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Fulfilment by Merchant. What is FBM and how does it work?

Amazon sellers often use FBA, and of course you may even be one of them, but there is an alternative method of selling and fulfilment on Amazon that may also be right for you. It is called Amazon Fulfillment by Merchant and simply involves you, the merchant, managing all aspects of your Amazon business yourself, including storage, delivery, and customer service.

Amazon FBM. What is it?

With the help of Amazon FBM, you can list your products on Amazon, store your own inventory, package, and send orders yourself. You can handle all customer service requests yourself  or through another third party. So, Amazon is simply your listing venue, and everything else is done by you. 

You create your FBM listing just like a regular Amazon product list, and in the Fulfillment Channel section, you can select “I'll send the product myself” (Merchant Fulfillment).

When is it profitable to use Fulfilment by Merchant?

Amazon FBM is convenient to use if you sell:

  • Small volume of production.
  • Low-margin products.
  • Products that are difficult to ship.
  • Goods with low sales frequency.

Also consider Amazon FBM if you have: 

  • Handmade items. Many handmade sellers like to use FBM to ensure that the order arrives at its destination.
  • You already use a third-party order fulfillment service that is less expensive than Amazon FBA.

What Are the Advantages?

Even though you will need to do all the work yourself, there are many advantages to using Amazon FBM. Especially if you are new to Amazon sales or you only have minimal inventory. 

1. It helps you understand how your Amazon business works
By managing your inventory, profits, customer service, and admin, you will have a clear overall view of how your business is running, allowing you to easily make better decisions.

2. You can easily expand your Amazon business
By completing all orders yourself, you will always have full control over the level of your inventory. You can quickly increase your inventory when needed without worrying about additional shipping fees and increased storage costs from Amazon FBA.

3. No strict FBA requirements
Although Amazon FBA may take away many of the tasks and processes associated with managing your Amazon business, you will have to adhere to its strict rules and regulations. You won't have such problems with Amazon FBM. All you need to do is focus on delivering orders quickly to keep your reputation intact.

4. Increase profit
A huge plus is that you will save on execution and storage fees compared to using FBA, mainly if you sell large products with low-profit margins.

5. Customer interaction
As an Amazon FBM seller, you will need to provide customer service, not force Amazon to do it for you. You will get a better understanding of your customers ' requirements and personally deal with all the reviews, good and negative. This interaction, even if it is negative, allows you to get valuable information about the work of your business.

6. No Storage Fees
If you have a product with slow sales and you use FBA, Amazon may charge a сommission for storing your products that are in its warehouses for a long time. But if you use the FBM program, it won't be a problem.

How much does it cost?

The subscription fee for Pro FBM sellers is $39.99 per month.

However, if you use an Individual plan, you shouldn’t pay a subscription fee, but you will be charged $0.99 for each unit sold. So if you sell more than 40 units a month, you should switch to the Pro package to stay cost-effective.

But remember that Amazon also takes a referral fee. The referral fee is a percentage of the total sales price. In most product categories, this figure is 15%, but ranges from 6% to 45%. Full seller fees can be viewed on the Amazon website. 

Can I use both FBA and FBM?

Yes. The main advantage of the simultaneous use is that you will benefit from double exposure.

Doubling is especially beneficial if you have a large inventory containing a wide range of products with a large number of different price points and profit margins.

In conclusion

One of the factors of your success on Amazon is understanding how to properly set up your Amazon business and work for you, making it as efficient and optimized as possible. Of course, many Amazon sellers use Amazon FBA to store and send their orders. This frees up their time and resources so that they can focus on research, search, and marketing their products. 
But still, what is better? Amazon FBA or FBM? Keep in mind that this depends on many factors related to your individual Amazon business.

Choose FBM if:

  • You have slow turnover. 
  • You have an alternative storage space.
  • Your products are heavy or large.
  • You can deal with customer enquiries effectively.
  • You have other employees who can take on other responsibilities.

Choose FBA if:

  • You have fast turnover. 
  • You have a large inventory, but no place to store the product.
  • Your products are small and lightweight.
  • You have a good rate of return.
  • You can't fulfill orders yourself.
  • You don't have enough time to work with clients and feedback.