In the world of e-commerce, there are two main distribution methods for sellers who want to sell on the Amazon platform. These are Amazon FBA (Fulfillment by Amazon) and Amazon FBM (Fulfillment by Merchant). Both methods aim to take advantage of various aspects of selling on Amazon, but there are significant differences between them.
Amazon FBA: Fulfillment by Amazon
Amazon FBA entails sellers sending their products to Amazon’s warehouses and Amazon managing all logistical processes such as order processing, shipping, customer service, and returns. Sellers using Amazon FBA can benefit from Amazon’s logistics infrastructure and customer services from storage of products to delivery.
Advantages of Amazon FBA:
- Products can be listed as Amazon Prime labeled items.
- Fast delivery due to Amazon’s strong shipping network.
- Management of customer services and returns by Amazon.
Amazon FBM: Fulfillment by Merchant
Amazon FBM is a model where sellers are responsible for the stocking, packaging, and shipping of their products. The FBM method offers sellers more control and direct management over their products, but they are responsible for managing all logistical processes themselves.
Advantages of Amazon FBM:
- More control over logistical processes.
- Cost-effectiveness for low-volume or high-profit-margin products.
- Opportunities for personalized packaging and branding.
Differences between Amazon FBA and FBM
The most fundamental difference between Amazon FBA and Amazon FBM is who manages the logistical processes. In FBA, Amazon handles these processes, while in FBM, the seller is responsible. Another advantage of using Amazon FBA is the special shipping options such as two-day fast delivery offered to Amazon Prime members. In contrast, with FBM, sellers have more freedom in customizing their products and customer experience.
Potential disadvantages of Amazon FBA include higher costs and less control over how products are stored in Amazon warehouses. Amazon FBM, on the other hand, is generally more cost-effective. However, sellers shoulder the entire burden of order processing and often need to exert more effort to meet customer expectations.
Conclusion
When selling on Amazon, choosing between Amazon FBA and Amazon FBM depends on the seller’s business model, resources, and goals. Amazon FBA may be ideal for sellers who prefer to streamline logistical processes and offer fast shipping options. Meanwhile, Amazon FBM is suitable for sellers who require more control and are ready to manage logistical processes on their own. Both models have their own advantages and challenges, but with proper planning and management, both can help Amazon sellers succeed.