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“What is Amazon FBM and how does it work?”

“Is Amazon FBM better than FBA?”

“Will I save more money with FBM or FBA?”

These are a few questions new sellers think about. After all, Amazon goes the extra mile to please its customer so messing up the shipping process is the last thing you should do!

Amazon allows third-party sellers the choice of fulfilling orders themselves (also known as self-fulfillment or FBM), or outsource the shipping process through FBA (Fulfilled by Amazon)

Figuring out the nuts and bolts of both allows you to choose the right fulfillment model for your Amazon business and avoid costly mistakes!

So what is Amazon FBM?

What is Amazon FBM?

FBM (Fulfilled by Merchant), self-fulfilled, and MFN (Merchant Fulfilled Network) are all names used for the same fulfillment method. When sellers select FBM, they have to store inventory, ship products, and handle customer support. 

FBM stands opposite to its more popular counterpart: FBA (Fulfillment by Amazon). In FBA, third-party sellers pay a per-unit fee in exchange for Amazon handling the packaging, storage, shipping, and customer services. 

FBA is the fulfillment method of choice for the majority of third-party sellers because it makes logistics and customer support management for eCommerce businesses easier, even if it comes at a cost.

How Does Amazon FBM Work?

After receiving an order, FBM sellers must ship their products to the buyers’ address within the specified time limit. The products are either shipped from the merchant’s warehouse or a 3PL (third-party logistics) service provider’s storage facility.

An important point to consider when choosing FBM over FBA is your bottom line. FBM is viable only if it’s cheaper than FBA. Otherwise, why would any seller forgo the convenience that comes with outsourcing logistics to Amazon? 

From above of crop anonymous female preparing parcel in carton box on floor among clothes
With FBM, product packaging, storing, and fulfillment is your responsibility!

FBM merchants need to adhere to Amazon’s packaging requirements by implementing quality control measures. Some of these include:

  • Proper packaging: Properly packaged products can withstand the rigors of transport. Improperly packaged goods may break or give the impression of being used. A suggested test is to drop the product in its original packaging from a height of 3 feet on all sides including the corners. If nothing gets damaged, you’re good to go.
  • Shipping times: Shipping products within the stated time limits leads to positive customer experiences. Amazon allows a late shipment rate of 4% over a 30-day period. Should you continually exceed this limit, not only will your seller performance rating take a drop, but you also expose yourself to an account suspension.
  • Accurate product listings: Routinely check and update your product listing content to ensure it accurately represents your product. Adding information that could be interpreted as misleading may lead to negative reviews that decrease product ratings.
  • Positive customer-seller interactions: You are expected to respond to customer messages within a 24-hour timeframe (This applies to FBA sellers as well). Any interactions with your buyers must be honest, respectful and should positively reflect on you—as a seller—and on Amazon, as the shopping platform of choice. 

Make selling easier by downloading the Amazon seller app on your phone to respond to buyer queries and stay up to date with your seller metrics.

Advantages of Amazon FBM

Taking Amazon out of the fulfillment equation is advantageous for a few reasons, here are some of them:

No Amazon FBA Fee = Greater Profit Margins

Amazon charges FBA fees in exchange for its services. If your product has a high monthly sales volume, a significant chunk of your revenue goes to Amazon. This is especially true for large dimensional products that come with higher storage and fulfillment costs.

Amazon also reworks its FBA free structure annually and makes changes to seller policies; it’s not outside the realm of possibility to incur unexpected fees.

Maintain an Online and Offline Presence

The “Amazon FBA Dream” is about creating a successful and thriving online business. However, FBA cannot cater to brands with retail outlets. Sure, it’s possible to store inventory in Amazon fulfillment centers with multi-channel fulfillment (a subset of FBA) and sell via both Amazon and your website. However, brands with an offline presence may find FBA to be a costly undertaking.

In this case, FBM lets sellers maintain a single inventory and use it to sell both online and offline, a feat that cannot be achieved with FBA alone.

Better Understanding of Customers

An FBM seller has to frequently deal with customers and answer their queries allowing for buyer feedback, insights, and ultimately ideas on how to improve the business.

More Suited for Big Businesses

Part of FBA’s popularity is its ability to provide a solid logistics network to budding third-party sellers. For established businesses with prior shipping experience or links with reliable shipping service providers, FBA may not be the best option. 

The ability to cut down on costs results in greater profit margins. So if fulfillment services shipping is cheaper than FBA, you should definitely avail the opportunity.

When to Choose FBM over FBA?

