FBM vs FBA, the age old debate of yee Amazon sellers. In this article, we are going to cover just FBM. These two types of fulfillment only apply to sellers using Amazon Seller Central. We will be covering the benefit, drawbacks and why, that are seen in Fulfillment by Merchant
Fulfillment by Merchant (FBM) Benefits & Drawbacks
In FBM the seller fills and ships each order to the customer and handles any returns or refunds. A big benefit to FBM is going to be “lower shipping fees” and added control over the supply chain. I air quote “lower shipping fees” because I honestly don’t think it saves enough money to justify using it.
You’re still going to pay the 8 to 15 percent referral fee on each sale regardless. Here is a link to Amazon’s shipping cost breakdown for FBA. Keep in mind you will also need to factor in the cost of shipping to Amazon’s warehouses, but Fedex can be a god send for that.
Overall, I am a big fan boy of FBA in terms of shipping.
Being able to have control over the supply chain can be extremely beneficial. Amazon’s warehouses can become clogged with inventory during the peak seasons. The inventory may stay in transit to the warehouse, but not be available for purchase. Being able to quickly restock and adapt is a huge benefit.
Especially, if the price of your product fluctuates pretty dramatically and spikes when the item is out of stock. Fulfillment by Merchant may be the way to go so you can quickly make your inventory available.
A big draw back to FBM is going to be building infrastructure and buy box eligibility. Normally products using FBA’s fulfillment channels will take priority in the buy box over FBM inventory. There are a lot of different factors behind the buy box that Amazon will never disclose but two I know for certain are price and shipping speed.
Competing on price is always an Amazon seller’s worst nightmare. The buy box does rotate frequently so if two sellers are selling a product at the same price, but one is FBA and the other is FBM. The FBA seller normally gets the buy box, but why.
SHIPPING SPEED! Amazon’s number one goal is to get the customer a product at the lowest price and to them as quick as possible. Amazon strategically places FBA warehouses based on a lot of data to reduce the shipping time for the customer. With FBM often times people may have only one locations they are shipping from.
Something very interesting to note though, during COVID-19 FBM began to win the buy box significantly more. Since the Amazon warehouses were accepting only essential items for a period of time and their shipping times for regular products increased heavily. FBM became the quicker shipping option and then took priority of the buy box.
I just wanted to try to point out, it isn’t that Amazon hates FBM inventory. It is because FBM seller can’t typically provide the short shipping times that FBA inventory can. The amount of warehouses and resources that Amazon has to spend on speeding up the supply chain makes it a bit hard to compete.
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