AMAZON: What is The difference between FBA and FBM?

𝗛𝗼𝘄 𝗱𝗼𝗲𝘀 "𝗙𝗕𝗔" 𝗩𝗦 "𝗙𝗕𝗠" 𝘄𝗼𝗿𝗸𝘀 𝗮𝗻𝗱 𝘄𝗵𝗶𝗰𝗵 𝗼𝗻𝗲 𝗶𝘀 𝗽𝗿𝗲𝗳𝗳𝗲𝗿𝗲𝗱?

𝗙𝗕𝗔(𝐅𝐮𝐥𝐥𝐟𝐢𝐥𝐦𝐞𝐧𝐭 𝐛𝐲 𝐚𝐦𝐚𝐳𝐨𝐧):

FBA refers to fulfillment method in which Amazon is responsible to pick pack and ship goods to customers. 

𝗙𝗕𝗔 𝗣𝗿𝗼𝘀: 

● 𝑷𝒓𝒊𝒎𝒆 𝑬𝒍𝒊𝒈𝒊𝒃𝒊𝒍𝒊𝒕𝒚:

When products are fulfilled by amazon they are automatically eligible for Amazon prime badge and free 2 days shipping. It helps to get organic sales. 

● 𝑺𝒆𝒍𝒍𝒆𝒓 𝒇𝒆𝒆𝒅𝒃𝒂𝒄𝒌: 

You don’t need to worry about negative seller feedback from customers during the fulfillment process, and you don’t need to worry about storing your products.

● 𝑯𝒂𝒏𝒅𝒔-𝑶𝒇𝒇 𝑭𝒖𝒍𝒇𝒊𝒍𝒍𝒎𝒆𝒏𝒕:

 FBA allows you as a seller to not have to worry about any hassles that come with fulfillment. There is no need to keep customers orders and no need to ship that to customers or store inventory yourself. 

● 𝑴𝒐𝒓𝒆 𝒄𝒉𝒂𝒏𝒄𝒆𝒔 𝒐𝒇 𝒘𝒊𝒏𝒏𝒊𝒏𝒈 𝑩𝒖𝒚 𝑩𝒐𝒙: 

One of the biggest factors in determining who wins the Buy Box is fulfillment method. Generally an FBA seller can set a slightly higher price than an FBM seller and still win the Buy Box.

● 𝑴𝒖𝒍𝒕𝒊 𝑪𝒉𝒂𝒏𝒏𝒆𝒍 𝑭𝒖𝒍𝒇𝒊𝒍𝒍𝒎𝒆𝒏𝒕:

 FBA allows Amazon to also handle fulfillment, shipping, packing etc. from sales made on sites outside of Amazon. 

● 𝑳𝒐𝒘 𝑺𝒉𝒊𝒑𝒑𝒊𝒏𝒈 𝑹𝒂𝒕𝒆𝒔: 

Amazon has some pretty discounts on shipping, and has an incredible network dedicated to fulfillment that would be pretty difficult to replicate on your own At-scale, shipping lots of inventory through Amazon makes everything a WHOLE lot more cost-effective and efficient. 

𝗙𝗕𝗔 𝗖𝗼𝗻𝘀: 

● 𝑨𝒅𝒅𝒊𝒕𝒊𝒐𝒏𝒂𝒍 𝑭𝒆𝒆𝒔: 

There are actually a decent amount of fees that come from utilizing everything FBA has to offer, which should be expected. 

● 𝑳𝒊𝒎𝒊𝒕𝒆𝒅 𝒊𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝒂𝒄𝒄𝒆𝒔𝒔: 

Because you’re inventory is in Amazon’s warehouses you won’t have easy access. 

● 𝑻𝒂𝒙 𝒐𝒃𝒍𝒊𝒈𝒂𝒕𝒊𝒐𝒏𝒔: 

Amazon does not automatically collect sales tax for the seller in a LARGE majority of cases. 

● 𝑴𝒖𝒍𝒕𝒊-𝑪𝒉𝒂𝒏𝒏𝒆𝒍 𝑭𝒖𝒍𝒇𝒊𝒍𝒍𝒎𝒆𝒏𝒕 𝑪𝒐𝒔𝒕:

 Multi-Channel Fulfillment here is possible through Amazon FBA, however at the same time it is EXPENSIVE.

