Most Amazon sellers nowadays are confused! But why? Sellers are confused between choosing Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). This confusion is not unnecessary. It’s for maximizing profits and optimizing logistics due to the huge popularity of e-commerce platforms.
Therefore, understanding the differences between FBA and FBM turns out to be crucial. Then only you as a seller will identify which fulfilment method goes right with your business goals and needs. To start with the differences, sellers need to pay some fee for FBA to let Amazon handle it. On the other hand, FBM requires you to handle fulfilment on your own. An Amazon FBA course can help you master these models effectively.
Now let’s dig deeper into finding more differences between FBA and FBM.
Amazon FBA is a useful program where Amazon handles several parts of product shipment. To understand the process of how it works, Amazon begins with receiving your merchandise and storing it in its warehouses.
Then it packs and ships your product to the buyer when they purchase it. When anyone opts for Amazon FBA, it could result in extra expenses leading to fulfilment and storage fees. This could have effects on your profit margins especially if products don’t sell well.
Prime Eligibility:
Products fulfilled by Amazon are eligible for Amazon Prime, increasing visibility and potentially boosting sales due to faster shipping options.
Simplified Logistics:
Amazon handles storage, packaging, shipping, customer service, and returns, allowing you to focus on other aspects of your business.
Customer Trust:
FBA products benefit from Amazon’s reputation, which can increase customer trust and lead to higher conversion rates.
Fees:
FBA fees, including storage and fulfillment fees, can add up, impacting your profit margins, especially for small or low-margin items.
Inventory Management Challenges:
Balancing inventory levels is crucial. Overstocking can lead to long-term storage fees, while understocking can cause stockouts and missed sales.
Limited Control:
You have less control over the fulfillment process, including how your products are handled, packaged, and returned.
Amazon FBM is another program where you are in charge of managing the shipping and warehousing of your products. When any customer buys from you on Amazon, you ship their orders directly to them.
In other words, you are in charge of maintaining your inventory using FBM. It offers you greater control over the shipping and packing procedure allowing a tailored experience for the consumer.
This also eliminates the need to pay for Amazon’s fulfilment and storage fees while you make possible cost savings. However, without opting for FBM, you will not qualify for Amazon Prime which can impact how customers view you. Overcome challenges and maximize your selling journey with the help of an Amazon seller account consultant.
Lower Costs:
You avoid FBA fees, which can significantly reduce costs, especially for low-margin or slow-moving products.
Greater Control:
You have full control over your inventory, packaging, shipping methods, and customer service, allowing you to manage your brand’s presentation and customer experience.
Flexible Inventory Management:
You can manage inventory levels more flexibly, avoiding long-term storage fees and stockouts that can occur with FBA.
No Prime Eligibility:
FBM products are not eligible for Amazon Prime, which may reduce visibility and appeal to customers who prioritize fast shipping.
Increased Workload:
Managing fulfillment, shipping, and customer service on your own can be time-consuming and may require additional resources and infrastructure.
Potentially Higher Shipping Costs:
Without Amazon’s bulk shipping rates, you may incur higher shipping costs, particularly for small or light items
FBA makes products automatically Prime eligible while providing benefits for SEO and the Buy Box. Saying this would not be wrong that the benefits of FBA are fantastic but they involve several costs. While merchants that use FBM have more predictability and control over their inventory and fulfilment process.
Sellers can increase their overall profits by developing their logistics and operational skills. When compared to FBA, FBM sellers lose out on some SEO and Buy Box benefits. However, they gain more control over merchants who are willing to shoulder the additional duty.
The decision to choose between FBA and FBM depends on your business journey. However, as a newbie Amazon seller, it may be daunting to pick between the two.
If you want to make the right decision, then you can come to us at Ecommerce Gyan Private Limited. We are the leading provider of Amazon PPC management service with 10 years of experience. With the help of our e-commerce team expertise, we offer result-driven services and help you grow your business on Amazon.