Choosing the Best Amazon Vendor Supply Chain Programme: A Guide to Reducing Costs and Boosting Efficiency

Navigating Amazon’s supply chain programmes as a vendor can feel like a complex puzzle. With multiple options, each offering unique cost-saving and logistical benefits, it’s crucial to find the programme that aligns best with your business needs. From Fulfilment Centres (FCs) to Inbound Cross-Dock (IXD) and Vendor Central, Amazon’s supply chain programmes come with distinct pros and cons. In this article, we’ll break down each option to help you make informed decisions, manage costs effectively, and fine-tune your vendor strategy for success.

1. Regular PO Ordering

2. Forward Orders

3. Bulk Buy Orders

4. Born to Run (B2R) / Vendor Initiated Order (VIO)

5. Pan-European Inbound Consolidation Service (PICS)/Consolidation Fulfilment Service (CFS)

6. Acapulco

7. Direct Fulfilment (DF)

8. Vendor Flex (VF)

9. Direct Import

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 1. Regular PO Ordering

Regular PO ordering is the most straightforward process for Amazon vendors. Typically, purchase orders (POs) arrive on a Monday or Wednesday morning (though sometimes as early as Sunday evening or late Tuesday night). The shipping window generally opens right away or the following day, ranging between 3 - 14 days ; 5 days being the most common. For instance, an order created on Monday will usually need to be delivered by Friday.

Pros: Orders arrive consistently each week, establishing a dependable backbone for Amazon's purchase order cycle.

Cons: The timing and volume of orders can be unpredictable. A sudden change in demand can create stress from week to week, as orders may surge or drop dramatically. Most products are ordered based on algorithms and sell-through rates, but these systems don’t always account for seasonal fluctuations. Additionally, since orders are generated algorithmically, it’s not uncommon to receive multiple orders for the same destination and shipping window but containing different items. This often results in extra work for order management teams to consolidate shipments effectively.

 

2. Forward Orders

Forward orders, also called “commitment ordering” or “advance ordering,” are essentially regular POs set for future dates. They usually come through on the same vendor code as regular POs but have due dates up to 12 weeks out, though some can be scheduled as far as 16 to 20 weeks ahead.

These orders are issued alongside regular POs, so the demand for any given week will reflect both regular and forward orders combined. Since you can see these future orders in the system in advance, they offer the opportunity to prepare early, allowing your warehouse to begin picking and packing ahead of schedule. This proactive approach can help manage workload peaks and keep your team productive during quieter periods.

Pros: Forward orders offer better forecasting for demand, extending beyond day-to-day ordering. For instance, knowing you’ll need 600 units over the next 12 weeks provides a clearer picture than a weekly average of 50 units sold.

Cons: Managing forward orders requires careful planning. Consider when to allocate stock and when to release it for picking and packing. Committing stock too soon could backlog your systems with orders that won’t need dispatching for several weeks, potentially impacting availability for more immediate customer orders. Using an order management system that accounts for the shipping window can help optimise this process.

 

3. Bulk Buy Orders

Bulk Buy Orders, also referred to as “forward orders” or “request for quantity” (RFQ) orders, are initiated by Amazon with a request for vendors to commit to a larger volume at a discounted price per unit. These orders require separate approval in Vendor Central, allowing you to review and approve Amazon’s bulk buy request with the agreed price discount. While Amazon may commit to purchasing, say, 1,000 units, this volume may be split across smaller orders, such as ten orders of 100 units over time. It’s essential to ensure your minimum order quantity (MOQ) and inner case sizes are appropriately set up.

Typically, Bulk Buy Orders are issued under a different vendor code from the regular PO flow.

Pros: A committed purchase volume allows for more accurate stock and inventory planning. In some cases, Bulk Buys can align with full container loads or sourcing multiples, enabling better cash flow planning and smoother sell-through than with weekly orders. They also provide an opportunity to clear out older stock at a discount. Longer lead times allow more time to prepare inventory, which can be particularly beneficial during peak periods.

Cons: Bulk Buy Orders have a mixed reputation among vendors. Some vendors appreciate the predictability they bring, while others view them as sacrificing margin without much benefit. If items are expected to sell well anyway, accepting a discounted rate may seem unnecessary. Additionally, vendors cannot negotiate or make counter-offers on bulk buy requests—it’s a take-it-or-leave-it arrangement. There’s also a risk of unsold stock if demand projections are off. Even though a bulk buy request may involve a large volume, the resulting orders may be broken into multiple individual POs destined for different fulfilment centres, increasing administrative complexity.

