Amazon FBM (Fulfillment by Merchant) is a technique of selling on Amazon where a seller can handle all aspects of their business, including listing items, managing storage, shipping products, and so on.
Amazon has approximately 9.7 million sellers worldwide. Almost 3million active sellers by 2021 have been competing on Amazon for rapid selling and high benefit, and sellers gain most of these profits from Amazon FBM.
Although it’s not enough for sellers to stay competitive with many other sellers; they must also organize their impeccable processes to succeed.
If you’re a newbie Amazon seller, then don’t miss the chance to read the below information to understand the overall process of Amazon FBM.
What is Amazon FBM?
Rather than FBA, most new Amazon sellers start selling worldwide using FBM. However, there seems to be another additional process of selling and fulfilling products on Amazon that might be appropriate for you. It’s Amazon FBM (Fulfillment by Merchant).
Using FBM, you’ll be in complete control of all shipping, delivering, and handling aspects. To top it off, you can try out the Amazon Flywheel strategy to skyrocket your business on Amazon.
However, FBM allows sellers to manage the shipping themselves rather than paying Amazon’s service charges and shipping inventory.
How Does Amazon FBM Actually Work?
Amazon FBM is undoubtedly an incredible platform for listing your items; everything else is up to you. So, to begin with Amazon FBM, you must do the following:
- Create an Amazon account.
- Add your products to Amazon.
- Keep your stock.
- Orders should be packaged and shipped.
- Handle all queries of customers either directly or through a 3rd party.
It’s not a big deal, and FBM listings are made the same way as standard Amazon product listings. So you can choose the option: ‘I will ship the item myself’ inside the Fulfilment Channel section (Merchant Fulfilment).
As a seller, you have two options for delivering your products after establishing your Amazon seller account and making listings:
- The person selling the item can use the Amazon Merchant Fulfillment Network (MFN) to deliver your order for them; this is called Amazon FBA.
- Another way people can do this is to do it independently and use FBM Amazon.
This means that the merchants ensure that the orders get to the consumer’s pickup location from their distribution center, which is also called “slashing.” Also, the MFN (Merchant Fulfilled Network) merchant is in charge of handling rates of return and giving service to the customers.
What is Merchant Fulfilled Network (MFN)?
MFN is when a seller ships and handles his/her own items/products from their amenities or through a third-party logistics provider if an order has been placed on Amazon.
It’s up to the person who sells something to store and keep track of all of the items they have, fulfill customer orders, deal with refunds for customers, and work with them individually.
Note: You can check out Amazon Attribution as well to track your traffic. A reliable tool we’d highly recommend.
FBM shipping should be considered by Amazon sellers who will go this route. They must find shipments or delivery partners who are trustable and also cost-effective.
[Precaution: If FBM shipment/delivery costs are higher than the FBA fees, sellers should not fulfill orders according to their own because it will reduce their profit margins.]
Who is The Most Appropriate Candidate for Amazon FBM?
In 2022, Amazon’s market value raised $1.649 trillion along with the top e-Commerce companies. So you should understand first whether you’re an appropriate candidate for Amazon FBM or not.
Yes, anyone can choose to go the Amazon FBM pathway, but it’ll be most beneficial for some individual Amazon sellers who can sell the following items:
- Products that are exclusive and have a low sales frequency
- Goods with a low production volume
- Items with a low-profit margin
- Handmade products that are too large or fragile
Researchers say that FBM is less expensive than FBA. So if you’re a new seller in the Amazon marketplace and have a limited quantity of exclusive items, difficult-to-ship items, or have beautiful handmade things, Amazon FBM will be the right approach for your new business.
When is The Right Time To Choose Fulfillment By Merchant?
Selling items by FBM is beneficial for the seller when the items being sold are exclusive to the seller’s shop, which will build the product’s credibility and the online store.
FBM is also favorable for sellers with small volume businesses when the shipping process doesn’t become overwhelming and possibly affects the standard expected by Amazon and the customer.
Selling items that use the FBM procedure is beneﬁcial for you as a seller;
- When the products being marketed are exclusive items to the retailer’s shop
- If your items being sold are in high demand
This will undoubtedly help increase the legitimacy of the products and the online marketplace.
How To Make Product Listings on Amazon FBM?
Listing products in Amazon FBM is the same as making any other items/product offer. See the images below for how it works;
After the item/product shows in Amazon’s catalog, then you will find your actual Merchant Fulfilled items/products under the Inventory > Manage Inventory.
