Today, Amazon is the dominant online marketplace for ecommerce. As a result of Amazon’s popularity, ecommerce companies worldwide have signed up to become sellers on Amazon to tap into the company’s vast customer base. If you’re one of the many companies considering selling on Amazon, you must make a vital fulfillment decision: FBA vs. FBM. But what are these fulfillment models, and which one is the best choice for your company?
How to Fulfill Customer Orders on Amazon: FBA vs. FBM
As you consider FBA vs. FBM, it’s important to know the difference. After all, order fulfillment plays a major role in your ecommerce business, so you want to get it right.
The Fulfillment by Amazon (FBA) program utilizes Amazon’s standard warehousing and fulfillment service. This essentially puts many of your logistics needs into the hands of Amazon. Your inventory is kept in Amazon warehouses, and Amazon takes responsibility for shipping your orders. Amazon charges fulfillment fees and monthly inventory storage fees to use its FBA service.
On the other hand, Fulfillment by Merchant (FBM) means you (as the seller) are solely responsible for storing your inventory and shipping your orders. FBM implies that you’re handling your fulfillment needs yourself without Amazon’s help, or you may outsource these needs to a third-party logistics provider (3PL).
The Different Advantages of FBA vs. FBM
In weighing FBA vs. FBM for your ecommerce company’s fulfillment needs, there are evident advantages of each to factor into your decision.
The Advantages of FBA
Amazon Handles All Your Fulfillment Needs
In the FBA vs. FBM debate, this is hard to top. With FBA, all of your fulfillment needs are Amazon’s responsibility (for a fee, of course). Your inventory is stored in Amazon’s ever-expanding warehousing space around the world.
Amazon picks, packs, and ships your orders using its own shipping materials and transportation fleet, eventually delivering them directly to the customer. Amazon even handles all the customer service related to your order and manages returns. With these responsibilities out of your hands, you’re able to focus on other needs in your ecommerce business, knowing your fulfillment operations are in Amazon’s capable hands.
With FBA, your products will be automatically eligible for Amazon Prime. This means you’ll have access to Amazon’s millions upon millions of Prime customers, who are more likely to purchase Prime products over those that aren’t eligible.
Plus, fast shipping is a perk you can easily advertise. One or two-day shipping is hard to pass up when customers are choosing where to buy their products online. And in a world where customers expect their items as quickly as possible, that’s something to think about when deciding between FBA vs. FBM.
The Advantages of FBM
You’re in Charge
If fulfillment independence is a value as you consider FBA vs. FBM, your decision may be an easy one. With FBM, you have total control over your fulfillment operations, so you’re not at the mercy of Amazon’s fulfillment policy changes (which at times can be disruptive).
Your company can make your own decisions regarding your inventory (and can access it at any time, unlike FBA inventory). If customer service is a strong selling point, then it’ll be in your control to develop. You can also utilize your own branded packaging and inserts with FBM, something you currently can’t do as an FBA seller.
In FBA vs. FBM, fulfillment fees can make all the difference. With FBA, you have regular fees to pay Amazon for utilizing its warehousing and fulfillment services, and sometimes these fees can be hard to understand (or may change regularly). With FBM, you don’t have to pay any of these Amazon fees, which is especially helpful if you have lower profit margins.
If you excel at logistics and have strong buying power with your suppliers, you could even command better shipping rates, meaning more profit for you. Plus with the Seller-Fulfilled Prime program, exceptional FBM sellers can still attain Amazon Prime status (though the performance standards are high), just as if you were utilizing FBA — without paying FBA fees.
FBA vs. FBM: Smart Warehousing is the Best of Both Worlds
In the FBA vs. FBM debate, both options have their perks. But what if you could get the best of both worlds instead? With Smart Warehousing, you can outsource your fulfillment needs into the hands of a trusted 3PL with decades of proven expertise. We even offer solutions that integrate seamlessly with Amazon and other platforms.
Yet our services also empower you to stay in control of your fulfillment process and be true to your brand (including your own branded packaging), all at affordable prices. If you’re ready for an industry-leading fulfillment solution, contact us today to get started.