FBA or FBM? That is the question!
Amazon FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant) are two different fulfillment options available to sellers on Amazon. Here are the key differences between them:
Amazon FBA (Fulfillment by Amazon)
Fulfillment, Storage and Shipping: With FBA, sellers send their products to Amazon's fulfillment centers, and Amazon handles storage, packing, and shipping of the products to customers. These fees can vary based on the size and weight of the products.
Customer Service: Amazon takes care of customer service and returns for FBA orders, providing 24/7 support.
Prime Eligibility: FBA products are eligible for Amazon Prime, which can increase sales due to faster shipping options and the trust associated with Prime.
Inventory Management: Sellers need to monitor their inventory levels in Amazon’s warehouses to ensure stock availability and avoid long-term storage fees.
Sales Tax: Amazon handles sales tax collection and remittance in states where it’s required, simplifying tax compliance for sellers, but you still need to report your sales where required.
Amazon FBM (Fulfillment by Merchant)
Storage and Shipping: With FBM, sellers are responsible for storing, packing, and shipping their products directly to customers - Choose your ship window wisely!
Customer Service: Sellers must manage their own customer service and returns, which can be more time-consuming and require additional resources. You can set it up to have Amazon handle this.
Prime Eligibility: FBM products are generally not eligible for Amazon Prime meaning you can sell to those who don't have a Prime membership.
Shipping Fees: Sellers can choose their shipping methods and costs, potentially saving money if they have an efficient fulfillment process. However, they must meet Amazon’s shipping performance standards.
Inventory Management: Sellers have direct control over their inventory and storage conditions, which can be advantageous for unique or custom products.
Sales Tax: Like FBA, Amazon handles sales tax collection and remittance in states where it’s required, simplifying tax compliance for sellers, but you still need to report your sales where required.
Summary
FBA is ideal for sellers who want to leverage Amazon’s logistics network, enjoy Prime eligibility, and have Amazon handle customer service and returns. It’s especially beneficial for high-volume sellers.
FBM is suitable for sellers who prefer to manage their own fulfillment process, have lower volumes, or sell products that require special handling. It offers greater control over the fulfillment process but requires more effort in terms of logistics and customer service.
Choosing between FBA and FBM depends on a seller’s business model, volume, and preference for managing logistics and customer service. Yes - You can have a mix of both. I always recommend to start with FBM and make the switch to FBA when you have more capital to work with or to try each option out to see what works best for you.
