Amazon FBA label applied to a product to indicate that it belongs to a specific seller. The sticker, or “label,” is applied over the barcode (e.g., UPC, EAN) and is scanned when the item is stored, picked and packed.
Stickerless inventory — or “commingled” inventory — allows you to send products to FBA without labeling them with the traditional FBA identification label that corresponds to the seller and the item. As a result, this commingled inventory relies on the manufacturer’s barcode to identify the product. Nothing remains on the item to connect it to a specific seller. Therefore, a seller’s product is grouped with the same barcoded item sold by other retailers.
Let’s say you sell garlic presses and have six to offer through FBA. With stickered inventory, you print FBA labels for each of the six presses and apply them over the UPC before sending to the FBA warehouse. With stickerless (commingled) inventory, though, you can simply box and send the items to FBA. In practice, if I sell OXO garlic presses and choose to use FBA to warehouse six with commingled inventory, these will be pooled with all the OXO garlic presses sold by other retailers and will no longer be “owned” by me.
Commingling: The Benefits
1. More Time: Using stickerless inventory speeds the setup of an FBA shipment by skipping the FBA labeling step. Some exclusively virtual retailers are also streamlining their distribution chain by having the manufacturer or wholesaler ship stickerless inventory straight to FBA warehouses, removing the retailer in the process. Sellers who don’t have time or resources to label their products, but who still want to maintain ties to the items they own in the FBA warehouse, can use the FBA Label Service, where for a small fee (20 cents) Amazon will label their inbound products so they’re no longer commingled.
2. More Options: Amazon also finds stickerless, commingled inventory beneficial because it can fulfill orders from the closest warehouse to the buyer without requiring that the item sent in the fulfilment box is the one originating from the seller. This means more freedom, with dozens of fulfilment centres and millions of orders to source from locations dispersed across a country or region.
What’s the Big Deal?
So, with benefits to the seller and to Amazon, what’s missing? Here’s the catch: Commingling is built on faith that the barcode universally identifies an item as authentic and specific to that UPC or EAN. The premise seems sound, but in reality, many stakeholders are losing out.
The most troubling problem: Counterfeit merchandise with the same barcode is being commingled with authentic merchandise. This scenario is essentially a lose-lose-lose:
The customer loses because they risk receiving a product other than what’s advertised. The quality of the counterfeit is almost certainly subpar to the authentic version.
Amazon loses when the customer experience dips and trust in the marketplace diminishes. Plus, because items aren’t tied to sellers, Amazon gives up its ability to identify seller(s) at the source of the counterfeit issue.
The seller with authentic goods has the most to lose because not only could their customers receive an illegitimate item, but sellers also run the risk of receiving account violations related to feedback, A-to-z claims, returns and more. Being tied to a counterfeit-product claim could also lead to your account being shut down. If Amazon closes your account, you could face significant removal fees that range from 50 to 60 cents per item to reclaim items stocked through FBA. According to Amazon’s counterfeit policy, inventory deemed counterfeit could be destroyed, and payments from Amazon could be withheld or forfeited altogether.
Your Next Steps
How do you avoid this scenario? The best way to protect your business is to use stickered inventory when fulfilling through FBA. If you aren’t able to sticker your inventory, invest in the FBA Label Service to make sure that your products are the ones delivered to your customers. If you decide that going stickerless is worth the risk to you, take measures to document the authenticity and condition of your items that you send to FBA for warehousing.
Given the recent increase of issues with commingled inventory, Amazon could likely put measures in place to protect sellers and customers. In the meantime, take time to use stickered inventory when selling on FBA.
If you’d like to learn about other common ways sellers get into trouble on Amazon, view our tips on How to Avoid Being Suspended from Amazon. To speak with a ChannelAdvisor expert, please contact us at email@example.com or call 866-264-8594.
Blog post by Rachel Miller, product marketing manager, ChannelAdvisor