Amazon FBA vs. FBM – Which One Should a New Business Choose?

Thinking about selling your products on Amazon so that you can tap into its massive market and boost your bottom line? That’s a good choice, but before you start to sell items you need to make a choice between Amazon FBA or Amazon FBM.

What is Amazon FBA?

Amazon FBA stands for Fulfillment by Amazon. That means that the seller (i.e. you) will deliver your stock to Amazon’s warehouses and subsequently they’ll be responsible for packing and shipping the products to consumers when they’re purchased.

In addition to that, Amazon will also take on responsibility for customer service and returns.

Aside from simplifying fulfillment, Amazon FBA offers numerous other benefits. It will make your products eligible for Amazon Prime’s free 2 day shipping, improve your chances of winning the Buy Box, and typically provide lower shipping rates.

However at the same time you should expect other additional fees, tax obligations, and less control over your items.

What is Amazon FBM?

As you may have guessed, Amazon FBM stands for Fulfillment by Merchant – which means that you’ll be responsible for packaging and shipping all orders. Technically, you don’t need to do it yourself, and could outsource it to a third-party fulfillment service.

The main benefit of Amazon FBM is that you’ll remain fully in control. That will mean that you can shop around and keep any costs and fees as low as possible for storing and packaging your products.

Unfortunately although you can qualify to be eligible for Prime shipping using Amazon FBM – it is not easy. The requirements are strict, and you’ll need to be able to match up to them.

On top of that it is a lot more complicated to manage fulfillment yourself, including customer service issues and returns. Any lapses may affect your standing on Amazon.

So Which One To Choose?

For new businesses the best option is to evaluate both Amazon FBM and Amazon FBA carefully before deciding which one would be a better fit. Ideally you should base your decision on the type of items that you’re selling, which you may also have on your website, and the magnitude of sales that you expect to make.

If your business is selling products that have a low volume or are one-offs, using Amazon FBM is probably best since handling the fulfillment won’t be that complicated. On top of that if the profit margins are low you won’t have to worry about incurring additional fees.

On the other hand if your business is selling products that have high volume, and large margins then you could think about using Amazon FBA. Although you may have to lower your margin slightly, it will help to streamline your business.

It should be noted that Amazon FBM may be a better option for products that are large, bulky or expensive – whereas Amazon FBA is good for products that are light and small.

Final Words

As you can see, it isn’t really a question of which option is ‘best’ – but rather, which is suitable for your business? That is a question only you can answer.

If you find that getting started and selling on Amazon is a bit too complicated, try this step-by-step guide. It should help to put things into context, and make it easier for you to figure out what you need to do.

Make no mistake there are many different ways to sell on Amazon, and many different things that you’ll need to do to succeed. That being said as long as you’re willing to carefully look over your options and learn more about them – you shouldn’t find it too difficult.