Amazon FBA manages products and processes them on sellers’ behalf. However, FBM makes sellers more independent to manage the inventory and order processing. Each has pros and cons, so how will a seller pick one? Read more to know what Amazon FBA and FBM offers and make an informed choice.
The competition to sell products at a fair price online is growing massively. However, sellers are eager to know the ideal shipping process to complete the fulfillment.
Amongst sellers, the Fulfillment by Amazon option has an edge on Fulfillment by Merchant. It is so because in FBA, Amazon takes care of the entire shipping process, right from picking up the product and packing to timely delivery at the given address. However, such privilege is not offered under Amazon FBM. Here, the seller has to handle everything, like packing the product and monitoring it until delivered.
But, there are several benefits and drawbacks of each of these processes. Let’s understand what makes them both distinctive and which one can be a profitable choice for your business.
Key Difference between Amazon FBA and FBM
Fulfillment by Amazon, sellers can store their products in Amazon’s warehouses.
Amazon ships the same after receiving an order from the customer. It also provides customer assistance and return services for the respective order. However, the seller has to pay the fulfillment and inventory storage fee every month.
Remember, the charges are extra in case of any referral fees.
On the other hand, Fulfillment by Merchant(FBM) lets the seller store and sell products either by itself or via third party (except Amazon). This fulfillment type makes sellers more responsible for product storage and shipment. Hence, it lowers dependency on amazon.
A look at the advantages and disadvantages of each of the fulfillment types will offer clarity about which is an ideal fit for your business.
Know Why Fulfillment By Amazon (FBA ) Is Beneficial
Under its Fulfillment by Amazon program, Amazon offers an umbrella of services for sellers. Take a detailed look at them.
1. Shipping Is easier Under Prime Subscription
You must have heard that a buyer has an Amazon Prime subscription. But did you know this feature works for sellers too?
Opt for the FBA program, sellers can easily ship their lightweight products to customers anywhere.
The shipment delivery depends upon the location. But the Amazon Prime subscribers are open to receiving their orders on time.
Sellers have the golden opportunity to reach customers seamlessly to yield huge profits. Some sellers leave no stone unturned to capitalize on this opportunity by offering lucrative offers on their products. Hence, Amazon FBA is more advantageous for sellers when it comes to selecting the fulfillment type, between seller fulfilled vs Amazon fulfilled.
2. Make It To The Buy Box
Buy box is the final step to receiving orders from customers. This is the dedicated section for putting together the products a customer wishes to purchase. The Amazon algorithm has been known to enhance the visibility rate of such products which are offered at the cheapest price with the guarantee of the fastest delivery. Sellers with these features win against their competitors to earn a place in the buy box.
By opting for Fulfillment by Amazon type, from Amazon FBM vs FBA, a seller can improve his/her delivery parameter and make it to the buy box.
3. Focus on Reaching Target Audiences
Usually, sellers focus more on sales. Due to this, a lot of their time goes into managing inventory, estimating freight charges, packing, and other shipping processes.
Hence, many sellers prefer FBA when choosing from fulfillment by Amazon vs fulfilment by merchant, as Amazon has warehouses to store products and ship the same well in time. With the support of this gigantic infrastructure, sellers can now only focus on reaching their target audiences to yield huge profits.
4. Amazon Search Engine Optimization
There is nothing official about the effectiveness of FBA on product rankings in search results. But, FBA sellers indeed get some benefits from the Amazon SEO
Between Amazon FBM vs FBA, FBA is the right way for timely delivery, better feedback, consistent customer experience, and it increases the seller’s reputation and ranking. The A9 algorithm considers these parameters for ranking product pages. Hence, FBA has a significant impact on this search algorithm and overpowers FBM in this case.
5. Customer Assistance
The dedicated client-centric approach by Amazon makes it more reliable and FBA supports that. This policy allows an easy return process for buyers and provides customer support when required. Also, Amazon virtual assistant can make it easy for the sellers to manage their business.
6. Multi Channel Fulfillment
Better known as MFC, it is a platform for sellers to fulfill orders from any other platform apart from Amazon. However, for sellers who want to utilize MFC, registration under Amazon Seller Central Account is mandatory.
