Amazon FBA vs Amazon FBM: Pros & Cons
27 Jan 2021
Amazon FBA vs Amazon FBM and Seller Fulfiller Prime (SFP) programmes are Amazon Order Fulfillment options for shipping.
Amazon sellers have three options to choose when it comes to ordering fulfilment – the Fulfillment-by Merchant (FBM) and Seller Fulfilled Prime (SFP) programs if they wish to pick & pack the products of their own and the Amazon Fulfillment-by-Amazon (FBA).
Selling on Amazon is beneficial for any eCommerce seller and using Amazon FBA or FBM programs is a handful for better sales control. There is no lack of competitiveness between the Amazon sellers, as there are millions of users, and Amazon is the largest online retail marketplace globally.
Sellers sometimes are having a hard time choosing between the Amazon FBA vs FBM programs. Both platforms offer incredible solutions for the sellers, and the choice depends on many factors starting from the fulfilment methods differences and ending with the program features nuances.
This post will discuss Amazon FBA vs FBM programs’ pros and cons and determine your business’s best option.
What is Amazon FBA: Program Premises
Fulfilled by Amazon (FBA) program in practice offers the sellers a versatile solution for order fulfilment- free shipping, storage, removals and returns services all in one program. To become an FBA program user, you should create an Amazon selling account and set up the FBA program. The next is to add your product listings and prepare your inventory for transportation to the Amazon fulfilment centres. The product listing should follow the Amazon packing guidelines & routing requirements.
Amazon FBM: Program Premises
Fulfilled by Merchant (Amazon FBM) basically is the case when the sellers choose to ship products to the customers by themselves. The sellers are responsible for taking care of the inventory fulfilment process, and Amazon has nothing to do with the shipping procedures. The seller takes to care for the whole process to create product listings, picking, packing and inventory shipping. As an FBM user, the businesses will not be using advantageous Prime Seller services.FBM assumes the seller responsibility for late, damaged arrivals and time losses as well.
Using Amazon FBA: The Advantages
Amazon Prime Service
Amazon Prime acts as an advantage to the FBA users. The customers have the fast and free delivery service with Amazon Prime within 2 days and higher chances to win the Amazon Buy Box.
Professional Logistics Support
The Amazon FBA users concentrate on developing their Amazon business rather than accurate logistics as the FBA program takes care of it.
Logistics system plays a major role in any business. The FBA system allows the users to store their inventories inside the Amazon warehouses, and when there’s an order Amazon sends the inventory directly to the customers’ postal addresses. Amazon FBA is a time-consuming service, as it handles the order packaging and all the fulfilment process from A to Z, including the customer service and order return handling.
Amazon FBA enables the business to sell their inventory on Amazon and still, enjoy the program service solutions. Amazon FBA will handle the shipping and fulfilment process on your behalf to perform multi-channel sales.
Imagine having such an FBA program solution for your business to sell products on your website or other eCommerce sales platform and still rely on Amazon to sort the shipping and order fulfilment processes.
Using Amazon FBM: The Advantages
Total Ownership on Fulfilment Process
As a seller having total ownership over the fulfilment control assuming storing, picking, packing and shipping the products and accessing your inventory whenever you need to is a great advantage. The actual fulfilment process is on the Seller’sSeller’s hands, giving the inventory damages or loss cases the freedom and responsibility.
Immediate Product Listings
The FBM sellers list their products for sale more quickly as soon as the listing has been submitted. Note that the FBA seller, unlike FBM sellers, experiences a tough time to fulfil the Amazon requirements for accepting their inventory to the Amazon warehouses.
Independent Brand & Fewer Amazon Fees
Amazon FBA vs Amazon FBM: These programmes represent different forms of fulfilment options, and the fees are important in this context.
The Amazon FBM sellers have better chances to create their own independent brands with the fewer Amazon fees to pay for. The FBM sellers have more chances to create their own brand with the Seller-Fulfilled Prime (SFP) program’s support. The Seller Fulfilled Prime program allows the sellers to directly use the Amazon quality service to Prime customers from your own warehouse. The seller fulfilled prime requires a trial period before displaying the Prime Badge. The trial period assumes the sellers to fulfil the requirements for prime fulfilment excellence.
