Understanding Amazon FBM: What Is It and How It Works

January 27, 2023

What is Amazon FBM?

Amazon FBM (Fulfilled by Merchant) is a program that allows third-party sellers to sell their products on Amazon but handles their own inventory management and shipping. This means that the sellers are responsible for shipping and handling their products and customer service. The program is an alternative to Amazon FBA (Fulfillment by Amazon) where Amazon manages all the fulfillment and shipping for the seller.

How to Start Doing Amazon FBM?

1. Create an Amazon seller account: To start selling on Amazon, you need to create an Amazon seller account. You can do this by visiting the Amazon Services website and clicking on the "Sell" button.
2. List your products on Amazon: Once you have your account set up, you can start listing your products on Amazon. You'll need to provide details about your products, such as the title, description, and images.
3. Prepare your inventory: Once you've listed your products, you'll need to prepare your inventory for shipping. This includes packaging, labeling, and tagging your items.
4. Set up your shipping: You will need to set up shipping methods, shipping rates, and handling times for your products.
5. Monitor your inventory: You'll need to keep an eye on your inventory levels and reorder products as needed.
6. Handle customer service: You'll be responsible for handling customer service and returns, so make sure you have a plan in place to address customer concerns.
7. Monitor your sales and performance: Keep an eye on your sales and performance metrics, and make adjustments as needed to optimize your listings and increase your sales.
8. Continuously stay updated with Amazon's policies and procedures: Amazon's policies and procedures are subject to change and it is important to stay updated with them to ensure your compliance.

It's worth noting that starting with FBM also requires you to have your own storage space for your inventory and resources to handle shipping and handling.

Why Choose Amazon FBM?

Amazon FBM (Fulfilled by Merchant) is a program that is suitable for sellers who:

Want more control over their inventory: 

With FBM, sellers can store their products in their own warehouses or even in their own homes, giving them more control over how and when their products are shipped.

Want to save money on fulfillment costs: 

With FBM, sellers only have to pay for the cost of shipping the item to the customer, which can be significantly less expensive than the fees associated with Fulfillment by Amazon (FBA).

Have the resources and expertise to handle the logistics of shipping and fulfillment:

FBM requires more effort and resources on the part of the seller as they must handle all of the logistics themselves.

Have their own shipping and handling processes: 

Sellers need to have their own shipping and handling process to ensure that the products are shipped and delivered on time.

Have a low volume of sales: 

If a seller's sales are low, it might not be cost-effective to use FBA as the storage and handling fees can outweigh the benefits of the program.

Advantages and Disadvantages of Choosing Amazon FBM

Advantages of Amazon FBM	Disadvantages of Amazon FBM
More control over inventory	More effort and resources required for handling logistics
Lower fulfillment costs	Less scalability and flexibility compared to FBA
Flexibility in managing inventory, shipping, and handling	More responsibilities for customer service and returns
Greater branding opportunities	More risk of stockouts and delayed shipments
Increased profit margins	Less visibility and traffic compared to FBA
Cost-effective for low volume sellers	Limited access to Amazon's services and features
Ability to offer more specific shipping options	No access to Amazon Prime
Ability to offer expedited shipping	More work and cost to handle the shipping of the product

FBM can be a great option for sellers who have a low volume of sales, want more control over their inventory and want to save money on fulfillment costs. However, it also requires more effort and resources on the part of the seller, and may not be suitable for sellers who have a high volume of sales.

FBM vs FBA

Fulfillment by Merchant (FBM)	Fulfillment by Amazon (FBA)
Seller is responsible for shipping and handling	Amazon handles all shipping and handling
Seller is responsible for customer service and returns	Amazon handles customer service and returns
Seller stores and ships products from their own location	Amazon stores and ships products from their own fulfillment centers
Lower fulfillment costs	Higher fulfillment costs
More control over inventory	Less control over inventory
Greater branding opportunities	Less branding opportunities
Increased profit margins	Decreased profit margins
Cost-effective for low volume sellers	More cost-effective for high volume sellers
Ability to offer more specific shipping options	Limited shipping options
Ability to offer expedited shipping	Limited expedited shipping options

It's important to note that both FBM and FBA have their own advantages and disadvantages, and the best option for a seller will depend on their individual needs and circumstances. FBM is a good option for sellers who have a low volume of sales, want more control over their inventory, and want to save money on fulfillment costs. On the other hand, FBA is more suitable for high-volume sellers as it provides more scalability and flexibility and allows sellers to take advantage of Amazon's services and features.

Using Both FBM and FBA

Yes, it is possible for sellers to use both Fulfillment by Merchant (FBM) and Fulfillment by Amazon (FBA) simultaneously. This is known as a "multi-channel fulfillment" strategy, which allows sellers to take advantage of the benefits of both fulfillment options.

For example, a seller may choose to use FBM for products that they want to store and ship from their own location while using FBA for products that they want Amazon to handle the logistics of shipping and handling.

Additionally, a seller may use FBA for their best-selling products to take advantage of Amazon's services and features, while using FBM for the rest of their inventory to save on fulfillment costs.

It's important to note that multi-channel fulfillment can be a bit more complex and time-consuming to manage, as sellers will have to keep track of inventory levels and shipping schedules for both FBM and FBA. However, it can also provide more flexibility and help sellers to increase their sales and profits.

Takeaways

In conclusion, Amazon FBM is a program that allows sellers to store and ship their own products to customers, giving them more control over their inventory, shipping options, and branding opportunities. However, it also requires more effort and resources on the part of the seller to handle logistics, customer service, and returns. It's important to weigh the pros and cons of using Amazon FBM before deciding to use it for your business and to make sure you are following all the rules and guidelines set by Amazon. It's also important to keep in mind that FBM can be cost-effective for low-volume sellers, but not suitable for high-volume sellers. Additionally, using FBM and FBA simultaneously as a multi-channel fulfillment strategy can provide more flexibility and help sellers to increase their sales and profits.

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