What are Amazon FBA and FBM?
When you sell in the Amazon store, you get to choose between two basic fulfillment methods: Fulfillment by Amazon (FBA) and Fulfilled by Merchant (FBM). You can use one method for all your eligible products, or you can combine methods to meet the needs of your business.
Fulfill orders with FBA
FBA is a program that lets you send products into Amazon’s fulfillment network and outsource the packing, shipping, customer service, and returns. As part of Supply Chain by Amazon, FBA can help you save time, reduce operational costs, and grow your business. It can also allow you to offer customers fast, free shipping through Amazon Prime.
Fulfill orders with FBM
If you want to handle fulfillment yourself, you can maintain your own inventory and ship products directly to customers with Fulfilled by Merchant (FBM) tools and services. With Fulfilled by Merchant, you can list products for sale in the Amazon store and fulfill orders from your own facilities while benefitting from our suite of ecommerce solutions.
Learn more about Fulfilled by Merchant
What’s the difference between FBA and Fulfilled by Merchant?
FBA allows you to outsource the entire fulfillment process, whereas with Fulfilled by Merchant, you manage various fulfillment tasks. This in-house fulfillment method can give you greater control over the fulfillment process from beginning to end, while FBA enables you to take a more hands-off approach as you focus on other aspects of your business.
Your choice of fulfillment method may depend on the types of products you sell, where your customers are located, and your business model and goals. Both methods can be a great option, and many sellers use both on a per-product basis.
Find out whether FBA could be worth it for you
5 factors to consider: Which fulfillment method should you choose?
1. Type of products
Your fulfillment approach will be closely linked to the types of products you want to sell. For example, smaller products that require minimal packaging may be easier to fulfill directly, while reliably packing larger products may be more difficult. FBA can be a great option to ensure your products are packaged safely for transport.
For both Fulfilled by Merchant services and FBA, fulfillment costs related to storage, shipping, and handling can vary greatly based on product size, weight, and dimensions. Perishables, hazardous materials, and other types of products can also bring special considerations like shelf life, required certifications, and safe-transport precautions. FBA also has certain product restrictions you’ll want to consider.
Explore Amazon product categories
2. Personalization and time savings
If you have the time and enjoy taking care of fulfillment tasks as part of your day-to-day, or if you want to add a personal touch to some part of the process, Fulfilled by Merchant could be the right option for your business. For example, when you fulfill orders on your own, you can use a particular type of packaging or include a handwritten note for customers.
If you’d rather not spend your time and energy on picking, packing, and shipping customer orders, you might want to consider FBA, which handles all those aspects for you. That way you can focus your time on other aspects of growing your business.
3. Inventory management
When deciding between FBA and Fulfilled by Merchant, you’ll want to think about your preference for storage and other aspects of inventory management. Here are some considerations:
- Do you have the space to store inventory?
- How long do you need to store inventory?
- What’s your expected turnover rate?
- Do you require special types of storage like climate control?
- Do you need 24/7 access to your inventory?
If you need direct access to your inventory at all times, or have special requirements in terms of the packaging and fulfillment techniques you want to use, Fulfilled by Merchant might be the best fit. On the other hand, FBA has the potential to save you considerable time and resources by managing inventory for you.
Learn more about preparing and sending inventory into FBA
4. Customer service and returns
How do you want to handle communication with customers? Customer service can involve answering questions and assisting buyers with returns and refunds.
Some sellers who use Fulfilled by Merchant enjoy interacting with customers personally. Others prefer to work through a customer service provider. With FBA, we take care of customer service and returns on your behalf.
We also offer tools that help you keep track of customer feedback, ratings, and reviews. Check out Customer Review Insights in Seller Central to gauge audience sentiment. You can also enroll a brand in Amazon Brand Registry to use the Customer Reviews tool, which gathers reviews in one place for efficient analysis. Brand Registry is a free program that can help you build and protect your brand.
Learn more about Brand Registry
5. Sales volume and velocity
Optimum fulfillment might look different for products that have steady sales year round compared to products that have fluctuations in sales (like seasonal products) or products that sell sporadically.
