Share with you the pros and cons of Amazon FBA and FBM to help you make an informed choice.
contents
1. What is Amazon FBA
2. How does Amazon FBA work?
3. The pros and cons of Amazon FBA
4. What is FBM
5. How FBM works
6. Pros and cons of FBM
7. What is the difference between Amazon FBA and FBM
8. What should the seller consider when choosing a delivery service
9. Which logistics service is more suitable for you
10. Summary
What is Amazon FBA?
The full English name of Amazon FBA is: "Fulfilled by Amazon."
When you use the FBA service, Amazon will store your products in one of its warehouses, ship them to those who want to buy them, check the refund status, and manage all logistics details related to shipping.
Amazon provides you with a transportation service. As a third-party supplier/seller, you can choose to store your products in Amazon's fulfillment center and let Amazon start operations from their terminals.
01 Features of Amazon FBA Service
Simplify your logistics work
When you use FBA, you outsource the entire packaging, storage, and transportation process to Amazon.
Provide shipping discounts
Amazon FBA provides sellers with shipping discounts when they send inventory to Amazon fulfillment centers (not available at all times). This is a win-win situation, because sellers can benefit from many orders on Amazon, which are now free shipping.
Customer service and returns
With Amazon FBA, you no longer have to worry about answering customer questions and complaints by yourself. Moreover, you don't have to take on the arduous task of handling returns, replacements and reverse logistics.
Huge storage capacity
As your order volume starts to grow, you may find it increasingly difficult and expensive to store and properly maintain a large number of products yourself. After handing them over to Amazon, you can save storage troubles!
02 Amazon FBA fees
Regarding the various fees involved in Amazon FBA, you can visit the Amazon FBA help page for the latest and complete list of fees.
Quick breakdown:
Shipping fees
These costs depend on the size, shape, volume and weight of the product, ranging from $2.41 to $137.32. These include the cost of packaging items, storage, transportation, and processing returns and customer service.
Label
If you don’t follow the Amazon label specifications for all products sent to them, you may have to pay 20 cents per unit.
The cost of removing inventory
If you want to remove a product from Amazon's inventory, it usually costs 50-60 cents per unit.
Long-term storage fee
If your product has been stored in an Amazon fulfillment center for more than 35 days, you need to pay these fees.
How FBA prepares and unplanned preparation services
Amazon has strict packaging requirements for FBA products. You can pay Amazon to package the product, or you can do it yourself. However, if you do not comply with their guidelines, you will be charged an unplanned preparation fee, usually ranging from US$1.00 to US$2.2 per product unit.
Storage fee
Depending on what your product is, or when of the year, these costs can range from 48 cents per cubic foot to $2.40 per cubic foot.
How does Amazon FBA work?
01. Send the product to the Amazon fulfillment center
When you choose the FBA service, Amazon will contact you and ask you what product you want to send. You need to log in to the seller's back office to create a shipping plan.
02. Amazon stores and categorizes your products
Once Amazon receives your products, they will add them to their inventory. This means that your property has been officially listed in Amazon's inventory and is ready to be sold.
03. Your product goes on sale
At some point in the process, the customer decides to buy your product. The Amazon FBA service ensures that the entire process is handled for you, and your product inventory will also change.
04. Amazon FBA is responsible for customer service
You don’t need to follow up with customers on your own initiative, and you don’t have to risk being troubled by complaints and delivery details, all of which are handled by Amazon.
05. Get income
When it comes to your payment, Amazon will deposit the money directly into your bank account.
The pros and cons of Amazon FBA
01. Advantages of Amazon FBA
Automatic Amazon Prime qualification certification
Logistics and transportation are not too risky
Large storage space
Ensure fast delivery and feedback management
Help to win Buy Box and more sales
02. Disadvantages of Amazon FBA
Tracking inventory can sometimes be troublesome
Shipping to Amazon can become complicated
A very simple return policy may mean you will get too many unnecessary returns
What is FBM?
The full English name of Amazon FBM is "Fulfilled by Merchant."
It means that the seller can control the entire storage and transportation process by himself.
Sellers are responsible for delivering their products to every buyer. As you may have guessed, this process may not be so appealing to many small sellers who find storage and transportation difficulties.
