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Fulfillment by Amazon (FBA) or Fulfillment by Merchant are the two options available to Amazon sellers for order fulfillment (FBM). As a result of the COVID-19 global pandemic, worldwide supply chain disruptions, and Amazon’s own FBA and warehouse constraints during the last year and a half, many sellers have been compelled to reassess their fulfillment strategy.
This Amazon FBM 101 article is for you whether you previously used FBA exclusively or if you’re currently learning the ropes of fulfilling orders yourself.
It can be difficult to fulfill your own orders because you have to deal with Amazon prep standards, finding a dependable third-party logistics partner (3PL), customer support, tracking, returns, and more. It’s no surprise that many sellers are feeling overwhelmed.
The good news is that if you know what you’re doing, FBM doesn’t have to be daunting.
Continue reading to learn everything there is to know about FBM.
What is Amazon FBM, exactly?
Fulfillment by Merchant (FBM) refers to the fact that you, the seller, are in charge of every aspect of the shipping and handling procedure. Instead of paying a service fee and transporting your inventory to Amazon fulfillment centers, you prepare and ship items directly to purchasers using your own resources. You have complete control over the entire process with FBM, from ordering to shipping and receiving, customer care, and return management.
Contrary to popular belief, FBM does not imply that you must go it alone. To facilitate and support the fulfillment process, many sellers choose to cooperate with 3PLs like PrepFort.
Seller Fulfilled Prime is NOT FBM.
It’s vital to distinguish FBM from Seller Fulfilled Prime, which allows merchants to fulfill orders on their own and show the Prime logo on non-FBA listings if they meet specific speed and SLA requirements.
The following standards were met by Seller Fulfilled Prime:
Provide high-end shipping options
Have an order cancellation rate of less than 0.5 percent and ship over 99 percent of your orders on time
For 99 percent of orders, use Amazon Buy Shipping Services.
For all standard-sized products, provide nationwide delivery.
Make use of delivery and pickup options that are available on weekends (Saturday or Sunday)
Ensure that one-day and two-day delivery guarantees are kept.
Deliver orders via our Seller Fulfilled Prime couriers, which we support.
Amazon’s Returns Policy must be accepted by the seller.
Allow Amazon to handle any and all customer service inquiries.
FBM versus FBA
FBA and FBM both have the same goal: to get your things to your customers as quickly as possible. Both ways can accomplish this, but your company’s role and level of involvement in each varies.
To begin, Amazon oversees all FBA products. As things are sent to an Amazon fulfillment or distribution facility, Amazon chooses, packs, and sends them when they sell. Amazon also handles any returns or customer service concerns that may arise.
Prime members are automatically shown FBA products with Prime badges, and shipments are frequently made within two days. In contrast to FBM, where sellers are in command of certain components of the order fulfillment process, this is not the case with FBM.
Other significant distinctions between FBA and FBM, according to Jungle Scout, include:
FBM vendors earn greater money, with 33% making more than $25K per month compared to 26% for FBA sellers.
More than half of FBM sellers get their Amazon companies up and running within six weeks.
Finally, FBM sellers devote more time to their business, with 20% spending more than 40 hours each week on it, compared to only 16% of FBA vendors.
FBM’s advantages and disadvantages
If you’re deciding between FBA and FBM, consider their advantages and disadvantages and how well they match your needs. Choosing between FBM and FBA as a fulfillment strategy comes down to your company’s specific demands, and those needs are likely to evolve over time, so your strategy will as well.
The most obvious difficulty with FBM is working out the logistics, warehousing, preparation, and customer support required for your Amazon sales. On the other side, this implies that you have complete control.
Benefits of FBM
Total command of your company’s operations
Cushions and better margins
Amazon policy improvements have reduced the possibility of unavoidable losses.
There will be less paperwork and processes to deal with, giving you more time to do other things.
Build a direct relationship with your customers more easily.
You have complete control over how you run your firm.
Because you oversee operations from beginning to finish, you know exactly what’s in stock, what’s selling, and what changes you need to make to ensure continued success.
To complement your fulfillment strategy, you can choose a 3PL that is adapted to your needs.
When everything is under your control, it is up to you to make things right when they go wrong.
Fulfillment can be a huge effort for high-volume organizations (and even an entirely separate business you have to run on the side)
You may incur large, unexpected fees if you are not properly set up.
You have a less chance of winning the Buy Box.
You’ll need enough space to carefully prepare, store, and package your merchandise.
If you’re not careful, warehousing, staffing, and shipping costs can easily offset FBA pricing.
You must select a dependable logistics network, or your deliveries will be late.
Developing an FBM approach
Your FBM approach will be unique to your company and include a lot of moving pieces. To improve your processes and increase your productivity and sales, we recommend employing a combination of FBA and FBM.
In a nutshell, the FBM setup if you already have an Amazon seller account, all you have to do is post a product to sell and select “FBM” as your fulfillment channel. The same important information should be included in your FBM product listings as it is in your FBA listings: beautiful pictures, solid written content, keywords, and an accurate item description. Price, condition, and quantity will all be included.
When a sale goes through, you must promptly fulfill the order. To begin, follow Amazon’s prep and packaging recommendations when packing your goods. Your merchandise will then be delivered to your customer’s door by your chosen delivery provider. You’ll be responsible for any customer support inquiries that arise, as well as processing returns and refunds.
Implementation of FBM
Implementing a strategy is often a difficult undertaking, and this is where a little imagination and planning come in handy.
