Amazon offers a range of ways to help sellers use their platform, including FBA and FBM. But what are they and which will suit you better? Below we explain what FBA and FBM is and their advantages and disadvantages. So you can decide which option works best for you.
What is FBA and FBM?
FBA stands for Fulfilled by Amazon. With FBA you buy the product and send it into Amazon’s warehouse. Amazon then store the product, send the item out to the customer and deal with any returns or customer service. From a seller’s perspective FBA is a more hands off business model. In return for Amazon dealing with a large proportion of the selling process FBA seller’s pay higher fees to Amazon than FBM sellers.
FBM stands for Fulfilled by Merchant. FBM sellers are responsible for buying the product, storing it and dealing with customer support. This is a more hands on business model which takes advantage of Amazon’s prime shipping.
What are the strengths of FBA and FBM?
Pros of FBA
Fast delivery speeds – FBA sellers items will be delivered via next day delivery. A huge selling point when using Amazon is the fast delivery speeds it boasts. As an FBA seller you can take advantage of this, as buyers are willing to pay higher prices for the convenience of getting an item the next day.
Access to the Buybox – compared to Amazon FBM, FBA sellers have a much higher chance of winning the Buybox. This is due to the higher percentage of fees FBA sellers sell. It is therefore profitable for Amazon to prioritise Amazon FBA sellers.
Don’t worry about warehouse space – As an FBA seller you do not need to think about finding your own warehouse to store your items. Because Amazon store your items for you. With this added layer of flexibility you can continue to scale without having to invest in a warehouse.
Amazon’s high customer service – Amazon pride themselves on their high quality of customer service. So you can be confident that any support given to your customers is the highest standard.
Suited to a quicker turnover – By sending your items off to Amazon they deal with the rest, delivering your items to the customer and dealing with any issues. So, with less for you to prepare and organise, Amazon FBA has a quicker turnover time.
Are you new to the world of Amazon FBA? Check out our Youtube playlist for Amazon FBA beginners.
Pros of FBM
Can be more cost effective – By packaging, preparing, storing and sending out items yourself you can save considerably compared to Amazon FBA sellers. Amazon FBA sellers pay fees for Amazon to manage their items which can add up quickly. Depending on the types of items you sell FBM can be a more cost effective option.
If you sell oversized or heavy items you can save a considerable amount of storage fees by selling larger items using FBM.
More control over inventory – Amazon are a massive company, and care very highly about their reputation and the standards they keep. This therefore means FBA items can be rejected if they are not prepared to Amazon standards. Amazon FBA sellers items can also be used for co-mingling.
Co-mingling refers to when different sellers’ products are grouped together and sent to customers. So even if you have the Buy Box another seller’s item could be sent out by Amazon. The other seller may not keep their items in the same high condition as you. This can lead to unwanted returns. However, with FBM you know your items are being sent directly to the customer.
Seller Fulfilled Prime – Using Seller Fulfilled Prime you can ship products from your own warehouse directly to Prime customers. Your items are also given the Amazon Prime badge, adding an extra layer of credibility. As a member of Seller Fulfilled Prime you are still in charge of shipping methods and customer service. If you enjoy delivering great customer service this can be an advantage to you. As you can stand out from other sellers and provide a great experience. There are requirements to become a member of Seller Fulfilled Prime, including completing a trial period. Learn more, just click here.
Direct customer service – We’ve touched on this a little above, but if you enjoy customer service FBM gives you an opportunity to shine! By managing your own customer service you can ensure that your customers have the very best experience.
So which will suit you better? FBA or FBM?
If you have less space to store items and are at the beginning of your seller journey Amazon FBA is a great option for you. Although there are more fees involved compared to Amazon FBM, Amazon FBA allows you to focus on sourcing items and learning about the different processes. Are you less comfortable with completing customer service? With FBA Amazon deal with all customer service for you.
Learn more about Amazon FBA below.
If you have the space to store items and want more flexibility over the processes of selling FBM may suit you better. With FBM the process of selling an item from sourcing it to shipping it and completing customer service is your responsibility. Are you an experienced seller Amazon? FBM may be better suited to you. It is important FBM sellers are comfortable with customer service, unlike Amazon FBA where customer service is dealt for you by Amazon.
We hope that you now understand how Amazon FBA and FBM work and which suits you better. Would you like to learn more about Amazon FBA? We have a Youtube channel where we post informative content which you can find here.
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Learn more about Amazon FBA with our recent blog posts!