Last Updated on August 4, 2022 by andrewtk
Almost everyone knows about Amazon FBA…right?
But Amazon FBM seems to be a far better kept secret.
But in fact, FBM may well be the better option for a lot of businesses!
So we're going to take a good look at both of them to figure out which is best for you.
Amazon FBA vs FBM…
…let's crack on!..
What's The Difference Between Amazon FBA & FBM?
The key differences between Amazon FBA vs FBM are simply these:
FBA: An approved seller has their products sent directly to Amazon's warehouse/s. Amazon stores the inventory and upon an order receipt, ships it directly to the customer. Amazon also manage customer service support.
FBM: A seller lists their products on Amazon, but still manages the storage of inventory, order fulfillment, and customer support themselves.
What Is FBA?
FBA stands for Fulfillment By Amazon.
The brief summary above is a pretty neat description.
But, if you want to read up on it in more detail, have a look at this article I wrote, all about how Amazon FBA works.
What Are The Benefits Of FBA?
Not sure which of FBA and FBM is the best option for you?
Okay then, let's take a run through of the relative strengths of Amazon FBA.
#1. Easier to Win the Buy Box
The Buy Box is immensely important for Amazon sellers.
They fight for it tooth-and-nail!
In case you're not certain, the Buy Box is the box to the side of the page, containing the all important button that says “Add to Cart”.
It's important because without it, your potential customers will have to click on the “buy from other sellers” link, to buy from you.
The vast majority of sales made on Amazon are made through the Buy Box.
So, if you don't win the Buy Box, you lose a whole whack of sales!
It's pretty clear that Amazon has a preference to giving the Buy Box to FBA sellers.
Why? Because Amazon has total control over the entire fulfillment process for FBA sellers.
So they are totally confident that the product os going top get shipped without any issues.
I'm sure you'll be as confident as I am that it has nothing to do with the fact that Amazon makes more money from selling FBA products!
#2. Amazon Prime Eligible
All FBA products are eligible for Prime and all FBA sellers get the Amazon Prime badge on their listings.
Do not underestimate how strong the pull is for Prime members to only ever purchase Amazon Prime eligible products…
…whenever they're shopping online!
They've paid for their Prime membership, they're sure as hell going to get their same day dispatch and free delivery!
Prime membership has been growing and growing.
And according to Feedvisor, it's reckoned that something like 6% of Prime members buy something online every day.
I'm a serial offender! I pretty much filter to show Prime products only whenever I'm shopping on Amazon.
#3. Less Order Management
Fulfilling orders is a lot of work.
Picking, packing, posting, handling customer service, dealing with returns.
There is a lot to do!
And the magic wand of Amazon FBA makes it all go away.
Most importantly, the time that going with FBA saves you here, can be spent on the growth areas of your business.
#4. Management of Inventory
Using Amazon FBA can make it possible for you to get your inventory in a number of Amazon warehouses around the globe.
So your products can be closer to potential customers!
Shortening delivery times and leading to happy customers who will be more likely to buy from you again.
#5. Storage Space
As an Amazon FBA seller, you don't really need to concern yourself with storage space.
I'm not aware of Amazon ever running out of room to keep inventory.
But if you're dealing with storage space yourself, it's something you are likely going to have to keep a very close eye on.
#6. Location Independent
Genuine location independence is what you get with FBA.
You can run your e-commerce business from pretty much anywhere you want to!
The flexibility that this brings to you is massive.
Flexible working, flexible lifestyle, for you and any employees you might have.
#7. Minimal Customer Service
If you're running an FBA business, Amazon will deal with most of your customer service issues.
At the standard of their customer service is super high.
This includes full management of any returns.
What Is FBM?
FBM stands for Fulfillment By Merchant.
FBM is quite different to FBA, as you will need to to store, pick, pack and ship all the products yourself.
I mean, it doesn't actually have to be done by you.
You are free to use any other third-party logistics provider that you like…
…it just won't be Amazon!
Let's take a look at the relative strengths of FBM.
#1. Lower Fees
Amazon makes more money from sales of FBA products, than it does from sales of non FBA products.
Because quite clearly they are charging fees for all of the fulfillment operations they are taking off the sellers plate.
So, as a potential FBM seller, you'll be doing more work, but you will be keeping more of that money for yourself.
#2. Hands-On Ability
You may want to take total control of your order fulfillment process.
You may see it as somewhere where you can add further value through the way you pack and ship you product.
You can add unexpected freebies.
You can cater to special customer requests.
This more personal service can enable you to build up increased customer loyalty.
#3. Direct Customer Relationship
This follows on from the point directly above.
FBM puts you closer to your customers than FBA.
You can build up relationships by using FBM, something that is almost impossible to do when using FBM.
#4. Better for Slow-Moving, Big or Heavy Products
Amazon FBA works pretty well for items that fall into certain size brackets.
If your inventory is significantly outside of these parameters, FBA fees ramp up significantly.
So if your inventory is large and heavy, it's going to cost you a fair whack on additional fees!
FBM is therefore likely to be a better option for you.
#5. Cheaper & Easier for Multi-Channel Fulfilment
If your plan is to be selling your products across multiple different online channels, there may be little advantage in using FBA simply for your Amazon sales.
You'll be needing some kind of order fulfillment systems and processes in place to manage all of the other channels you're selling through anyway.
It may be much simpler, and cheaper, to just be dealing with one warehouse operator and one logistics provider.
Amazon FBA vs FBM: Which Is The Best?
Well, there is no ‘best'!
They both serve different types of sellers well for different reasons.
And this is what you have to get super clear on:
- What are your needs?
- What type of business do you want to own and run?
- What product types, sizes, weights, will you be selling?
- Are you going to be selling across multiple different online channels?
- In which areas of your business do you want to be mainly focused?
Very generally, FBA tends to be better for higher volume, higher margin products.
FBM tends to be better for lower volume, lower margin products.
Can You Use FBA & FBM At The Same Time?
There's nothing to stop you. Amazon don't mind.
I think there are plenty of sellers using both.
If some of your inventory is a good fit for FBA, while some of it is better suited to FBM, go ahead and use both.
Wrapping It Up!
Getting orders fulfilled correctly and on time is essential for online selling success.
Get it wrong, and you'll be seeing returns and bad reviews.
This is why making the right decision on whether Amazon FBA vs FBM is best for your business, is so important.
Get this big decision right and you'll be ranking well, making sales and building a following of happy customers.
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