What's the difference between FBM and FBA on Amazon?

The Question Every Amazon Seller Asks

We often get asked, what is the difference between FBM (Fulfilled by Merchant) and FBA (Fulfilled by Amazon)? Many sellers are unsure whether they need to invest in getting inventory to the local market or sell from their current operation. The decision shapes everything from your margins to your customer experience, so it's worth understanding both models before committing to either.

Understanding Fulfilment by Merchant

Fulfilment by Merchant (FBM) is an alternative to Fulfilment by Amazon (FBA), where sellers handle the shipping and customer service for their own products. Some perks of using FBM include:

• Lower fees: Without the additional costs associated with FBA, sellers may be able to offer their products at a lower price.
• More control over shipping and customer service: By handling the shipping and customer service themselves, sellers have more control over these processes and can respond to customer inquiries and resolve issues more quickly.
• Flexibility with product pricing: Since sellers are not subject to FBA’s additional fees, they may have more flexibility with their pricing strategy.
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Some downsides of using FBM include:

• Reduced visibility and sales: Products fulfilled by the merchant are not eligible for Prime shipping and may not be displayed as prominently in search results, which can lead to reduced visibility and sales.
• Increased logistics burden: By handling the shipping and customer service themselves, sellers will have to invest more time and resources into these tasks.
• Limited access to Amazon's customer base: Sellers that use FBM will not have access to the same customer base as those that use FBA.
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Overall, FBM can be a good option for sellers who want more control over their shipping and customer service processes and are looking to keep costs low. But it may come with a trade-off in terms of visibility and access to Amazon's customer base.

Understanding Fulfilment by Amazon

FBA (Fulfilment by Amazon) allows sellers to store their products in Amazon's fulfilment centres. When an order is placed, Amazon will pick, pack, and ship the product to the customer. They will also handle customer service and returns on behalf of the seller. Some perks of using FBA include:

• Increased visibility and sales: Products that are fulfilled by Amazon are eligible for Prime shipping and are often displayed more prominently in search results. This can lead to increased sales and visibility for your products.
• Reduced logistics burden: By having Amazon handle the shipping and customer service, sellers can free up time and resources to spend on other tasks.
• Access to Amazon's customer base: By using FBA, sellers can tap into Amazon's massive customer base which can result in more leads.
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Some downsides of using FBA include:

• Higher fees: FBA comes with extra costs, including storage fees, picking fees, and shipping fees. These fees can add up, especially for sellers who have many products or products that are bulky or heavy.
• Limited control over shipping and customer service: Sellers do not have direct control over shipping and customer service and may not be able to respond to customers or resolve issues as quickly as they would like.
• Less flexibility with product pricing: Sellers may have to adjust their prices to account for the additional fees associated with FBA.
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Overall, FBA can be a great option for sellers looking to reach more customers and reduce their logistics burden. However, it is important to carefully consider the additional costs and lack of control before deciding to use the service.

So Which One Is Right for You?

The answer is completely contextual and dependent on your business. FBM can suit sellers who want more control over their operations and are looking to keep costs lean, while FBA tends to favour sellers chasing reach and willing to pay for the infrastructure that comes with it. We encourage businesses to understand conversion rate impacts and additional shipping fees associated with both models before making a decision.

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