As an Amazon seller, one of the biggest decisions you’ll face is whether to use a prep center or handle everything yourself. Some sellers swear by prep centers for their efficiency and scalability, while others prefer the control and cost savings of prepping in-house.

In this guide, we’ll walk through both perspectives, explore how prep centers work, and share insider tips to help you decide if outsourcing prep is right for your business.

What Is a Prep Center?

A prep center is a third-party service that receives your inventory, inspects it, prepares it according to Amazon’s requirements, and ships it to Amazon’s fulfillment centers.

Services often include:

• Labeling with FNSKU stickers
• Polybagging and bubble wrapping
• Bundling or kitting multiple units
• Storing short-term inventory before shipping

Instead of filling your living room with boxes and bubble wrap, you can outsource the entire process. But that convenience comes at a cost, and whether it’s worth it depends on your business model.

When a Prep Center Makes Sense

According to experienced sellers, prep centers are most useful for:

• Online Arbitrage (OA): Buying products online and shipping directly to a prep center saves time and can avoid sales tax if you choose one in a tax-free state.
• Wholesale: Large, repetitive orders are easy for prep centers to process efficiently.
• Private Label: Prep centers can handle custom packaging, labeling, and compliance checks.

For retail arbitrage (RA)—buying from thrift stores, garage sales, or clearance aisles, using a prep center rarely makes sense. You’d ship everything twice, adding unnecessary cost and delays.

One seller started with a prep center immediately because his state charged 10% sales tax. Paying ~$1.50 per unit to a prep center was cheaper than paying tax on every purchase, and it freed him to focus on sourcing instead of labeling.

What to Look for in a Prep Center

Not all prep centers are created equal. Top selection criteria:

1. Communication: Fast, open lines via phone, email, or messaging apps. Issues happen—lost packages, damaged goods, mislabels—and slow replies cost money.
2. Size and Relationships: Smaller “mom-and-pop” centers often provide better service and flexibility than high-volume operations.
3. Turnaround Time: Test with a small order. If it takes five days to move inventory, you’ll miss sales opportunities.
4. Location: Tax-free states (e.g., Oregon, New Hampshire) help arbitrage sellers save money, though fees may be slightly higher.

Costs: What to Expect

Prep centers typically charge $0.99–$1.50 per unit for standard items, with add-ons such as:

• $0.30 for polybagging
• $0.30 for bubble wrap
• $1.79 flat fee for small bundles/multipacks
• Discounts for high-volume sellers (5,000+ units/month)

Costs vary by model: arbitrage sellers with mixed, smaller shipments usually pay more per unit than wholesalers sending pallets of a single SKU.

Downsides of Using a Prep Center

While convenient, prep centers aren’t perfect. Common drawbacks include:

• Loss of Control: You can’t inspect items yourself—riskier if you source from eBay or inconsistent suppliers.
• Slower Lead Time: Routing through a prep center adds a step before inventory hits Amazon.
• Trust Issues: Some sellers report centers going dark, abandoning packages, and tying up cash flow.
• Less Flexibility: With inventory at home, you can flip to FBM quickly. Prep centers usually can’t accommodate that.

For sellers who value speed and control, in-house prep may still be the smarter choice.

Tips for Working With a Prep Center

If you decide to outsource, here’s how to make the relationship smoother:

1. Follow Their Process: Most use software or Sheets to track shipments. Provide tracking numbers, purchase details, and invoices accurately.
2. Over-Communicate: Share what’s coming, how it should be prepped, and confirm check-in accuracy.
3. Know Amazon’s Rules: You’re still responsible for compliance; review Seller University prep guidelines.
4. Budget Correctly: Fragile items (bottles, toys) may need extra materials—build higher prep costs into margins.

Why Some Sellers Skip Prep Centers

Not every seller outsources. Those who handle prep themselves cite three main reasons:

• Inconsistency of Products: eBay-sourced items can be damaged, counterfeit, or poorly packaged; sellers want to inspect and control quality.
• Cost Savings: In-house prep can be <$1 per unit vs. $2–$3 at some prep centers.
• Trust and Control: Faster turnaround, no third-party risk, and full oversight.

These sellers often reinvest profits to build small in-house teams instead of outsourcing.

Conclusion

So, should you use a prep center?

• If you’re scaling online arbitrage, wholesale, or private label, a prep center can save time, eliminate tax headaches, and free you to focus on sourcing and strategy.
• If you rely on eBay flips, inconsistent suppliers, or want full control of your inventory, in-house prep may be safer and cheaper.

Ultimately, the right choice depends on your sourcing model, volume, and comfort with outsourcing. Whether you prep in-house or partner with a center, what matters most is building a reliable system that supports your Amazon growth.

Wanna find out more? Watch the video below!