The FBM sellers have better chances to sell with higher margins and as independent brand owners make more income per each sale, but perform fewer sales as they are not FBA sellers.
Using Amazon FBA: The Disadvantages
Amazon FBA Seller Fees & Limited Inventory Access
If you are an FBA seller, you might know the sellers’ difficulties to pay for the overall fulfilment costs. It includes the fulfilment fees, monthly inventory storage fees, closing fees, order handling fees.
The FBA performance depends on the type of inventory, its category, and how you control your sales. There’sThere’s limited access to your inventory, making the tracking of your products way much more complicated. Losing track of your inventory becomes easy, and you’ll be dependent on Amazon to resolve the issues concerning the inventory shipment or other relevant problems.
Amazon Tax Liabilities & Costly Fulfillment Service
Using FBM assumes the Customer responsibility to manage the taxation of the sales. It is not Amazon’sAmazon’s responsibility to collect the sales taxes for the sellers. The sellers should take care of the state tax registration numbers and enable the Seller Central Account’s sales taxation. The fulfilment process might be costly as the sellers experience higher fulfilment service costs to make the fulfilment process as advantageous as they wish to see it.
FBA Product Labeling Service Costs
Amazon has strict rules over the product labelling system, and it might be a tedious process for the sellers to take care of each product’s labelling. The product labelling plays an important role in product identification for the Amazon FBA users. Amazon provides two types of product labelling barcodes – Manufacturer Barcodes and Amazon Barcodes. The Amazon FBA Label Service provides barcoding per item to exchange a particular per-item fee of $0.30 per item.
Using Amazon FBM: The Disadvantages
Complete Responsibility for the Inventory
As an FBM Seller, the businesses experience more responsibility for the inventory staring from the packaging, shipping, product labelling, etc. Most probably, some businesses might find this an advantage over a disadvantage, as they may have higher margins for product sales performance and more income per each sale.
The overall time spent on product management will logically put more responsibility on your shoulders, including when product demand becomes higher, and the shipping process will be hard to manage.
Fewer Chances to Win Amazon Buy Box
The FBM Sellers will definitely experience a tougher time to win the famous Buy Box to boost their sales and become more attractive from the consumer perspective. The Product should be having a lesser competition in the Amazon marketplace there’ll be chances of winning Buy Box. Otherwise, the FBM sellers should offer prices to win the buy box, or experience competition on multiple sales platforms to gain more income.
No Prime Service
Amazon FBM Sellers experience the tough competition to be on the road, to be on time for all the times and fulfil the consumer demand on time. Without the Prime Service, the FBM sellers will experience more competition to be on time and satisfy customer demand. The FBM sellers enjoy a 2-day free shipping Prime service and won’t lose valuable customer base due to this quality service.
eSwap’s Integration with Amazon FBA
Amazon FBA vs FBM: Which one to use depends mainly on your business’s size, the inventory you trade, and the niche you wish to reach. However, it is worth to note that amazon FBA suits best for the businesses who have a fast turnover. In addition to the Amazon FBA seller fees, it is worth to note that FBA sellers enjoy the Prime Badge and Buy Box as an asset to their businesses.
Businesses with low sales volume will find it better to use Amazon FBM since the orders will be manageable. There’s no point to use the Amazon FBM for considerably small businesses trading on Amazon. If there’s an established shipping method for FBM sellers, then there’s no need to go for the FBM program along with the higher fees.
eSwap, as an Inventory Management Software offers its users the FBM Integration for better sales management and order fulfilment. This program offers the users the chances to ship their orders to and from Amazon FBA locations and keep total control over your warehouses.
Using the eSwap’s FBA Integration allows the users to ship orders from other sales channels as well. Imagine having such a service to keep your stock updated and synced data provision. This is a great solution for any business with the problem of managing their Inventory.