When selling on Amazon, one of the things you should pay particular attention to is your fulfilment techniques. An Amazon FBA specialist can assist you with this topic. You have the option of using Amazon FBA, FBM, or the lesser-known SFP for this. FBA, FBM and SFP are the acronyms for Fulfillment by Amazon, Fulfilment by Merchant, and Seller-Fulfilled Prime, respectively. Despite the fact that FBA offers more advantages than the other fulfilment methods, you are free to choose whichever works best for you.
In this article, we list out the advantages and disadvantages of both Amazon FBM and FBA and weigh up the best option for your online business. Find out which you should choose in this Amazon FBA vs. Amazon FBM battle of fulfillment methods.
What is Amazon FBA?
Simply said, Amazon FBA stands for Fulfilled by Amazon — in Amazon’s words, “you sell it, we ship it.” FBA sellers keep their products at Amazon fulfilment centres, where Amazon chooses, packs, and ships all of the seller’s product orders.
What is Amazon FBM, and how does it work?
Amazon FBM, on the other hand, stands for Fulfilled by Merchant. Amazon merchants use FBM to manage storage and every part of the order fulfilment process.
An FBM seller is in charge of producing listings and then choosing, packing, and shipping orders directly to customers after a sale is made. Keep in mind that you’ll be solely responsible for any late or damaged deliveries, as well as any products that go missing.
Benefits of Using FBA
Amazon will take the hassle of ‘booking’ (my new verb) out of your hands in exchange for a significant portion of your income per sale.
Except for identifying your stock, you’re outsourcing practically everything to Amazon. They’ll store, coordinate, package, and send your “book” as you sit at home doing whatever your heart desires.
It sounds far more peaceful than it is until you start printing labels and making UPS appointments. You’ll still have to keep track of your inventory, deal with stranded items, and Amazon may occasionally damage your books.
Once you start FBA you realise that there’s a whole bunch of additional things that you didn’t necessarily sign up for and these can be a hassle and a little daunting.
Whilst it’s relatively easy to FBA your stock, getting answers about what to do when things go wrong is about as easy as getting a PhD in Astrophysics.
Benefits of Using FBM
The main benefit of using FBM is an increase in your profit margins. You’ll get more of your profit and more direct control of your business.
You’re outsourcing less to Amazon and you’ll reap more of the rewards per book that you sell. This, in turn, means that you can price yourself competitively and you’ll be able to sell lower-priced books at higher volumes.
If you can rapidly scale up your business and get your hands on a lot of books at next to nothing then you’ll be retiring pretty damn fast on this side hustle of yours. Needless to say, I’m jealous.
If you’ve got a big empty space you’re dying to use and enjoy the cut and thrust of running your own business on a full-time basis then this might be the best option for you.
The downsides of FBA
- No control over service fees: Amazon often restructures fulfillment fees, which can make it hard to predict profits. Merchants also have monthly and long-term storage fees to contend with.
- Extra shipping costs: As well as Amazon’s fees, sellers need to ship products to Amazon’s fulfillment centers.
- Off-brand packaging: You can’t showcase your brand as Amazon has strict packaging guidelines and doesn’t allow marketing materials.
- Amazon’s fulfillment fees can be very costly. Each unit is charged depending on its weight or size. Monthly storage charges also triple from October-December. However, Amazon does help FBA sellers by providing plenty of online resources.
The downsides of Amazon FBM
Less likely to appear in the Buy Box: Amazon favors sellers that are fulfilled by Amazon
No access to Amazon Prime: unless you use Seller Fulfilled Prime you won’t have the benefits that come with Amazon prime
Time-consuming logistics: you’ll have to take the time and effort to sort out your own end-to-end logistics rather than allowing Amazon to take care of it
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FBA vs FBM: deciding what’s best for your business
So after all this information, what’s the answer to the FBA vs FBM question? The answer: it depends on your business and strategy.
Because of its pricing structure, Fulfillment by Amazon is best suited to small, lightweight products which sell quickly in high volumes.
It may also suit businesses who don’t have the ability to effectively store, handle, ship and provide customer service. Amazon will look after all of this, while you invest time in other areas, such as ecommerce marketing and procurement.
Remember, seller ratings are essential to success on the Amazon Marketplace so if you can’t efficiently provide these services by yourself, opt for FBA.
Amazon FBM is best for large, heavy items (over 20lb) with small margins. It’s also recommended for one-off or exclusive products. If inventory turnover is slow, FBM will also avoid Amazon’s storage fees.
Well-established businesses selling through multiple channels are likely to have shipping and customer service in place already. If they want to improve efficiency, they can simply invest in specialized support software.
Choosing whether or not to use Amazon fulfillment services is a daunting decision. If you’re still unsure which wins out in the FBA vs FBM debate, use an FBA calculator to estimate your potential Amazon Fulfillment fees. Or register for both FBA and FBM, then trial each fulfillment method for different products.