 

4. Born to Run / Vendor Initiated Order (VIO)

A Born to Run (B2R) or Vendor Initiated Order (VIO) is a vendor-generated purchase order that enables vendors to send products directly to an Amazon Fulfilment Centre (FC). This programme is typically designed for new products that don’t yet have an established sales history, meaning Amazon’s purchasing algorithms don’t have enough data to calculate demand accurately.

While Born to Run is an effective tool for launching new products, it’s essential to use it responsibly. Misusing B2R to push excess stock into Amazon can result in overstock issues and potential returns after a few months. The B2R process generally involves vendors forecasting the product’s demand over a 10-week period. Amazon reviews and, if approved, purchases the forecasted quantity. Any unsold units after 10 weeks can either be returned (with refunding costs) or kept in Amazon’s inventory at a 25% retention fee for unsold items. Born to Run doesn’t apply to Direct Import or Direct Fulfilment orders, and vendors should ensure no other active B2R offers exist on the same ASIN when submitting a new one. This programme empowers vendors to leverage their demand forecasts, drive initial sales, and proactively launch new products on Amazon.

Pros: Ideal for launching new products, minimising stock-outs, and boosting initial sales.

Cons: Incorrect demand estimates can lead to significant costs due to return or retention fees. Planning each new product launch requires careful coordination, as Amazon’s demand may differ from general retail trends for the same product. Unsold units after 10 weeks must either be returned (incurring refund costs) or incur a 25% retention fee. Additionally, for EU marketplaces, there’s a limited 5-week window to submit further Born to Run offers for the same ASIN, necessitating coordinated planning.

 

5. Pan European Inbound Consolidation Service (PICS)/Consolidation Fulfilment Service (CFS)

PICS helps European vendors streamline shipments by consolidating them across fewer fulfilment centres, providing cost efficiencies by allowing Amazon to cross-dock the goods upon arrival. In the U.S., the benefits of CFS are somewhat reduced, as Amazon often covers freight costs via the ARN framework, making consolidation less critical for U.S. vendors. However, CFS can still add value by allowing more organised, palletised shipments.

PICS requires a term discount (typically 4–8% of Cost of Goods Sold) but can reduce internal operational demands by enabling palletised shipments. A cautionary note: while palletised, mixed SKU pallets will still often go through the carton receive process and require carton-level identifiers to ensure goods are received under the correct vendor code. For mixed pallets, using a License Plate SSCC label is recommended, while single SKU pallets should use pallet-level SSCC labelling per ASN Version 2 requirements.

Pros: Reduced shipping locations mean fewer, larger orders that are usually palletised rather than in small parcels, making it easier for your warehouse to handle, similar to other retail partnerships.

Cons: Cost is a factor, with the required 4–8% term discount being significant. It’s essential to ensure convenience doesn’t lead to operational inefficiencies. Take a holistic view, factoring in lead times, warehouse handling, and terms costs to balance efficiency with your profit and loss. Additionally, vendors must pay a per-unit freight allowance fee for PICS use, adhere to palletised shipping and specific labelling standards, and provide eight weeks’ notice to terminate the service.

 

6. Acapulco

The Acapulco programme offers two formats: full truckload (FTL) and pallet ordering.

In FTL Acapulco, orders are rounded to the nearest full truckload, so that each purchase order (PO) fills an entire truck. This approach doesn’t increase the demand forecast for a product (ASIN); it simply consolidates the demand into a single truckload and reduces the number of fulfilment centres involved. FTL Acapulco operates under a unique vendor code and allows for mixed-ASIN truckloads. With an entire truck dedicated to the shipment, there’s a reduced risk of goods being damaged, lost, or stolen, as the truck goes directly to the fulfilment centre. However, good confirmation rates are essential. If you routinely reject a high percentage of items intended for a “full” truck, the load may no longer be sufficient to fill a truck, which can lead to scrutiny. Typically, a full truckload is ordered every two weeks under Acapulco.

Pallet ordering rounds orders to full pallet quantities, with orders priced at a discounted rate. Like FTL, pallet ordering operates on a separate vendor code, but it differs from bulk buy programmes.

Both FTL and pallet ordering under Acapulco are suitable for items with steady demand and high turnover, provided they have a reliable confirmation rate.

