If you want to start an ecommerce business on the Amazon platform, you have two primary fulfillment options available to you. These are FBM, or Fulfilled by Merchant, and FBA, or Fulfilled by Amazon. Each one has its own unique set of benefits and downfalls, but for many merchants, utilizing the FBM option alongside an expert fulfillment service is the best course of action. Here are the differences between these options.
The Fulfilled by Amazon (FBA) Process
When you choose the FBA route, this means that you sell the product and Amazon ships it out to customers. You will send products in bulk to various fulfillment centers scattered across the nation, and Amazon employees pick, pack, and ship the products on your behalf as the orders come in. Many merchants choose FBA because it saves them a great deal of time and eliminates the need for them to procure their own warehouse space, hire their own employees, and negotiate their own shipping rates with the various carriers in the area.
Though FBA is a popular choice, there are a few things that you should consider before you decide. First and foremost, is there are more affordable option? Amazon does not provide this service for free, of course, so you will need to pay them to do it. The rates are a bit confusing, as well. They charge the greater of the dimensional weight or actual weight to fulfill orders, and as your company grows, this can become a huge chunk of money. Once you’ve gotten involved in FBA, it can be difficult to make the switch to FBM.
The Fulfilled by Merchant (FBM) Process
If you opt for FBM, this simply means that you sell and ship the products utilizing Amazon only as the sales platform. This can benefit many merchants in many ways. In fact, for most sellers, the benefits of FBM far outweigh any potential benefits of FBA. You can get:
- More control over the orders. Whether you pack and ship orders yourself or hire an outside fulfillment company, you get far more control over how your orders are packed and shipped.
- Lower costs (in many cases). Due to the way Amazon charges by weight, if you have large, heavy items with relatively low profit margins, you’ll likely save money by shipping yourself or hiring a fulfillment company other than Amazon.
- Seller Fulfilled Prime. You don’t have to opt to have orders fulfilled by Amazon in order to provide Prime shipping to buyers. If you have a Professional Selling account, you can utilize Prime just like FBA sellers.
- Better discounts. If you pick a fulfillment company, you can usually get your shipping and supplies for much less than what Amazon would charge you.
- Better customization of packaging. Finally, if you want your packaging to display your brand logo and/or colors, this is almost impossible with FBA. In fact, this is why most merchants choose (or make the switch to) FBM.
For the most part, small businesses that choose the FBM route experience fewer hiccups, generate more sales, and have more time to spend on the more important parts of their businesses. Learning more about the various fulfillment options and the services you can get along with order management and fulfillment is crucial to designing the package that is right for you.