For Amazon sellers, choosing the right fulfillment method can have a great impact on business. Everything from customer experience to profit margins and scalability can depend on how you fulfill orders.
Amazon sellers can use one or more fulfillment options, including Amazon FBM, Amazon FBA, Amazon Direct Fulfillment, and more. Amazon FBA is the most popular choice (used by about 86% of sellers) for its convenience, Prime eligibility, and outsourced customer service. This article will explore Amazon FBM with a focus on how it compares to Amazon FBA.
You should choose your Amazon fulfillment option based on business needs and expectations for the future. For the majority of Amazon sellers, FBA is the obvious choice. However, if you’re looking to grow your brand, it might be time to consider switching from the conventional fulfillment method.
What is Amazon Fulfilled by Merchant (FBM)?
Amazon Fulfilled by Merchant (FBM) is an Amazon fulfillment option where sellers handle their own order fulfillment, taking charge of packing, shipping, and storing inventory instead of using Amazon’s fulfillment centers. This fulfillment method is also called Merchant Fulfilled Network (MFN).
While the downsides of FBM might be obvious from the get-go, this model provides certain perks that are important for any business that wants to access its full potential.
Amazon FBM provides 2 main benefits that empower your business: freedom and flexibility. Under this model, you will no longer rely on Amazon’s fulfillment services, and you won’t be tied down by their product restrictions, storage limitations, and complicated fulfillment fees. If you want to develop your e-commerce strategy and stand out as an online retailer—not just on Amazon—these factors are holding you back.
Freedom: Use FBM to Grow
Because Amazon Fulfillment by Merchant separates you from FBA fees and regulations, you’re free to make bigger decisions for your business and grow your brand. Amazon’s warehouses handle the demands of thousands of Amazon sellers every day, so with FBA, you are limited by regulations such as complicated fees, small storage capacity, and standardized packaging and customer service that leave your brand in the shadow of Amazon’s empire.
With Amazon FBM, you won’t have to deal with certain limitations imposed by Amazon. Now, you have the freedom to enhance your customer experience, product packaging, inventory management, and customer service. Without FBA fees, limitations, and sudden policy changes, you’re in control.
Flexibility: Greater Control with FBM
With Amazon FBM, you’ll have the flexibility to ship, store, package, and fulfill orders exactly how you want. To this end, you can use your own warehouse, partner with a powerful third-party logistics provider (3PL), or use a combination of outsourced and self-fulfillment.
With the right 3PL, you can take on order fulfillment, lightning-fast shipping, and optimized inventory storage that goes beyond the confines of Amazon’s warehouses, allowing you to strengthen your brand, build loyalty, and gain recognition. You can even expand into new products, like items that are too large or fragile, and increase your stock, regardless of your Amazon IPI score or sell-through rate.
How to Use Amazon FBM
Amazon FBM allows sellers to manage all fulfillment responsibilities, giving them the flexibility to customize their process. While FBA sellers have less responsibility for their products, they also have less power over them. Here’s a step-by-step look at how selling on Amazon FBM works:
- Create Listings on Amazon Seller Central: Set up your product listings, manage pricing, and use keywords in titles and descriptions to boost product visibility. Using the right words and imagery will increase sales and get you closer to becoming a top seller.
- Store Inventory: You can store your inventory any way you want with FBM. When you partner with a fulfillment warehouse, you’ll have better control over stock levels, inventory storage space, and long-term storage options. With the right fulfillment partner on your side, you enjoy your own warehouse, adding to your infrastructure and capabilities as a growing business.
(Tip: Now that you have a dedicated warehouse, you can expand your business by exploring new product types you couldn’t offer with Amazon FBA.) - Ship Orders: Once an Amazon order is received with FBM, you have the autonomy to carry out order fulfillment however you choose. This allows you to pick, pack, and ship with your own kits and branding while maintaining control over delivery times and accessing discounted carrier rates.
