Navigating the Amazon minefield can literally be a nightmare for new sellers. There's a heap of ways to source products to sell on Amazon, and a heap of ways to handle fulfillment.
None of them are particularly right or wrong, but all experienced sellers tend to try out various methods of selling before settling on something that works for them.
Questions often come up around fulfillment by Amazon (FBA) versus fulfillment by merchant (FBM) or merchant fulfilled (MF), about which one is best and so on. The answer to this question is going to depend on every seller's particular circumstances, but in this article we are going to cover the entire topic of FBM so you'll discover how it works, and whether or not it will work for you.
How Does Amazon FBM work?
FBM stands for Fulfilled by Merchant and you probably guessed it already, but it means that the seller is handling the entire fulfillment process.
You may also hear this called MF or merchant fulfilled depending on what seller you are talking to.
This means that you, the seller, will package up the product when it sells on Amazon and send it to the customer. This also means that you must store the products yourself, rather then sending them in to an Amazon FBA (fulfillment by Amazon) warehouse.
Fulfillment by Merchant is often referred to as just FBM, but is also called seller fulfilled, merchant fulfilled, or Merchant Fulfilled Network (MFN) which is what Amazon actually calls it. They all mean the same thing.
Listing your product with Amazon FBM is not overly different to the way you would list a product if you were an FBA seller.
When you're listing a product inside your Amazon seller account, you just need to select the "I will ship this item myself (merchant fulfilled)" box when finishing off your new Amazon listing.
When Should You Use Amazon FBM?
Without knowing much about the different methods of selling on Amazon, it might be easy to assume that FBA is a much better way to sell on Amazon. Given that sellers don't have to handle shipping, returns or even customer service with FBA, it's easy to see why that might be the preferred method.
Quite to the contrary however, there is a handful of use cases where FBM is going to be the better option for sellers.
Here's some examples why FBM might be a great choice for you:
- You pick up some last minute holiday or seasonal products that you want to sell, but don't have time to ship them in to an FBA warehouse before deadlines.
- You sell products that are considered hazardous materials (Hazmat) by Amazon and you're not approved for hazmat yet.
- The products you sell are very large or difficult to ship items.
- Your products are very small, weighing less than 1lb, and they can be shipped with USPS first class.
- You don't sell much volume on Amazon, or your products take a long time to sell.
- Your products are very seasonal so they only sell at certain times of the year.
- You like to maintain more control over your business.
The majority of these reasons for selling with FBM are due to restrictions or policies to do with selling products using fulfillment by Amazon (FBA).
Let's compare FBA with FBM so you can get a clear picture of the differences between the two selling methods.
Amazon FBA vs FBM
I've previously written a guide about everything you need to know about selling on Amazon FBA, but if you want a quick summary of the main differences between FBA and FBM then keep reading.
Fulfillment and Customer Service
Amazon FBA sellers package up and ship their products to one of Amazon's fulfillment centers, which means Amazon then handles the customer fulfillment in addition to the customer service (in most cases). Amazon will also handle the entire returns process.
To shortcut this process, Amazon FBA sellers may even use an Amazon prep center to do all the FBA warehouse prep, so they don't even need to handle the products they are going to be sending in to Amazon's warehouses.
FBM sellers need to handle the storage, shipping, customer service and returns themselves. Here's a tip though - make sure your order isn't marked as pending before you ship! I've written an article on Amazon Orders Pending which you should read up on.
Both FBM and FBA sellers will pay the same selling (referral) fees, but FBA sellers will pay extra for storing products at the Amazon FBA warehouse.
Shipping costs are something you need to cover with both FBA and FBM sellers. Amazon will charge you shipping costs along with all the other fees if you are using FBA.
Amazon has a handy revenue calculator you can use to compare costs for specific products on Amazon. This will give you a good indication of the price differences between FBM and FBA.
Both FBM and FBA sellers can choose to sell either on a professional selling plan or an individual selling plan, so the costs there don't change other than the fact that you will have an additional $0.99 fee as an individual seller.
One huge, often overlooked, consideration is the time spent packing and shipping out orders yourself if you're an FBM seller. Plus, don't forget that customer service needs to be handled by FBM sellers too.
Amazon FBA sellers are able to spend more time sourcing new products and working on things that grow their business, rather than getting caught up on fulfillment or customer service issues.
this can be overcome with an employee or a team to manage the shipping of your inventory but then that has it's own host of management issues.