Pros: Shipping by full truck or pallet is operationally efficient, especially for high-demand items, allowing vendors to send large quantities in fewer shipments.

Cons: Cost, returns, and catalogue configuration are key considerations. Acapulco requires a discount, which impacts margins. If items don’t sell through as expected, there’s a risk of returns, making it crucial to select products with steady sell-through rates. Additionally, catalogue setup must be precise; misconfigured quantities may lead to ongoing manual adjustments, as pallet and truck quantities need to align accurately.

 

7. Direct Fulfilment (DF)

Direct Fulfilment (DF) allows vendors to ship products directly to the end consumer, akin to the Fulfilled by Merchant (FBM) model in Amazon’s seller ecosystem. DF orders must be either fully accepted or rejected in a so-called“fill or kill,” and must be confirmed within 24 hours of receipt —there is no partial fulfilment or split shipping.

DF is well-suited for high-value, bulky, or customisable items, such as televisions, large appliances (e.g., refrigerators, washing machines), or rarely stocked products with many variations such as made-to-order clothing. In this model, product availability status inside Amazon needs close monitoring, ideally through an automated feed of your stock levels to Amazon. As long as a product shows as “available,” it can be ordered by consumers, so having an automated feed ensures that your confirmation rate is as good as possible

DF also serves as a useful backup to maintain stock availability and bridge gaps in supply due to inbound delays or the standard PO process. For example, if a PO of 500 units is en route but not yet received, DF can step in to prevent stockouts during peak seasons or sudden demand spikes. This “dual offering” approach is effective for handling flash sales, lightning deals, or other high-demand periods while helping to avoid overstock.

Unlike Seller Fulfilled Prime (SFP), DF is part of the vendor model, meaning Amazon manages customer returns and support, allowing vendors to focus solely on fulfilment. DF operates under a unique vendor code and has a different integration method than retail POs. More info - {Link to EDI blog - and we probably should update that with the DF requirements too}

Vendors handling DF must also address data compliance, as Direct Fulfilment involves handling personally identifiable information (PII) for end consumers. PII data must be deleted within 30 days, retaining only what is necessary for accounting.

Pros: DF is ideal for larger, high-value, or custom items that benefit from direct-to-consumer shipping, minimising risk of damage, theft, and returns. The dual offering approach reduces the risk of stockouts during inbound delays or high-demand periods.

Cons: Direct Fulfilment requires substantial operational adjustments. As a D2C channel, DF is different from typical B2B operations, requiring warehouses to act quickly to accept or reject orders and provide real-time updates on stock availability. Vendors must also ensure data retention and compliance to meet Amazon’s regulatory standards.

 

8. Vendor Flex

Vendor Flex (VF) is an exclusive, invite-only programme for Amazon’s most strategic partners, in which vendors allocate a dedicated area of their warehouse for an Amazon team to fulfil orders directly. These designated areas, known as “Vendor Flex Nodes,” effectively integrate with Amazon’s fulfilment network.

In the VF model, purchase orders arrive under a separate Vendor Flex code. Instead of dispatching to an Amazon fulfilment centre, stock is transferred internally to the Vendor Flex node within the vendor’s warehouse. Once Amazon receives receipt of the stock, they manage the outbound fulfilment. Vendor Flex works alongside the regular PO process, with a buffer stock still shipped to traditional fulfilment centres to ensure availability during weekends, holidays, and other periods when the Vendor Flex warehouse is closed.

 

Here's a summary of which party is responsible for what:

 

Vendor Flex Aspect	Liability
Inventory	Owned by Amazon
Warehouse space	Provided, Insured against theft, fire, flood etc by Vendor
IT equipment, Packaging	Provided by Amazon
Carrier Pickup from Node	Provided by Amazon
Labour and Workforce	Sourced by and Paid by the Vendor
Equipment, Benches, Pump trucks etc	Provided by Vendor

 

ASINs best suited for Vendor Flex include:

-Larger items

-High-value products

-Hazardous materials (hazmat)

-SIOC (Ships In Own Container; chargebacks apply if not eligible)

Pros: Vendor Flex can reduce shipping costs for “TheyPay” vendors, as Amazon organises logistics. With Amazon responsible for outbound packaging, the risk of prep chargebacks decreases, as does the likelihood of shortage claims. This model also eliminates the need for CARP bookings and allows for faster, priority handling of goods as they are managed directly by Amazon within the vendor’s warehouse.