𝗙𝗕𝗠 (𝗙𝘂𝗹𝗳𝗶𝗹𝗹𝗺𝗲𝗻𝘁 𝗯𝘆 𝗠𝗮𝗿𝗰𝗵𝗮𝗻𝘁): 

In FBM, the seller lists the product on Amazon and handles storage and all aspects of order fulfillment. 

𝗙𝗕𝗠 𝗣𝗿𝗼𝘀:

● 𝑯𝒂𝒏𝒅𝒔-𝒐𝒏 𝒇𝒖𝒍𝒇𝒊𝒍𝒍𝒎𝒆𝒏𝒕: 

When you’re working through FBM, you have control over inventory. Some sellers definitely see this as a benefit. 

● 𝑺𝒕𝒐𝒓𝒂𝒈𝒆 𝒐𝒇 𝒍𝒂𝒓𝒈𝒆𝒓 𝒊𝒕𝒆𝒎𝒔:

With FBM, you can store larger items for longer in a location of your own without worrying about accruing Amazon fees. 

● 𝑭𝒆𝒘𝒆𝒓 𝑨𝒎𝒂𝒛𝒐𝒏 𝑭𝒆𝒆𝒔: 

 Saving money is a huge aspect of selling via FBM. Fulfilling yourself means escaping most of the fees that come from fulfilling through Amazon. 

● 𝑯𝒊𝒈𝒉𝒆𝒓 𝑴𝒂𝒓𝒈𝒊𝒏𝒔:

A huge aspect of selling on Amazon is competing with Price. The more room you have to compete on Price, the better. Going with FBM gives you the opportunity to work with higher margins and gives you a greater price flexibility, simply because you’re spending less on those FBA fees. 

𝗙𝗕𝗠 𝗖𝗢𝗡𝗦:

● 𝑴𝒐𝒓𝒆 𝒓𝒆𝒔𝒑𝒐𝒏𝒔𝒊𝒃𝒊𝒍𝒊𝒕𝒚: 

When selling FBM, responsibility falls on you. Packaging, shipping, managing inventory… It’s all you. 

● 𝐁𝐮𝐲 𝐁𝐨𝐱 𝐢𝐬 𝐡𝐚𝐫𝐝𝐞𝐫 𝐭𝐨 𝐰𝐢𝐧:

 Because fulfillment method is a major factor in determining who gets the buy box, FBM sellers will have a harder time getting and keeping the buy box than FBA sellers. FBM sellers may have to set a lower price to win.

● 𝐎𝐯𝐞𝐫𝐡𝐞𝐚𝐝 𝐜𝐨𝐬𝐭𝐬: While you won’t pay fulfillment and storage fees selling FBM, you will likely have more overhead costs, including your own storage, fulfillment, and shipment expenses.

● 𝑴𝒊𝒔𝒔𝒊𝒏𝒈 𝒐𝒖𝒕 𝒐𝒏 𝑷𝒓𝒊𝒎𝒆 𝒎𝒆𝒎𝒃𝒆𝒓𝒔: 

Because over half of Amazon shoppers are Prime, 2-day free shipping with Prime is often a purchase criteria. Without being Prime, you’re missing out on many customers who many have purchased your product if it were Prime.

● 𝑵𝒆𝒈𝒆𝒕𝒊𝒗𝒆 𝒔𝒆𝒍𝒍𝒆𝒓𝒔 𝒇𝒆𝒆𝒅𝒃𝒂𝒄𝒌:

If something goes wrong with your delivery, and there is a delay. In that case, you’re responsible to negative seller feedback from your customers, which will reflect poorly on your Amazon seller account and make future potential customers less likely to purchase from your store.

¶ 𝗪𝗵𝘆 𝗙𝗕𝗔 𝗶𝘀 𝗽𝗿𝗲𝗳𝗳𝗿𝗲𝗱 𝗼𝘃𝗲𝗿 𝗙𝗕𝗠: 

 FBA is the better solution for brands selling on Amazon. Customer satisfaction, cost efficiency and customer service are the top reasons sellers should be choosing FBA.

FBA allows products to be Amazon Prime eligible. Another benefit for customers is that brands selling on FBA ensure that products are shipped in 1 2 days and it's significantly cheaper than using FBM because Amazon has the best freight rates in the country and passes them on to the seller. Amazon handles the returns and customer service included in the price.

● FBM is the right choice only if you are selling larger or heavy products like furniture because FBA is not made for most larger products.And if you run out of FBA inventory and need to use FBM as a backup plan.