As a seller on Amazon, you have several options for delivering your products to your customers. You can either organize shipping on your own or hire Amazon to store and deliver it – this last option is called Amazon FBA (Fulfillment by Amazon).
Even though Amazon FBA is very popular, there are many benefits of Amazon FBM that you can take advantage of as an Amazon merchant. In this article you will find all the important information about Amazon FBM, including the pros and cons and which of the shipping methods you should choose.
What is Amazon FBM?
Amazon merchants have two different options for shipping products: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). With the FBA service, Amazon handles storage, shipping, returns, and customer service as well.
Amazon FBA is now the more popular system of the two. However, there are still many Amazon Sellers who prefer Amazon FBM and take care of the warehousing, packaging and shipping of their products independently.
According to a survey by Jungle Scout, two-thirds of Amazon merchants use FBA as their shipping method and one-third use FBM. Likewise, there are Amazon Sellers that take advantage of both options.
Tools for FBM Dealers
If you’re going the Fulfillment by Merchant (FBM) route on Amazon, it’s critical to use the right tools. The following tools can help you optimize your product performance, perform competitive analysis, and sell more effectively. Here are some of the best tools available to FBM dealers:
- Helium 10: Helium 10 offers a comprehensive suite of 22 tools, including product research, keyword analysis and listing optimization tools. It is known for its versatility and cost-effective use.
- Jungle Scout: Jungle Scout is a powerful product research tool that helps you find profitable niches and products. It provides data on revenue estimates, competitive analysis and more.
- AMZScout: AMZScout is another product research tool that helps you find products that can be successful on Amazon. It provides data on sales rankings, price trends and more.
Choosing one or more of these tools can make a significant difference in your success as an FBM merchant on Amazon. Note, however, that the effectiveness of these tools depends on your individual sales strategy and niche. It is advisable to try them out and choose the ones that best suit your needs.
The Helium 10 tool offers by far the most features and is also very inexpensive compared to its competitors. The software suite offers a total of 22 different tools. The best part is that you can sign up for Helium 10 for free. Plus, get 20% off your first 6 months at Helium 10 through our link:
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:
- Create an Amazon Seller Account and add your products.
- 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.
- 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.
- 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.
How much does Amazon FBM cost?
Here are the fees that apply to FBM sellers:
- Agency fees
- Amazon Seller Account Fees
- Administrative fees for reimbursement
- 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.
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:
|Du hast die volle Kontrolle über die Lieferung deiner Produkte||FBA Produkte werden meist von Amazon bevorzugt und auf den Amazon SERPs oft vor den FBM Produkten platziert (=> dein Produkt bekommt weniger Aufmerksamkeit von Amazon Kunden)|
|Weniger Amazon Gebühren, da du nur an die monatliche Abonnementsgebühr und die Verkaufsgebühr gebunden bist||FBM Produkte haben eine geringere Chance, die Amazon Buy Box zu gewinnen|
|Höhere Marge durch weniger Gebühren||Du verlierst den Amazon-Prime Status (kannst aber seller-fulfilled Prime nutzen)|
|Du musst weniger Vorgaben befolgen, als Händler, die Fulfillment by Amazon nutzen||Du trägst die Kosten für das Fulfillment des Logistikpartners|
|Du kannst dafür sorgen, dass deine Ware fachgerecht verpackt und versendet wird (Amazon Mitarbeitern fehlt oft das Knowhow)||Du bist für den gesamten Bestellabwicklungsprozess selbst verantwortlich|
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.
The main difference between FBM and FBA is who is responsible for shipping and storing the products. With Amazon FBA, Amazon takes care of these tasks, while with Amazon FBM, the seller is responsible for them.
Amazon FBA offers convenience and scalability because Amazon handles warehousing, shipping, and customer service. Products with FBA also have a higher chance of being placed in the Amazon Buy Box.
Amazon FBM offers greater control over the shipping process and can be more cost effective, especially for specialty products or low inventory. It also allows the seller to maintain Prime status.
The choice between FBA and FBM depends on a number of factors, including product type, sales volume, storage capabilities and long-term goals. It is important to perform a cost analysis and a market analysis.
Amazon FBA charges storage and shipping fees, as well as monthly subscription fees. There are no storage fees with FBM, but there are sales commissions and monthly subscription fees for the Professional Seller Account.