It is an advantage to multi-channel sellers. Amazon’s fulfillment centre can process orders for Amazon consumers alongside consumers on the seller’s website, social media, and other platforms. The seller has to pay a higher fee than FBA to avail of this option.
Still finding it difficult to be a seller on Amazon FBA?
Take A Look At The Drawbacks Of Fulfillment By Amazon
Despite being the front-runner in the race of fulfillment type, this program has some disadvantages that sellers must know.
1. Minimal Shipping & Storage Authority
The major disadvantage of fulfillment by Amazon FBA is that sellers can’t visit a warehouse to inspect products after selecting the FBA option. They have to trust that Amazon will take care of products and there will be a minimal chance of mishandling products.
A difference between Amazon FBA and FBM is that sellers cannot examine their products stored in the Amazon warehouse.
2. Proper Packaging
Amazon has stringent guidelines about shipping. The Amazon warehouse can reject the shipment if it is not packed and labeled according to the standards. The packing and labeling are checked at the time of submission by the dedicated service agent. The agent submits the product to the Amazon warehouse after collecting it from the seller.
Shipment rejection due to improper packing is a waste of the seller’s effort. So, you must take care of the packing standards and send the shipment accordingly to save time and effort.
It’s not surprising that some sellers are good with the logistic support, and the FBA price is likely to be on the higher side for them.
At large, the pricing depends upon the product dimensions. Between fulfilled by Amazon vs fulfilled by merchant, ideally, the FBA option is best to ship lightweight products that are quick to deliver compared to heavy and slow-moving shipments. Take a note that the charges for Fulfillment by Amazon increase during the peak season, which is from October to December. This is an important point to consider when selecting seller fulfilled vs Amazon fulfilled.
Fee Details –
Valued Things to calculate Charges
Check Out The Benefits Offered Under Amazon FBM
1. Seller Is In The Commanding Position
Fulfillment by Merchant option is preferable for sellers who want to keep a check on their inventory.
To be precise, Fulfillment by Merchant offers flexibility to sellers. They have total command over the shipment process and are solely responsible for packing, labeling, and shipping.
2. Least Dependency On Amazon
One thing that simplifies the Amazon FBA vs FBM debate is the margin. Sellers with better logistic support and fulfillment costs can enhance their profit margin by selecting the FBM option.
By selecting the fulfillment by merchant option, sellers avoid massive charges like returns processing fees applicable to some categories, long term storage fees for products that remain unsold for six months, and stock removal fees for fetching stock from the Amazon warehouse.
Top Reasons That Makes Fulfillment by Merchant Disadvantageous
1. Lose Buy Box
The major difference between Amazon FBA and FBM is that the sellers with the FBM option lag behind in the race for buy box as they do not have the prime advantage of offering lucrative deals to consumers and ensuring two-day delivery. To do so, they will have to improve their logistics and that can be a hefty investment.
Fulfillment by Amazon has an edge over FBM in this case.
2. Minimal Additional SEO Support
If we go with the idea that FBA sways the Amazon algorithm in some ways by increasing overall seller reputation, then by choosing FBM, sellers lose that opportunity. Thus, fulfillment by merchant has no say in improving Amazon product listing ranks and the seller will have to work on SEO, listing optimization, and seller reputation themselves for better visibility in the Amazon marketplace.
3. Customer Assistance and Returns
Amongst seller fulfilled vs Amazon fulfilled, sellers backing their products with these two things are at risk of losing time and money.
It is undoubtedly a drawback. But seen in a positive spirit, it can give sellers an idea about consumers’ expectations.
Fulfilled by Amazon vs Fulfilled by Merchant – The Better Option
|Criteria||Fulfilled by Amazon||Fulfilled by Merchant|
|Product shipping under Prime||Eligible By default||Is possible only via SFP|
|Benefits of Buy Box||Yes||No Benefit|
|Amazon SEO Benefit||Yes||No Benefit|
|Customer Assistance||Take care by Amazon||Seller is responsible|
|For Refund and Return||It is Amazon’s responsibility||It is seller’s responsibility|
|Issues related to order (timely delivery, order cancellation, etc)||It is Amazon’s responsibility||It is seller’s responsibility|
|Price||Sellers are liable to pay Amazon for storage, fulfillment and referral charges.
The best option for lightweight and fast moving products.