Cons: Vendor Flex is a highly customised programme that represents a long-term, deeper partnership with Amazon. Contracts are individually tailored, making it difficult to standardise cost estimates. Being invite-only for top-tier vendors, Vendor Flex should be considered carefully with expert consultation to assess the fit and financial implications on a case-by-case basis.

9. Direct Import

Direct Import enables vendors to ship containers directly from their factory or supplier to Amazon’s fulfilment centres (FCs), resembling a container-sized FBA shipment. Unlike FBA, Amazon takes on the role of Importer of Record, covering import clearance and transit costs, while vendors remain responsible for export clearance.

With a high degree of consolidation, Direct Import minimises injection points into Amazon’s FC network by transporting goods directly from port to warehouse. This approach not only reduces road mileage but also has a lower carbon footprint by using larger vessels. Direct Import transactions are hedged in a single currency with a fixed exchange rate, and the inventory and associated risks are transferred to Amazon from the moment of transport and storage.

Direct Import is best suited for products sourced outside the EU, with minimum order quantities (MOQ) per ASIN that align with one month’s sell-through demand. For instance, if an ASIN sells 2,000 units monthly, the MOQ should remain below 2,000 units to reduce Amazon’s stock holding risk, though exceptions are sometimes made.

One major drawback of Direct Import is its lead time, which could range from 21 to 60 days depending on shipping schedules. This programme is ideal for larger, high-demand items with steady, predictable demand.

A key benefit of Direct Import is cash flow, as the invoice terms start once Amazon collects the goods from the port. With 60-day terms and an extended shipping journey, vendors are often paid soon after the goods arrive at the warehouse.

A variation of Direct Import, known as “FC Direct,” still sources directly from the factory but typically involves continental transport without a sea crossing. In this model, goods are collected by truck as full truckloads with single ASIN pallets, ideal for EU vendors sourcing within the EU.

Pros: Direct Import offers guaranteed, high-volume orders shipped directly from factories into Amazon’s network, with advantageous cash flow terms.

Cons: The lengthy shipping time introduces uncertainty around availability dates in Amazon’s warehouses, necessitating an agile, fast-moving internal process to manage demand spikes and regular orders. As Amazon fully controls the inventory, these goods are exclusively reserved for Amazon and cannot be used to fulfil other customer orders.

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Amazon’s array of supply chain programmes offers vendors unique tools to tailor their fulfilment strategy, from the foundational Regular PO Ordering to the invite-only Vendor Flex. Each programme presents specific opportunities for optimising costs, boosting demand forecasting, and navigating supply chain challenges. Here’s how to make the most of Amazon’s offerings:

- For Consistent Reliability: Regular PO ordering serves as the backbone, keeping orders steady but occasionally unpredictable. Ideal if your demand fluctuates and you’re looking for a stable, if basic, option.

- For Smarter Forecasting: Forward Orders help you anticipate demand weeks ahead, ideal for vendors who can manage stock flow to avoid overcommitting and are focused on refined forecasting. 

- For Volume Discounts with Trade-offs: Bulk Buy Orders deliver cost savings for high-volume commitments, but only if you’re prepared for potential unsold inventory and leaner margins.

- For New Product Launches: Born to Run/VIO programmes can accelerate new product sales, though precise forecasting is crucial to avoid returns or retention fees if demand falls short.

- For Consolidated Shipping: PICS is a win for European vendors seeking freight efficiencies, though it comes with terms that require careful compliance and operational finesse.

- For High-demand, Large-quantity Items: Acapulco’s full truck or pallet ordering can streamline logistics and lower per-unit costs, provided your demand forecasting and catalogue management are accurate.

- For Direct-to-Consumer Fulfilment: Direct Fulfilment (DF) suits bulky or high-value items sold directly to consumers, offering reduced stockouts and a buffer against PO delays, though it demands responsive, B2C-ready operations.

- For Strategic Partnerships: Vendor Flex deepens your relationship with Amazon, offering shipping and handling efficiencies, but as an invite-only programme, it’s best suited to top-tier vendors ready for a committed partnership.

- For Cash Flow Benefits: Direct Import allows you to ship directly from factories to Amazon’s network, an efficient option for predictable, high-volume products with longer lead times.

Selecting the right Amazon programme depends on a clear understanding of your product demand, forecasting capabilities, and operational readiness. The right choice can boost efficiency, improve cash flow, and position your business for growth in Amazon’s marketplace.