Amazon FBA vs. FBM: Which One Is Right for You

If you’re selling products on Amazon, you have two main fulfillment options to choose from: FBA and FBM. Each has its own advantages and disadvantages, so it can be difficult to determine which one is the best fit for your business. In this article, we’ll break down and compare FBA and FBM to help you make an informed decision.

The Difference Between FBA and FBM Sellers

The two main methods of fulfillment for selling products on Amazon are FBA and FBM, which differ in terms of storage, shipping, and customer service.

With Fulfillment by Amazon (FBA), sellers send their products to Amazon’s warehouses, where the inventory is stored and shipped directly to the customer, with Amazon also handling customer service.

On the other hand, with Fulfillment by Merchant (FBM), sellers list their products on Amazon but manage all aspects of storage, shipping, and customer service themselves or through a third party.

Which One Is More Profitable?

The decision of choosing between FBA and FBM depends on various factors such as the nature of the product, the size of the business, and the budget. If you’re selling products that are bulky or require special handling, FBM can be a more profitable option as it gives you more control over storage and shipping.

On the other hand, if you’re just starting or have a small business, FBA can be more advantageous as it allows you to benefit from Amazon’s warehousing and shipping infrastructure.

As your business grows, you can always switch to FBM. Furthermore, if you have a limited budget, FBA might be the better option as it provides access to Prime shipping, which can result in increased sales.

Which Sells Faster Amazon FBA or FBM?

FBM sellers were able to establish their Amazon businesses faster than FBA sellers. FBM sellers took a median time of one year from their start on Amazon to reach $100k in annual sales, while FBA sellers took two years to achieve the same.

54% of FBM merchants were able to start selling on Amazon within six weeks, compared to only 34% of FBA sellers. This is likely due to the fact that FBA requires more setup time, as sellers have to send their products to Amazon’s warehouses and create individual listings for each product.

Additionally, 28% of FBM sellers achieved profitability within three months, compared to 20% of FBA sellers.

Factors To Consider When choosing Between FBA and FBM

When deciding between Amazon FBA and FBM, there are several factors to take into consideration.

Firstly, consider your product type. Depending on the nature of your product, FBM may be the more profitable option, as it allows for more control over storage and shipping.

Secondly, consider the size of your business. For small businesses or those just starting out, FBA may be more cost-effective due to Amazon’s warehousing and shipping infrastructure.

You should also consider your budget Although FBA has higher upfront costs due to storage and shipping fees, sellers often see an increase in sales thanks to Prime shipping eligibility, which can make up for the extra expense.

When To Use FBA

While Amazon FBA can increase sales through Prime shipping, FBM may be the better option in certain situations, like selling large or special handling products. FBM might be a good choice if you want more control over your customers, already have established customer service procedures, have oversized or heavy merchandise, have set up logistics, want to reduce fulfillment costs, or have slow-moving inventory.

Ultimately, choosing between FBA and FBM depends on your business’s specific needs and priorities.

When To Use FBM

Consider utilizing the Fulfillment by Merchant (FBM) approach if any of these factors apply to your business:

  1. Your inventory consists of bulky or specialized items.
  2. You desire greater management over your customer base.
  3. You have implemented exceptional customer service protocols.
  4. Your merchandise is excessively large or weighty.
  5. You prefer to avoid handling returns.

Pros and Cons of FBM and FBA

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Pros of Fulfillment by Amazon (FBA):

  • By utilizing Amazon’s Prime shipping service, you can boost your sales.
  • Since Amazon takes care of storage and shipping, you have less work on your plate.
  • Amazon also handles customer service, alleviating the burden of dealing with unhappy customers.

Cons of Fulfillment by Amazon (FBA):

  • Upfront costs can be higher due to storage and shipping fees.
  • You have less control over the storage and shipping processes.
  • If Amazon makes a mistake with shipping or customer service, it ultimately falls on you.

Pros of Fulfillment by Merchant (FBM):

  • You can retain more control over how your products are handled during storage and shipping.
  • Upfront costs are lower as you are not required to pay for storage and shipping fees.
  • You can handle any issues with shipping or customer service on your own.

Cons of Fulfillment by Merchant (FBM):

  • Without access to Prime shipping, you must focus on marketing efforts to stand out from competitors.
  • You are responsible for handling storage, shipping, and customer service yourself or through another third party.
  • Without an efficient system in place, fulfilling orders can be time-consuming and expensive.

Which Should You Use?

These guiding questions can help you determine the best Amazon fulfillment option for your business:

  1. What are my long-term goals for my business?
  2. Do I plan to expand my business to a point where I can outsource or hire staff for fulfillment?
  3. Do my products tend to be large or heavy?
  4. Is quick product delivery crucial to my business?
  5. Do my products require specialized handling or storage?
  6. Do I have the capacity and resources to manage fulfillment myself?
  7. How much can I afford to invest in fulfillment?
  8. Am I comfortable relinquishing some control over my product to increase sales?

If you answered affirmatively to any of these, Fulfillment by Amazon may be the best option for your business:

  1. You want to benefit from Amazon’s Prime shipping.
  2. You lack the time and resources necessary to manage fulfillment yourself.
  3. You offer large or heavy products.
  4. You require rapid delivery for your products.
  5. Your products need specialized handling or storage.

If you answered positively to any of these, Fulfillment by Merchant may be the best option for your business:

Fulfillment by Amazon and Fulfillment by Merchant each have advantages and disadvantages. Therefore, examining your objectives, requirements, and resources is critical to choose the most appropriate option for your business. Use the above questions as a guide to making the best decision.

Wrap Up

In essence, what distinguishes Amazon FBA from FBM? Amazon FBA entails sending your products to an Amazon warehouse, which then takes charge of shipping orders to customers. On the other hand, with FBM, you are responsible for all aspects of order fulfillment, including packing, shipping, and customer service. The choice between the two hinges on factors such as the volume of orders, the size and weight of products, and delivery time constraints.

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