What are the Differences Between Amazon FBA Fulfillment by Amazon and FBM Fulfillment by Merchant? Which Fulfillment Method is Right for You?

As one of the giants of e-commerce around the world, Amazon offers millions of sellers the opportunity to get on its platform. However, it is not only product selection and marketing skills that play a critical role in developing a successful sales strategy, but also choosing the appropriate fulfillment method.

Amazon offers sellers two main fulfillment options:

FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant)

So what are the differences between FBA and FBM? Which system is better for you and your business model? In this article, we'll take a detailed look at what Amazon's FBA and FBM options are, the advantages and disadvantages of each, and help you understand which way is right for you.

Whether you are a new Amazon seller or an entrepreneur re-evaluating your current strategy, knowing the specifics of FBA and FBM systems can help you make the right decisions and manage your business more efficiently. If you are ready, let's start exploring both fulfillment methods!

What is Amazon FBA (Fulfillment by Amazon)?

FBA: Fulfillment by Amazon literally means fulfillment by Amazon. Basically, it means that Amazon will take care of the storage and shipping of products on your behalf, so you can sell physical products without having a warehouse or worrying about logistics. This is one of the great “equalizers” provided by Amazon and allows small businesses and even individual entrepreneurs to compete with much bigger brands on Amazon, the world's biggest store.

What are the Advantages of Using FBA?

Amazon's Fulfillment by Amazon (FBA) service offers many advantages for sellers. Here are the main benefits of the FBA system:

Amazon Prime Access

Amazon FBA gives you the opportunity to offer your products to customers who are Amazon Prime members. This means that your products will be listed with a Prime badge. Prime members can benefit from free and fast shipping, which means your products will reach more customers. Products with the Prime label are often more desirable, which can increase your sales.

Example: With FBA, your products will be included in the Prime program, which means that your products will be offered free 2-day shipping. This feature increases the likelihood of being preferred by Prime member customers.

Fast and Reliable Shipping Service

FBA gets your products to customers quickly through Amazon's advanced logistics network. Thanks to Amazon's extensive distribution network, orders are usually delivered within 24-48 hours. This fast delivery increases customer satisfaction and leads to positive reviews.

Example: Using FBA, your products are shipped from Amazon's large distribution centers and offered fast delivery options. This allows you to manage shipping to a minimum.

Customer Service and Returns Management

FBA allows you to leave customer service and returns to Amazon's team of professionals. Amazon communicates with customers, answers questions and manages returns. This eases your operational burden and increases customer satisfaction.

Example: Amazon provides customer support for orders made through FBA and manages return requests directly. This resolves customer issues without requiring you to run an additional support process.

High Quality Storage and Packaging

FBA guarantees that your products are stored and professionally packaged to a high standard. Amazon ensures that your products are stored securely and the packaging processes are carried out in a professional manner.

Example: With FBA, your products are stored and shipped in Amazon's warehouses in accordance with high quality packaging standards.

Higher Visibility and Sales Potential

FBA can help your products rank higher in Amazon's search results. Amazon's algorithm usually lists FBA products higher than FBM products. Also, FBA products can appear in categories such as Amazon's “Best Sellers”.

Example: Thanks to FBA, your products can stand out in Amazon search results and appear in Amazon's recommended products section, which can increase your visibility.

More Sales Channel Options

FBA allows you to offer your products not only on Amazon but also on other sales channels. Thanks to Amazon's Multichannel Fulfillment (MCF) service, you can also use your FBA stocks on platforms such as eBay and Shopify.

Example: With FBA, you can sell your products on e-commerce sites other than Amazon and manage all orders through Amazon's logistics network.

Efficiency in Inventory Management

FBA supports the dropshipping model. Amazon keeps track of your inventory levels and automatically restocks when necessary thanks to its inventory product management. This makes your inventory management process more efficient.

Example: With FBA, Amazon monitors the stock level of the products and does not demand inventory management from you by automatically restocking as needed.

Amazon FBA offers fast shipping, customer service support, advanced storage and packaging services to make your e-commerce operations more efficient. By taking advantage of Amazon Prime benefits, it increases your visibility and expands your sales potential. All these advantages show that FBA can be an important tool to become a successful seller on Amazon.

What is Amazon FBM (Fulfilled by Merchant)?

Amazon FBM is when sellers fulfill their own orders instead of using Amazon's own distribution centers. With FBM, sellers store their inventory in their own warehouse or facility and ship orders directly to customers when they receive an order on Amazon's marketplace.

FBM gives sellers more control over their inventory and fulfillment processes. It's generally a good option for sellers who have the resources to handle fulfillment on their own or want to offer customized fulfillment options. It can also be a good option for sellers who are just starting out and don't have enough sales volume to justify the cost of using Amazon's fulfillment centers.

However, FBM requires sellers to handle all fulfillment aspects such as picking, packing, and shipping orders and handling customer service inquiries and returns. Sellers must also meet Amazon's fulfillment and customer service performance standards to keep their seller accounts in good standing.

What is Amazon SFP (Seller Fulfilled Prime)?