The Pros and Cons of FBM
While the pros and cons of FBM might differ based on your personal circumstances, here's the advantages and disadvantages of selling on Amazon with FBM.
Pros of FBM
- You don't ship to amazon so there no (FBA) warehouse storage fees
- Sellers have the option of Seller fulfilled prime (see next section)
- Better for smaller quantities or one-off products
- More control over shipping and customer service
- Less costs, bigger margins (potentially)
- Still eligible to win the Amazon buy box
Cons of FBM
- For Amazon beginners, FBM costs can be higher than FBA costs
- Prepare to Commit More Time to the Day to Day Running of Your Amazon Business
- Ineligibility for Amazon Prime (but check out Seller fulfilled prime)
- FBM sellers must handle their own customer service
- Need storage space
- Must manage own returns process
- Shipping can cost more than FBA (Amazon has buying power)
What is Seller Fulfilled Prime?
Seller Fulfilled Prime (SFP) is a premium option for Amazon sellers that fulfill their own products, but want to display the Amazon Prime badge on their listings.
At the time of writing this article, however, Amazon is not accepting new applicants. You will need to go and join the seller fulfilled prime waitlist.
In a nutshell, SFP sellers need to guarantee two-day delivery to Prime customers at no extra charge to the customer.
If you are accepted into the SFP program, you will start on an initial trial to prove yourself to Amazon that you are capable of meeting their strict requirements.
Remember, Amazon makes a commitment to Prime members so because they don't have control over the fulfillment processes with SFP, they must make sure you can meet their Prime shipping standards.
Here's the requirements involved in being a Seller Fulfilled Prime FBM seller:
- Ship orders on time, 99% of the time
- Offer nationwide delivery for any standard size products
- Have less than a 0.5% order cancellation rate
- 99% of orders must use Amazon's Buy Shipping Services
- Use delivery services that support weekend delivery and pick ups
- Meet 1-day and 2-day delivery promise targets
- Use Amazon's supported Seller Fulfilled Prime carriers for delivery
- Abide by Amazon's Returns Policy
- Hand over all customer service inquiries to Amazon
While there still might be good reasons to stick with SFP, the majority of Amazon sellers opt to switch to Amazon FBA after reading all of the above mentioned requirements.
Frequently Asked Questions
In case this article hasn't already answered your most burning questions about FBM, here's some of the more common queries we get about this topic.
Can I use both FBA and FBM?
Yes, you can use both FBA and FBM. In fact, it's a great idea if you sell a variety of products that may or may not be suitable for one of the two options.
You can even list an item on Amazon in both FBA and FBM conditions. This can be handy if you have a fast moving product that you want to cash in on now while some of your invenotry is on it's way to Amazon's fulfillment centers.
Who Pays for Shipping Amazon FBM?
You, the seller, pays for shipping when you a sell a product that is fulfilled by merchant. You may charge shipping to the customer if you set up your shipping templates correctly.
How do Amazon FBM returns work?
Sellers that use the Merchant Fulfillment Network (MFN/FBM) must handle their own returns as well as the customer service for the returns. Amazon may step in at any time, of course, if the customer goes around you.
Does Amazon Charge for FBM?
There is no extra charge for selling products with FBM, but sellers still need to pay Amazon selling fees and the monthly subscription fee if they use an Amazon professional selling plan.
What Shipping Supplies do FBM Sellers Need?
Ok, so you've decided that you want to give the fulfilled by merchant route a go, and you need to stock up on some supplies so you are ready to ship out products to your customers.
Well luckily for you, you really don't need much. Most of the items in the following list you can get on Amazon itself, or at your local home office and stationary supply store.
- Shipping boxes - you may even be able to get some for free from your local USPS post office.
- Packing tape
- Fragile stickers - if required
- Safety packing material such as bubble wrap, packing paper etc.
- Mailing labels
- Label printer
Conclusion - Amazon FBM
I started selling on Amazon back in 2011 and I've tried my fair share of tactics, tips, tricks, and strategies. My personal favorite method of selling is online arbitrage with Amazon FBA.
Why? It's the most hands-off, I can leverage the power of great software like Tactical Arbitrage, and I can literally do it from anywhere in the world with just my laptop.
But that's not to say that there's anything wrong with the seller fulfillment method. In fact, you might find some products that are low competition, high profit-margin that are best suited to FBM.
And FBM is also a great way to test the waters and see if being an Amazon seller is your thing!