Many Amazon sellers use FBA, you may be one of them, but there are other ways of selling and fulfilling on Amazon that can also work for you. It’s called Amazon FBM (Customer Fulfillment) and it means that you, the seller, manage all aspects of your Amazon business yourself, including storage, shipping, and customer service.
Part of making sure you’ll be successful on Amazon is understanding how to set up your Amazon business and make it work for you, making it as efficient and organized as possible.
This is why many Amazon sellers use Amazon FBA (Fulfillment by Amazon) to store and ship their orders. This frees up their time and resources so they can focus on researching, sourcing and marketing their products.
FBMs are often overlooked by Amazon sellers who wonder, why take care of all of this yourself when Amazon can use their FBA service to do it for you?
It’s a good question, but there’s a lot more to Amazon FBM than you might think. Let’s start at the beginning.
What is Amazon FBM?
Amazon FBM requires you to list your products on Amazon, store your own inventory, package and ship orders, and handle all customer inquiries yourself or through third parties. So Amazon is the only place you list, and everything else happens to you.
You create your FBM listing exactly the same way you would create a standard Amazon product listing, and in the channel fulfillment section, select “I will deliver the item myself” (Sales Fulfillment).
Sometimes it is called Amazon MFN (Merchant Fulfillment Network).
Overview: Amazon FBM is a self-fulfillment option for newbies using Amazon rather than established sellers. This is mainly because it is the only first option available when starting with FBA which requires more time to install.
When should you use Amazon FBM?
Anyone can decide to go the Amazon FBM route, but running an Amazon business will never be a “one size fits all” situation. FBM will work for some Amazon sellers, not all.
In general, Amazon FBM is worth considering if you sell:
- Special products have low market prices
- Small stock products
- Low quality products
- Products that are difficult to ship (eg, bulky or fragile)
Also consider Amazon FBM if you have:
- Third-party (non-Amazon) fulfillment services are already cheaper than Amazon FBA.
- Handmade products in your inventory. Many manual traders like to use FBM to ensure that the process arrives as expected.
Review: Choose Amazon FBM if you are a beginner, have a small volume or a unique product, a product that is difficult to ship or a handmade item.
What are the benefits of using Amazon FBM?
Surprisingly, keeping in mind that you have to do all the work, there are many advantages to using Amazon FBM. This is especially true if you are new to selling on Amazon or have a small inventory.
- Understanding how your Amazon business works
Sometimes it’s better to manage your business yourself instead of handing everything over to others. This is important if you are a startup because it helps you understand how your business works, allows you to implement better policies and practices, and gives you a sense of control.
By managing your inventory, profit, customer service and administration, you will have a clear picture of how your business is going, making it easier for you to make better decisions.
- The freedom to grow your Amazon business faster
By fulfilling all the orders yourself, you will be able to control the level of your product at all times. You can quickly increase your inventory when needed without worrying about additional shipping costs and increased Amazon FBA storage costs.
- Avoid FBA requirements
Although Amazon FBA can remove many of the tasks and processes involved in running an Amazon business, you will need to follow strict rules and regulations. You will not have such problems with Amazon FBM because your values are yours. All you have to do is focus on fast shipping to keep your reputation intact.
- Get more value
Of course, that is not a given, however, without FBA payment fees, if you calculate your other payment correctly and negotiated the best price for your goods and Shipping needs, your profit margin should be good. You will save on fulfillment and storage costs compared to using FBA, especially if you are selling large quantities of products at low profit margins.
- You interact with your customers to build your brand
As an Amazon FBM seller, you will be required to provide customer service instead of having Amazon do it for you. It may seem like a lot of effort (and a headache) to you, but it’s really worth it.
You will understand the needs of your customers and handle all the feedback, good and bad, yourself! This conversation, even if negative, allows you to gain valuable insight into the performance of your business as a whole and ensure that your brand is recognized for the right reasons.
- No long-term storage costs
If you have a product that sells quickly and you use FBA, Amazon may charge additional storage fees to hold your product that sits too long in their warehouse. As you hold your own products as an FBM seller, this will not be a problem. Related: How to Avoid Amazon FBA Long Term Storage Fees
- Sales and shipping are flexible
During the recent COVID-19 pandemic, some Amazon FBA sellers were in limbo for months after Amazon stopped all shipments through FBA for goods deemed non-essential. However, FBM sellers can continue to sell and ship without problems because the implementation of the law is completely under their control. If a similar situation were to occur, the business of Amazon FBM sellers would not be greatly affected.
