Companies that want to start selling on Amazon have to decide whether to go for FBA or FBM.
Before you make a decision about which one is right for you, make sure you understand their differences.
Fulfillment By Amazon (FBA)
Fulfillment By Amazon (FBA) refers to when a seller sells an item that Amazon then ships.
Usually, sellers sending products in bulk to Amazon’s fulfillment centers, where they are picked, packed, and shipped to wherever the product needs to go.
FBA makes more sense for high-volume sellers that ship products frequently. Part of the reason for this is that they can also afford to drop costs significantly when needed.
The Benefits of FBA Include:
- Amazon is responsible for shipping and customer service
- Better conversions because customers trust Amazon to deliver on time
- Retail operations are open 24 hours
- Greater customer reach
- Streamlined returns process
- It saves time and costs which can be spent on expanding your business
- There’s a plethora of online tools you can use to manage the process and monitor costs
- It’s a practical solution for products that require labor-intensive packaging.
- Amazon stores inventory
Fulfillment By Merchant (FBM)
Fulfillment By Merchant (FBM) is when a seller only uses Amazon for listing products, but handles all the storage and shipping themselves. They sell it themselves, and they ship it themselves.
FBM is suitable for sellers that sell one-off products or small quantities.
The Benefits of FBM
- The seller will have complete control over their business
- Greater margins, since Amazon isn’t involved as much
- The seller has a chance to build an independent brand
- The seller can avoid losses due to Amazon’s policy changes
- There’s less documentation; especially in states with no sales tax
- Better control over inventory
- No hidden/unexpected costs
- Sellers can manage both online and offline activities
To help you decide whether FBA or FBM is right for your business, take the size of your business, your product categories and your business’s growth potential into consideration. Think about what parts of your business you’d like to invest in and expand in the future.
If you need guidance on selling through Amazon, FBAPrep4U is happy to help! We provide consulting services along with our FBA prep services. As experienced online sellers ourselves, we can provide you with the knowledge you need to navigate through Amazon’s system.
Contact us for more information by calling our Amazon FBA consultant on 614-392-8850.