Comparing Amazon Fulfillment Options: FBA vs FBM

When it comes to selling on Amazon, you will want to consider how to have your orders fulfilled. Currently, Amazon offers two primary options: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). Of course, each option has its own set of advantages and disadvantages, and understanding their differences is essential if you plan to sell on the platform. The type and scale of your business will determine which option suits you best. In this article, we will compare and contrast FBA and FBM by exploring each of their advantages and disadvantages in an easy-to-understand manner in the hopes that by the time you’re done reading, you’ll have a clear understanding of which fulfillment option aligns best with your goals.

Fulfillment By Amazon (FBA)

What is Amazon FBA? This is a question asked by many aspiring entrepreneurs. Simply put, it is an option that allows sellers to store their inventory in Amazon’s fulfillment centers. This means that when you sell an item Amazon takes care of the entire fulfillment process, including packing, shipping, and even customer service. Of course, there are some benefits of Amazon FBA but it also is not for everyone.

Advantages of Amazon FBA

Prime Eligibility: Arguably the biggest advantage of using FBA Is that it allows you to access Amazon Prime’s massive customer base, increasing your product’s visibility and potentially boosting sales. It also means you can offer much quicker shipping times to potential buyers, giving you an edge over the competition.

Enhanced Customer Trust: The reality is that most customers trust Amazon’s fulfillment process over sellers who fulfill orders themselves. This can lead to higher conversion rates and positive reviews, growing your page and ranking you higher in search results.

Scalability: FBA allows you to scale your business quite quickly as Amazon is capable of handling huge amounts of inventory. Additionally, by outsourcing your fulfillment, you can focus on other areas, such as marketing which also has the potential to help scale your business.

Disadvantages of Amazon FBA

Storage Fees: FBA charges storage fees based on the size and duration of your inventory storage. Whilst they are arguably worth the cost, you should still try to run a system such as just in time, to keep costs to a minimum.

Limited Control: With FBA, you have less control over the fulfillment process, including packaging and shipping customization. Whilst Amazon is of course trustworthy, some sellers may not like this lack of control, especially if you are selling high-end items.

Analysis

Overall, one could argue that the benefits of using Amazon FBA outweigh its drawbacks. It can allow you to turn your small side hustle into a major business relatively quickly due to the increased trust you will gain among buyers and the amount of volume you will be able to move. However, the lack of control over certain aspects may mean some sellers will want to use Fulfillment by Merchant (FBM).

Fulfillment by Merchant (FBM)

Fulfillment by Merchant (FBM) is an option where the seller themselves handles the entire fulfillment process, including storing inventory, packing, shipping, and customer service. This is similar to selling on platforms such as eBay. Below are our advantages and disadvantages of using this system.

Advantages of Amazon FBM

Cost Control: With FBM, you have more control over your fulfillment costs as you are not paying for Amazon’s fulfillment services. Whether this is worth the saving or not will depend on a lot of factors such as where you live. For example, Amazon does not offer FBA in a lot of countries so you may be forced to sell via FBM in order to sell on Amazon.

Inventory Management: FBM allows you to have direct control over your inventory. This can help in enabling better tracking, customization, and flexibility. It is crucial to have a proper system in place if you plan on doing this however as things can get complicated fast depending on the size of your inventory.

The brand-new Juiced app actually offers an easy way to manage your inventory and automatically imports your sales, orders, and more all into one central hub. This is on top of the countless other services and resources provided on all things reselling. If this sounds good to you then you can sign up for free by clicking here.

Higher Profit Margins: Without the fees associated with FBA, there is a potential for higher profit margins using FBM. However, this may be minimal and again depends on a variety of other factors should as what type of product you are selling and your location.

Disadvantages of Amazon FBM

Increased Logistics Responsibilities: Managing inventory, packing, shipping, and customer service can be time-consuming which can take you away from other more important areas of the business.

Customer Trust: As previously mentioned, Amazon FBM may be perceived as less reliable or trustworthy compared to FBA. In part, this is due to the fact that FBM sellers don’t qualify for Prime which can mean slower shipping times.

Analysis

FBM is a good way to sell on Amazon if you like control and are not selling in large volume. However, it is arguable that the convenience offered by FBA is worth the extra cost. Of course, as previously mentioned FBA is not available in every country and region so you may have to use FBM to sell on Amazon and that is better than not selling at all.

Our Choice: Amazon FBA