Should You Use A Prep Center

Oh how I love my prep center, let me count the ways… In a previous post I helped you better understand your priorities within your Amazon business to both help you save time and grow a tremendous amount. In that post, one of the main aspects of saving yourself time running your wholesale business is to outsource your inventory prep and shipping.

Imagine you spending the same amount of time to prep and ship 1,000 units as 100 units.

A proper “prep” warehouse can help you accomplish that for a relatively small fee, which will vary on which warehouse you end up going with.

 

Of course, it would still technically take more time to prep and ship 1,000 units than it would 100 units, but the key is that you aren’t doing that work, so it becomes irrelevant to you. This frees up a great amount of time each week for you to focus on adding new wholesale accounts. I’m talking 20+ hours each week here people!

 

How do you actually find a prep center and what do they look like? Easy enough, these companies solely specialize in preparing and shipping your inventory to meet Amazon’s guidelines, which keeps you in Amazon’s good graces.

 

The pricing structure will vary, again, depending on who you end up going with. Some may charge a setup fee, a monthly fee and all will charge a per unit “prep” fee. Me personally, I only want to pay a simple fee that scales as my business does. So monthly fees and setup fees are a no go. This alone will decrease your options for the better, but ultimately it’s your choice to make.

 

Next, we have to decide how much per unit in profit we’re willing to give up. Some warehouses charge $1.25 per unit some more, some less. I personally pay $1 per unit with a minimum of 50 units each month that needs to be processed, but that’s quite an easy minimum to hit in a 30 day period.

 

So for $1 less in profit per unit, I’m able to save myself 20+ hours each week that can now go towards adding more profitable wholesale accounts, or take a nap. I like naps.

 

I’m sure you’re asking yourself why this even matters to begin with, right?

 

Your other alternative is to setup a mini warehouse in your garage, which will limit you with some suppliers as they prefer a commercial shipping address, rather than your residential home address. Some shipments may require a lift gate.

 

You could also lease a smaller warehouse, but that’s another fixed cost in your business, where we want as many variable costs as possible. I.e. Our costs go up AND down depending on our inventory volume. If we source 1,000 units this month our costs would be $1,000, but what if that was cut in half to 500 units? Our cost would deflate to $500 in total.

 

This lends to some amazingly flexible systems within your business, especially as you grow and experience some learning pains.

 

The process couldn’t be simpler in dealing with a prep company. Here’s all of the steps:

 

1. Notify your prep warehouse of incoming shipment with details such as total units, number of SKUs and tracking numbers
2. Email/upload your SKU labels that Amazon requires you to put on your inventory
3. Your pre company will do the above for you and email/message you back once they have completed the prepping process, including the shipping information to create the shipment on Amazon like the carton dimensions and weight.
4. Create the shipment on Amazon like you normally would, print the shipping labels and email/upload them to your prep company.
5. Mark the shipment as shipped.

 

That’s literally it. This whole process typically takes less than 15 minutes per shipment, regardless of 100 units or 1,000 units.

 

So here’s what to look for in a prep company:

 

1. No/low setup fees, but avoid if possible
2. No ongoing fees as this is just dump
3. Affordable per unit fee (use $1 per unit as a reference)
4. Great communication (This will take some testing)
5. Find a prep company in a state with lower or no state sales tax (you’ll thank me later)

 

I know this may seem like a lot, but I promise you it’s the simplest thing you can do for your Amazon wholesale business THIS week that will have a massive impact on your growth and stress levels, but if you have more questions, you can always jump into our private Facebook group and ask us!