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Last updated on August 1st, 2023
Written by Mohamed Aden
One of the things that you should pay close attention to when you're selling on Amazon is your fulfillment methods. For this, you can go with either Amazon FBA or FBM.
Although FBA has more advantages than the other fulfillment method, you are free to choose whichever will work for you. In this blog post, we'll help you with the difference between FBA and FBM, so you can choose the best one that suits your Amazon business.
If you're a new Amazon seller, one of the first fulfillment methods you will be introduced to is FBA. Basically, with FBA you're handing off the order processing and delivery to Amazon's Fulfillment Centers. You don't have to pack the items ordered, label, or ship them one by one. Amazon handles the fulfillment process for you.
Now, the question for you is: is Amazon FBA worth it? For the most part, having Amazon FBA as your fulfillment method is worth it, especially if you're targeting Amazon Prime members.
If you're still unfamiliar with how this method works, you can ask a trusted Amazon FBA consultant to help walk you through the process. In this way, you can ask how to start an Amazon FBA business, among the other questions that might come up.
Now that you know how Amazon FBA works, let's take a deeper look at this fulfillment method by exploring the benefits of FBA. Here are some of them.
If you choose Amazon FBA as your fulfillment method, your FBA products will all be eligible for Amazon Prime. Prime members can enjoy free two-day Prime shipping, while all Amazon customers can get free shipping on qualified orders.
Your eligible product listings will be displayed with the Prime badge so customers know that Amazon is handling the picking, packing, and shipping.
According to Statista's data, there were over 150 million Amazon Prime members worldwide in 2019. 112 million of those Prime members were from the United States. That's how big your market will be if you choose to become an Amazon FBA seller. Amazon sellers should always aim for wider market reach, which the Amazon FBA program can fulfill.
Amazon favors FBA sellers because the platform knows their orders will be delivered on time. Fulfillment method and on-time delivery are two important factors to getting the Buy Box.
With this, signing up for Amazon FBA program increases your chances of winning the Amazon Buy Box—the most coveted feature of Amazon sellers.
The Buy Box is where the "Buy Now" and "Add to Cart" buttons are on a product detail page. This makes shopping easier for many Amazon customers and helps Amazon sellers increase their visibility and sales.
If you enroll in Amazon FBA, Amazon will handle customer service for you. Your customers can contact their support team via phone or email at no extra charge. Amazon will also manage product returns. If an Amazon customer wants to return a product, the platform will direct them to their online returns center.
Aside from the benefits, the Amazon FBA program also has disadvantages. Here are some of them.
Since Amazon will take care of the process, you must expect to spend some money on FBA fees: namely the fulfillment fee and monthly inventory storage fees. Fulfillment fees cover orders picked, packed, and shipped to your customers from Amazon's Fulfillment Centers.
Before Amazon does this, however, you’ll be in charge of getting your items to an Amazon warehouse, and you have to factor in this additional cost.
You'll also pay for monthly storage fees depending on the volume of your inventory stored in Amazon's Fulfillment Centers. To see if FBA is worth your while, you can use the "Revenue Calculator" in Amazon Seller Central.
Your items should meet Amazon's packaging and labeling requirements before they can be accepted into the warehouses. Failing to prepare your inventory according to these guidelines increases the possibility of Amazon refusing your incoming shipment.
As a result, you will need to invest time and money to retrieve and re-prepare your inventory.
Based on the name itself, you should already know what to expect. FBM is the complete opposite of FBA. Instead of Amazon shipping out your products, you will do everything on your own.
You will have to process orders, package them for shipping, label them, and send them out to your customers.
If you think you’re better off doing everything yourself, here are the benefits of FBM that may interest you.
The Seller Fulfilled Prime is a program offered by Amazon. It allows sellers to complete their own orders and sell Prime-eligible products, but only if they meet Amazon's strict criteria. The program also enables you to display a Prime badge on your listings, making it easy for Prime customers to find your products.
With FBM, Amazon sellers obviously won't have to pay FBA fees. This means you don't have to worry about paying for fulfillment fees or Amazon's storage space. This is a huge benefit if you have a high level of expertise in logistics or if you have heavy and slow-moving items.
Some Amazon sellers want total control over their business processes, even if it means that additional employees must be hired to ensure that every product is processed and shipped out properly.
So if you're the type of seller who wants full access to your inventory, processing, packaging, and shipping, then FBM might suit you better.
Aside from its benefits, you also have to be aware of the drawbacks of Amazon FBM. Here are some of them.
One major disadvantage of FBM is that it can take a while before getting approved for the Amazon Buy Box. This can be a big loss, as Amazon has reported that 80–90% of purchases on their platform are made through the Buy Box.
Since you're fully responsible for handling everything on your own, you will also be responsible for shipping. You'll have to pay for shipping costs, packaging materials and shipping labels.
Shipping and handling may also affect your business if you're not properly prepared to deal with an influx of orders, especially during holiday sales.
Now that you know the main differences between both fulfillment methods, which is best for you? Let's compare FBA and FBM through the following factors.
Choose Amazon FBM if you want full control over your business processes. However, if you don't want to oversee your Amazon business's processing, labeling, and shipping, then FBA might be the suitable fulfillment method for you.
Handling customer service is one thing that's important for both Amazon FBA and FBM sellers. If you already have an established customer service set in place, you can consider going for FBM. With FBM, your team should be trained to handle all customer concerns.
But if you're not confident about managing it or don't have a huge team to handle customer inquiries, you can hand it off to the Amazon FBA program.
One major factor in this decision will have to be storage space. If you already have a warehouse, you'll save a lot in terms of storage fees.
But if you're just starting out and don't have a dedicated space, it might be worth your while to pay Amazon to store your products for you. Thus, go for Amazon FBA.
Your fulfillment method is one of the main things you must thoroughly decide on when selling on Amazon. More than simply deciding on who will fulfill your orders, this will greatly affect how your business will be run and your overall sales.
Do you need help in dealing with your Amazon seller account? Talk to a reputable Amazon account specialist today.
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