Blog

Amazon Warehouse vs. Third-Party Prep Centers: Which Fulfillment Option Should You Choose?

Your choice of fulfillment strategy can affect your profits in e-commerce. Amazon sellers pick between two main options: Amazon’s warehouses (through FBA) or outside third-party prep centers. Both have their good points, but more sellers now use tax-free Amazon services in Oregon and other states without sales tax to cut costs and make more money.

This guide will show you the differences between third-party prep centers and Amazon warehouses those in states without sales tax. This will help you decide which one works best for your business.

Know About Amazon Warehouses (FBA):

Fulfillment by Amazon (FBA) allows sellers to ship their products to Amazon’s fulfillment centers. Amazon then manages returns, customer support, packaging, shipping, and storage.

Benefits of Using Amazon Warehouses:

Amazon Prime Eligibility: Your items qualify for Prime, boosting sales and visibility.
Hands-Free Logistics: Once Amazon receives your stock, they handle everything.
Scalability: Perfect for high-volume sellers who need reliable infrastructure.

The downsides of using Amazon warehouses:

Higher Costs: Amazon's fulfillment and storage fees can add up.
Tax Exposure: Storing goods in certain states might create tax liabilities.
Lack of Control: You can't decide how Amazon handles or packages your items.

Third-Party Prep Centers' Ascent:

Third-party prep centers link you to Amazon. They check, label, bundle poly bag, and ship your stock to Amazon while ensuring it meets FBA rules.

Fill out the form for a free logistics consultation!

You can contact us directly and schedule your shipment now

Why Are Tax-Free States' Third-Party Prep Centers Worth It?

Using prep centers in tax-free states like Oregon Montana, or Delaware has a major advantage. Oregon’s tax-free Amazon services have made it a hotspot for sellers looking to cut down on their taxes.

Benefits of Using an Amazon Prep Center in a Tax-Free State

No Sales Tax – When you purchase and get items ready in Oregon, you can steer clear of sales tax by using Amazon prep center services in a tax-free state. This can cut down your total cost of goods sold (COGS) a lot.
Lower Operating Costs – Many third-party centers offer clearer pricing and charge less for prep and storage than Amazon warehouses do.
Freedom and Adaptability – If you want to customize your customer experience, you have full say over how your products are packaged, branded, and shipped.
Avoiding Long-Term Storage Fees on Amazon – Third-party centers often provide more flexible and affordable options to store items long-term, helping sellers steer clear of Amazon's steep LTSF (Long-Term Storage Fees).
Buffering Inventory – Prep centers can act as buffer warehouses to keep you within restock limits. They hold extra inventory and send it to Amazon as needed.

When Is Amazon FBA the Best Option?

FBA works best for:

Quick inventory turnover and high sales volumes.
Sellers who prioritize faster shipping times and Prime eligibility.
Companies that want to hand over all customer service and logistics.

But FBA fees and tax exposure might eat into your profits if you’re new to the game or work with slim margins.

When Is It Time to Select a Third-Party Prep Center?

Particularly in a tax-free state like Oregon, a prep center is perfect for:

Amazon FBA sellers looking to boost control and trim costs.
Companies that get shipments from overseas suppliers and need to check for compliance.
Sellers affected by Amazon's restocking limits and long-term storage fees.

Prep centers provide a smart way to stay FBA compliant while boosting profits with Amazon fulfillment services that don’t incur taxes.

Example of a Cost Comparison

Let’s dissect it using a straightforward example:

When paired with tax free Amazon fulfillment services, even a few cents saved per unit can add up over hundreds or thousands of products.

The Best of Both Worlds with a Hybrid Approach?

Many successful Amazon FBA sellers use a hybrid approach. They use prep centers in states without sales tax to receive, inspect, prepare, and ship inventory to Amazon warehouses. This strategy allows them to:

Cut costs on prep work and taxes.
Keep control of their branding and packaging.
Still benefit from Amazon's vast logistics network and Prime eligibility.

Wrapping Up: What's the Right Choice for You?

Your fulfillment strategy should match your budget, growth plans, and business goals.

Amazon FBA might suit you best if you prefer total automation and sell big volumes. But if you’re new to the game, want more control, or watch your pennies using tax-free Amazon services in Oregon through a trusted prep center could give you an edge.

In the long run, success, growth potential, and making money matter more than ease of use. With some digging and the right fulfillment partner, you can boost your Amazon business and dodge common traps.

Frequently Asked Questions: Amazon Warehouse vs. Third-Party Prep Centers

What is the difference between using Amazon FBA warehouses and third-party prep centers?

Amazon FBA warehouses handle storage, packaging, shipping, and customer service for sellers, offering fast delivery and Prime eligibility. Third-party prep centers, especially in tax-free states like Oregon, focus on preparing, inspecting, and shipping inventory to Amazon while offering more flexibility, lower costs, and reduced tax exposure.

Why should I use a third-party Amazon prep center in a tax-free state like Oregon?

Using a third-party prep center in a tax-free state helps Amazon sellers avoid sales tax, significantly lowering their cost of goods sold (COGS). It also provides affordable long-term storage, better control over packaging and branding, and helps sellers navigate Amazon’s restock limits and storage fees.

When is Amazon FBA the best fulfillment option for my business?

Amazon FBA is ideal for businesses with high inventory turnover, large sales volumes, and a need for fast Prime shipping. It’s perfect for sellers who want to fully outsource logistics and customer service, although it may not be cost-effective for newer or lower-margin businesses due to high fees.

How can a hybrid fulfillment strategy benefit Amazon sellers?

A hybrid strategy, using both a third-party prep center and Amazon FBA, allows sellers to save on taxes and prep costs while still benefiting from Amazon’s logistics network and Prime eligibility. It offers the best of both worlds—cost control, branding flexibility, and scalable fulfillment.

What are the cost advantages of using tax-free Amazon services for FBA prep?

Tax-free Amazon services, like those offered in Oregon, can save sellers significant money by eliminating sales tax on inventory purchases and preparation. Over time, these savings add up across hundreds or thousands of units, helping sellers improve profit margins and overall business profitability.

Blog

Amazon Warehouse vs. Third-Party Prep Centers: Which Fulfillment Option Should You Choose?