- Manage Returns and Customer Service: FBM sellers are responsible for handling returns and customer inquiries. Once again, this added responsibility is just another opportunity to empower your business. With more responsive, authentic customer service, you’ll reinforce brand loyalty and provide a personal touch that keeps buyers coming back. Your customer service can also be handled by a 3PL partner, who has a closer relationship with you, your inventory, and your business goals.
As you can see, using FBM comes with its challenges. Many of these challenges overlap with other fulfillment options, like Amazon FBA, and some are unique. This is why the best way to use FBM is to partner with a strong fulfillment warehouse or 3PL company. When handled correctly, these challenges can become fruitful opportunities.
Pros and Cons of Amazon FBM
Amazon Fulfillment by Merchant involves more responsibility and strategic decisions, but if done right, it can be a huge leap forward for your business. For many sellers, the benefits of Amazon FBM outweigh the challenges. Still, it is important to consider the downsides when deciding to use FBM or not.
Pros of Amazon FBM
- Complete Control Over Fulfillment: With FBM, you maintain control over the order fulfillment process, from inventory management to packaging. This is ideal for brands that require a customized approach, have unique products, or want to expand their offerings.
- Cost Savings on FBA Fees: By handling your own Amazon fulfillment, you can avoid additional FBA fees that add up significantly over time. Just a few of these fees include: low-price fees, fulfillment fees per unit, aged inventory surcharges, long-term storage fees, low-level inventory fees, product return fees, and inventory overages. Amazon’s fee structure is complicated and extensive. It also changes often, and fees increase during certain seasons.
- Flexible Storage and Shipping: Using FBM means you can control your inventory storage and choose shipping providers. Ideally, you would hire an expert fulfillment partner who can do these things for you. They can also implement custom packaging and kitting to enhance customer experience.
- Responsive Customer Service: Since FBM sellers manage customer interactions directly, they can build stronger relationships with customers, address inquiries quickly, and personalize responses. This also helps with returns processing, refunds,
Cons of Amazon FBM
- No Prime Badge: FBM sellers do not automatically qualify for Amazon Prime, which can sometimes affect sales from customers who are loyal to Amazon. However, you can still offer fast and free shipping with the right fulfillment partner. You can also retain Prime status while using Amazon FBM if you qualify for Seller Fulfilled Prime. This way, you can control your fulfillment and still win the coveted Buy Box.
- Increased Responsibility: Handling all aspects of order fulfillment, from storage to shipping, requires more resources and operational oversight. This is why reducing the workload by partnering with a 3PL is the best way to take advantage of Amazon FBM.
- Higher Shipping Costs: Without free shipping from Amazon Prime, sellers may face higher shipping costs. This can be managed by working with strategically located warehouses or partnering with a 3PL to optimize delivery. It is possible that you can use the money saved from bypassing FBA fees toward increasing profit margins and still offer free 1-2 day shipping.
Deciding if the Pros of FBM outweigh the Cons depends on the specific needs and aspirations of your business. As we have learned, if you are looking to grow, it’s worth taking on FBM for the unique opportunities it gives your business.
Amazon FBM Fees and Costs
Amazon FBM operates with a different fee structure than FBA, enabling sellers to avoid many of the additional FBA fees. These fees are far less complicated than Fulfillment by Amazon. Below are the primary costs associated with Amazon FBM:
- Monthly Subscription Fee: Amazon’s professional seller account costs $39.99 per month, essential for sellers who want to advertise on Amazon and sell high-volume. As long as you are selling more than 40 items per month, this fee can pay for itself, especially with the perks it provides.
- Referral Fees: Amazon charges a referral fee for every sale you make, which varies by product category and can range between 5% to 45%, but is typically between 8% and 15%.
- Shipping and Fulfillment Costs: FBM sellers cover the costs of inventory storage, packing materials, and shipping labels. These expenses vary based on storage facility costs, shipping providers, and location.
It’s worth noting that as a professional Amazon seller, you won’t have to pay the $0.99 referral fee for each item sold. This is part of having a professional seller account, sometimes called the Pro FBM plan. Lastly, when fulfilling your orders manually, it’s important to have a 3PL partner who knows how to optimize storage space and negotiate discounted shipping rates.