Now, make sure the things that, you check ‘Active’ for ‘Status’ as well as ‘Merchant’ for ‘Fulfilled by.’
Amazon FBM Vs Amazon FBA: Which One Should You Choose?
From an Amazon report of JungleScout, 74% of shoppers regularly begin their search for products on Amazon. And if they had one store to go with, they’d surely select Amazon above all.
That means you should be careful which method you’ll choose for your new business. It’ll always be dependent on a variety of factors that are specific to your Amazon business.
However, the following are some general distinctions between FBM and FBA:
|Having a fast turnover||Having a slow turnover|
|Items are small-sized and lightweight||Items are quite large or heavy|
|Have a large inventory but no storage facility||Have small inventory with a good storage facility|
|The seller is solely responsible for inventory storage.||Allows sellers to ship items to Amazon warehouses|
|Able to efficiently deal with customer inquiries||Don’t have enough time for required customer service|
|Unable to access the prime customers||You can easily access the prime customers|
|Having control over shipping rates||Opportunity for effortless shipping|
The shipping costs you charge as a verified FBM seller are more flexible, and you can set them yourself because the seller buy the shipments from UPS and FedEx directly. That’s why more orders and lower prices can lead to much more profit.
Several shippers can use the home delivery services to get the product packages to the customers in two days. But customers who live a long way away will have to get them by express.
When Should You Use Amazon FBM Rather Than FBA to sell Your Products?
Here’re a few instances in which fulfilling your products rather than depending on Amazon to do so is the better choice.
You sell items that are difficult to ship via FBA
Specific products, including oversized items, things that mainly require special handling, and also the items with a slow revenue, can sometimes be nicer shipped on your own instead of FBA.
Going to ship your own big/heavy items
Shipping your own big/heavy products can save you finances while also ensuring that the goods are displayed to your consumer in the manner you desire.
Amazon requires its own shipping and routing requirements. But, if you’re absolutely not sure about which strategy of fulfillment will be less expensive, you can make a comparison using Amazon’s FBA calculator.
Different kinds of Amazon’s FBA calculators seem to be available for every Amazon seller who can sell in multiple countries. All of these FBA calculators would then account for the respective currencies and any fee differentials between countries.
You can do it for less than Amazon charges
On a similar note, you may already have an MFN (merchant fulfillment network) in place or may contract with a 3rd-party fulfillment service other than the Amazon platform to handle fulfillment for you. Within that case, establishing your own infrastructure or network may be the preferable course of action.
Dropshipping is an option
In order to comply with the business strategy, drop shippers must ship their goods or products through FBM, as each product will be shipped directly from the supplier or manufacturer to the customer.
Note: If you’re interested in Walmart Dropshipping, check this out.
Even you can sell handcrafted items
While handmade merchandise can be kept in Amazon’s fulfillment centers as well as get shipped through the use of Amazon FBA, countless handmade sellers prefer to fulfill his/her own orders to ensure that the final product arrives within the condition in which the seller aimed.
Can Amazon FBM Be Used With Amazon FBA?
Definitely! Countless Amazon sellers are unaware that they can use both FBM and FBA simultaneously on the platform. The outstanding feature here is that you’ll experience two benefits as exposure.
Doubling up is good if you’ve got several different products prices and profit margins in your store. So, divide your stock or inventory between Amazon FBA and Amazon FBM. What will happen then?
- FBA can achieve your rising products that sell quickly.
- FBM can accomplish your relatively low and slower-selling products that sell slowly but are still profitable.
How Much Does Amazon FBM Cost?
Amazon FBM costs can vary depending on the type of seller, and individual sellers pay a different price than pro sellers.
- Individual Seller Cost
You don’t need to pay a subscription fee if you aren’t a pro seller, but just a person/individual seller who sells things. You will, however, pay $0.99 for every item you sell.
- Pro-Seller Cost
The monthly subscription for a Pro FBM Amazon seller is $39.99 per month.
[Note: If you sell more than 40 units in a month, you can upgrade from individual to the Pro package to keep your costs down and competitive.]
Amazon also assesses two types of fees. There is a referral fee as well as a shipping fee. See the below brief of these fees:
- Referral Fee
The referral fee is generally calculated as a percentage of the overall sales revenue. Like most types of products category, this could be 15%, but it can range from 6% to 45%.
In that case, you just need to double-check due to the products you’re selling. The complete list of seller fees is available on the Amazon website. Because you’re such a seller on Amazon’s platform, they consider that they’ll have referred consumers to you.
