Are you still confused about what Amazon FBA and FBM is all about? Do you still wish to become a FBM seller, even after being an FBA seller? Well, this Amazon FBA Vs FBM article will help you out with the ins and outs of Amazon FBA and FBM, keep reading!

6 million plus sellers, and literally millions and billions of buyers – Amazon is a crazy marketplace where anyone can set up a huge business at any given time.

On top of this, Amazon over the years has come up with so many lucrative services that have helped sellers sell products across different states without worrying much about their business. And one such flexible service offered by Amazon to sellers is – Amazon FBA.

However, the interesting part to note here is Amazon never forces its sellers to take their services. Sellers have complete independence to choose what they want for their business. Hence, if they don't want to go for FBA, they can go for FBM.

And if you are someone who is thinking about starting out their Amazon business and is unaware of what FBA and FBM actually means, this article has literally got you covered with everything, read it out!

But before that, pick up a business model that really works for you!

Amazon is a marketplace for anyone and everyone, you can literally pick up any business model, and start selling products. However, the most popular ones are: private label, wholesale, reselling (arbitrage), dropshipping, and even handmade. You can even sell digital products on Amazon like Kindle direct publishing or Amazon Merch.

And, here comes the fulfillment part – FBA and FBM!

Now that you have chosen a business model for yourself, next comes the most important decision – how will you be fulfilling orders to customers, and here's where FBA and FBM comes into the picture!

What is Amazon FBA? Amazon FBA Review

Fulfillment by Amazon, popularly known as Amazon FBA, is a fulfillment option offered by Amazon through which sellers can send their inventory directly to Amazon warehouses. Amazon will then store all the inventory with utmost care, and whenever the seller will receive any purchase order, Amazon will ship the order directly to the customer. Other than this, Amazon even manages the whole customer support part, so that the seller just has to worry about marketing and not inventory management and delivery.

What is Amazon FBM? Amazon FBM Review

Fulfillment by Merchant, popularly known as Amazon FBM, is a fulfillment option offered to merchants before they start selling products on Amazon. If the seller opts for this option, he/she will only be listing their products on Amazon, and that's it. The further process like storage, shipping, and customer support will all be in the hands of the seller. They can control the whole fulfillment process and can customize the packaging, all according to their brand's needs.

Whatever fulfillment method you choose, remember that, you will have to open an Amazon seller account by giving your business a name, and listing products you want to sell!

Amazon FBA Vs FBM: Pros and Cons

The reason why FBA is still the most preferred option of much sellers out there is the advantage it offers, which we will be covering in this Amazon FBA pros section.

Amazon FBA Pros

Buy box advantage

Amazon buy box is something every Amazon seller wishes to win from the day they step into the marketplace. If you are new to this term, the buy box by Amazon simply means you get the ‘Buy Now’ and ‘add to cart' button on the right side of a product listing. This box basically lets an Amazon seller stand out from others, and the chances of getting higher sales through this box increases a lot.

Hence, when a seller enrolls for Amazon FBA, the chances of them being eligible of winning buy box is a lot more than FBM sellers.

Access to quick prime facility

Many customers have already subscribed to Prime services to get their products delivered quickly at their doorstep. In fact, in the future years, there will be millions of buyers who will only vouch for prime eligible products, because it gets delivered quickly and are of the highest quality.

On top of this, as a seller on Amazon, you would know that prime customers, as compared to regular customers, buy products more often. Hence, with FBA all your products gets quickly eligible for Amazon Prime two-day shipping (because the fulfillment is completely handled by Amazon). In this way, you will get to make more profits!

Smooth shipping service

As mentioned previously, Amazon is best known for its strict shipping rules and regulations. Hence, as a FBA seller, you really wouldn't have to worry about timely delivery, good and safe packaging, and return policies for any single order.

Highly interactive customer service

Choosing Amazon FBA for fulfillment comes with a plethora of benefits, like best customer service. From replacement, returns, to refunds, Amazon will truly take care of everything. It will make sure that your customer gets instant notification about their orders whenever they ask for it!

Higher position in search result page

This is not stated officially, but since the fulfillment process is done very quick from Amazon's end, the chances of receiving any grievances related to shipping and packaging is very less, hence the seller gets a higher position in the search result page.

Amazon FBA Cons

Amazon FBA undoubtedly comes with irresistible benefits, as a seller, you will literally be delegating your whole fulfillment task to a proficient team. But, over here too, the chances of you facing losses is present, and we have explained that in detail below:

Higher storage fees

One of the major downsides of Amazon FBA is the fees itself it charges to Amazon sellers for packaging and fulfilling an order. You really have to be much aware of the margins you are expecting from each order.