What are the disadvantages of Amazon FBM?
Listen, it would be great if there was nothing to become a successful Amazon Merchant, but as with any idea, there will be failures.
- Picking, packing and shipping takes time
Accomplishing your own accomplishments will undoubtedly consume your time. You will need to be self-motivated and willing to put in many hours each week into your Amazon business.
- Get ready to spend more time running your Amazon business every day
This can be considered as a minus or a plus. In the same way, investing time in your business is good because you will understand better how it works, which in the end can be the key to your success.
On the other hand, you may find yourself in general administration, customer service issues, and other tasks that can prevent you from starting your Amazon business.
- Shipping costs may be higher
In theory, Amazon sellers who choose FBM and pick, pack, and ship their own orders should have lower prices than those who use Amazon FBA.
However, while your savings may be greater when you choose Amazon FBM, your shipping costs may be higher if you don’t negotiate a good deal with your preferred carrier.
- Customer service is your responsibility
As an FBA seller, you have the advantage of using Amazon’s customer service, they will handle all questions, returns and refunds. There is no such help in FBM. Everything will depend on you.
- Ineligibility for Amazon Prime
Unfortunately, FBM sellers are not eligible for the Amazon Prime badge. Prime is tied to helping you get higher organic rankings and so it can be a big deal for you unless you qualify for another option, Seller Fulfilled Prime.
This is a program you must apply to join, and applications are currently closed however you can add your name to the waiting list
How much does Amazon FBM cost?
This comes very serious stuff that you can surprise you.
As an Amazon Pro FBM seller, the subscription fee is $39.99 per month.
If you are not a professional seller, but any seller, there is no subscription fee, but you will pay $0.99 for each unit you sell. So, if you sell more than 40 units per month, you need to upgrade to the Pro package to benefit. Amazon also takes a referral commission. In fact, you are a marketer in their market, so they think they sent you customers.
The referral fee is a percentage of your total sales price. In most types of products it is 15%, but it varies from 6% to 45%, so you have to check depending on the product you are selling. Seller fees can be viewed in full on Amazon’s website.
You’ll also want to consider your shipping costs. Remember that it is your responsibility to ship orders and deliver them to your customers, and on time. You should consider not only the cost of shipping and handling, but also the time spent preparing, packing and shipping the process.
Evaluation: Take average monthly sales and compare final costs as a salesperson and a professional salesperson. Choose the most cost-effective option based on your monthly transaction, subscription fee and shipping fee.
Can Amazon FBM be used with Amazon FBA?
Yes! What many Amazon sellers don’t realize is that FBM and FBA can be used at the same time. The main advantage of this is that you get double exposure.
Double is especially useful if you have a large inventory with different products with different prices and profit margins.
Environment: Split your inventory between FBA and FBM. Therefore, your fast-selling, high-margin products can be FBA-friendly, and your low-margin, slow-selling products can be.
Which is better – Amazon FBM or Amazon FBA?
It’s soft! This will always depend on many factors related to your Amazon business, but here are some guidelines:
Choose FBA when:
- You have a quick turnaround
- Your stuff is small and simple
- You have a good profit margin
- You have a great product but no storage space
- You can’t make laws
- You don’t have time for effective customer service
Choose FBM when:
- You have a slow transition
- Your item is too big or heavy
- You have a good storage space or a small inventory
- You have staff or you can manage the execution yourself
- You can handle customer inquiries effectively
Amazon FBM has many advantages, even though it can seem like hard work! Key management is one aspect of your Amazon business that should not be overlooked, and FBM provides you with exactly that.
As an FBM seller, your reputation is ultimately your responsibility and is critical to your success. With this in mind, you must ship all orders on time. To help you do this, Amazon offers a “Buy Shipping” feature that includes tracking and will help ensure that your fulfillment process is efficient and reliable.
In general, Amazon FBM can be a perfect choice to double or as a backup plan so that you can create or even pivot if necessary.