Will you allow Amazon to fulfil your product, or will you fulfil it yourself? If your answer is by Amazon then it's FBA and if the answer is to fulfil by yourself then it's FBM. In this article, we will be discussing Amazon FBA vs Amazon FBM and their pros and cons.
FBA (Fulfilled by Amazon) is Amazon's storage and fulfilment service that authorizes Amazon sellers to send products to an Amazon warehouse and have their orders shipped by Amazon. FBM (Fulfilled by Merchant) is a fulfilment system in which the seller bears full responsibility for keeping inventory and shipping orders.
Pros of Amazon FBA (Fulfilled By Amazon)
Let’s begin with the pros of allowing Amazon to ship it for you. This is called Amazon FBA or fulfilled by Amazon.
The first Pro is you don't have to ship it yourself that's the whole point. Amazon does the entire fulfilment for you. This isn't the only pro, but it's a fairly big one. Your Amazon sales volume gets to be pretty high. You're not going to pack up each little individual item, go to the post office and send it every day. It's just a waste of your time.
The second Pro is you don't have to handle the returns. When you're doing Fulfilled by Merchants or FBM that means that every time there's a return you got to deal with it. You got to deal with all of that but if you're going with FBA, then Amazon manages all those returns.
The third Pro and maybe the biggest Pro out of all is you get more sales when you put your product as an FBA product. It is prime eligible, which means people that pay for the Prime membership can get it within two days. There are also much of other benefits with it but it’s ultimately going to get more sales. The model goes that Amazon also encourages products that are prime eligible for a number of different reasons. They know it's going to make customers happier, and they make more money out of them.
Pros of Amazon FBM (Fulfilled By Merchant)
Some benefits to doing Fulfilled by Merchants are:
The first Pro of doing FBM is you don't have to pay the fee. Amazon does charge you to do FBA. Now it's worth the money because you're going to have to pay to ship, and you're going to have to pay someone to pack it up, and you're going to spend your time actually carrying it to the post office, but that is a pro if you're very price conscious. If you're very sensitive about how much money you're paying you might save a bit of money by doing Fulfilled by Merchants.
The second Pro is you can offer more options when you're doing FBA which means that you have to ship everything to the warehouse which means you have to guess how much you're going to sell early.
The third Pro for FBM is you can do made-to-order items. The reason like first off you didn't know what was going to sell, so you don't want to create a bunch of some items and send it in, but the next part is once someone would order it we would make it by hand so, and then we fulfil it, and you can't do this with FBA, with FBA you have to make it and send it in.
Able to Compete for Amazon Buy Box If you qualify for Amazon Seller Fulfilled Prime (SFP), then you can contend for the Buy Box with FBA sellers.
Cons of Amazon FBA (Fulfilled By Amazon)
First Con: The Amazon FBA fee is higher. Some sellers are happy to pay the fee because they don't want to do the work of packaging and shipping out.
Second Con: Amazon may lose or damage items, this is okay though because if they damage an item or lose an item they will pay you for it for the full price.
Third Con: The last downside of using Amazon FBA is you really need to pay attention to the inventory. If you're out of stock for too long, Amazon will dent you and your sales rank will go down. So that is a downside of having FBA. Your sales may be so good then you have a hard time staying on top of replenishing the inventory.
Cons of Amazon FBM (Fulfilled By Merchant)
First Con: No Amazon Prime badge. The main disadvantage of using FBM over FBA is not having Prime-eligible products. The aim of Amazon Prime is to get orders delivered in two days.
Second Con: Spend more time on self-fulfilling If you’re handling your Amazon FBM orders; you can finish up spending a lot of time packing boxes.
Third Con: Costs of warehousing and if outsourcing. Outsourcing can be costly, particularly if you have a lot of inventory sitting and not selling.
So we talked about very much of pros and cons of Amazon FBA versus Amazon FBM, so now let's determine which one is good for you. If you're doing private labelling or if you're doing like you only have one SKU it's not that hard to track inventory and you're going to get way more sales through FBA, in addition, you don't have to do with all the shipping.
But maybe you have a company where you have many SKUs and you're not sure which ones are going to sell. You can always begin with Fulfilled by Merchants and then go into FBA.
There are a bunch of other reasons you might want to use FBA versus FBM, but for 95% of the sellers, FBA makes sense.