Selling on Amazon requires you to choose between fulfilment by Amazon (FBA) and fulfilment by merchant (FBM). Each option offers separate strengths and weaknesses that may impact your profits.
Here is a comparison of FBA versus FBM to help you determine the best fulfilment solution for your business.
Overview of Fulfilment by Amazon (FBA)
Fulfilment by Amazon (FBA) involves storing your products at one of Amazon’s fulfilment centres. Amazon picks, packs, and ships items.
Amazon FBA Australia is a convenient option. Amazon is responsible for shipping, logistics, and customer service. This gives you more time to focus on selling items instead of worrying about shipping them.
Prime shipping is another benefit of FBA. You cannot choose Seller Fulfilled Prime (SFP) in Australia. Choosing FBA is the only way to receive the Amazon Prime badge for your product listings. As Prime members often prefer to buy Prime-eligible products, you may sell more items.
Yet, Amazon FBA also comes with drawbacks. You need to pay for storage and any violations of Amazon’s packaging requirements. The fees involved with FBA may shrink your profit margins.
Amazon also frequently updates its guidelines for FBA sellers. Recent changes to the inventory storage limits have forced sellers to consider alternative options, such as working with an FBA prep centre or switching to FBM.
- Eligibility for Amazon Prime shipping
- Saves you time and energy
- Amazon handles shipping inquiries
- You may sell more items
- FBA costs more money
- Amazon’s FBA requirements are subject to change
Overview of Fulfilment by Merchant (FBM)
Fulfilment by merchant (FBM) is an Amazon shipping option that requires you to send items to customers. You store the items at your house, a storage facility, a warehouse, or a third-party prep centre.
Choosing FBM gives you more control over inventory, as you do not need to deal with Amazon’s limits. However, FBM also increases your responsibilities.
You need to ensure that items are shipped quickly to avoid disappointing your customers. You must also handle customer inquiries when an item gets lost or stolen. Yet, there are ways to mitigate these risks, such as working with an FBA prep centre.
- Often results in lower costs
- You have more control over inventory
- You are less likely to “win the buy box”
- You need to ensure that you ship items quickly
Can You Use FBA and FBM to Sell on Amazon?
About one-third of sellers use both FBA and FBM to sell on Amazon. Deciding to use both fulfilment options provides greater flexibility.
Using FBA and FBM helps reduce the risk of dealing with inventory shortages and capacity problems. You can use FBA for specific items and FBM for others. Here is a closer look.
When to Use FBA
FBA remains the preferred choice for selling popular items on Amazon. Choosing FBA allows for Prime shipping for your products, which is the main reason people sign up for Amazon Prime. You also increase your chances of getting the coveted “buy box.”
According to Amazon, over 75% of non-media sales come from the buy box. Fulfilment is the main criteria Amazon uses to determine which seller wins the buy box.
FBA also offers an efficient option for selling large volumes of items, small items, and lightweight items. If you move inventory quickly or sell low-ticket items, you may find that FBA is more cost-effective.
When to Use FBM
Sellers often use FBM for items that are large, heavy, or sold in small volumes. Handling the shipping and fulfilment of large items keeps you from using up your inventory storage limit. You can save space for items that are sold in larger volumes and that come with lower storage fees.
FBM also tends to result in lower fees when dealing with items with low turnovers. Choosing FBM for items that do not sell quickly helps you avoid Amazon’s long-term storage fees.
Streamline Your Shipping and Fulfilment with Prep Services
Working with an Amazon prep centre is an effective way to simplify inventory management. You can spend less time dealing with shipping and fulfilment and more time attracting new customers.
Although prep services are a common solution for Amazon FBA Australia, you can also use a prep centre for third-party logistics (3PL) orders. This includes fulfilment by merchant (FBM) orders and orders from other sites, such as eBay or your own ecommerce store.
You can manage your FBA and 3PL inventory from a single source, helping to consolidate your shipping processes and inventory management. You also avoid the challenges that come with FBM, such as shipping items promptly.
Contact the experts at Easy FBA Prep to learn more about the advantages of using prep services for FBA, FBM, and other platforms.