Ecommerce Ecommerce Logistics & Fulfillment 1 — Questions and Answers
Question 1: What does 'fulfillment by Amazon' (FBA) mean for a third-party seller?
- Amazon stores, picks, packs, and ships the seller's products and handles customer service (Correct answer)
- The seller ships orders directly to Amazon customers without Amazon's involvement
- Amazon buys the seller's inventory wholesale
- Amazon provides the seller a free warehouse subscription
Correct answer: Amazon stores, picks, packs, and ships the seller's products and handles customer service
With FBA, sellers send inventory to Amazon's fulfillment centers and Amazon handles all warehousing, picking, packing, shipping, and returns.
Question 2: What is dropshipping and what is its main operational advantage for new ecommerce merchants?
- Selling products you don't physically stock — the supplier ships directly to the customer — eliminating upfront inventory costs (Correct answer)
- Offering free same-day delivery by partnering with local couriers
- Using a 3PL to manage returns from customers
- Pre-ordering large inventory quantities at a discount
Correct answer: Selling products you don't physically stock — the supplier ships directly to the customer — eliminating upfront inventory costs
Dropshipping removes the need to hold inventory, so merchants can launch with low upfront capital while offering a wide product catalog.
Question 3: What is a third-party logistics provider (3PL)?
- An outsourced company that handles warehousing, order fulfillment, and sometimes returns on behalf of an ecommerce brand (Correct answer)
- A shipping carrier like UPS or FedEx that delivers directly to consumers
- A software platform that connects multiple shipping carriers via a single API
- A manufacturer that also delivers finished goods to the brand's warehouse
Correct answer: An outsourced company that handles warehousing, order fulfillment, and sometimes returns on behalf of an ecommerce brand
3PLs like ShipBob or Whiplash receive a brand's inventory, store it, pick and pack orders, and hand them off to carriers for last-mile delivery.
Question 4: What is 'last-mile delivery' in ecommerce logistics?
- The final step of the delivery process from a local distribution hub to the customer's door (Correct answer)
- The shipping route between the manufacturer and the brand's warehouse
- The handoff between a 3PL and the shipping carrier
- Returning a package from the customer back to the warehouse
Correct answer: The final step of the delivery process from a local distribution hub to the customer's door
Last-mile delivery is typically the most expensive and time-consuming part of the shipping process because it involves delivering to many individual addresses.
Question 5: Which shipping strategy offers free shipping to all customers above a certain cart value?
- Free shipping threshold (Correct answer)
- Flat-rate shipping
- Real-time carrier rate
- Subscription-based shipping
Correct answer: Free shipping threshold
A free shipping threshold (e.g., 'Free shipping on orders over $50') incentivizes customers to increase their order size, boosting AOV while partially offsetting shipping costs.
Question 6: What does SKU stand for and how is it used in ecommerce inventory management?
- Stock Keeping Unit — a unique identifier assigned to each distinct product variant for inventory tracking (Correct answer)
- Sales Key Upgrade — a pricing modifier applied to premium products
- Shipping Key Unit — a barcode used only by the carrier
- Store Knowledge Update — a changelog entry for product edits
Correct answer: Stock Keeping Unit — a unique identifier assigned to each distinct product variant for inventory tracking
SKUs allow merchants to track individual product variants (size, color, etc.) separately, enabling accurate inventory counts and reorder triggers.
Ecommerce Ecommerce Logistics & Fulfillment 1
What does 'fulfillment by Amazon' (FBA) mean for a third-party seller?