- Shipping Fee
Shipping costs should also be factored into your budget. Remember that you must pack every order and ship them correctly on time to your consumers.
So keep in mind the packaging or shipping costs and the duration you managed to spend picking, preparing, wrapping, and shipping the order.
What Are the Advantages of Using Amazon FBM?
There are numerous benefits to using Amazon FBM. You can take advantage of it if you’re a new amazon seller or have a small inventory.
- A better understanding of how your business runs
What if you could run your own business without entrusting everything to a third party? This could be one of the best tips for new Amazon sellers. Since it’s essential even if you’re a newbie because it assists you in understanding;
- How your company operates on a step-by-step basis
- Allows you to have a better sales strategy
- Permits you to have a better sales strategy
By handling your inventory, revenues, customer service, support, and the administrators, you can gain a clear picture of how your business is running on a real platform, allowing you to make more informed decisions.
- Enough freedom to grow your Amazon business
By manually fulfilling clients’ orders, it’s possible to take control of your inventory levels.
If necessary, you can bring higher your amount of inventory without worrying about extra shipping fees or additional storage charges from Amazon FBA.
- There are no extended storage fees
If you’re trying to sell a slow-moving product and use FBA, Amazon may consider charging you additional storage fees for each product that stays through its warehouses for long periods.
It isn’t a big issue because you’ll hold your own stock/inventory as an Amazon FBM seller.
- Increased Profits
It isn’t considering that you will make more money with no FBA fees. But if you calculate other expenditures and try to get the best rates for your stock or shipping needs, you should make more money.
Especially when you compare to FBA, you can see that you’ll save money on fulfillment and storage fees, mainly if you sell heavy or oversized items.
- You’ll be able to interact directly with your customers
If you’re an Amazon FBM seller, you’ll be able to interact with your customers directly yourself instead of relying on Amazon to handle the customer service part.
This may necessitate a significant amount of effort on your side, but don’t worry about it. It’s worthwhile.
You’ll observe a clear understanding of your valuable customers’ needs and be able to deal with all types of customer feedback, whether it’s positive or negative!
Although it sometimes has a negative effect, this interaction can help you learn a lot about how your business is doing. Additionally, it ensures that your business is recognized for the correct purposes.
Besides that, knowing more about strategies for long-term customer loyalty will add extra value in that case.
- You don’t want to meet FBA rules that are too strict
Amazon FBA can eliminate many of the systems and responsibilities that come with running an Amazon business. As a result, you’ll be required to follow its stringent guidelines and restrictions.
But you won’t have such problems with Amazon FBM. As long as you ship orders on time and keep your public image strong with a nice storefront, you don’t have to worry about anything else.
- Consistency in sales and delivery
It took several Amazon FBA sellers to get back on their feet after Amazon prevented shipping goods through FBA because they were deemed unnecessary.
However, FBM sellers could keep selling and shipping without incident because they had complete control over order fulfillment. If a related situation exists, the businesses of Amazon FBM sellers will be relatively unaffected.
- Less paperwork
An Amazon FBA seller must deal with two inevitable issues:
- Amazon’s taxations
- Loads of paperwork
Luckily, an Amazon FBM seller isn’t burdened by these issues.
What Are the Drawbacks of Amazon FBM?
Regrettably, it would’ve been perfect if the merchants had not experienced any difficulties in receiving a shipment from the Amazon seller. But It’s inevitable, of course, that any strategy will run into obstacles.
Here are some drawbacks of Amazon FBM you can see below:
- Shipping costs may be higher than expected
Using FBM should cost less for Amazon sellers than using Amazon FBA. In theory, FBM sellers who can pick, pack, as well as ship his/her own customer orders should pay less than someone who uses the method of Amazon FBA.
However, even if you can choose the method of Amazon FBM, your delivery charges or shipping rates could go through the roof if you don’t even get a good deal from your desired shipping company.
- It takes a long time to pick, pack, and ship things
The time you spend taking care of your own fulfillment is sure to consume up a lot of time. You’ll have to be very hands-on and also be ready to spend a lot of time each week on your online Amazon business.
- Make sure you’re ready to spend a lot more time running your Amazon business every day
In some ways, this could be good or bad for you. When you spend a lot of time in your business, you can learn a lot about how it works, which can help you to be more successful in the Amazon platform.
But, if you’re not careful, you could end up having to deal with general admin, commercial terms, customer service problems, and other work activities that take you back from expanding your Amazon business, which can slow you down.