To put your FBM strategy into action, align your teams and procedures so you can fulfill orders at any time. Organize your products in storage in a way that is simple to administer for you (and your staff). Lower-volume products may be placed in a less accessible location, while high-volume products may be placed at eye level in the entrance of your warehouse so you can simply grab your best-sellers.
To avoid last-minute runs to the shop for things like boxes, packaging tape, or bubble wrap, make sure you have all of the packing supplies, labels, inserts, and other products you’ll need for your Amazon setup on hand.
Finally, create a system for fulfilling orders and tracking their progress. Is this your only responsibility? Or will a team member be held accountable? Assigning roles and responsibilities is a key part of putting your strategy into action.
Remember, you don’t have to do it all by yourself.
When should you use FBM instead of FBA?
FBM will be more practical for you at times than FBA, and vice versa, but recognizing when is difficult.
FBM may be a better option if you sell unique items such as handmade crafts. Because FBA can deliver more rapidly and you can create your brand and trust utilizing unique packaging and inserts, an FBA seller has a slim chance of obtaining a sale.
FBM is also a fantastic option if you sell large or pricey items, as FBA costs are substantially higher. In these cases, finding a prep partner and 3PL that specializes in this type of product to meet your demands is the best option.
Small-volume firms would benefit from FBM as well, because shipping isn’t a difficult operation and won’t disrupt the Amazon and customer experience.
Similarly, FBM is an excellent option for low-volume products (those that don’t fly off the online shelves and may incur greater long-term FBA storage expenses).
That means FBA is a smart choice for your most popular and high-volume items. This offloads the majority of your job to Amazon and relieves the stress of handling a large number of deliveries. Not to mention, the more you sell, the more customer service requests you’ll receive, which Amazon will handle if you use FBA.
Of course, if you engage with a 3PL who specializes in FBM, you can expertly handle even your high-volume products.
Fees and pricing to consider
Because you aren’t purchasing Amazon’s storage and fulfillment services, FBM has a separate set of fees than FBA. Instead, you’ll have to cope with Amazon’s usual selling fees.
Monthly subscription costs, referral fees, and per-item selling fees are the three main fees to bear in mind.
Professional Selling Plan monthly subscription fee: USD $39.99 per month This is the most cost-effective option if you sell 40 or more products per month.
Individual Sales Strategy: There is no subscription charge, but you must pay the per-item selling price.
Selling charge per item
Professional sellers: There is no per-item fee because you pay a monthly fee.
Individual sellers pay a fee of USD $0.99 per item sold, making this the most cost-effective option for low-volume or casual merchants.
Fees for referrals
Every sale made when you list and sell your products on Amazon is considered a recommendation. Amazon’s referral fee varies depending on the type(s) of products you sell, however it normally ranges from 8% to 15%. (with 30 percent and 45 percent being on the higher end, associated with Amazon products).
If you opt to outsource your Amazon FBM to a 3PL, you must account for charges such as storage and fulfillment. Look into these fees if you store and fulfill sales on your own to determine which method or solution is best for your bottom line.
Don’t forget about opportunity costs: instead of building your firm, you’ll be packing boxes and going to shipping materials stores.
Typical FBM issues
FBM, like any technique (including FBA), has a few drawbacks that must be managed and overcome.
The bandwidth required to pick, pack, and ship items during peak periods is perhaps the most significant problem for small firms adopting FBM for Amazon sales.
With high-volume items, this can soon become onerous for lean teams, resulting in shipment delays that degrade the customer experience and potentially violate Amazon’s shipping time criteria.
Amazon shoppers have grown to anticipate two-day shipping, but if you don’t have a robust supply chain or shipping partner to assist you, this schedule may be impractical.
Keeping stuff in storage takes up room, and renting or owning warehouse space can be costly. You’ll also need a location where you can physically prepare orders for fulfillment.
For FBM sellers, finding adequate warehouse space can be a huge difficulty, especially for those with high-volume firms who have large quantities of merchandise on hand.
Direct access to your consumers is an FBM trait that FBA merchants normally do not have because Amazon handles customer service and support.
Customers, on the other hand, might be demanding, and dealing with their needs can take time. Because Amazon expects merchants to follow its refund, customer happiness, and timeliness policies, FBM sellers may face significant challenges.
No badge for Prime
Unless you’re already a member of Seller Fulfilled Prime (which has a waiting list and doesn’t appear to be expanding), not having the Prime emblem can be a disadvantage for FBM sellers.
Your FBM products, on the other hand, can still offer free two-day shipping or any other free shipping option that you like. You can apply for the program to earn the Prime badge if you’ve consistently completed the Seller Fulfilled Prime standards.
Choosing a partner to help you with your FBM strategy
You can still seek outside help if you use FBM for some or all of your Amazon selling. A fulfillment partner like PrepFort specializes in handling Amazon seller fulfillment to guarantee that products are picked, appropriately packed, and dispatched fast to customers for a smooth and efficient experience. Even better, a great partner can assist you overcome the problems listed above.
Look for a partner who is familiar with Amazon’s criteria and who can assist you in staying on top of policy changes as they occur so that you stay compliant. Your sales procedures may require a nationwide or even worldwide network, depending on your industry. A solid 3PL partner will also advise you when it’s time to make business adjustments, such as moving a product to FBA.
To summarize, using FBM Fulfillment by Merchant to strengthen your eCommerce operations is a terrific method to handle your Amazon business demands and set yourself apart from other sellers. It also helps you to make a more personal connection with your customers, allowing you to form strong bonds and foster trust and loyalty among Amazon customers.
FBM may be an effective method to develop your business and give you more control over your Amazon store with a little forethought and a sound strategy in place, whether you want to manage fulfillment on your own or with the help of a 3PL partner.