Amazon will have roughly 3 million active merchants by 2021. And, according to Jungle Scout’s 2021 State of the Seller Report. All Amazon merchants have various strategies for achieving success on the platform.
One of the most common issues that Amazon sellers have is deciding which option to use to fulfill their sales. They can do it themselves, using the Fulfillment by Merchant (FBM) method. Also known as Merchant Fulfilled Network, or they can enlist Amazon’s help, using Fulfillment by Amazon (FBA). Both of these systems have their own set of advantages and disadvantages. So don’t worry if you’re torn between the two. With that in mind, we’ve put together this detailed guide to assist you to choose between Amazon FBM and Amazon FBA.
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All About Amazon Fulfillment Options:
Amazon sellers’ fulfillment method of choice is a key differentiation. Amazon Fulfillment (FBA) and/or Merchant Fulfillment (FBM).
Amazon FBA vs FBM
Amazon’s storage and fulfillment service, FBA (Fulfilled by Amazon), allows retailers to deliver products to an Amazon warehouse and have their orders dispatched by Amazon. A fulfillment technique is FBM (Fulfilled by Merchant). In this scenario, the seller assumes complete responsibility for inventory storage and order fulfillment.
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Pros & Cons of Amazon FBA
Amazon charges a fulfillment fee and a monthly inventory storage fee when you use FBA.
- The fulfillment charge is used to pay the costs of choosing, packaging, shipping, and customer support.
- The monthly inventory storage fee covers Amazon’s fulfillment center costs.
Pros of FBA
- Prime Shipping
- Winning the Buy Box
- Focus on Selling, Not Fulfilling
- Amazon SEO
- Customer Service
- Multi-Channel Fulfillment (MCF)
Cons of FBA
- Costs
- Loss of Control
- Packaging and Labeling Requirements
What is FBM? Pros & Cons of Amazon FBM
The greatest alternative to FBA is fulfillment by merchants, often known as Merchant Fulfilled Network (MFN). As previously indicated, you are responsible for processing and shipping orders with FBM. In addition, you must provide customer assistance as well as process returns and reimbursements as needed.
Seller Fulfilled Prime (SFP)
SFP is a variant of FBM that allows sellers to participate in Prime shipping without having to use FBA.
Amazon Seller Fulfilled Prime is quite similar to FBM. In that merchants are solely responsible for processing orders and timely delivery to their consumers. This one, however, has a significant advantage. sellers can use the Prime logo on listings that they fulfill themselves. And get all of the accompanying perks without having to sign up for FBA. It also makes it easier for vendors to compete for the coveted Buy Box.
SFP requirements:
- Ship over 99% of orders on time
- Orders placed before the order cut-off time will be processed the same day.
- Have a less than 0.5 percent order cancellation rate
- For at least 99 percent of orders, use Amazon Buy Shipping Services.
- The Amazon Returns Policy must be accepted by sellers.
- Allow Amazon to take care of all customer service inquiries.
Pros of FBM
More control over inventory and fulfillment
Less Amazon fees
Cons of FBM
Less Buy Box power
No SEO Perks
Customer service and returns responsibilities
Customer service and returns are handled by the merchant with FBM, which takes time. This isn’t always a terrible thing, though.
When FBM sellers communicate directly with customers, they can gain a greater grasp of their wants and trouble issues. This can provide them with useful business insights and suggestions.
FBA vs FBM - what to choose?
After seeing how the two fulfillment options function. It’s reasonable to state that Amazon FBA is the way to go if you have a popular product with a high turnover rate. Because you’re likely to get many orders each day. It’s best to delegate fulfillment and other associated operations to Amazon.
At the same time, you should make sure your things aren’t too big or heavy in order to avoid paying expensive FBA fees. While these payments are unavoidable with FBA. They are well worth it because they assist you in obtaining the Prime badge and the Buy Box advantage.
If you have a product with a low sales velocity, however, Amazon FBM or Seller Fulfilled Prime are preferable options. Paying Amazon FBA storage fees is pointless because the orders you receive may not be steady or frequent. If you already have a shipping network in place, this fulfillment option will be a good fit for you.
Additionally, if your things are especially heavy, bulky, or require specialist packing, FBM will work effectively. It will provide you more packaging control, allowing you to pack your products any way you desire. If you go the FBA route in this situation, your products may not be handled correctly, resulting in damage. If you already have a shipping network in place, this fulfillment option will be a good fit for you.
As a result, when deciding between FBA and Amazon FBM, the size of your business and the kind of things you sell play a big role. Use an FBA calculator to run the numbers properly before jumping into the company for greater outcomes.
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