FBM takes precedence over FBA in the following situations:

  • Lower sales volume: Not all products sell in thousands of tens of thousands each month—and some don’t have too. Products priced $150 and above tend to have lower sales figures and end up making higher profits when sold via FBM
  • Exclusive products: Exclusive and one-of-a-kind products (like Handmade) can be stored in a fulfillment center. However, artisans who produce such goods prefer to ship the products themselves to ensure they reach customers’ in the intended condition.
  • Large dimensional products: As a general rule, the bigger a product, the higher the fulfillment, storage, and long-term storage fee. Merchants who sell such products often find FBM to be a cheaper shipping alternative. 
  • Dropshipping: Because of how the business model works, dropshippers have no choice but to go for FBM.

Note: Use the Amazon FBA calculator to find out fulfillment costs and compare it with FBM to know which shipping method is cheaper.

Amazon FBM Fees Every Seller Should Know About

The following are fixed fee charges every FBM seller must pay:

Referral Fee

Referral fees is what Amazon charges sellers for listing and selling products on its platform. These vary based on the product category and can go as low as 3% (for watches priced $1,500 and above) and as high as 45% (for the Amazon device accessories category). To view the full referral fee structure, visit the Selling on Amazon Fee Schedule page.

Monthly Subscription Fee

Subscribing to the individual seller plan results in a $0.99 per unit sold fee. The professional plan is a flat $39.99 per month cost without additional per unit charges. 

Fulfillment Fee

The fulfillment fees for FBM varies depending on your shipping service provider and degree of operations. 

Seller Fulfilled Prime 

Amazon encourages new sellers to go for FBA (and pay Amazon extra fee in the process). To ensure more people choose FBA over FBM, sellers who self-ship products cannot market to Amazon prime customers. This wouldn’t be much of a problem if it weren’t for the fact that there are more than 200 Amazon prime members worldwide.

Fortunately for FBM sellers, enrolling in the seller fulfilled prime program removes this restriction and allows them to access a significantly larger pool of customers. But entering into the program is no joke which is evident by the incredibly high bar sellers have to meet should they wish to retain their seller fulfilled prime status. Here are some rules Amazon expects SFP sellers to abide by:

  • Agree to the Amazon Returns Policy
  • Offer Premium Shipping Options
  • Have an order cancellation rate below 0.5%
  • Rely on Amazon Buy Shipping Services for a minimum 99% of all orders
  • Be prepared to ship orders on Saturdays and Sundays

The advantages of seller fulfilled prime include the opportunity to target prime customers, to increase the chances of winning the Amazon buy box, and to make your offer more attractive to buyers because of the free 2-day delivery period.

Amazon recommends the following products for seller fulfilled prime users: 

  • Slow-moving goods
  • Seasonal products
  • High-priced products
  • Products with multiple variations
  • Items that require special preparation or handling

Applications for the SFP program are currently on hold. If you’re interested, you can add your name to the waiting list and await a notification for when it resumes.

Is FBA or FBM Better?

FBM has its pros but seeing as how the majority of Amazon sellers do not have existing fulfillment networks to rely on nor the expertise needed to operate one, Amazon FBA comes out on top. The advantages of FBA over self-fulfillment don’t end here—FBA sellers outsource logistics as well as the mental energies needed to ship products to customers. 

Woman Surrounded by Boxes
Self-fulfilling orders—big or small—could be too much of a handful!

Time that would otherwise be spent responding to customer queries or packaging boxes can now be used to improve your listings, enhance PPC ad campaigns, or source better suppliers. 

Even if you’re able to meet the strict seller fulfilled prime requirements, applications are currently on hold. 

You’ve learned about the scenarios where FBM takes precedence over FBA but these too are situational. Unless there’s a compelling reason to engage in self-fulfillment, we recommend selling products via FBA.

Amazon Fulfillment FAQ’s

Let’s answer a few commonly asked questions related to fulfillment on Amazon.

How Do I Create a FBM Account on Amazon?

There’s no such thing as an FBM or FBA Amazon account. FBA and FBM are two fulfillment methods used to ship products. The account you use to sell items on Amazon is simply called a seller or seller central account. 

Can You Do Both FBA and FBM?

Yes, you can. If an already listed product is sold via FBA, and you wish to change it to FBM or vice versa, go to the Inventory tab and select Manage Inventory. At the far right of the product listing, click on the Edit dropdown menu and select Add another condition. Fill in the details and assign a new fulfillment method in the Fulfillment Channel section at the end.

Amazon FBA vs FBM – The Conclusion

Merchants selling on Amazon can sell products via FBA and FBM and switch between FBA and FBM for a single ASIN when it’s favorable to do so. However, the ‘when’ of switching can be a bit tricky, as are other aspects of selling!

Whether you’re just starting your Amazon journey or been in the game for a while, ZonGuru has just what you need to improve your business. Sign up for a FREE trial today, cancel any time.

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