And on top of this, you will even have to pay Amazon inventory storage fees (depending on the duration for which you will store your item in any Amazon fulfillment center, and the area the item occupies).

No control over shipping

Since the whole fulfillment process will be carried by Amazon, sometimes your product can reach to the customer in a damaged state, or it will be improperly packed. Hence, if you choose Amazon FBA, you will have to worry a bit about shipping.

No proper access to inventory

Sellers who opt for Amazon FBA have less control over their inventory, it can become difficult for them to maintain a record of their overall inventory. However, this issue can be dropped out by using proper Amazon FBA seller softwares.

Taxation issues

Amazon FBA comes with a lot of taxation obligations, and these constraints varies from state to state. Hence, before opting out for this service, make sure to understand all the tax liabilities in your state and the state you will be selling products on.

Amazon FBM Pros

Even though Amazon FBA comes with alot of superior benefits, still many sellers don't opt for this services, and decide to go for Amazon FBM instead, and there are many reasons behind this, like:

No hefty Amazon fees in Amazon FBM

By now, we all know how expensive Amazon fulfillment services can get for new Amazon sellers, they will literally have to pay fees for not just order fulfillment but for inventory management as well.  However, Amazon FBM sellers don't really have to pay any fees to Amazon, they can enjoy selling their products at Amazon at cheap rates, and can even figure out a good margin for each product.

More control over packaging

With FBM, you as a seller, get extreme control over shipping and packaging. You can customize the packaging of each order to attract more positive reviews from customers. And you can even always cross check all the customer details for timely and secure delivery.

More control on Inventory

You will not have to manage your inventory in a jiffy when you don't choose Amazon FBA. In fact, you will not even have to pay penalty charges for any old inventory or space covered by your products. You can calculate your safety stock, maintain all the stocks directly, and order stocks when the demand is high, at any given point, without worrying about additional charges.

Higher margins in Amazon FBM

Since, you will not have to pay hefty fees to Amazon for fulfilling your order, you can keep your per order margins high. Moreover, you can also give your customers additional support by adding a gift card, surprise card, or handwritten letters with your each order.

Fewer formalities to be done

With FBA comes a lot of paperwork, and in fact, Amazon changes its rules and fees quite often. But when it comes to Amazon FBM, the paperwork here is very less, and the fees too doesn't keep on changing, because of which you get more access to your margins and profits.

Amazon FBM Cons

More competition in winning Buy Box in Amazon FBM

As mentioned previously, Amazon FBA sellers have more chances of winning a buy box because of higher on time delivery rates, and positive customer reviews, thus the competition here for FBM sellers is a lot more.

Strict Amazon criterias in Amazon FBM

Amazon values each customer a lot more than we think, hence it's very careful about the sellers selling any product on their marketplace. As an FBM seller, you will literally have to follow strict Amazon criterias, like fulfilling on time delivery rates and on time customer service practices.

Time consuming

As an FBA seller, you really have to look after the whole fulfillment process which is alot time consuming. You will not be able to focus on other aspects of selling like marketing and SEO. In fact, if you start getting bulk orders, you will even have to get an entire team to assist you out with fulfillment.

Customer trust issues

Amazon always shares buyers details about who will actually be fulfilling their orders, and buyers often prefer sellers with FBA over FBM – since they believe that Amazon fulfilled orders are quick and trustable.

Amazon FBA Vs FBM Fees: How much will you have to pay?

Now you would have a clear idea of how Amazon FBA and FBM comes with both advantages and disadvantages – and one such pros of Amazon FBM over FBA is the fees itself.

If you are choosing Amazon for fulfillment services, you will definitely have to pay a sum amount to them every month, on every shipment. This sum amount/fees covers the costs to pick up a product, pack the product, and ship the product to the end customer. Amazon will even charge you the storage cost of a product, but will handle the whole customer service part too.

On the other hand, Amazon FBM sellers do not really have to pay any fees to Amazon for fulfillment, but they do have to incur the whole fulfillment expenses on their own. These expenses often include: storage costs, labor costs, product packaging costs, and the actual product shipping cost.

To give you a rough amount,

For example, if you are selling a toy car on Amazon, if you choose to be a FBA seller, you will have to pay Amazon $1.20 to sell that product, and the fee the marketplace will charge you to sell it would be anything around $3.50 – $4. This fee changes depending on the weight of the product. And if you choose to become an FBM seller, you will just have to pay the selling charges on Amazon, and the rest fulfillment expenses will be completely incurred by you.

