What is Amazon Fulfillment by Merchant?
Amazon FBM (Fulfillment by Merchant) is just what the initials indicate: you, the Amazon seller, handle the logistics of inventory management, order fulfillment, customer returns, and service. While most Amazon sellers rely on FBA (Fulfillment by Amazon), there are situations, if you have the resources and time, as well as the experience, where Amazon FBM is a potentially more profitable selling option. Sellers can make use of the hugely popular Amazon eCommerce platform to list their products to manage storage, picking and packing, and shipment, as well as customer service.
To determine whether Amazon FBM is a good selling model for you to consider, let’s take a look at:
- The pros of Amazon FBM
- The cons of Amazon FBM
- When Amazon FBM is a better option
- Amazon FBM fees
- How to list Amazon FBM products
- Amazon FBM shipping methods
- Amazon FBM Best Practices
The advantages of Amazon FBM include:
- Greater freedom and flexibility to run your eCommerce business.
- Better control over inventory.
- Added ability to run your own offline and online retail stores to market outside of Amazon.
- No Amazon FBA fees represent opportunities for greater profit margins, with the ability to source less expensive warehouse and shipment options.
- Less of a squeeze on profit margins whenever Amazon decides to make changes in its fees and fulfillment policies; also eliminates extra fees for long-term storage.
- Reduced paperwork, particularly regarding state taxation.
- More direct interaction with customers with improved ability to build brand identity.
Cons of Amazon FBM
The disadvantages include:
- Amazon FBM sellers typically invest more time managing their business than Amazon FBA sellers who need to worry less about inventory and order fulfillment logistics.
- Managing customer service is an additional time-consuming endeavor that can be frustrating.
- Novice sellers are more likely to incur higher fulfillment expenses using Amazon FBM than Amazon FBA.
- Competitive disadvantages if unable to provide Amazon Prime service.
- More complicated logistics management.
- Of course, there is no free lunch: Amazon FBM sellers incur warehousing and order fulfillment costs which in some cases exceed those of Amazon FBA.
When Amazon FBM is the Better Option
Amazon FBM is best suited for:
- Products with low sales volume and/or low inventory levels and/or lower profit margins help save on Amazon FBA warehousing and storage fees
- Amazon FBA fees are set primarily based on product weight and dimensions. In some situations, third-party shippers provide more favorable fees.
- Products that aren’t easy to ship via Amazon FBA, e.g., oversized products, and/or require special handling.
- Products you want to present with your own branding vs. Amazon’s.
- Dropshipping (purchasing products from manufacturer or supplier only when a sale is made).
- Handmade products to better ensure products arrive as intended to customers.
- Situations where you can profitably and comfortably partner with a third-party logistics service provider.
Use Amazon’s FBA calculator to determine if Amazon FBM is the better fulfillment option.
Amazon FBM Fees
Opting for Amazon FBM does not mean you don’t pay any fees to Amazon. Amazon FBM fees are assessed for:
- Monthly subscription
- High volume listing
- Rental book service
- Refund administration
How to List Amazon FBM Products
Listing an Amazon FBM product is no different than creating any other product listing on Amazon. The only difference is when you complete the Fulfillment Channel under the Offer, you select: I will ship this item myself (Merchant Fulfilled).
Amazon FBM Shipping Methods
As soon as Amazon notifies you of an order, you need to confirm the order is shipped within 24 hours. Large items (furniture, for example) usually require transport trucking. Otherwise, you can choose among the normal shipping options (USPS, FedEx, UPS, DHL).
Amazon FBM sellers might also consider qualifying for Seller Fulfilled Prime. In addition to possibly fast shipping, it appeals to Amazon Prime members who are more likely to choose sellers with a Prime badge. Amazon FBM sellers must apply for Seller Fulfilled Prime and there may be a waiting list, so it is best to apply as soon as possible.
Amazon FBM Best Practices
Best practices for Amazon FBM sellers include:
- Use Amazon’s Buy Shipping feature. The option to purchase shipping from Amazon in many cases better ensures on-time shipment.
- Provide customers with tracking numbers (automatically provided through Amazon’s Buy Shipping.
- Provide clear instructions for customer returns.
- Comply with Amazon policies if dropshipping.
GETIDA for Amazon FBA
What determines whether Amazon FBM or Amazon FBA is the better option depends on the product mix as well as seller experience, capabilities, and competencies. Using Amazon FBM for order fulfillment certainly has some benefits, although it also entails more work. Such benefits make Amazon FBM attractive as a primary choice or even as a backup plan.
For situations where you do sell using Amazon FBA, note that you are owed reimbursement whenever Amazon makes mistakes in handling your inventory and order fulfillment. Oftentimes this reimbursement is not automatic and it is your responsibility to identify errors and submit claims.
If you don’t have time to continually monitor your accounts for errors, let alone complete claims, consider GETIDA as a cost-effective alternative. GETIDA software reviews the previous 18 months of your Amazon FBA transactions to flag instances that qualify for reimbursement. With your approval, the appropriate claims are then filed.
GETIDA doesn’t charge for this service. GETIDA’s only fee is a percentage of approved claims. And the first $400 in FBA reimbursement is free.