What is the Difference Between FBA and FBM?

Amazon is undeniably the world’s largest e-commerce marketplace, with nearly 3 million active sellers. When sellers register to sell on Amazon, they have to make a choice: Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). Sellers can register for both. Both fulfillment methods have their pros and cons.

What is FBA?

FBA is Amazon’s fulfillment service. It allows sellers to store their inventory at an Amazon warehouse, and the company takes care of shipping and handling. Amazon also takes responsibility for the customer service. To read more about amazon FBA, read our blog!

What is FBM?

With FBM, or Fulfilled by Merchant, the seller takes responsibility for storing and shipping inventory, as well as for customer service. Your product is still listed on Amazon, but you are responsible for handling storage and fulfillment.

Pros of FBM

There are many benefits to consider when it comes to the “old fashioned way”. Amazon FBM gives you as the seller more control over your customers, and allows you to establish and maintain a particular brand image.

FBM is great for products with a lower turnover rate, those that are heavy/large, and those being sold in small volumes. It is also nice for businesses that are just starting out, and may not have the funds to pay for the extra fees associated with FBA. Profit margins may be greater as well.

FBM allows sellers to maintain a greater sense of control over their business and branding. You don’t need to use Amazon packaging allowing you to customize packaging, and you have complete control and access over your inventory.

Pros of FBA

There’s a reason so many Amazon sellers use FBA: Convenience. When using FBA, sellers don’t need to worry about storing their inventory, fulfilling orders, or managing customer interactions. This gives them more time to focus on developing other aspects of their business. FBA is a great option for sellers who have high sales and/or are scaling up their business.

Amazon FBA merchants have access to the Amazon Prime shipping option, increasing its appeal to more buyers.

Cons of FBM

Because each step of the fulfillment process is on you, you need to make sure certain procedures are in place in order for this to work for your business. FMB sellers need to have a place to store inventory effectively, as well as the ability to process and package orders swiftly.  You also need to consider whether you have the time to respond to any customer questions or complaints in a timely manner.

Cons of FBA

In one word, fees. FBA isn’t the most affordable program to be a part of, and they are compounded on top of the regular Amazon seller fees. Amazon charges fees for storage in their warehouses, as well as for each item sold/packaged. For a full list of FBA fees, click here.

FBA makes more sense for small, lightweight items, as well as for shops that have a high turnover rate.

Additionally, sellers who use FBA have to use Amazon’s strict packaging requirements. This makes it difficult to uniquely brand your business.

Conclusion

When deciding between FBA and FBM, it is important to consider the size of your business and your growth potential/goals. You also want to consider the category of your products, and what part of your business you want to invest the most into. A helpful tool to help you decide is the Amazon FBA Calculator, which allows you to compare FBA and FBM costs!

Still can’t decide? Don’t choose! Register for both to double your exposure and grow different aspects of your business at the same time. Let Listing Mirror help you manage your e-commerce channels, including your FBA and FBM Amazon sales! Try our 14-Day Free trial today.