Amazon is a massive platform connecting millions of sellers with customers worldwide. Among the various services it offers, two standout options are Fulfillment by Merchant (FBM) and Fulfillment by Amazon (FBA). Sellers must grasp the differences between these methods to streamline their processes and improve customer experience.
This article discusses what FBM is and its key features, what FBA is and its key features and the key differences between the two.
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What is Amazon FBM?
Fulfilment by Merchant (FBM), as the name suggests, puts the responsibility of order fulfilment squarely on the shoulders of the seller. When employing FBM, sellers store, pack, and ship their products directly to customers. This method grants sellers greater control over their inventory and shipping processes, as they oversee every fulfilment aspect.
Key features of FBM
- Control over inventory: With FBM, sellers retain complete control over their inventory, allowing them to manage stock levels, product packaging, and shipping methods according to their preferences.
- Flexibility in pricing and offers: Sellers using FBM have more flexibility in setting prices, running promotions, and offering customised shipping options to customers.
- Lower fulfilment costs: Since sellers manage their own fulfilment processes, they can potentially reduce fulfilment costs compared to FBA, especially for products with low sales volumes or irregular demand.
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What is Amazon FBA?
FBA is a service provided by Amazon where sellers ship their products to Amazon’s warehouses. Once the items arrive, Amazon handles everything from storing them to packing, shipping, and dealing with customer service. Many sellers appreciate this hands-free method because it’s convenient and allows for easy expansion of their business.
Key features of FBA
- Prime Eligibility: Products fulfilled through FBA are often eligible for Amazon Prime, which can significantly boost sales by attracting Prime members who value fast and reliable shipping.
- Customer Service Support: Amazon handles customer inquiries, returns, and refunds, relieving sellers of the burden of managing customer service issues directly.
- Scalability: FBA aids sellers in expanding their business seamlessly since Amazon oversees inventory storage and ensures products are always ready to ship, even during high-demand periods.
Key differences between FBM and FBA
Here are a few key differences between Amazon FBM and FBA
- Cost Structure: FBM typically incurs lower fulfilment costs since sellers manage their own inventory and shipping processes. In contrast, FBA involves fees for storage, picking, packing, and shipping, but offers the convenience of Amazon’s infrastructure and Prime eligibility.
- Control and Flexibility: FBM provides sellers with greater control over inventory management, pricing, and shipping methods. FBA, on the other hand, offers less control but streamlines operations and enhances customer trust through Amazon’s reliable fulfilment network.
- Prime Eligibility: Products fulfilled by FBA automatically qualify for Prime shipping, potentially increasing their visibility and sales. FBM sellers can also achieve Prime eligibility through Seller Fulfilled Prime (SFP), but they must meet stringent requirements for shipping speed and service levels.
Which one should you choose?
The decision between FBM and FBA depends on various factors such as the nature of the products, sales volume, operational capabilities, and long-term business goals. Sellers with limited inventory space, seeking to leverage Amazon’s Prime program, or aiming for hands-off fulfilment may find FBA more suitable. Conversely, sellers prioritising control over their operations, seeking to minimise costs, or selling unique or personalised items may opt for FBM.
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