As an Amazon seller, choosing the right fulfillment strategy, FBA vs FBM, is crucial to elevate your business in the ever-competitive Amazon marketplace. Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) are the two most common ways to sell on Amazon. While both have their own advantages and disadvantages, one may be better suited for your business needs than the other.
tl;dr – If you want to have ease of daily workload, FBA offers a great advantage. If you use the same stock to sell on multiple platforms, FBM may be the better choice. FBA can lead to higher sales volume but less control
In this article, we will delve into the differences between FBA vs FBM and help you determine which Amazon strategy is the best fit for you.
Key Takeaways:
- FBA (Fulfillment by Amazon) is an Amazon fulfillment method where sellers send their products on Amazon to Amazon’s fulfillment centers and use Amazon employees to pack and ship the products.
- FBM (Fulfillment by Merchant) is an Amazon fulfillment method where sellers handle the storage, packaging, and shipping of their products themselves at their own facility.
- The choice between FBA vs FBM fulfillment option depends on your specific business goals and requirements.
- Both FBA and FBM have associated fees, and it’s essential to calculate the costs to make informed decisions about profitability.
- Carefully evaluate your priorities and use the information in this article to determine which strategy is best for your Amazon business.
What is FBA (Fulfillment by Amazon)?
Fulfillment by Amazon (FBA) is an Amazon fulfillment method that offers sellers a convenient way to fulfill orders. With FBA, sellers list a product on Amazon, then send their products to Amazon’s fulfillment centers, where Amazon handles care of the storage, packaging, and shipping of the products. Leveraging FBA allows you to use Amazon’s distribution to scale your business faster.
FBA sellers enjoy several benefits, such as Amazon Prime eligibility, which allows their products to be eligible for Prime shipping. This can increase sales and customer satisfaction, as more customers are likely to purchase products that are eligible for Prime shipping. FBA also gives sellers access to Amazon’s vast customer base, which can elevate their business to the next level.
It’s important to note that there are fulfillment fees and storage fees associated with FBA. Amazon charges a fulfillment fee is based on the size and weight of the product and covers the cost of picking, packing, and delivering orders. The storage fee is based on the amount of space the product takes up in Amazon’s fulfillment center and applies monthly.
It’s essential for sellers to carefully calculate these costs using an FBA calculator to determine whether FBA is the best fulfillment method for their business. Many sellers choose FBA to become eligible for Amazon prime let Amazon ship their FBA products to the customers.
What is Amazon FBM?
FBM stands for Fulfillment by Merchant. It is an Amazon fulfillment method where sellers are responsible for handling the storage, packaging, and shipping of their products themselves, without relying on Amazon’s storage and shipping services. With FBM, sellers take care of all aspects of the fulfillment process, from picking and packing items to shipping them to the buyers as well as customer service. This means that FBM sellers have more control over the fulfillment process and can personalize their customer service.
However, unlike FBA, it does not come with the Amazon Prime badge and automatic access which millions of Amazon customers love. This means that FBM sellers may have decreased sales on their Amazon store. On the other hand, FBM can be more cost-effective as it does not have the additional Amazon fulfillment fees associated with FBA.
One of the key benefits of using FBM is the ability to manage your own inventory, which can be a critical component to ensuring your products stay in-stock. In contrast, having your products stocked in an Amazon warehouse through FBA can create financial challenges if inventory is not managed effectively and can result in additional fees.
Another important consideration is the level of control you have over the fulfillment process. With FBM, sellers can customize packaging and shipping methods to create a unique brand experience for buyers. However, FBM also puts the onus on sellers to ensure that orders are fulfilled accurately and on-time. Handling a single inventory to handle multiple sales platforms like Ebay and Shopify are also easier
Benefits of Amazon FBM (Fulfillment by Merchant):
- FBM offers more control over fulfillment process
- Possibly lower fulfillment fees
- Ability to personalize customer service and create a unique brand experience
- Gain greater insight into inventory management and customer buying habits
Drawbacks of FBM:
- No Amazon Prime badge or access to millions of Amazon customers
- Requires more time and effort to manage inventory and fulfillment process
- Higher responsibility for accuracy and effectiveness of fulfillment process
- Puts more pressure on sellers to market and drive traffic to their Amazon store
Overall, FBM is a great option for sellers who are willing to put in more effort to manage fulfillment and want more control over the fulfillment process. It can also be more cost-effective for sellers with lower sales volumes or niche markets. However, for those who are looking for a more hands-off approach to fulfillment and want to leverage Amazon’s infrastructure and customer base, FBA might be a better option.