- Ineligibility for Amazon Prime
FBM merchants are ineligible for the exclusive Amazon Prime badge. Because Prime is related directly to helping you reach concentrations of organic rankings, it could be a major drawback for you unless you meet the requirements for the substitute, Seller Fulfilled Prime.
- Providing Great Customer support is your role and responsibility
While Amazon will handle the rate of return and refunds, as an FBA seller, you’re responsible for dealing with any customers ’ inquiries, complaints, or issues that might arise. With FBM, there is no such assistance. You are the only one who can make this happen.
Amazon’s Five Best Practices for FBM
As per Amazon’s best-practices documents, the following are some points to consider when selling your products through FBM.
Make use of Amazon’s ‘Buy Shipping’ option
If you want to make sure that your customer orders arrive before the deadline and also have their own tracking numbers, you can use Amazon’s “Buy Shipping” option to purchase your overall shipping directly from Amazon.
When a customer orders one among your product lines, you have the option to buy shipment directly from Amazon.
To use Amazon’s ‘Buy Shipping’ option, you must first take a number of steps:
- Go over to Orders > Manage Orders to manage your orders.
- Next, select the order that you would like to ship by clicking the ‘Buy Shipping’ button.
- After that, double-check and confirm the given information.
- The label should then be printed.
When you purchase shipments through Amazon, everything just automatically appears to confirm your order and then sends the tracking information to the customer.
Must provide tracking numbers
The popular platform Amazon requires an individual tracking number for all orders. When you buy shipping from Amazon, the given tracking number will generate automatically, and then the number will be sent to the customer.
Handle delivery times with the right strategy
Since Amazon wants to make sure that all its valuable customers receive his/her orders on time, it’s critical that you as a seller can confirm, pack, and ship each product as soon as possible. Furthermore, if you sell products with higher prices or Prime shipping, they must arrive even by the specified deadline.
Include a reasonable return policy
Make absolutely sure that your packaging includes clear and reasonable return guidelines as well as a legitimate return address. Keep in mind that as an FBM seller:
- You’ll be responsible for processing and handling your own rates of return.
- Returns are also not an option with Amazon. So, you must understand and accept return requests from such a customer.
Cooperate with Amazon’s drop shipping policy
If you’re a dropshipper, then the following dropshipping policies apply to you. Have a look:
- Assume the role of the primary seller of your merchandise.
- Indicate that you are the Amazon seller of your goods across all the external packaging, packaging slips, billing, as well as other relevant information inside or associated with them.
- To make sure that the 3rd-party drop shipper isn’t found, consider removing any external packaging, packaging slips, billing, invoices, or other data that identifies them.
- Assume responsibility for the receipt and processing of your customer returns.
Is Amazon collecting sales tax from FBM sellers?
On FBM orders, the popular platform Amazon doesn’t collect sales tax, and just FBA orders are accepted. If you fill customer orders through FBM or your online marketplaces, you must keep track of the taxation and remit them yourself.
How does one go about creating an FBM listing?
Keep choosing your product as well as the condition. Choose “Sell this product” and “I want this to be a separate item” (it will appear from the existing Amazon listing). Fill in the blanks carefully with your accurate information and the Seller SKU. We suggest using the initial SKU with the suffix “–FBM” to distinguish your FBM listings from the FBA entries.
What does SKU stands for?
An SKU or stock-keeping unit is a unique product identifier for a particular seller.
How do I locate my FBM order?
If you’re a seller and still want to verify customers’ orders throughout your Seller Central account, go to “orders” and then “manage orders.” You can display all customer orders on the “manage orders” page throughout all marketing channels.
Are you able to do both FBA and FBM?
Yes. Indeed, you can sell both in FBA and FBM. If you have a wide range of items/products, you will need to use both to enjoy the double benefits.
What is the best way to ship a product?
To make sure your order has been shipped, you have a total of 24 hours after Amazon tells you that it’s ready. If you’re not sure how and where to ship the order, start by selecting a carrier. In the United States, you have several options, including
Furthermore, larger/big items, such as home decors like; furniture or mattresses, may necessitate the use of a delivery van for further shipment.
Amazon FBM has many advantages, even though it may appear to be strenuous work. As an Amazon FBM seller, you are ultimately responsible for your public image, which is extremely important for your success. (You should understand how to promote your product ads, too.)
You must ensure that all orders are shipped on time. Amazon provides a ‘Buy Shipping’ option to assist you in this endeavor that confirms your order fulfillment process runs smoothly. It’s worth a shot if you are ready to take on the responsibility and grow your business on Amazon!