Amazon FBA vs FBM — Which One is Better? (Pros and Cons)

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Have you decided to start selling on Amazon but can’t decide between FBA vs FBM? While you’ve probably been told that FBA is the best fulfillment method, it’s not the only option.

In this article, we will go over both FBA and FBM and highlight their pros and cons. And hopefully, by the end, you’ll be able to decide which fulfillment method is right for you.

Note: Although you can sell on Amazon using both FBA and FBM, I would not advise it. Why? Well, because your seller metrics are perfect when you use FBA. So when you mix in FBM, you run the risk of messing up your metrics.

What is fulfillment?

Before we compare FBA vs FBM, let’s understand what fulfillment means in ecommerce in general.

In short, fulfillment refers to the process of storing, picking, packing and shipping orders for goods. And fulfillment method is a term used to refer to who and how it’s done. Most companies either do it in-house while some outsource.

If that didn’t make sense, let’s go through it in more detail.

Selling products directly to consumers through your own website and/or third-party platforms like Amazon or Ebay is an opportunity accessible to anyone. As long as you have an internet connection and something to sell, you’re in business.

And once you start getting orders, you will have to fulfill and ship them as soon as possible. It is your responsibility, as the seller, to make sure the customer receives what they ordered. This is what fulfillment means.

FBM Vs FBA on Amazon

Once you set up a Selling on Amazon account, you can choose to fulfill orders yourself or get Amazon to do it. Or you could do a combination of the two. But I would suggest choosing one fulfillment method per account. Either FBA or FBM.

Let’s look at the two fulfillment methods available to you in more detail and their pros and cons.

Fulfilled by Merchant (FBM)

What is FBM on Amazon? As the name suggests, Fulfilled by Merchant (FBM) is a term used to describe seller fulfillment.

If you decide to sell on Amazon using FBM, it means you will be responsible for storing your inventory. And of course, for picking, packing and dispatching products when you get orders.

FBM is just like selling on EBay. You have your inventory listed, someone makes an order. Then you find, prepare and ship the product using a courier of your choice.

Pros of selling on Amazon using FBM

If you are just starting out in selling on Amazon and don’t feel comfortable giving away control of your inventory, you might want to consider selling on Amazon using FBM.

  • If you are a one-man band, FBM is great because you can keep overhead costs low. You probably won’t need a warehouse nor hire employees.
  • FBM sellers have more control over their inventory. That means you can access your inventory and don’t have to worry about how your products are handled.
  • You can make slightly more money. Especially on the bigger and bulkier products.

Amazon FBM cons

  • As an FBM seller onus is on you to ensure every order is fulfilled and shipped on time. While this is okay if you are selling a small number of goods, it can get intimidating if your sales increase.
  • You are responsible for handling returns and following up with customers.
  • As an FBM seller, you have a higher risk of getting negative feedbacks.
  • Unless you’re selling a private label product, you will find it harder to win and keep the Buy Box. Because the fulfillment method you use plays a big role in who Amazon gives the Buy Box position to. This usually leads to FBM sellers lowering their price, which only shrinks their margin.

Summary

The FBM fulfillment method is simple and perfect if you are running a small operation. Especially if your business doesn’t make much money and you want to keep costs low. It’s also a suitable if you want control of your inventory.

Fulfilled by Amazon (FBA)

Selling on Amazon using FBM is a good starting point. And while it gives you more control of your inventory, it does limit your growth. You, therefore, will probably want to outsource the fulfillment process in the future.

What is FBA on Amazon? FBA stands for ‘Fulfillment by Amazon’ and is a service available to Amazon sellers. If you choose to use FBA, in addition to storing your inventory, Amazon will pick, pack and ship all your orders.

All you have to do is send your inventory to an Amazon fulfillment center with proper labels.

Pros of selling on Amazon using FBA

  • You can scale your business. Amazon has the infrastructure to process as many orders as you can get. In fact, there is no limit as to how many orders they can fulfill on your behalf.
  • Amazon deals with returns and customer service.
  • Freedom. You can literally run a six-figure (or bigger) ecommerce business without ever touching a product. This is what I love the most about FBA.
  • Higher chance of winning the Buy Box, which basically is the ‘Add to Basket/Cart’ cart button on a product page. FBA sellers have a higher chance of winning the Buy Box, and thus, getting more sales.
  • Selling via FBA gives you the Prime status and thus more credibility. Especially important as some customers don’t even consider buying from FBM sellers.
  • Amazon Europe has a service called Pan-European, through which can sell in Europe as an FBA seller. But only if the product your selling has the same listing on the other Amazon marketplaces. You just have to send your inventory to Amazon UK and they will distribute your inventory across Europe. Of course, this does cost a bit more.

Amazon FBA cons

  • I’ve mainly been reselling goods (used and new) on Amazon and I can confidently say that preparing products for Amazon FBA is the most tedious part. Every product you send to Amazon must have an FNSKU label, as Amazon has its own system that it uses to fulfill and ship products.
  • Loss of control. You will have less control over your inventory as they will be stored at Amazon. This can be a pain, especially if there is a listing issue. I recently had about 300 units of product returned to me as it had regulatory issues. It wasn’t free, it cost about £0.15 per item.
  • Selling on Amazon using FBA involves more fees. The FBA fee includes fulfillment and shipping fees.

Summary

Amazon FBA is great. Especially if you want to spend less time on the tedious parts of running an ecommerce business and more time on higher level activities like sourcing and marketing.

Want to start selling on Amazon? Just get started

I believe that selling on Amazon is straightforward. But most people struggle to get started because they don’t know what and how to find inventory to sell.

Here are some articles I’ve compiled on how you can find inventory to sell on Amazon.

Conclusion

In conclusion, selling on Amazon is straightforward and how you fulfill orders is entirely up to you and your goals.

If you enjoy fulfilling orders and want control of your inventory, then selling on Amazon using FBM is more suitable. But be mindful that it could restrict your growth.

On the other hand, if you don’t mind giving up control of your inventory, then FBA is for you. Especially if you don’t enjoy the day-to-day activities involved in running an ecommerce business, like fulfilling orders and dealing with customers.

And although FBM is slightly cheaper in theory, it is harder to keep costs lower than FBA costs in practice. Mainly because most FBM sellers forget to account for labour cost and time consumed dealing following up with customers.