Choosing to sell on Amazon using Amazon FBA vs FBM is no small feat. The Amazon marketplace uses the most robust algorithm in the world known as A9. With so many moving pieces to one of the most efficient eCommerce sites available, sellers are faced with choosing which type of fulfillment service they would prefer to opt into.
This article will outline the differences between Amazon FBA vs FBM and highlight the benefits so that you too can make the best choice possible for your Amazon selling journey.
Amazon FBA vs. Amazon FBM
Amazon FBA or Fulfillment by Amazon means a seller sends their inventory to Amazon to be warehoused and shipped to customers on the seller’s behalf. Amazon charges the seller fees based on weight and size to store and ship these products.
Amazon FBM or Fulfillment by Merchant means a seller lists their products on Amazon, but sellers are responsible for storing, shipping, and managing their orders directly to customers or with the help of a third-party logistics company.
Which Method of Selling is Ideal?
Deciding between Amazon FBA vs FBM depends on the type of business model you are choosing:
Private label – Sellers create their products, brand, and market them on and off of Amazon.
Retail Arbitrage and Online Arbitrage – Buying products through retail businesses and turning a profit on Amazon.
Wholesale – Products are purchased directly from a distributor or brand in bulk to be sold on Amazon.
Handmade Goods – Typically, these are handcrafted products that are to be sold on Amazon.
Dropshipping – Products are purchased from a third-party manufacturer who fulfills the orders and ships them to customers.
How you decide between Amazon FBM vs Amazon FBM will rely on a few key factors:
- Shipping and logistics preferences
- Weight and dimensions of your products
- Turnover rate of your inventory
- Which Fee Structure is Preferred – Amazon FBA vs FBM?
- Do you Prefer to Manage your Customer Experience or Have Amazon Manage it?
1. Shipping and Logistics Preferences
If you cannot manage the prepping, packing, and shipping/logistics of your inventory, FBA is the best option. But, If you can pack, prep, and ship your products, have a slower turnover rate, and if your products are larger in size, weight, and or are breakable, FBM is a better option. FBM is ideal for larger products with a slower turnover rate.
During the peak of the global pandemic, when inventory restrictions were also at their peak, sellers leveraged using both Amazon FBA vs FBM simultaneously.
Sellers switched from FBA to FBM to ship their products themselves to satisfy customer demand and satisfaction. While not all sellers can use both options for the reasons listed above, leveraging both is a great way to navigate changing inventory allowances.
Amazon Prime is available for Amazon FBA vs FBM and is a program geared at fast shipping times within 1-2 days for customers enrolled in the program. Whether you are selling Amazon FBA vs FBM, you can still ship using Prime fulfilled orders. However, FBM sellers will also have to be enrolled in the Amazon Seller Fulfilled Prime program.
2. Weight and Dimensions of your Products
The weight and dimensions of your products should be considered when choosing either fulfillment option. Larger, heavier items will be costly to ship via FBA, so that means FBM will be the best option to suit these oversized items.
3. Turnover Rate of your Inventory
Amazon oversees how long inventory is housed in their fulfillment centers; the longer inventory remains, the higher your Amazon FBA Fees will be.
If products stay in a fulfillment center longer than 365 days, long-term storage fees apply, which can hurt your bottom line. If your product is slow to turn over, it’s wise to consider Amazon FBM as your preferred method of selling.
4. Which Fee Structure is Preferred – Amazon FBA vs FBM?
Fees vary on Amazon, and depending on the size and weight of your products; you may consider Amazon FBA vs FBM to minimize costs for the health of your business.
The Amazon Small and Light program is a great option for Amazon FBA sellers selling small and lightweight products in higher volume. The program is designed to offer smaller fees on products 6oz or smaller starting at $2.16 per unit.
It’s wise to review Amazon fee structures so you can make the best, most cost-efficient choice.
5. Do you Prefer to Manage your Customer Experience or Have Amazon Manage it?
Suppose you like the idea of managing your customer experience and handing seller feedback which is an essential component of your history on Amazon. In that case, Amazon FBM is a great option as Amazon does not take part in this role with FBM.
Unlike FBM, Amazon FBA means that Amazon handles all customer interactions and prefers to do so. There are instances where Amazon FBA sellers can reach out to customers, but these instances are not common.
Conclusion
Choosing between either fulfillment option will depend heavily on what type of eCommerce business model you are seeking.
Amazon FBA will remove a large portion of the burden in picking, packing, and shipping orders alongside handling customer care and can make the process of selling on Amazon a little more smooth.
With that in mind, Amazon FBM caters to those sellers with slower turnover rates, heavier items and appeals to sellers who prefer to manage the shipping, logistics, and customer experience all on their own.
Take some time to review which option best suits your eCommerce business model, and don’t be afraid to start selling on Amazon today!
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