Selling on Amazon requires selecting between Fulfilled by Amazon (FBA) or Fulfilled by Merchant (FBM). Yes, FBA puts you in the limelight, but there are more than a few situations where FBM is not only viable, it could be a well-considered choice.
In our guide below, we will cover when FBM makes sense and help give you ideas for how to incorporate it into your business. If you’ve been trying to decide between FBM vs FBA, this post is a huge factor in thinking through at least one component of that decision.
Understanding FBM: The Basics
Fulfilled by merchant Amazon (FBM), where you do all the storage, packing, and trucking, plus customer service yourself (or with help from a third-party logistics partner). With FBM, you do everything yourself (unlike FBA, where Amazon handles fulfillment).
This model is favored by most Amazon FBM sellers because it provides more independence, cost control, and flexibility than relying on Amazon’s handling network.
FBM vs FBA Explained: The Differences
But before we get into when FBM makes sense, it helps if we have the core differences clear.
- FBA (Fulfilled by Amazon): You send your products to Amazon, and they handle storing, shipping, returns, and customer service.
- FBM (Fulfilled by Merchant Amazon): You take care of fulfillment.
While FBA includes ease of use and Prime eligibility, it also incurs storage fees, fulfillment expenses, and tight operational control. In contrast, FBM may be cheaper if it is used in the proper situations.
Read More: Tips for reducing your Amazon FBA fees
When Does FBM Make Sense?
Now, let’s explore and break down the key circumstances in which FBM is better.
1. When You Sell Low-Margin Products
For products with small profit margins, FBA fees can be bad news in no time. This includes storage costs, fulfilment fees, and long-term storage fees.
FBM makes sense in such cases, as you are able to save on overhead costs because fulfillment is done individually by yourself. This can be particularly advantageous for sellers with business models characterized by high volume but low margins.
2. When Your Products Are Bulky Or Heavy
FBA charges high fees to store and ship oversized or bulky products. These fees from Amazon can eat into profits significantly.
With FBM, you can:
- Use cost-effective shipping solutions
- Partner with specialized carriers
- Optimize packaging to reduce costs
FBM often ends up being the more viable solution for large-item sellers.
3. When You Have a Logistics Setup Already
If you already operate a warehouse or have an established 3PL partner in place, FBM may be the next logical step for your operations.
This approach is preferred by most of the seasoned Amazon FBM sellers because;
- They maintain control over inventory
- They can simplify end-to-end processes across several sales channels
- They avoid the staged double handling (sending inventory to Amazon and then shipping to customers)
4. When You Want More Control Over Customer Experience
FBA also controls a great deal of packaging, branding, and customer experience. FBM allows you to have a much more bespoke solution.
This includes:
- Custom packaging
- Branded inserts
- Direct customer communication
If you want to build a strong brand identity, FBM gives you the flexibility to do so.
5. When You Are Selling Seasonal or Slow-Moving Items
Well, Amazon FBA levies long-term storage fees if your inventory sits idle for too long. Considering your products have seasonal demand or if you sell new items that may not give steady sales, then holding stock at an Amazon warehouse can be a risk.
FBM allows you to:
- Inventory shoring at your own facility
- Avoid unnecessary storage fees
- Scale inventory based on demand
This is probably one of the biggest reasons seasonal sellers start to realize when FBM makes sense.
6. When Inventory Flexibility Is Critical
With FBA, you need to ship your inventory ahead of time, which can lock up cash and complicate forecasting.
With FBM:
- You can list products without stocking at an Amazon warehouse beforehand.
- A cost-effective way to pilot new products
- Quickly adjust the levels of stock
This is particularly beneficial for new sellers or those dabbling in additional product categories.
7. If You Are Selling Customized or Made-to-Order Products
FBM is often the only viable option if your products need to be customized, personalized, or made-to-order.
FBA is for your inventory that can be shipped out, and FBM provides you with:
- Produce items after receiving orders
- Offer tailored products
- Maintain quality control
FBM is well-suited to this and makes it perfect for niche and handcrafted products.
8. When You Do Not Want FBA Restrictions
Amazon FBA has an array of do’s and don’ts:
- Packaging requirements
- Labeling rules
- Inventory limits during peak seasons
In order to overcome these constraints and have the operational freedom, many amazon FBM sellers are opting for FBM.
Explore More: Guide, Strategies & Everything A Seller Should Know About Amazon FBA Reimbursement
9. When You Can Provide Competitive Shipping
One of the biggest benefits of FBA is prime shipping. But if you can meet or get close to those delivery times, FBM is a serious competitor.
With efficient logistics, you can:
- Offer fast shipping options
- Maintain high seller ratings
- Compete effectively without FBA
Ideally, in this case, the FBM vs FBA argument mostly supports FBM.
Challenges of FBM and Tips to Overcome Them
FBM provides some clear advantages, but it is not without challenges.
1. Shipping Responsibility
You’re responsible for timely delivery. Seller metrics are negatively affected by delays.
Tip: Collaborate with trustworthy carriers and examine the shipping supply chain.
2. Customer Service Management
Returns and customer-related queries can keep you occupied all the time.
Tip: Implement customer service tools or outsource your support
3. No Automatic Prime Badge
FBM listings do not automatically qualify for Prime.
Tip: For those who qualify, Amazon recommends Seller Fulfilled Prime (SFP)
Hybrid Strategy: The Best Of Both Worlds
Some of the most successful sellers don’t go one way or another, they choose both ways.
A hybrid strategy might include:
- Using FBA for fast-moving products
- FBM campaigns for cumbersome or slow-moving products
This method enables you to optimize productivity with minimum expenditure.
Ready to Scale Smarter?
If you’re still working through whether or not FBM is a good fit for your business, or how to successfully make it happen, book a call with consulting experts at Sipransh Ecommgrowth.
Let’s discuss the challenges you’re facing right now. Trust us to build a tailored strategy that really works with your business goals.