01. FBM Service Features
Amazon's FBM is often overlooked, because FBA has brought many benefits to many sellers, but this does not mean that it is not for you!
The following are the features of FBM services you should know:
Less paperwork compared to Amazon FBA
Amazon FBA has many different costs for many different things. The service involves a lot of paperwork, which may be a hassle for new sellers, FBM reduces your burden.
More control
If you are someone who wants to understand their business from the inside out, then Amazon FBM is your ideal choice.
Higher profit margins
Since you don't have to pay extra for shipping products to Amazon, storage and maintenance, your products will have greater profit margins when using Yamaha FBM.
02. FBM fees
FBM costs are just the costs incurred when you store and send products to customers yourself.
Some fees that need to be paid in using FBM services:
Monthly fee
Individual sellers don't need to spend any fees, and professional sellers only cost $39.99 per month.
Sales commission fee
Every time a product is sold on the platform, Amazon will charge you a specific fee.
Item cost
If you subscribe to the professional plan, you don't need to pay for any items. However, if you are an individual seller, you will usually be charged $0.99 for each item sold.
How does FBM work?
If you are an individual or professional seller on Amazon, you can store your own inventory and ship it to customers independently. It's that simple.
Pros and cons of FBM
01. Advantages of FBM
Your inventory is more independent
Better opportunities to build a brand for yourself
Less paperwork than FBA
You can control your shipping and expenses
02. Disadvantages of FBM
You must be responsible for storage and transportation
It is difficult to find suitable transactions and reliable service providers
After-sales processing will be troublesome
Competing Amazon Buy box has no advantage
What is the difference between Amazon FBA and FBM?
It mainly depends on your priorities as a seller and what kind of business model is more suitable for you.
01.Amazon FBA
This sales method outsources your storage, inventory management, and transportation to Amazon. All you have to worry about is managing your product listings on Amazon.
Amazon is responsible for returns and customer feedback.
Using Amazon's warehouses as storage space and letting Amazon manage transportation without your involvement will incur costs.
This implementation method is easier, and you can rest assured when it comes to managing transportation and reverse logistics.
02 .Amazon FBM
The seller is responsible for the transportation, storage and return of the goods, without the involvement of Amazon.
Sellers must manage returns and customer feedback themselves.
In addition to the usual seller and product fees, you do not need to pay any additional fees from Amazon.
This method can provide you with more "hands-on" sales experience. You manage the inventory yourself, transport the products yourself, and are personally responsible for returns and reverse logistics.
What should be considered when choosing FBA and FBM services?
First of all, how much storage space does your product need? If you need large storage space and convenient settings, you can choose Amazon FBA.
Second, look at where you can cut costs during transportation. If the cost of independent shipping is less than the cost of using Amazon FBA, the captain recommends that you choose FBM. Otherwise, you should rely on Amazon's reliable shipping service.
Finally, ask yourself, what kind of business do you want to run? Do you want to have a more "personal" experience so that you can micro-manage a lot of things? Then it is recommended to choose FBM, if not, FBA is the best choice for successful sales.
Which logistics service is more suitable for you, FBA or FBM
You also need to fully consider based on your own experience and financial strength.
If you are an experienced Amazon seller, have sufficient financial support, or know how to find the most profitable products, then you can choose FBA.
The advantage of FBA is its light weight, which helps product ranking. Of course, it also has obvious shortcomings. In other words, it takes up too much capital and inventory. Once the product cannot be sold, it will affect your capital chain.
Therefore, if you want to sell on Amazon through FBA, you must choose products carefully. Otherwise, every penny you invest in the product will be in vain.
With FBM, it won't take up too much of your funds and inventory, so you can freely decide what to sell and how much inventory to keep.
But if you can't win the Amazon Buy Box, your product ranking will get lower and lower. If your product happens to be the most competitive product, you will find that even if you release thousands of products, there are no sales.
Summarize
If you have confidence in your products and have sufficient financial support, you can choose FBA; if you are just a new seller and don't know your profitable products, then FBM is a good way to help you get started and gain more experience.
A statistics from the Internet:
Sellers who only use Amazon FBA: 66%
Sellers who only use Amazon FBM: 6%
Both Amazon FBA and FBM are used: 29%