FBA Or FBM ? How To Ship Product In Amazon In 2021? After have seen the 7 key steps to sell on Amazon we will detail the 2 solutions offered by Amazon to ship products.
What is Amazon FBA?
Fulfillment By Amazon (FBA) is an Amazon service that provides storage, packaging, and shipping assistance to sellers. This takes the burden off of sellers and grants them more flexibility in their selling practices. The program allows sellers to ship their merchandise to an Amazon fulfillment center, where items are stored in warehouses until they are sold. When an order is placed, Amazon employees physically prepare, package, and ship the product(s).
What is Amazon FBM?
Fulfilled By Merchant, popularly known as FBM, is when sellers list their products on Amazon and choose to ship products to each buyer by themselves. In other words, sellers are responsible for fulfilling their orders and do not rely on Amazon for the same. While it is a rather advantageous method for products with lower margins, FBM Amazon is rather overlooked owing to easy shipping, handling, and other benefits that come with Amazon FBA.
Advantages of FBA (Fulfillment by Amazon)
One of the biggest advantages of fulfillment by Amazon is Prime eligibility. Prime members spend $1.4K a year on average. Amazon customers prefer items eligible for Prime shipping because of the speedy fulfillment and delivery. Prime eligible items are also more likely to win “buy box”. When a product has several vendors, just one vendor’s product will appear in the box with the “buy now” button. “Buy Box” win over 80% of purchases! There are various factors regarding Amazon’s algorithm that determine what product wins the buy box, but Prime fulfillment increases the likelihood when competing with FBM products.
Advantages of FBM (Fulfillment by Merchant)
Sellers who choose merchant fulfillment, or FBM, do not pay fees to Amazon for storage and fulfillment because the seller controls all their own inventory. Customer may pay shipping fees, however merchants have to pay Amazon a referral fee, which is either $1.00 or 15% of the sale price. With FBM, the vendor has an opportunity to establish an independent brand because they are interacting directly with the consumer. Vendors who fulfill their own orders have a better understanding of precise shipping costs and don’t encounter unexpected fees.
When to choose FBA?
- The products you sell are small and lightweight.
- You’re okay surrendering control to your customers to Amazon.
- You want Amazon to handle your customer service.
- Your inventory turns over quickly.
- You do not have logistics in place.
- Your expenses would be higher if you fulfilled your own products.
When to choose FBM?
- Exclusive products – products that have a lower frequency of sales
- A smaller amount of products – cuts down the shipping charges considerably for a relatively low volume of product units.
- Products with lower profit margins – helps save on the warehousing and storage fees on FBA
- Situations where FBM works out to be cheaper than FBA. FBA fees depend primarily on the weight and dimensions of the product. If sellers can ship their orders for a more reasonable price in comparison to using FBA through their delivery partners/network, then it is feasible to opt for FBM.
To conclude there is not best program to sell on Amazon but you have to adapt program according to your product and you can mix the two programs if you have product to sell with intrinsic features very different.
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