FBA or FBM? Choosing Your Amazon Fulfillment Method

No matter where you begin your journey as an Amazon seller, the grass on the other side of the fence can always look a little greener. Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) — also known as the Merchant Fulfillment Network (MFN) — may only be a letter apart, but they are worlds apart in their implications. Before answering the FBA or FBM question for your business, explore our breakdown of the two fulfillment options to help you decide which is the best for you and your business. 

What are Amazon FBA and FBM?

Amazon FBA and FBM are the two ways independent merchants can sell products through the Amazon platform. Each method has its advantages and disadvantages.

What is Amazon FBM?

Amazon FBM, or fulfillment by merchant places all the heavy lifting on the seller. With FBM, sellers are responsible for handling the entire order fulfillment process, including storing inventory, picking and packing orders, and managing shipping and customer service. FBM puts more control and responsibility in the hands of the individual seller. There is still plenty of Amazon FBM guidance and support to help you succeed, but the execution is completely on you. 

What is Amazon FBA?

Amazon FBA, or Fulfillment by Amazon, is a service offered by Amazon that streamlines the order fulfillment process for third-party sellers. With Amazon FBA, sellers send their inventory to Amazon's fulfillment centers, and Amazon takes care of the storage, packing, shipping, and customer service for those products. This service is designed to simplify the logistics of selling on Amazon and allows sellers to leverage Amazon's extensive fulfillment network. While there are added FBA fees to cover these services, there are also added benefits. 

Regardless of whether you choose Amazon FBA or Amazon FBM, you will be held to many of the same Amazon seller guidelines. Even as an FMB seller, you will still have to meet or exceed Amazon's return policy for example.

So, Amazon FBA or FBM?

Fulfillment by Amazon stands as the preferred and often strategic choice for many Amazon sellers. This service revolutionizes the traditional approach to order fulfillment by placing the intricate logistics of storage, packing, and shipping in the hands of Amazon's extensive and efficient fulfillment network. Sellers who opt for FBA benefit from streamlined processes, faster shipping, and the coveted Amazon Prime eligibility. The advantages of FBA extend beyond convenience, as it allows sellers to focus on business growth and product development, leaving the intricacies of order management and customer service to the pros at Amazon.

Being eligible for Amazon Prime can significantly enhance product visibility and appeal to a broader customer base. While Amazon offers a seller-fulfilled Prime (SFP) program for FBM brands, the requirements to qualify are difficult to meet, and there is currently a waiting list to be approved for the program. 

This is not to say FBM doesn't have its advantages. There are some specialized products and situations for which FBM makes more sense. Luckily, sellers aren't restricted to only one choice between Amazon FBA and FBM. You can use FBA for most of your products and still sell different products — or even the same ones — through an FBM listing, or vise versa.

The Advantages of Amazon FBM

There are specific scenarios where it makes sense for a seller to use FBM. The biggest factor to consider is what the product you are selling is. Let’s dive into the advantages and disadvantages of Amazon FMB.

Pros:

• Cost Control: FBM allows you to have more control over your fulfillment costs, as you are handling storage and shipping directly.
• Customization: You have more control over packaging and can include personalized branding materials with your shipments like stickers or postcards. 
• Direct Customer Interaction: FBM allows you to have direct contact with your customers. This gives you the opportunity to build relationships with your customers and have more control over customer service.

Cons:

• Shipping Challenges: Managing shipping and handling can be time-consuming, especially as your business grows.
• Not Prime Eligible: Unless you offer your own fast shipping options, your products won't be eligible for Prime, reducing product visibility to Amazon Prime customers.
• Storage Concerns: You are responsible for storing and managing inventory, which may require more space and organization on your part.

In short, for large or very heavy items it might make sense to use FBM. Another time to consider using FMB for is if the product is a novelty item that is crafted or hand-made. If a product only sells a few times a year FBM is the smarter choice to avoid any of the warehousing or other FBA seller fees. 

The FBA Advantage

Amazon FBA has many advantages for sellers on the platform. Where FBA really shines is with scale. The smaller the item you are selling, the more this holds true. So what are the pros and cons of FBA?

Pros:

• Prime Eligibility: Products fulfilled by Amazon are eligible for Prime shipping, which can attract more customers due to the faster and free shipping options. This feature can significantly enhance the attractiveness and visibility of your products to customers.
• Scalability: FBA allows you to scale your business without worrying about order fulfillment, storage, and shipping logistics. Amazon takes care of these aspects for you.
• Customer Trust: Many customers trust products fulfilled by Amazon, and they are more likely to make a purchase if they know their order will be handled by Amazon.
• Time-Saving: FBA saves you time as you don't have to pick, pack, and ship orders. This allows you to focus more on growing your business and less on logistics. 

Cons:

• Fees: FBA comes with fulfillment and storage fees. While it can be convenient, these fees can cut into your profit margins.
• Limited Control: With FBA, you have less control over the fulfillment process. If there are issues with packaging or shipping, it may be harder for you to resolve them directly.
• Long-Term Storage: If your products don't sell quickly, you may incur long-term storage fees, which can be a disadvantage for slow-moving inventory.

Amazon Prime is 170 million members strong, many of which filter their searches for Prime eligibility. If you are not using FBA for your products, that means millions of customers will never even know your product exists. Another thing to consider is that shipping is also included in your seller fees, which are size- and weight-based. So, whether your customer orders $200 worth of your products shipped to Alabama or $5 to Alaska, it makes no difference to your bottom line, and Amazon takes responsibility for getting it there on time.

When you are selling the same product as other sellers, FBA can also give you an edge. Since Amazon trusts its own fulfillment system more than merchants', it will favor an Amazon FBA seller vs an FBM seller if there are multiple listings. That means you can be the first option in the Amazon Buy Box rather than listed as an alternative seller.

The Best of Both Worlds

Amazon does not lock sellers into choosing FBM or FBA. You can have different products listed as either, and you can even have identical listings for the same product with different fulfillment methods. Some sellers will make an identical FBM listing as a backup in case their FBA inventory runs low. For low-volume items with unpredictable sales, you can also keep an FBM listing as a backup while using a low-inventory FBA listing.

Though it requires a little planning, you can adjust your FBA inventory seasonally. If you are only going to sell 300 of a particular item each year, it might not make sense to have it listed as FBA year-round. Of course, if 90% of those sales occur during the same month every year, you can have an FBM listing you keep up most of the year and swap to FBA during your busy season. Or, you can simply adjust your FBA inventory seasonally. 

However, regardless of your sales strategy, you must understand how and why your products sell to succeed as an Amazon seller. Amazon handles much of the heavy lifting for FBA sellers and even provides plenty of useful sales data. What it doesn't do is tell you how to use that information. To really master selling on Amazon, you need a partner with the technology and experience to turn your Amazon sales data into insights that increase your sales.

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