Amazon FBM vs FBA. What are the differences between the two models? Which one is better?

People starting to sell through the Amazon platform are confronted with the need to choose the type of sale while still at the configuration stage. The biggest dilemma for sellers is to choose one model from the two presented: FBM or FBA. What are the features of Amazon FBM and what are the features of Amazon FBA? What to choose if you sell a narrow group of products targeting the domestic market? Do you want to learn more? In this article, we explain the issues of choosing the optimal selling model on Amazon.

FBM or FBA sales model? Why is the choice important?

A lot will depend on the choice of the right model. Each form of sale imposes a number of rights and responsibilities on the seller, as well as additional functionality related to the fulfillment of customer orders. Among the most frequently mentioned model proposals are FBA or FBM. The Seller-fulfilled Prime model is less common, although this solution also finds its supporters. What are the differences between the various forms of sale and which account management proposal should the seller choose?

What are the features of the Amazon FBM – Fulfillment By Merchant sales model?

FBM stands for Fulfillment By Merchant. It is a sales model in which the merchant is responsible for the distribution process. He sends the product directly from his warehouse, making sure that the package is properly prepared for delivery to the courier company. The entire shipping process is handled by the seller, who must ensure that the packages are prepared in a timely manner. Amazon can support order fulfillment, for example, for first-time sellers.

Seller fulfills the order

In this model, Amazon’s assistance includes providing the ability to easily print labels to affix to the order being shipped. The seller’s most important task is to ship the packages on time – that is, to hand over the ready boxes to Amazon’s courier. The measurements of the boxes and their maximum weight must be in accordance with Amazon’s guidelines. The seller should ensure that the goods are properly stored and ready to be packed quickly. If the goods are not shipped by sellers using Amazon FBM within the specified timeframe, the platform triggers a late shipment indicator, which lowers the seller’s prestige.

What are the pluses in the FBM model for the vendor?

A seller is fulfilling an order through Amazon in FBM format. What are the benefits of selling in this model? Below we point out a number of features attributed to Amazon FBM.

• The vendor has more control over elements of the business.
• A vendor can build their brand prestige based on their own sales methods.
• Sellers don’t have to use Amazon’s rented warehouses because they take care of product storage themselves.
• Sellers are less likely to change Amazon’s pricing policy, so there are fewer unexpected costs.

The differences between FBM and FBA? First of all, shipping!

Amazon FBM is designed for people who value their independence and want to sell, for example, exclusive products intended for a specific group of customers. Sellers do not have to worry about price changes e.g. due to products being stored in Amazon’s warehouse. This type of sale is recommended for sellers who have a small and attractive assortment, often with luxury features.

Amazon FBA – Fulfillment by Amazon

Amazon FBA is a type of sale where sellers use Amazon’s warehouse as an intermediary. What does this look like in practice? You sell products, but instead of handling the shipping and customer service yourself, you outsource all of these activities to Amazon. The seller using FBA (Fulfillment by Amazon) form of cooperation first sends the goods to Amazon outlets, where further processes of creating the order for the customer take place. Amazon employees in logistics centers perform tasks such as: packing, long-term storage, shipping (including bulky goods).

Using the Amazon warehouse

In the FBA model, sellers must expect to pay additional fees for the overall shipping process. In practice, a certain volume of products is shipped to Amazon and then stored at a local logistics center. Once the buyer has decided to purchase the product, Amazon’s staff will begin processing the shipment, which is a de facto transfer of tasks from your company. Importantly, Amazon provides end-to-end order processing, including order return handling.

Ship products of FBA. Special programs for European sellers

There are several Amazon FBA programs for sellers operating in EU countries. Below, I list the three most common and available for Polish users.

1. European Fulfilment Network. It consists of storing products in a local center, after which the goods are distributed to other countries in Europe.
2. Pan-European. The program allows sellers to fulfill shipments to a specific Amazon logistics center. From there, the company distributes packages to individual, smaller warehouses – so that they are closer to potential customers.
3. Multi-Country Inventory. That is, the storage of goods in different European countries, in diversified warehouse centers.

Amazon FBA sales model – what are the benefits for sellers of the product?

• Some of the benefits of Amazon FBA (Fulfillment by Amazon) include the ability to get free shipping for those with Prime subscriptions.
• Products also get higher rankings in Amazon search results (product ranking).
• A seller has a chance to win a buy box if a competitor has a similar product at the same price but does not use Amazon FBA.
• The seller is relieved by Amazon of much of the burden of running the business (under the don’t worry about principle).
• Merchandise sales and order fulfillment take place 24 hours a day, as shipping and packaging is organized by Amazon.

Are you selling products in bulk? Amazon FBA will be the best option for you

Amazon FBA is the best model for selling products dedicated to international, mass sellers. Great for distributing products throughout the European Union and Europe – Amazon relieves the seller from the tedious process of preparing orders. It is also a good option for those who are not able to organize adequate warehouse space and want to reduce risk and logistics costs. Amazon FBA is not without cost, however. The price for using FBA depends on the size of the products you sell. Amazon charges a fee for storage, for shipping, and for any other services dedicated to sellers.

Seller Fulfilled Prime (SFP) – For whom is the third way to sell products on Amazon?

The third selling model on Amazon is Seller Fulfilled Prime, which combines the functionality of the two systems discussed above. Seller Fulfilled Prime on Amazon is a service designed primarily for sellers offering customized luxury products. Here, at the shipping fulfillment stage, the primary activities are performed by the seller. In Prime, the goods are packaged by the seller, after which the products are picked up by a courier from Amazon. The rest of the process is already taken care of by the company that carries out the shipping and makes sure that customers are satisfied with the fast and efficient delivery of the products. SFP is also about customer care in terms of return handling and contact.

FBA, FBM or Prime?

Unfortunately, not everyone can sell with Seller Fulfilled Prime. This option is designed for sellers who make at least 5 transactions per day, with a rejection rate of no less than 1%. Therefore, it can be said that the Prime model is more prestigious than FBA, FBM. The seller must also control the size and total weight that the products have. Seller Fulfilled Prime allows you to have more control over the shipping process while still maintaining the high prestige associated with having a Prime badge.

I sell Amazon products across Europe – which model should I choose?

Each of the presented selling models active on the Amazon e-commerce platform has a number of benefits and functionalities. In fact, it is impossible to unequivocally indicate which one is the best. For each seller, a different format for executing this process will be most appropriate. If you sell low-margin products and the volume of sales is not impressive, FBM will be the best option. FBA, on the other hand, will be useful for those who want to relieve themselves in some way from the responsibilities of warehousing, storing and shipping certain products for customers. As your business grows, the amount of goods you offer may increase, and thus, your home warehouse may not be enough. As a seller and owner of your brand, you need to decide for yourself which type of selling goods on Amazon is best to use: FBM, FBA or SFP.

How do you run a shipment for customers by combining FBA and FBM functions?

For those who want to combine FBM functionality with FBA, it is recommended to use SFP. However, this is a relatively restrictive model that requires a number of conditions to be met. Among Amazon’s main expectations are a low order rejection rate and a certain number of completed shipments per day. This means that not everyone will be able to switch to this mode of running a sales account on Amazon.

Brief summary

To sum up, FBA will come in handy if you are a mass seller of various products that are being snapped up by your customers. If you are focused on selling luxury goods and are able to take full care of your inventory and shipping format – FBM is for you. You need to consider all the pros and cons and choose the most suitable model for the form of your business on Amazon.