Demi JenkinsIf you are a seller or a merchant on Amazon, some of the most common concerning questions that ring a bell are, Why should I consider Amazon FBM as a seller or a merchant? Is FBM Amazon the correct option for me to sell my products? Or is it the best fulfillment option to run my merchant business? Today, I am going to help you answer all of these questions and help you understand it all.
If there is one place that’s pretty competitive in the online world, then it is none other but the Amazon. Yes, Amazon is not just complex but it is quite competitive when it comes to online marketplaces. Those who are actively using Amazon to sell their products do not only have to compete against millions of other retailers but also manage the complex requirements of the fulfillment process.
So what is basically the fulfillment process?
Amazon classifies two different categories for sellers to fulfill their orders. They are namely,
- Fulfillment by Amazon (FBA)
- Fulfillment by Merchant (FBM)
In this article, I am going to focus on what is Fulfillment by Merchant (FBM) and how it helps sellers?
What is Amazon Fulfillment by Merchant (Amazon FBM)?
It is a fulfillment process where sellers choose to ship their products to their customers on their own. What they basically do is get their items listed on Amazon and takes up the responsibility of shipping their items to customers through their shipping services. Technically speaking, in Amazon FBM, the seller or merchant himself/herself is responsible for fulfilling the delivery requirements of the orders.
In this fulfillment method, Amazon is not responsible and neither does the merchant rely on Amazon. Even though Amazon FBM is a more cost-effective option, people still rely on Amazon FBA because they don’t have to handle any product shipping. They would rather pay extra to save themselves the hassle.
How to Sell on Amazon by Amazon Fulfillment Merchant (Amazon FBM)?
First of all, a seller has to set up an account and list all of the products which he or she wishes to sell through Amazon. Then they have to choose the option of shipping each product by themselves which means that they do not rely on Amazon for shipping anymore. By selecting this option, the merchant ensures that he takes full responsibility for shipping the order to the customer’s delivery address from their specific warehouse located near the customer’s regional location. Also, there is a thing called the Merchant Fulfilled Network (MFN) where the seller is responsible for handling returns and customer support. Amazon merchants who are leveraging this particular method need to keep all of it in mind.
It becomes their responsibility to find the right shipping/delivery partners who are not only cost-effective but also very reliable with delivering their products. If your FBM shipping cost is going above the FBA, then it is best advised that you don’t resort to the following option but let Amazon handle deliveries for you. Not only will it impact their profits negatively but they will also suffer loss.
Related Article: How to Sell on Amazon for Beginners: All you need to Know about Amazon FBA
When is the Best Time to Choose Amazon FBM for Product Fulfillment?
FBM is the best option for products which are exclusive, exists in a small volume and has low-profit margins.
- Exclusive Products – These are the products that have a lesser probability of getting sold.
- Small Volume Products – They are relatively less in number and their shipping charges are down.
- Low-Profit Products – These are the products with lower profit margins, warehousing, storage fees.
Speaking of warehouses, are you eager to learn how the Amazon warehouses are actually built? Take a look how it’s build by clicking here.
Also, it is best advised that you use FBM only where you can save yourself some shipping charges. If FBA is a better option for you, then it is better that you avail the other option instead of using FBM.
If you aren’t sure about the costs, then you can always use the Amazon FBA Calculator to check and compare the prices between FBA or FBM.
What are the Advantages of Using Amazon FBM?
- You get an opportunity to create an online presence as well as an offline presence.
- It provides you a better insight into how things actually work in the shipping processes.
- You have the freedom to run your merchant business exactly the way you want to.
- No more long term storage fees on Amazon, no more Amazon changes in fulfillment prices.
- You have the chance to create an individual standalone brand name for yourself.
- No Amazon taxation fulfillments and considerably less paperwork hassle.
- There are greater profit margins and you don’t have to face any unexpected costings.
What is the Fee Structure of Amazon FBM?
To give you a more detailed insight on the costings involved in Amazon FBM, here’s a complete breakdown of the Amazon FBM fee structure. Actually, the Amazon fulfillment by Merchant fee is barely anything, but the costs associated with choosing your own shipment and delivery charges. These charges aren’t stable and can differ from seller to seller depending on the delivery option.
However, the few charges that are fixed and will be applied on all merchants are as follows:
Monthly Subscription Charges
The Pro Plan for the Amazon FBM goes up to $39.99/month.
If you’re an individual selling on Amazon then there isn’t any fee.
Per Item Selling Charges
If you sign up for the Pro Plan then there won’t be any fee charged.
If you are an individual seller $0.99 will be charged for each product.
Referral Charges
Every time you become successful in selling a product unit online, Amazon deducts a small amount or a small percentage of the fee on the total sales price. The referral fee is around 15% on average, especially in the product categories. However, there are certain categories where you’re paid as low as 6% and as high as 45% for specific accessories.
Shipping Charges
When you are dealing with the Amazon FBA, the shipping fee is normally included. Whereas, when you’re dealing with the FBM, the shipping fees are paid additionally by every single customer/seller.
What are the Additional Fees which the FBA includes?
Now, here’s a particular reason why FBM is considered a better option in comparison to FBA. There are certain additional charges which the Amazon applies on the FBA which merchants are supposed to pay when they are using Amazon’s fulfillment network. These expenses include the following:
Label Charges
Every stock which is going to be shipped to the Amazon warehouse has strict labeling specifications. If they don’t want to pay the charges, they can allow Amazon to label their products as preference.
FBA Packaging Charges
When it comes to packaging, Amazon has its own set of unique rules. FBA sellers are opt-in to pay Amazon for packaging where they repack your product in accordance with their specifications.
Long-Term Storage Expense
Amazon also charges the merchant for long-term storage fees if the stock remains unsold for more than six months at a minimum.
Stock Removal Expense
In case, you want to pull down any of your stored stocks from the Amazon’s warehouse, then you will be charged by the Amazon. If you’re considering to switch from FBM to FBA, you will still be charged.
As far as the shipping fees are concerned, here’s a small chart to give you a brief insight on charges.
Some Frequently Asked Questions
FBM or FBA, which one do you believe is a better option?
It is all based on the individual seller and his preference. It depends on what kind of product they are selling and what factors are being addressed when they are selling that particular product. While FBM offers the seller an ultimate control on their respective business dealings, FBA simply takes the burden off their shoulders and give the merchant a complete peace of mind when it comes to dealing.
If you like to handle important responsibilities such as shipping, processing refunds, tracking orders, customer service and so on, FBM sounds like the perfect option for you. However, if you don’t want to fall, victim to trading hassles and logistics, then FBA sounds like an option you just don’t want to pass.
Is there a certain Package Requirement imposed by Amazon on the Amazon FBM seller?
As far as my knowledge is concerned, Amazon FBA has a number of packaging requirements, whereas when we talk about Amazon FBM sellers, these requirements are not quite much altogether. Since, in Amazon FBM selling, the seller takes up the whole sole responsibility of dispatching the product to the customer, it doesn’t have to deal with any sort of packaging requirements.
Also, it is advised that they always add a shipping label outside the package without any damage.
Check out this resource on Amazon jobs.
