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Content:
- What’s The Difference Between FBA and FBM
- Benefits and drawbacks of FBA and FBM
- Which option is best for you?
What’s The Difference Between FBA and FBM
Amazon is a multinational technology and e-commerce giant headquartered in Seattle, Washington, USA. Founded by Jeff Bezos in 1994 as an online bookstore, the company has grown into one of the world’s largest and most diverse technology companies.
Amazon is an online marketplace where third-party vendors can list and sell their products, contributing significantly to the company’s extensive product selection.
As a global company, Amazon serves customers in many countries, supported by strategically located fulfillment centers for efficient order processing.
As an e-commerce business owner, you have two options for fulfilling orders on Amazon: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM).
Fulfillment by Amazon (FBA) is a service that allows you to store your products in Amazon’s fulfillment centers. Amazon then picks, packs, and ships your products to your customers. They also handle customer service and returns for you. This service is ideal if you want to scale your business and focus on growing your sales while Amazon handles the logistics.
On the other hand, Fulfillment by Merchant (FBM) is a service that allows you to fulfill orders yourself. You store, pick, pack, and ship your products to your customers. You are also responsible for customer service and returns. This service is ideal if you want more control over your inventory and fulfillment process.
Benefits and drawbacks of FBA and FBM
Both services have their own benefits and drawbacks. Here are some of the key differences between FBA and FBM:
| Fulfillment Method | Benefits | Drawbacks |
| FBA | – Amazon handles logistics, customer service, and returns for you.
– Your products are eligible for Amazon Prime. – You can scale your business without worrying about storage and fulfillment. |
– You have to pay fees for storage, picking, packing, and shipping.
– Fees for oversized items can be very costly when shipping though FBA. |
| FBM | – You have more control over your inventory and fulfillment process.
– You can achieve lower fulfillment costs for oversized items. – You can fulfill orders from other sales channels. |
– You have to handle logistics, customer service, and returns yourself.
– You are responsible for complying with Amazon’s policies and guidelines. |
When choosing between FBA and FBM, you should consider the size of your business, your budget, and your goals.
If you want to scale your business and focus on growing your sales, FBA is a good option. If you want more control over your inventory and fulfillment process, FBM is a good option.
Which option is best for you?
The cost of selling on Amazon depends on your selling plan, product category, fulfillment strategy, and other variables. The options are flexible, so you can find the combination that works best for you and your goals:
- Selling plan
The Individual plan costs € 0.99 per unit sold, and the Professional plan costs € 39 (excl. VAT) per month no matter how many units you sell.
- Referral fees
Amazon charges a referral fee for each item sold. The amount depends on the product category. Most referral fees are between 8% and 15%.
- Fulfilment fees
The cost to ship your orders depends on whether you fulfil your own orders or use Fulfilment by Amazon (FBA).
- Other costs
Some selling partners may incur additional fees (such as long-term storage fees) or pay for optional programmes like advertising or premium account services.
Some sellers even use a combination of both models for different products or under different circumstances. It’s advisable to analyze your business model, sales volume, and fulfillment preferences to make the most suitable choice for your e-commerce business.
Shipping Times and Costs: If fast shipping is crucial, and you want to take advantage of Prime eligibility, FBA might be more suitable. However, if cost control is a priority, FBM may be a better choice.
Sales Volume: FBA might be more cost-effective for high-volume sales, whereas FBM can be more economical for lower sales volumes.
Brand Image: Consider the impact on your brand image. FBA may contribute to a more professional appearance, while FBM allows for more personalized customer interactions.
Product Characteristics: Some products may be better suited for one fulfillment method over the other based on factors like size, weight, and fragility.
Before you choose which product you want to manufacture its important to look at the size charts and fulfillment fees for FBA products. This will greatly effect the cost and profitability of your products.
In case of the Amazon FBA you can choose free FBA Revenue Calculator, here is their manual.
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