What is the difference between Amazon FBA and FBM?

With Fulfillment by Amazon (FBA), your online business stores products in Amazon's fulfillment centers and outsources logistics directly to Amazon. When a customer places an order, Amazon handles packing, shipping, returns and customer service on your behalf. Fulfillment by Merchant (FBM) means you are responsible for all fulfillment and customer service-related processes. This method gives you more control over your inventory and fulfillment process and is ideal if you have unique inventory and shipping requirements.

What are the advantages of using Amazon FBA and FBM?

FBA promotes competitive logistics like free Amazon Prime shipping, customer trust (i.e. higher chance of winning the Amazon Buy Box), and fast scalability. FBM allows cost control, customization and greater fulfillment flexibility, enhancing the unboxing experience and catering to unique shipping needs.

Can I use both Amazon FBA and FBM methods together?

Yes, you can use both FBA and FBM methods simultaneously. Multi-Channel Fulfillment (MCF) allows you to fulfill orders not only from your Amazon listings but also from other sales channels like their own website or other online marketplaces. Moreover, with careful inventory management, you can strategically employ FBA for high-demand items and FBM for specialized products, leading to optimized costs and customer satisfaction.

Amazon FBA vs FBM for Competitive Ecommerce Fulfillment

Tags: Ecommerce Marketplace

Written by: Erhan Musaoglu

Publish Date: November 7, 2023

In the ever-expanding realm of ecommerce, where speed, efficiency and customer satisfaction reign supreme, choosing the right fulfillment method matters. Whether you’re a seasoned entrepreneur seeking to optimize your operations or a budding seller eager to kick-start your ecommerce journey, choosing between Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) can have major implications on the success of your online operations.

In this article, we will define FBA and FBM, weigh the pros and cons of each and offer insights into choosing the best option for your ecommerce business.

Contents

FBA vs FBM: Differentiating Between Amazon Fulfillment Methods
- Key Differences Between Amazon FBA vs FBM
Pros and Cons: Amazon FBA vs FBM
Choosing Between FBA or FBM

Key Takeaways

Fulfillment by Amazon (FBA) offers a way to outsource item storage and order fulfillment to Amazon; Fulfillment by Merchant (FBM) means being in charge of your own logistics.
FBA offers access to Amazon’s fulfillment network, reduced shipping costs, Prime eligibility, and Buy Box advantage; however, it comes with added cost and limited control.
FBM provides autonomy, cost-efficiency and adaptability for specific products and branding initiatives; but risks competitive disadvantages and logistical challenges.
FBA promotes rapid scaling and competitive results, while FBM offers control, customization, and cost-effectiveness, catering to niche business needs.
It is possible to strategically employ FBA for small, high-demand items and FBM for specialized products.

FBA vs FBM: Differentiating Between Amazon Fulfillment Methods

Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) are two fulfillment method options offered by Amazon. Both offer a number of benefits depending on the level of control you wish to have over your operations.

Fulfillment by Amazon (FBA) represents the pinnacle of convenience for online sellers. When you opt for FBA, you’re outsourcing the entire fulfillment process to Amazon. Your products are stored in Amazon’s vast network of warehouses where Amazon can execute picking, packing and shipping processes on your behalf. As part of your monthly subscription, Amazon handles your customer service and returns management needs as well.

Fulfillment by Merchant (FBM) places the onus of order fulfillment squarely on the shoulders of the online seller. It allows you to retain total control over your inventory, warehousing, and shipping processes. When an order is placed, you or your designated third-party logistics (3PL) partner handles the picking, packing and shipping of orders directly to customers. FBM offers greater flexibility and control, allowing you to personalize your packaging, shipping methods and even customer service experiences.

Key Differences Between Amazon FBA vs FBM

While FBA and FBM have the same end-destination, they represent two significantly different paths for getting orders to customers. Which one you choose will depend heavily on your existing infrastructure, business goals and the type of items you sell.

FBA prioritizes convenience. When used correctly, it offers a hassle-free experience that entrusts your storage, packaging, shipping and returns with Amazon. This hands-off approach to logistics and customer service allows you to focus on sourcing quality products and marketing your listings while benefiting from Amazon’s extensive fulfillment network and competitive resources. This option includes a variety of monthly account fees related to inventory storage, sales, fulfillment processes, returns and more.

FBM, on the other hand, prioritizes control. It puts you in the driver’s seat, granting you absolute authority over your inventory management, order fulfillment and customer interactions. This approach is particularly appealing if you are already managing cost-effective logistics or unique, fragile or oversized items that do not fit well within the standardized FBA system. It is also a great option if you are concerned with personalizing your packaging or adding marketing-related items to your deliveries. With FBM, you store and ship items yourself or partner with a cost-effective 3PL to avoid FBA costs.