There are two shipping models Amazon sellers can choose from: Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM).
In general, most sellers prefer to enroll in FBA as it guarantees that the order fulfillment will be carried out flawlessly from the get-go.
However, there are some brands that prefer the FBM business model. How so?
For starters, Fulfillment by Merchant (FBM) is a great program that allows sellers to stay on top of customer delight. Also, this allows them to have more control over their operations.
So, which model is more convenient for your Amazon business?
Scroll down to find out.
What is Amazon FBM?
As we briefly mentioned above, when sellers enroll in FBA, they immediately pass the order-fulfillment buck to Amazon from start to finish. This involves: sourcing, packing and shipping.
Which allows brands to only source and sell products.
In contrast, FBM sellers take charge of supply, logistics and delivery.
The Amazon FBM program focuses on brand independence. So, instead of paying service fees, you can use your own resources to source, sell, and deliver products to customers.
That means more work, of course. But in return, you take charge of the entire sales funnel, with almost no reliance on Amazon.
Here are some of the perks that come from selling on Amazon FBM:
33% of FBM sellers earn over $25,000 in monthly profits. This is in contrast to 26% who do so under FBA, according to this study.
The reason behind this relies on the fact that FBM sellers don’t need to pay Amazon fees to ship, pack and deliver products.
For example, if you sell heavy and bulky products, there’s no need to pay any oversize fees. So, you’ll generate bigger profit margins from sales.
FBM sellers do not rely on Amazon’s warehouses to manage inventory. This has a few advantages:
- You can handle returned items and assess the damage to a product. Thus, you can determine what happened, and set a proper course of action with the customer.
- All products in storage are your own. So, you won’t need to worry about confusing shipments and delivering the wrong products to customers.
Since FBM sellers control the fulfillment process, they can oversee product packaging. So, FBM brands can decide how to store products for better protection.
Plus, they can also pack them in a way that minimizes damage during delivery.
In short, you’ll take full charge of quality control and protect your branding. This way, you can reduce mistakes and boost customer delight.
Although Amazon FBA features great customer service, it sometimes lacks that personal touch.
Amazon FBM puts sellers in direct contact with customers. It’s an opportunity to deliver a unique shopping experience.
Since you know the ins and outs of your product, there’s no one better to answer customer queries than yourself. In return, you’ll get better feedback, and improve your seller ratings.
Amazon Policy Protection
FBA sellers must follow Amazon’s policies and pricing at all times. That includes compliance with policy changes that may affect their operations.
FBM sellers need not worry about that. So, they have more leeway, less paperwork, and no unexpected costs.
Amazon FBM brands can start selling as soon as they list products in the marketplace.
FBA brands must wait for their products to reach the warehouse before they can sell. FBM brands don’t have that setback.
How to Sell on Amazon FBM
It’s very easy to list FBM products on Amazon. In fact, it is almost the same as with any other listing. Let’s review the process step by step.
- Go into your Seller Central account.
- Open the Inventory tab, and click on Add a product.
- Select ‘I’m adding a product not sold on Amazon.’
- Submit the product details.
Now that you have the listing set up, it’s time to complete the offer.
To do so, locate your listing and click on ‘Sell on Amazon’. Here you can add the following data:
- Product pricing
- Condition (whether it’s used or new)
- Item quantities
- Fulfillment method
If you’re going for Amazon FBM, select ‘I will ship this item myself’. FBA sellers should select ‘Amazon will ship and provide customer service.’
You can locate all your FBM products under the Inventory tab. Click on Manage Inventory to confirm that the product’s status is active and marked as FBM.
The inventory dashboard also registers some key data on your products. For example: sales rank, availability, shipping fees, and Buy Box eligibility.
How to Track Amazon FBM Sales
FBA sales get packed and delivered automatically by Amazon. FBM sales do not have that luxury. So, FBM sellers must keep track of sales confirmations to start the shipment process.
To do so, check the order widget on Seller Central. Here, you’ll find the status of every FBM order:
- Pending. This is the list of all product orders waiting for shipment.
- Premium unshipped. Lists offers eligible for fast shipment.
- Prime unshipped. Orders to be shipped using Seller Fulfilled Prime.
- Unshipped. Bulks orders with regular shipping methods.
- Return requests. Keeps track of all returns requested by customers.
Amazon gives FBM sellers 24 hours to confirm that an order is in transit.
Amazon FBA vs FBM
According to a study, 32% of sellers choose FBM as their go-to shipping model, but the remaining 89% enroll in Amazon FBA.
There are many reasons for this. First off, Amazon FBA is easier and faster to set up than FBM. It is also a bit simpler to manage, especially for new sellers.
This is because, when using FBA, merchants only handle product sourcing and sales. It’s Amazon who takes care of the logistics. That includes storage, packing, shipping, and order delivery.
Plus, FBA comes with a few other attractive perks:
- Access to Amazon’s renowned delivery service.
- Association with Amazon’s brand, meaning higher sales.
- The ability to use Amazon’s logistics to sell across different websites.
