As an entrepreneur intending to sell your products on Amazon, you need to choose your business’s fulfillment method carefully. This is because the choice you go for can have a significant impact on your efficiency, profitability, and customer satisfaction.
Among the many fulfillment options available, Amazon FBM (Fulfilled by Merchant) is one of them. Although many sellers know about FBA (Fulfilled by Amazon), FBM provides a different option. FBM allows the sellers to handle the storage, packaging, and shipping of the products themselves or contract a third-party service provider to look after the logistics for them.
However, as a seller on Amazon, it is crucial to ask yourself whether Amazon FBM is the right choice for your business before committing to it. In this article, we delve into how this option works, the benefits and downsides, and who should consider using it as their main fulfillment strategy.
Defining Amazon FBM
With Amazon FBM (Fulfilled by Merchant), the seller lists the products they want to sell on Amazon and takes up the responsibility of managing the entire order fulfillment process themselves. The seller does not rely on Amazon warehouses but stores inventory in its own facility or relies on an external logistics provider.
As part of the process of meeting customers’ needs once they place an order, the seller oversees:
· Storing the inventory
· Preparing and packing the product
· Shipping it to the buyer
· Dealing with returns and customer service
Thus, the seller handles the backend operation as they also take advantage of the massive traffic that Amazon provides.
Benefits of Amazon FBM
There are several benefits that a seller can enjoy by opting for Amazon FBM, and these include:
Greater control over inventory and shipping
Amazon FBM allows you, as the seller, to decide how you store your products and then package and ship them. As such, you can pick your own carriers, bargain for better shipping rates, and even package your products using eco-friendly or branded packaging materials.
Lower fulfillment fees
Among the most significant benefits of FBM is cost control. Businesses selling on Amazon can avoid the high storage and fulfillment costs charged by Amazon that essentially reduce one’s profits, especially for slow-moving and larger items.
Fewer storage restrictions
Amazon tends to impose storage limits, especially during peak periods. Fortunately, using Amazon FBM means that you are not affected by those constraints. This allows a good level of flexibility in managing your inventory levels.
Ideal for bulky or large products
It is common for Amazon FBA fees to be very high for large, oversized products. Sellers dealing in furniture, heavy equipment, or other items usually cut costs by handling fulfillment themselves.
Disadvantages of Amazon FBM
Below are some of the downsides of using Amazon FBM:
More work for sellers
As a seller on Amazon, you are responsible for storage, shipping, and customer service. If you do not have the right systems in place, handling the operations can easily become overwhelming.
It Is Demanding to Fulfill Customer Expectations
Amazon customers are accustomed to fast, reliable delivery. If you are an FBM seller, you must do everything you can to meet or get as close as possible to those expectations so you can maintain high ratings.
Harder to win the Buy Box
Sellers on Amazon know how critical Buy Box is for sales on the platform. You must compete with FBA sellers who already have an upper hand due to Amazon’s excellent customer service reputation and the fast Prime shipping. As an FBM seller, you must compete by pricing your goods competitively and providing reliable shipping.
Using third-party fulfillment partners
Selling through FBM does not imply that you must handle every activity in-house. Most of the sellers use the services of third-party fulfillment providers like Packageman to take care of warehousing, packing, and even shipping on their behalf.
Using a service provider frees you, as an Amazon FBM seller, to concentrate on marketing, product sourcing, and expanding your business, as you also benefit from the lower costs compared to Amazon FBA sellers.
Is FBM right for your business?
The reality is that not all sellers find taking the Amazon FBM route to be a suitable option. Below are some things that might make FBM the right choice:
· You already have a logistics partner or setup in place.
· You sell big, bulky, or slow-moving products
· You desire to retain more control over customer service and packaging
· Your products have thin margins, and you need to minimize Amazon’s fulfillment charges
Considerations before choosing FBM
Here are some of the key factors to consider before choosing to take the Amazon FBM option:
Cost analysis
You need to do your calculations and then compare the fees you would have to pay for FBA versus the charges for running FBM, factoring in everything, including shipping, storage, and labor. If FBM has bigger savings, you may choose the route. However, some sellers consider FBA for its convenience because it far outweighs the cost.
Customer service capability
Customers on Amazon are used to excellent customer service, and the platform values customer satisfaction. Before choosing FBM, you should be ready to make prompt replies to customer inquiries, maintain the efficient handling of returns, and work to maintain high performance metrics.
Shipping speed and reliability
Fast and reliable shipping is critical on Amazon. When considering whether to go for FBM, you must be sure that you can meet the delivery expectations; otherwise, your seller ratings will plummet, resulting in reduced visibility and fewer sales.
Scalability
You need to think about the long term as you consider whether you will choose the Amazon FBM route. Take into consideration whether you will manage to keep up with the logistics of FBM if your sales grow rapidly. If you have a reliable partner or automation systems in place, scaling your business can be smoother.
Final thoughts
So, who can find the Amazon FBM option a good choice? This is a good option for sellers looking to save costs, retain more control over their products, and want flexibility in managing their business. On the other hand, FBM requires sellers to have efficient, robust systems in place, reliable logistics or partner with reliable service providers, and be committed to maintaining customer satisfaction.
Businesses that sell oversized products, have thin margins, or have an existing warehouse setup can find FBM to be a better option. However, if for your company, convenience and Prime eligibility matter a lot, FBA may be a better choice.
As it is, FBM is not a one-size-fits-all solution. For some businesses, it can result in significant cost savings as well as operational control that yield long-term success.
