Amazon FBM: The most important information for merchants

To select FBM as your shipping method

The FBM shipping option is set by default. Accordingly, you don’t have to make any changes if you are just starting to sell on Amazon.

In Seller Central you can enable or disable FBM for individual product listings. However, it is best to use the “Add Product” option to create a new SKU code (also for products already offered) and only then select FBM for the respective product .

This approach will make your work much easier and keep your seller account clear. If you want to use FBM, you should also consider the following points:

1. Create an Amazon Seller Account and add your products.
2. Set up at least one camp. This warehouse acts as your own fulfillment center. If you have multiple warehouses, decide on the right distribution of goods to minimize delivery times and shipping costs.
3. Ship products on time. Make sure your product arrives on time and adhere to the customer’s selected delivery option (estimated delivery time shown on Amazon). Also, make sure customers can track your shipments.
4. Provide the information for returns and complaints. Once a customer submits a return request on Amazon, they will automatically receive a completed return slip with your business address. Therefore, make sure that this address is correctly specified at Amazon.

Also remember that Amazon products must be marked with the FNSKU code .

How much does Amazon FBM cost?

Here are the fees that apply to FBM sellers:

1. Agency fees
2. Amazon Seller Account Fees
3. Administrative fees for reimbursement
4. Opportunity cost

1. agency fees

Referral fees apply once you sell a product through Amazon. The brokerage fees differ according to the product category and are calculated on the basis of a certain percentage over the sales price.

Important:

Amazon Handmade sellers are subject to a 12% sales charge.

2. fees for the Amazon Seller Account

Amazon offers two different accounts for Amazon merchants. You can register as an Individual Seller or as a Professional Seller. You can use the Individual Seller Account without a flat monthly fee, while the Professional Seller Account costs €39 per month.

However, with the Individual Seller account, you have to pay Amazon €0.99 for each sale. So this only makes sense if you sell less than 39 products per month. Otherwise, the Professional Seller Account is cheaper. The Professional Account offers further advantages through advertising opportunities.

3. administrative fees for reimbursement

If you need to issue a refund to a customer, Amazon will reimburse you for the referral fee. Amazon charges a handling fee of €5 or 20% of the referral fee – whichever is lower.

4. opportunity costs

Opportunity costs are losses that result from not taking advantage of existing opportunities. Assuming you have to do the storage, packing and shipping yourself, it will take you about 10 hours per month. At an hourly rate of €20 per hour, you would lose €200 per month.

Besides, you have to pay other costs for storage, packing and shipping even though you do all these tasks yourself.

Advantages and disadvantages of Amazon FBM

Amazon FBM merchants are responsible for shipping their Amazon products themselves. Of course, this has some advantages and disadvantages. We have summarized them in the following table:

Amazon FBA vs. FBM – Which should you choose?

The decision between Amazon FBA and FBM is of great importance and should be carefully considered. Both fulfillment methods have their own benefits and limitations, and your choice can have a significant impact on your business results.

When you choose Amazon FBA, you benefit from the convenience of the Amazon network, which handles warehousing, shipping, and customer service for you. This can be especially beneficial if you sell large quantities of products or delicate goods. Note, however, that there are higher fees and requirements associated with FBA.

In contrast, Amazon FBM offers greater control over the shipping process, which is useful if you offer special packaging requirements or personalized services. It also allows for better inventory management, especially if you have products with seasonal demand.

To make the right decision, you should follow the steps below as an Amazon Seller:

• Cost analysis: Compare the costs of FBA and FBM for your specific products and sales volumes. Note that FBA usually incurs higher fees.
• Product type: consider the type of your products. Sensitive or personalized items might benefit from FBM, while common products with high demand might be more profitable from FBA.
• Scalability: think about your long-term goals. If you plan to grow your business a lot, FBA might be a better choice.
• Availability: make sure you have the resources and infrastructure available for FBM if you decide to do it.
• Market analysis: investigate how other sellers in your niche are using fulfillment methods.

The final choice depends on your individual circumstances and goals. In many cases, successful traders even combine both methods to get the best of both worlds. Remember, you can adjust your strategy over time to meet the changing needs of your business.

As a guide to your decision, you can remember the following:

FBM is basically suitable for Amazon sellers who produce or sell with a small print run. If only a few units are sold per month or the profit margin of the products is extremely low, you should operate FBM, because the costs of FBA would only reduce the profit.

Scaling your Amazon business is a lot harder with FBM than with Amazon Fulfillment. The reason is that FBA products are mostly preferred by Amazon and have a better chance to get the Amazon Buy Box. In addition, the logistics themselves must be taken care of.

In addition to choosing the right shipping method, you should also take a detailed look at product costing. It is important that your margin is high enough to make a sufficient profit. For the calculation you can use this Amazon FBA calculator.