Should I be using FBM, or FBA on Amazon?
What is Fulfillment By Amazon (FBA) and Fulfillment By Merchant (FBM)? What is the difference and benefits? It all comes down to shipping. Do you want to send your inventory to Amazon and have them fulfill your orders, or do you want to send it yourself?
Fulfilled by Amazon (FBA)
Most sellers are using FBA, in fact 66% of sellers are completely FBA only, several things need to be considered when seeing if FBA is right for you. What size is your item? You will be paying for storage in the Amazon warehouse, so smaller items are going to take up less room and have lower fees. Amazon will also handle all of the customer service and refunds; you have less control over returns, but it is also on autopilot. This is also a great option if you have inventory that turns over quickly. If you have several items have a high sales volume you may have to hire a team to fulfill these orders to keep up. With FBA, Amazon will fulfill them for you saving you time and additional expenses. Protentional buyers also have more confidence in purchasing your item if they see the Prime Badge and you are more likely to win the Buy Box. They know that they will have fast shipping and no headaches if they decide to return the item.
Fulfilled by Merchant (FBM)
This may be a better option when you have larger items that you are selling. Also, you will have more control over your customer service and returns. Where FBA items are automatically refunded, with FBM you can receive your item back and review the item condition before issuing the refund. You can also include a restocking fee. You want to be sure that you have a good customer service process in place and regularly check your account to be sure that messages are not going on SLA. FBM can also save you on expenses because you will not have to pay additional FBA fees. If you have the manpowered and an efficient process for shipping FBM may be a better option, but only 6% of seller are completely FBM.
Fulfilled by Amazon (FBA) and Fulfilled by Merchant (FBM)
Having both FBA and FBA is like having a backup plan. For new SKUs with no sales history, you can only send in 200 units. If your item sales fast, it may be a good idea to have an FBM listing as well if your FBA listing runs out of inventory. You can still generate sales while your replenishment shipments are in transit to the Amazon warehouse.
When considering using one option or both consider your item size, sales volume, fulfillment structure, customer services and fees. See where these is growth potential and where you are willing to invest. Still not sure what is the right option for you? Amazon offers a Fulfillment by Amazon Revenue Calculator to help you evaluate fulfillment costs and fees to see what options is more profitable.
January 2020 | Erin Hollingsworth | AiCommerce