Pros and Cons of FBA
Fulfillment by Amazon (FBA) is a popular option for Amazon sellers looking to streamline their operations. Here are some of the pros and cons of using FBA:
| Pros | Cons |
|---|---|
| Access to Amazon Prime customers: FBA sellers are eligible to offer Prime shipping, which can attract more customers. | Additional fees: FBA comes with fulfillment and storage fees you pay Amazon, that can add up and impact your bottom line. |
| Amazon’s fulfillment infrastructure: Amazon takes care of storage, packaging, and shipping, allowing FBA sellers to save time and focus on other parts of their business. | Increased competition: With FBA, you’re not the only seller on Amazon offering the same product on Amazon, which can make it harder to stand out. |
| Prime badge: FBA orders come with the Prime badge, which can make your products more attractive to Prime customers. |
It’s important to weigh the pros and cons of FBA carefully before making a decision, especially considering the fulfillment fees associated with this option. However, for many sellers, the benefits of FBA outweigh the costs.
Pros and Cons of FBM
FBM (Fulfillment by Merchant) allows sellers to handle the storage, packaging, and shipping of their products themselves. This option gives sellers more control over the fulfillment process and eliminates the need for additional FBA fees. FBM also offers a unique opportunity to offer Seller Fulfilled Prime, which allows sellers to access Amazon Prime customers without using FBA. However, FBM requires sellers to manage storage, packaging, and shipping themselves, which can be time-consuming.
| Pros | Cons |
|---|---|
| More control over fulfillment process | Increased responsibility for storage, packaging, and shipping |
| No additional FBA fees | Time-consuming management of fulfillment tasks |
| Possibility to offer Seller Fulfilled Prime | No access to Amazon’s fulfillment infrastructure |
Ultimately, the decision to use FBM over FBA depends on the seller’s business needs and priorities. While FBM allows for greater control over fulfillment and the possibility to offer Seller Fulfilled Prime, it also requires additional management and responsibility. Use this information to make an informed decision based on your specific business goals.
Differences Between FBA vs FBM
When comparing FBA vs FBM, it’s essential to understand the differences between these two Amazon fulfillment methods. The primary contrast lies in who handles the fulfillment process and customer service.
FBA, or Fulfillment by Amazon, is a method where Amazon takes care of the storage, packaging, and shipping of products. With FBM, or Fulfillment by Merchant, sellers are responsible for storing, packaging, and shipping their products themselves.
One advantage of FBA is that it allows sellers to leverage Amazon’s vast infrastructure and logistics network to reach millions of customers who prefer Prime shipping. Sellers who use FBA also have access to Amazon Prime’s customers, which can elevate their business. However, FBA requires sellers to send their inventory to Amazon’s fulfillment centers, which can be a drawback for some sellers.
On the other hand, FBM provides sellers with more control over the fulfillment process. Sellers do not need to pay Amazon’s fulfillment fees and can store their products themselves, which can be cost-efficient. However, selling with FBM does not come with the Amazon Prime badge, which may result in decreased visibility and customer trust.
In summary, FBA offers convenient access to Amazon’s infrastructure and millions of customers, while FBM provides more control over the fulfillment process and can be cost-efficient. To decide which Amazon fulfillment method is best for your business, consider your business goals and priorities, and carefully evaluate the pros and cons of each option.
Choosing Between Becoming a FBA Seller and FBM Seller
When it comes to choosing between Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM), the decision ultimately depends on your specific business needs and priorities.
If you’re looking to reach a larger customer base and leverage Amazon’s vast infrastructure, FBA may be the right choice for you. FBA offers benefits such as access to Amazon Prime customers and the Prime badge on orders, which can elevate your business. Additionally, since Amazon takes care of the storage, packaging, and shipping of your products, you’ll have more time to focus on growing your business instead of fulfillment tasks. However, it’s important to keep in mind that FBA does come with additional fulfillment fees and storage fees.
On the other hand, if you value control over the fulfillment process and want to avoid additional fees, FBM may be the better fit for your business. With FBM, you’ll handle the storage, packaging, and shipping of your products yourself. Although you won’t have access to the Amazon Prime badge, you can offer Seller Fulfilled Prime, which still allows you to reach many Amazon Prime customers. Additionally, you won’t have to worry about the additional fees associated with FBA, but you will need to manage the fulfillment process yourself.
Overall, when deciding between FBA vs FBM, it’s essential to evaluate your priorities and consider which strategy aligns best with your business needs. Both FBA and FBM have their pros and cons, so weigh them carefully and choose wisely.
Amazon Fees and Calculating Costs
When utilizing Amazon’s services, it’s important to understand the fees associated with each fulfillment method. For FBA, sellers can expect fulfillment fees based on factors such as product size and weight, as well as storage fees for keeping products in Amazon’s fulfillment centers. FBM, on the other hand, requires sellers to cover shipping costs themselves.
To make informed decisions about profitability, it’s crucial to use an FBA calculator or carefully calculate the costs of each fulfillment method. Take into account not only the fees but also the potential benefits such as Amazon Prime eligibility and access to millions of customers.
