Whether new to selling on Amazon or a veteran you have at some point heard these two terms. In this post we will cover what is similar and what is different between these two sales channels and their pros and cons.
FBA, Fulfillment By Amazon and Fulfillment By Merchant FBM represent the two sales channels by which merchants can fulfill their orders. For fulfillment by Amazon FBA, sellers ship products in bulk to one of amazon's fulfillment centers. As and when orders are received, Amazon fulfills the orders on behalf of the seller. Amazon provides customer service, packaging and delivering the product and after sales support in exchange for a fulfillment fee. There are advantages and disadvantages to using either and your costs vary significantly when going FBA, however it has significant upsides. Here are some FBA and FBM pros and cons to consider.
One of the biggest risks to a seller's existence are bad reviews. What if you could mitigate the risks of a bad review especially when it relates to customer service and fulfillment? With FBA you get this out of the box and any negative reviews related to customer service or order fulfillment are essentially nullified when using the amazon fulfillment option.
Although the price for your product may not be the lowest, which is the generally observed to the exclusive criteria to get the buy box, amazon sellers using amazon's fulfillment methods automatically get a buy box boost for free!
Access to the Amazon prime badge and prime shipping which FBM sellers generally do not get unless you use seller fulfilled prime and follow prime guidelines to the T.
Costs. With FBA you have no control over the FBA fees and the long-term storage fees are affected by seasonality. Moreover, these fees are dependent upon the product weight and dimensions. Your fulfillment fees are also dependent on the picks and packs fee that is bundles into the fulfilment fee. This fee depends on your product weigh and dimensions. Use the FBA calculator to estimate your fulfillment costs (https://sellercentral.amazon.com/hz/fba/profitabilitycalculator/index?lang=en_US).
Your shipping costs are increased when using FBA to accommodate the additional cost of shipping your product to the Amazon warehouse. Creating and processing the shipment is tedious and takes time affecting your total costs.
Lack of brand packaging. You cannot include your fulfillment packaging losing out on brand promotion.
You can provide customer service, promote brand awareness and maintain tight control over your inventory, profitability and margins. Tools like RockitSeller's xSell are an invaluable addition to your selling gear.
You can include branded packaging and include promotional materials, coupons to build brand loyalty.
Your company can negotiate shipping rates based on your shipping volume.
Tighter control and predictable costs.
Time is money. With Amazon FBM you will be spending time on your order fulfillment logistics.
You lose out on coveted Amazon Prime unless you are participating in seller fulfilled prime.
Unless your amazon business intends to be a constant lowest price leader you lost out on the coveted buy box. You can overcome this by using an automated repricer like RockitSeller's xSell
To FBA or FBM is wholly dependent upon your business model and organizational structure and availability of support staff. We have the tools to automate a lot of your mundane and day to day tasks and tools to automate your pricing and feed submission. Try RockitSeller Pro today free for 30 days!