Sales volume refers to sales amounts within a given time period. Sales velocity is a measurement of how quickly products sell, and can be a reflection of how sales volume is changing over time. Based on your inventory turnover rate and the scale of your business, is FBA or Fulfilled by Merchant better?
It can depend on your ability to keep up with demand. For example, if you run a small operation with seasonal products that you can store and ship directly, fulfilling orders in house might work best for your business. If you sell large volumes of products on a regular basis, FBA could be a more sustainable solution.
In addition to competitively pricing your products, another way to improve your chances of winning the Featured Offer is to use FBA to deliver orders with the speed and reliability customers love.
Amazon FBA vs Fulfillment by Merchant costs
Whether you choose to outsource fulfilment with FBA or handle orders directly with Fulfilled by Merchant tools and services, the total cost can vary based on the size of your products, the scale of your operations, and other components.
FBA costs
FBA uses a pay-as-you-go model with storage and fulfillment costs charged per unit and per order. When you use FBA to fulfill orders, your costs are be based on several factors, including:
- Product weight, size, and dimensions
- How long you need to store inventory
- Returns processing
- Customer service
Fulfilled by Merchant costs
When you fulfill orders using Amazon’s Fulfilled by Merchant program, your costs for fulfilling orders are based on your own in-house processes and working with delivery specialists.
You can choose from a variety of Fulfilled by Merchant services to help lower your costs. For example, pre-negotiated shipping rates through Amazon Buy Shipping are over 31% lower on average compared to retail ground rates for UPS, FedEx, and USPS. You can also get up to 5% back on eligible shipments with Veeqo, our free shipping software.
You can also look into solutions like Amazon Warehousing and Distribution (AWD). This low-cost bulk storage option allows you to distribute inventory to the Amazon store and other distribution channels and can help lower your FBA costs.
Amazon FBA vs FBM calculator
To find out what fulfillment approaches could be profitable for your business, start by doing research to decide what price points to set for the products you want to sell. Then you can calculate your expenses and estimate sales to see if you’ll be able to turn a profit and maintain healthy margins.
The Amazon Revenue Calculator is a free online tool you can use to estimate and compare potential costs and net profits for FBA with your own fulfillment method. Here’s how:
- Access the Revenue Calculator.
- Choose a product by selecting the tab for Search Amazon catalog, Define product, or Estimate in bulk.
- Fill in the fields with information as appropriate based on the products you want to sell.
Run calculations to see potential profits and margins for different fulfillment options compared with what you could make by enrolling products in FBA. Then use these estimates to decide what’s best for your business.
Learn more about estimating fees and costs
Can you sell using both FBA and Fulfilled by Merchant?
Yes, you can use one of these options or a combination of both in order to meet the fulfillment needs of your business. You can also use related services:
Multi-Channel Fulfillment
Supply Chain by Amazon includes the option to extend FBA services through Multi-Channel Fulfillment (MCF). With MCF, you can outsource fulfillment for orders placed on your websites and other sales channels.
Seller Fulfilled Prime
Display Prime branding on the products you sell directly using Seller Fulfilled Prime. Demonstrate you provide the fast, reliable delivery experience customers know and love to display the Prime badge on your listings.
Buy with Prime
Buy with Prime is a way to display the Prime logo and delivery promise on your own website. It’s been shown to increase conversions by an average of 25%.
Learn more in our guide to ecommerce fulfillment
Decide if FBA or Fulfilled by Merchant is right for you
Either FBA or Fulfilled by Merchant—or both—might be the best option for some or all of the products you offer. Keep in mind that solutions like Multi-Channel Fulfillment (MCF) can also help you strike a balance between various approaches to cover all your needs.
Consider outsourcing your fulfillment responsibilities to FBA if it would free up your time and resources and allow you to focus on other aspects of your business, like scaling up or building a brand.
If you’re new to Amazon, you could qualify for up to $50,000 in New Seller Incentives—including shipping credits, free storage, and more.
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