An FBA calculator can help estimate fees and potential profits, taking into account factors such as product category, size, and weight, as well as shipping and handling charges. This tool can be a valuable resource for sellers trying to determine the best fulfillment method for their business.
Comparison Table: Amazon Fees for FBA vs FBM
| FBA | FBM | |
|---|---|---|
| Fulfillment Fees | Based on product size and weight | N/A |
| Storage Fees | Based on amount of space used | N/A |
| Shipping Costs | N/A | Calculated based on shipping method and destination |
Note: fees are subject to change and may vary by product category and other factors. Always refer to Amazon’s fee schedule for the most up-to-date information.
What is Best for Your Amazon Business and Your Amazon Revenue?
Deciding whether to use FBA vs FBM depends on your specific business goals and requirements on fulfilling Amazon orders. FBA is a great option for sellers who prioritize convenience, want to leverage Amazon’s infrastructure, and gain access to the Prime badge. However, it comes with additional fees that could impact profitability. FBM, on the other hand, provides more control over the fulfillment process and can help avoid certain fees. Sellers who value control over fulfillment and want to avoid additional fees might find FBM to be the better option.
Ultimately, to determine which strategy is best for your Amazon business, carefully evaluate your priorities and use the information in this article to make an informed decision. Whether you choose FBA or FBM, either Amazon strategy could elevate your business to new heights, depending on your specific goals and requirements. Thank you for reading, and we hope this article has helped you decide which strategy is best for your business. We hope you have success on Amazon. Check out our completely FREE COURSE to get started selling on Amazon.
FAQ
What is the difference between Amazon FBA vs FBM?
The main difference between FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant) is who handles the fulfillment process. With FBA, Amazon takes care of storage, packaging, and shipping, while with FBM, sellers are responsible for these tasks themselves.
What is FBA Amazon Fulfillment?
FBA (Fulfillment by Amazon) is an Amazon fulfillment method where sellers send their products to Amazon’s fulfillment centers. Amazon takes care of the storage, packaging, and shipping of the products. Most Amazon FBA sellers say they have higher amazon sales due to the increased buybox.
What is FBM?
FBM (Fulfillment by Merchant) is an Amazon fulfillment method where sellers handle the storage, packaging, and shipping of their products themselves.
What are the benefits to use Amazon FBA?
FBA offers advantages such as access to Amazon Prime customers, Amazon’s fulfillment infrastructure, and the Prime badge on orders. It also relieves sellers from the packaging and shipping responsibilities and orders fulfilled by Amazon saving labor costs. Products fulfilled by Amazon using Amazon FBA generally get more Amazon orders due to higher buybox rotation
What are the benefits to use Amazon FBM?
FBM provides sellers with more control over the fulfillment process and eliminates the need for additional FBA fees. It also allows sellers to offer Seller Prime, gaining access to Amazon Prime customers.
What are the differences between FBA vs FBM?
The main difference lies in who handles the fulfillment process. With FBA, Amazon takes care of storage, packaging, and shipping, while with FBM, sellers are responsible for these tasks. FBA requires sending inventory to Amazon’s fulfillment centers, while FBM allows sellers to store inventory themselves.
How do I choose between Amazon FBA vs FBM as a seller?
The choice depends on your business needs and priorities. FBA may be suitable for sellers who want to leverage Amazon’s infrastructure and reach a larger customer base, while FBM might be a better fit for sellers who value control over the fulfillment process and want to avoid additional fees. Some sellers choose to use mostly FBA inventory but when they run out of FBA inventory they will use the FBM method and fulfill from their warehouse.
What fees are associated with FBA and FBM?
Both FBA vs FBM have associated fees. FBA has fulfillment fees and storage fees, while FBM has shipping costs. Sellers should use an FBA calculator or carefully calculate the costs of each method to make informed decisions about profitability.
Which fulfillment method is best for your business?
The best strategy depends on your specific business goals and requirements. Evaluate your priorities and consider the convenience and reach offered by FBA, as well as the control and potential cost savings provided by FBM.
How do I enroll into the Seller Fulfilled Prime program (SFP)?
To use Amazon’s seller fulfilled prime program, you must have a proven track record of ontime shipments of FBM orders. After a certain period, Amazon will allow you to do a trial period. While seller fulfilled prime seems like a great option many Amazon sellers feel the ability to find affordable shipping options to fulfill the SFP obligation is too expensive.
What is the difference in FBM vs SFP?
Both are considered fulfilled by merchant though the SFP will display the amazon prime badge and will be eligible for Amazon Prime free two-day shipping to over a million Amazon Prime members. These shipments often must be fulfilled with guaranteed shipping options like UPS 2 Day or USPS overnight. These fulfillment costs are very expensive though there are some cheaper options available based on the customer proximity to you.