Seller Fulfilled Prime (SFP) is a variant of FBM that allows sellers to deliver from their own warehouse directly to local Prime customers. By displaying the Prime badge on their offers, sellers commit to fulfill orders with one-day and two-day delivery for Prime customers at no additional cost. To be eligible for Amazon SFP, sellers must meet strict performance standards, including free one-day and two-day delivery for Prime customers, free nationwide standard shipping for all customers, and other criteria such as on-time delivery rate, valid tracking rate, and low seller-initiated cancellation rate.

How Does Amazon FBM Work?

An FBM Seller lists their products on Amazon's marketplace and then fulfills orders themselves.

Fulfillment Process

Here's a step-by-step breakdown of the Amazon FBM delivery process:

First, the FBM seller lists their products on Amazon and creates their seller account, which includes setting up shipping rates and policies.

When a customer orders a product, the order is sent to the seller for fulfillment.

Sellers then pick, pack, and ship the order themselves.

Once the order has been shipped, merchants must enter tracking information into their merchant account to inform the customer about the status of their order. Sellers handle any customer service requests that arise.

Fees and Expenses

The main cost difference between FBA and FBM is that in FBM the seller is responsible for paying all fulfillment costs; labor, materials and equipment, to name a few. FBM sellers are still responsible for paying the referral fee for each product sold on Amazon's marketplace. The referral fee is a percentage of the selling price of the product and varies depending on the category of the product.

Pros of Amazon FBM

Amazon FBM can be a great choice for sellers looking for more control, lower fees and more flexibility.

Lower Fees and Storage Costs

Sellers using Amazon FBM do not pay Amazon for storage because they do not use Amazon warehouses. Amazon also charges them less overall.

More Control Over Inventory and Branding

Sellers using Amazon's warehouses may have limits on the amount of inventory they can store there, which can lead to stock-outs in the event of a large increase in demand. With FBM, sellers have full control over inventory. FBM also allows sellers to add their own branding to packaging materials, which can help increase brand awareness and customer loyalty.

Flexibility in Shipping Options

FBM allows sellers to fulfill and ship orders in a way that works best for their business. Sellers can offer faster shipping times than Amazon's distribution centers. This can be especially important for sellers who quickly deliver the products that customers need.

Cons of Amazon FBM

Amazon FBM can be a great option for some sellers, but it can be time-consuming, provide limited access to Prime customers, and require more responsibility for sellers.

Time-Consuming Fulfillment Process

FBM requires sellers to handle every aspect of fulfillment (including picking, packing and shipping) in-house or with a fulfillment partner. This can be time-consuming, especially for merchants with a large volume of orders.

Limited Access to Prime Customers

One of the advantages of selling on the Amazon platform is access to a huge customer base. Products delivered through FBM are not eligible for Amazon Prime, which is a disadvantage for sellers who rely on Prime to attract customers.antaj olabilir.

Customer Service and Responsibility for Returns

With FBM, brands take responsibility for all aspects of the fulfillment process, including customer service and returns. These can also be time-consuming aspects of the fulfillment process.

FBA and FBM Differences

When selling on Amazon, you can deliver your products to customers with either FBA (Fulfillment by Amazon) or FBM (Fulfillment by Merchant). Both methods have their own advantages and disadvantages. In this section, we will compare the main differences between FBA and FBM and the features of both systems in detail.

Warehousing and Logistics Management

FBA Advantage: Thanks to Amazon's warehousing and logistics processes, you don't have to manage your orders directly.

FBM Advantage: You can control logistics processes by storing your products in your own warehouse.

Customer Service and Returns Management

FBA Advantage: Amazon handles all services for you, such as customer support and returns.

FBM Advantage: You can manage customer support and returns yourself, giving you more control over these processes.

Costs and Fees

FBA Advantage: FBA offers bulk costs instead of high costs thanks to Amazon's advanced logistics network.

FBM Advantage: You are limited to shipping and packaging costs only, with no extra costs for fulfillment and warehousing.

Sales Potential and Visibility

FBA Advantage: Provides more visibility for your products with prime advantage and top ranking opportunities.

FBM Advantage: You can offer your products to general Amazon users outside of Prime, but visibility may be lower.

Flexibility and Control

FBA Advantage: It alleviates your workload by taking on Amazon's operational burden.

FBM Advantage: Provides flexibility by keeping control of all processes.

Stock Management and Storage

FBA Advantage: You can perform inventory management and storage operations with the management systems provided by Amazon.

FBM Advantage: Provides complete independence in warehousing and inventory management.

Conclusion

The FBA and FBM systems on Amazon offer various advantages according to different needs and business strategies. FBA offers great opportunities such as Prime benefits, fast shipping and customer service support, while FBM gives you complete control, cost savings and flexibility. Depending on your needs and goals, you can evaluate which of these two systems suits you better and choose the best option. You can use the FBAPro Private Label 2.0 training course to learn and manage this whole process yourself.

If you choose FBA, you can benefit from all the logistical advantages Amazon offers, while if you choose FBM, you can better control your own processes and manage your costs.