Amazon FBA vs. FBM – Which is Right for Your Business?

Home 9 Nuanced Thoughts 9 Amazon FBA vs. FBM – Which is Right for Your Business?

Are you thinking of selling on Amazon?

If yes, then you need to decide whether you are going to fulfill your orders yourself or get Amazon to do it for you.

With pros and cons for both Amazon FBA and FBM, the below blog will help you to decide which method is better for your bottom line, and, ultimately, your business.

What is Amazon FBA?

Before we explore which method is best for you, let’s first take a closer look at what is Amazon FBA.

Amazon FBA, or Fulfilment by Amazon FBA, is a service offered by Amazon to sellers that enables you to send your FBA inventory directly to Amazon fulfillment centers, where it will then be shipped to your customers.

When you choose to use Amazon FBA on seller central, Amazon charges a fulfillment fee as well as a monthly inventory storage fee.

What is Amazon FBM?

On the other hand, Amazon FBM, Fulfilled by Merchant, is a fulfillment network where the seller is responsible for both storing inventory and shipping orders.

Although this method can work out more cost effective, this isn’t always the case, as it depends on how much stock and how much manpower you have.

If you are looking to grow your Amazon business, you should employ the help of expert Amazon consultant services who can help you expand and manage your business.

What Are the Benefits of Amazon FBA?

If you are already thinking that it would be easier and far less stressful to let Amazon take care of your storage and shipping, then you are far from alone. In fact, more than half of all the top sellers on Amazon pay to use this service.

There are many advantages to using Amazon FBA, including:

Prime shipping

Any items that are fulfilled through Amazon FBA are eligible for Prime shipping. This means that any Amazon Prime members who purchase your products will get faster and free shipping.

As you would expect, this can significantly increase sales as today’s demanding consumers love to get their items as quickly as possible.

Winning the Buy Box

If you want to become a top Amazon seller and scale your business, then you need to know about the Buy Box. Essentially a tool that enables your product to become the default option for a particular search, if you want to outsell your competitors, then you need to win the Buy Box.

Fulfillment is one of the key variables when it comes to who Amazon decides to win the Buy Box, with the faster and more efficient your shipping methods, the better.

Amazon SEO

Amazon SEO, search engine optimization, is a complicated process with the Amazon algorithm constantly changing. While Amazon remains fairly tight-lipped about this aspect of their business, it is well known that FBA sellers have a distinct advantage over FBM sellers when it comes to SEO.

Customer service

As any seller will tell you, customer service is everything when it comes to making a profit. If you do not have the time or resources to deliver good customer service yourself, then why not let Amazon do it for you?

As an FBA seller, Amazon will not only take care of shipping and storage, but they will also deal with returns and refunds in a timely and effective manner which makes for a more enjoyable customer experience.

Multi-Channel Fulfilment (MCF)

MCF is a similar model to FBA but with the added benefit of Amazon fulfilling orders from not just Amazon but any sales channel. However, as this is a higher-tier service, there are higher FBA fees involved.

Are There Any Drawbacks to Using Amazon FBA?

Although Amazon FBA is a great service that can help you to drive your Amazon business forwards, there are a few drawbacks.

These include:

Cost

As mentioned above, Amazon does not offer this premium service out of the kindness of their heart, so there are fees involved. If you are a new business and you do not have much of a start-up budget, then Amazon FBA may be cost prohibitive for you.

It is worth knowing that there are other merchants out there that are more cost effective.

Less control

If you have worked hard to develop a product and build up your business, you may not feel comfortable handing over the reins to a third party. Although it is unlikely that Amazon will let you down, you may feel better handling your entire business on your own.

Labeling requirements

Before you can send your items to an Amazon warehouse, they need to be properly packaged and labeled. In fact, Amazon has very strict rules about this, and a failure to adhere can lead to them rejecting your items.

What Are the Benefits of Amazon FBM?

If you choose to be an FBM seller, you can either store and ship items yourself or hire a third party to do this for you.

There are several benefits to choosing this method, including:

More control over inventory

If you worry about inventory management, then Amazon FBM allows for greater control over both your inventory and your fulfillment processes, including buying shipping, etc.

Furthermore, Amazon is prone to changing its FBA policies which can be frustrating and disruptive for sellers.

More affordable

Amazon fees for FBA are not cheap, and for some, this can be cost-prohibitive. As well as their standard FBA fees, you may also have to pay a returns processing fee, a stock removal fee, and long term storage fees.

Are There Any Drawbacks to Amazon FBM?

There are a few downsides to choosing to go it alone, including:

Less chance of winning the Buy Box

FBM sellers are less likely to win the Buy Box than FBA sellers, so if you operate within a highly competitive niche, FBM might not be the best option for you.

Less effective SEO

Although being an FBA seller doesn’t automatically make your product listings appear at the top of Amazon search, it does give you a slight advantage in Amazon SEO.

More responsability

As an FBM seller, you are in charge of all aspects of selling on Amazon, including storage, shipping items, and customer experience elements such as dealing with complaints.

Ryan Flannagan

Ryan Flannagan is the Founder & CEO of Nuanced Media, an international eCommerce marketing agency specializing in Amazon. Nuanced has sold $100s of Millions online and Ryan has built a client base representing a total revenue of over 1.5 billion dollars. Ryan is a published author and has been quoted by a number of media sources such as BuzzFeed, CNBC, and Modern Retail.