Amazon FBM vs FBA: What’s the Best Option?
Both Amazon FBM and FBA offer unique advantages, and the best choice will depend on a seller’s specific needs and business model. Here is a brief overview of the main differences between Amazon FBM and FBA:
| Amazon FBM | Amazon FBA |
| Manage your orders and shipments yourself, or hire a 3PL partner | Amazon handles shipments |
Very few Amazon fees |
Complicated fees, which are further affected by seasonality, product type, and Amazon’s changing policies |
| Little to no inventory restrictions (except for Amazon’s prohibited products list) | Restrictions on inventory such as quantity, size, weight, and sell-through rate. |
| No automatic Prime eligibility (must qualify for Seller Fulfiled Prime) | Automatic Prime eligibility |
| Customizable shipping rates, including free shipping | Fast, free shipping |
| The ability to personalize your customer service | Customer service provided by Amazon |
| Custom kitting, packing, and branding | All products are shipped in Amazon’s packaging |
| Ample storage, depending on your warehouse or fulfillment partner | 15 cubic feet of storage |
FBM is ideal for large sellers who are looking to grow their business and improve operations. As an Amazon FBM seller, it’s important to have control over your fulfillment process, partner with a dedicated fulfillment warehouse, and enhance your customer experience and branding.
FBA is a good choice for sellers prioritizing speed and convenience who don’t want to decide on other shipping options. FBA is well-suited for smaller businesses with lightweight items that fit neatly into Amazon’s standard fulfillment regulations.
Some sellers find using both FBM and FBA to be the most effective solution. This approach allows Amazon FBM sellers to rely on FBA for high-demand, lightweight items and FBM for larger, niche, or customized products. Using both fulfillment options is also a good idea for sellers who want to try FBM for the first time while letting Amazon handle a portion of their FBA-approved products.
Partner with TRG to Succeed on Amazon FBM
Having full control over your brand’s fulfillment process is challenging, but rewarding. Taking advantage of Amazon FBM and succeeding on the world’s biggest e-commerce site requires careful planning, efficient inventory management, and expert logistics. As fulfillment veterans, TRG has been crushing fulfillment challenges and scaling businesses for years.
We help you make FBM an efficient, profitable, and scalable option, offering the infrastructure and expertise that allow you to grow without sacrificing quality or customer satisfaction. With TRG as your partner, you get more than just order fulfillment; you gain a strategic partner focused on optimizing your logistics, with tailored services that improve your customer experience and boost your bottom line.
How we help top Amazon sellers with FBM:
- Veteran 3PL Provider: With years of experience in e-commerce logistics, TRG knows how to navigate Amazon’s unique fulfillment requirements, enabling sellers to bypass costly FBA fees and restrictions.
- Optimized Shipping and Storage: TRG has strategically located warehouses and distribution centers that allow for efficient storage and shipping, with capabilities for fast 1-2 day delivery. Plus, our advanced storage protocols help lower costs, saving you money on storage fees and making sure your products reach customers fast. We do not limit your inventory
- Streamlined Inventory Management: With real-time inventory tracking technology, we simplify inventory management, making the switch from FBA to FBM easier than ever. You’ll have full access to your inventory with the ability to check stock and make adjustments any time you need.
- Friendly, Reliable Customer Service: TRG offers dedicated support, including on-site project managers and a knowledgeable customer service team. This means faster responses, personalized assistance, and a fulfillment partner who cares as much about your customers as you do.
While Amazon FBM is a good option for sellers looking to take control of their fulfillment, it also requires significant time and resources. By partnering with a 3PL like TRG Fulfillment, you can enjoy the best of both worlds: full control over your fulfillment operations without the burden of managing logistics yourself. Plus, you’ll retain the many benefits of FBA, like fast shipping and offsite inventory.
When you succeed, we succeed. Choosing TRG fulfillment means adding a strategic logistics partner to your business. Reach out today to start scaling with confidence and transform your Amazon business into a powerful, independent brand.
You can read more about how we help Amazon FBM sellers here.