Amazon FBA is a great model for new sellers. It’s a good opportunity to learn the ropes without placing too much stress on the business. You get access to the Amazon way, and build yourself up from there.
Experienced sellers, with access to a third-party supply chain, may not benefit from FBA. In this case, dealing with FBA fees could prove more expensive than handling orders on their own.
Seller Fulfilled Prime
One of the most popular perks of Amazon FBA is automatic eligibility for Amazon Prime. That means all FBA products feature free 2-day delivery and exclusive offers during Prime day.
But the marketplace did not leave FBM sellers out of Amazon Prime. That’s why Amazon designed the Seller Fulfilled Prime (SFP) program.
Amazon SFP allows FBM sellers to access Prime shipping benefits. This means FBM brands can receive Amazon’s coveted Prime badge.
Here are some of the perks available for Amazon SFP sellers:
- Tap in to the exclusive Prime customer base.
- Improve chances to win the Amazon buy box.
- Ship bulky or heavy items directly from your warehouse.
- Sell products with special storage requisites.
- Keep all your Amazon FBM privileges.
Note that enrolment on Amazon SFP requires that you meet Amazon’s standards. This means you must meet the following metrics:
- Distribution track record of 99%
- Product cancelation rate under 1%
- On-time order delivery rate of 92%
- Valid tracking ID over 94%
Once you are enrolled in SFP, make sure you also:
- Ensure free two-day deliveries.
- Offer nationwide delivery for standard-size items.
- Provide shipping options with weekend-support.
- Accept Amazon’s returns policy.
The trial period requires that sellers meet the previous requirements for 200 orders.
When to Use Amazon FBM
Amazon FBM is the go-to option for Dropshipping and Amazon Handmade.
The dropshipping model relies on a third-party to fulfill orders. This goes hand-in-hand with the FBM approach, where sellers take full control of their Amazon store.
Amazon handmade means that sellers create and sell the products. Then, they can offer them in the marketplace as unique items to customers.
Handmade sellers also handle fulfillment by themselves. It’s better for artisans to take care of fulfillment than to pay the monthly FBA fees. That way, they can also ensure their products arrive undamaged.
Both business models usually deal with exclusive products, with low sales frequency. They’re also more niche-focused than private label sellers. This means they offer fewer products, for a very specific customer base.
Amazon FBM is also the better option if you sell heavy and bulky items.
Oversize or delicate products may incur extra fees from Amazon FBA. This is due to the added difficulties of shipping the item safely. It’s much better to pack the product by yourself, and avoid the extra fees.
There’s also the issue of necessity. Many sellers also switched to Amazon FBM during 2020 and 2021.
COVID-19 and the global supply chain disruptions put many shipping constraints on Amazon’s networks. As a consequence, many sellers got stuck with too much stock in Amazon’s warehouses.
So, with all the current barriers to Amazon’s supply machine, FBM is becoming a solid model for old and new sellers.
Best Practices for Amazon FBM Sellers
Let’s review some of Amazon’s best practices for FBM sellers. Make sure you follow them so you can build the best FBM business you can.
Work with Great Carriers
Take the time to choose your shipping partner wisely. Since FBM sellers oversee the whole process, it’s crucial that their carrier meets their own standards.
Amazon features a list of various shipping carriers approved to handle fulfillment. The marketplace recommends that FBM sellers work with such allies to ensure products get handled and delivered on time.
Use “Buy Shipping”
Amazon expects that all orders include tracking numbers. This data helps both sellers and users make sure products arrive safely, and on time.
The Buy Shipping feature allows FBM sellers to buy shipping labels from Amazon. This too helps sellers ensure product orders include tracking numbers. It’s also a great tool to ensure that deliveries arrive on time. Here’s how to activate it:
- Log in to Amazon Seller Central.
- Go to Orders and select Manage Orders.
- Click on Buy Shipping.
That’s it! Now, when a user places an order, Amazon will send a valid tracking number to them. You only need to print the shipping label so that customers can track their order.
Deliver Products on Time
The marketplace expects FBM sellers to live up to Amazon’s standards. This means delivering products in a timely fashion.
So, make sure your supply chain picks, packs, and dispatches products on time. And if you’re enrolled in Seller Fulfilled Prime, make sure that items arrive in less than 2 days.
Amazon requires both FBA and FBM sellers handle returns and refunds. To prevent misunderstanding, include clear return instructions with your orders.
Also, make sure customers know where to send the return, and how they can get in contact with your service staff.
FBM sellers have full control of storage, and there’s no need to wait for stock arrival at an Amazon warehouse. You only need to list your products, talk to customers, and start selling.
But this is by no means an easy decision to make, so take your time. We recommend that you try out both methods, and see which delivers the results you are looking for.
Go with Amazon FBA, FBM and Seller Fulfilled Prime, or a mix! It’s up to you to decide what the best model is for your store.
True, Amazon FBM takes a lot more work than FBA. But its hands-on approach to selling might be what sellers need to improve on customer delight.