The fees for storage in warehouses rise between October and December, the reason being the peak season.
|Sellers are liable to pay only the referral charges to Amazon.
The best option for heavy products like furniture, which is slow moving.
A few sellers can have lower fulfillment costs in comparison to FBA.
|Storage Check||Complete dependency on Amazon||Seller is responsible|
|Customer experience||Not much exposure||A lot of exposure|
|Packing and Labeling||Should meet the set standards||Depends on the Seller|
By far, you must have an overview of the difference between Amazon FBA and FBM. But, we’ll make it simpler to understand.
FBA is a hamper of perks in the offering. The sellers not only have great chances to earn a buy box but, they also get great SEO, shipping, customer support and return support from Amazon.
That’s not all. By paying some extra charges, the seller can avail MFC (Multi-Channel Fulfillment) option via which Amazon will process orders from other channels as well.
On the other hand, FBM makes sellers responsible for packing, shipping, returning and managing inventory.When comparing Amazon FBA vs FBM, the fulfillment by merchant method does not have
much to offer when compared with FBA. However, this option is best for sellers to yield better margins if they have strong logistic support.
Know Expert’s Opinion Before Deciding on Fulfilled by Amazon vs Fulfilled by Merchant
Experts believe that both Amazon FBA and FBM have advantages according to their characteristics. However, the decision-making largely depends on the seller. It will be better to save the money going into fee payment by choosing the FBM option if the seller has robust logistic support. Also, many Amazon experts believe that newly registered sellers on Amazon should opt for FBA. This fulfillment type offers services for everything related to an order. Fulfillment by Amazon is also ideal for sellers in today’s cutthroat competition as it helps them bag every opportunity to allure customers.
We hope this guide helped you differentiate between Amazon FBA and FBM and make a decision as to which fulfillment method suits your business more. If you still have doubts or find yourself stuck in the Amazon FBA vs. FBM dilemma and need to know more, reach out to us in the comment section or send your message to firstname.lastname@example.org.
Frequently Asked Questions
Q: Which niches can I sell in FBA?
You can sell a wide range of products such as Books, Baby Products, Beauty Products, Camera, Video Games Console, Mobile Accessories, PC Accessories, Home Decor, Kitchen Items, Jewelry, Tablets, Toys, watches, Personal Care Appliances, Luggage, Mobile Phones and any light weight products.
Q: What are the ways to register for FBA?
If you are not a seller on Amazon, then the first step is to register on Amazon and list your products for sale under FBA. After becoming a seller click on the “Join FBA” button at the top or bottom of the page to get started.
Q: Is registration mandatory to sell products on Amazon?
Yes. After joining the FBA program, it is mandatory to register the Amazon fulfillment centre as an additional place for business with the tax authorities. This step is compulsory only if you sell taxable goods under our platform.
Q: Do I need to pay for the storage and shipment process? Does Amazon offer a return policy or customer support?
The FBA charges include
- Storage of your products in Amazon Fulfillment Centre.
- Better visibility for your products on the Amazon marketplace.
- Picking, packing and shipping your products by Amazon every time a consumer orders your product.
- Customer assistance and return facility on all your products by Amazon.
Q: How will you create my bill for Fulfillment by Amazon?
Amazon will subtract the FBA charges from orders credited to your sellings on Amazon and will hold back the fees from the funds’ payment that you will receive.
Q: Is there a weight capacity to follow for shipping products under FBA?
The weight shipment for FBA is close to 500 grams.
Q: Are there safety parameters to protect my products in Amazon Fulfillment Centre?
All Amazon Fulfillment centres are highly automated to pack, pick and ship your products to the said address.
Amazon has fully-automated wireless and computer-operated order monitoring facility. They also have highly equipped cage storage.
Q: How is delivery to Amazon Fulfillment Centre managed?
Amazon has dedicated service agents to collect product packets from your store and deliver it to the Amazon warehouse.
Q: Does Amazon compensate for damage or loss of product?
If the loss or damage to the product happens in some circumstances, then Amazon takes the responsibility under the Amazon Services Business Solutions.
Q: Between Amazon FBA vs FBM which one should I prefer?
The sellers should prefer FBA for lightweight products, and FBM for heavy products such as furniture while considering an option from seller fulfilled vs Amazon fulfilled.