FBA is great for you, if…

  • You want to save your time and focus more on other aspects of selling products on Amazon
  • The products you are selling are of lightweight and small
  • You don't really want to worry about handling customer service
  • You don't have best access to logistics
  • Most of your products sells very quickly (inventory issues)
  • You feel that you would end up spending more if you fulfill your own products

FBM is great for you, if…

  • You want to pay no fees to Amazon for the complete fulfillment process
  • You are capable of handling overall product fulfillment process and are great with customer service too
  • You have good knowledge of logistics and can do it smoothly than Amazon
  • The products you wish to sell on Amazon are either oversized or a lot heavier
  • You have great knowledge of packaging and delivering high quality, heavier products safely
  • You can afford the additional expenses that would incur in fulfilling your own products
  • You have very little inventory, or seasonal demand for any products.

But, can a seller use both FBA and FBM?

And now since you have explored what Amazon FBA and FBM is all about, next comes the question that has to be answered? Can you do both at the same time, and the answer is YES, DEFINITELY YOU CAN!

Infact, many Amazon FBA sellers have already tried out FBM to gain the benefits from the two. They are selling small and light weight products though FBA, but are still using their own fulfillment methods to fulfill heavier and oversized products. In this way, by building a strong strategy for Amazon FBA and FBM, these Amazon sellers are able to maximize their profit and minimize their expenses.

Top FAQs on Amazon FBA Vs FBM

Is it better to do FBA or FBM on Amazon?

Both FBA and FBM fulfillment methods are profitable, because with FBA you don't have to worry about the whole fulfillment process, and with FBM you won't have to pay any charges to Amazon to carry out any fulfillment process.

Is Amazon FBM free?

Yes, Amazon FBM is free, however, you will still have to pay Amazon a certain amount to sell your products on the marketplace.

How can I identify FBA and FBM sellers?

If a product is sold by an FBM seller, Amazon will list it out on the marketplace, “sold and fulfilled by the seller name“, and if it is sold by an FBA seller, the customer will get to see “sold by the seller name, and fulfilled by Amazon” while shopping.

Can you sell FBA and FBM at the same time?

Yes, many sellers are already making thousands of dollars by choosing both the fulfillment methods: FBA and FBM, depending on the product's weight and size.

What are FBM fees?

FBM sellers don't have to pay any fees to Amazon for fulfillment services, however, the charges of selling an item on the marketplace has to be paid by the seller.

Can FBM be prime?

Yes, FBM can be prime, but for this the seller has to prove that they can meet Amazon Prime shipping standards within the 30 day trial period.

Conclusion: Amazon FBA Vs Amazon FBM: Which fulfillment model is really worth trying?

This conclusion would get really long, because we want to keep it true and unbiased.

First thing first, FBA or FBA: which model is really profitable? The answer to this is FBM, and the reason behind us saying this is, Amazon FBA sellers have very less profit margins because of the fees they pay to Amazon (trust us, it's hefty). And FBM sellers here enjoy paying less fees to Amazon because they are the one handling the whole fulfillment process.

But, we aren't saying Amazon FBM is more profitable than Amazon FBA!

Because if you value time more than the dollars you make, FBM would disappoint you a bit. Reason being, when you choose Amazon for fulfilling all the orders, the marketplace does that very efficiently, you don't even have to bother about your order reaching to customers appropriately, you are very well updated about everything. But, if you are fulfilling your orders on your own, you will be responsible for every delayed delivery.

Capital part in Amazon FBA and FBM

If you are stepping into Amazon marketplace now and are very uncertain about your capital – you really don't have much to spend, FBM will come to your rescue. You won't have to pay hefty fees, in fact, you can even start out with less than $1000.

However, if you want to use Amazon's fulfillment services, and you are really vouching for FBA, you will have to keep at least $5000 in your pocket.

Category diversity in Amazon FBA and FBM

There's this saying in the Amazon marketplace – The more you sell, the more you earn, but there's a trick here, this mantra is not actually going to work with single product, YOU WILL HAVE TO SELL PRODUCTS OF DIFFERENT CATEGORIES, TO EARN MORE.

And, when it comes to selling vast product categories, FBM sellers enjoy this space. In fact, an FBA seller would struggle much with selling just 10 categories, while on the other hand, a FBM seller would be selling more than 50 categories with much ease.

So, down the line, both the fulfillment methods are good, it's just the seller who needs to look after his priorities.

For example, if you have just started out on Amazon, you wouldn't really know how fulfillment works, then at that time, taking Amazon's help would be beneficial for you. However, on the other hand, if you have been selling on Amazon for years now, and you know which product would best sell in which season, it's better to carry out the fulfillment process on your own, to cut off Amazon FBA storage fees.

Now, this is everything you need to know about Amazon FBA and FBM fulfillment models, the choice is yours, do your calculations, do a physical test, and we, at Amzmojo, as always, are here to help!

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