If you’re selling on Amazon, deciding between Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) is one of the most important decisions you’ll make.
Each fulfillment option comes with its own advantages, costs, and challenges. But which one is the best fit for your business? This guide will walk you through the pros and cons of FBA vs FBM, helping you make an informed choice based on your specific needs.
What Do FBA and FBM Mean?
Before diving into the details, let’s clarify the difference between these two fulfillment models.
Amazon FBA Meaning
Fulfillment by Amazon (FBA) means you send your inventory to Amazon’s warehouses, and they handle the entire order fulfillment process, from storage to shipping and even customer service.
Amazon FBM Meaning
Fulfillment by Merchant (FBM) means you manage your own fulfillment process. You store inventory, ship products, and handle customer service independently.
Both options have their unique benefits and costs, which we’ll explore below.
How Does Each Fulfillment Option Work?
Fulfilled by Amazon (FBA)
With Fulfillment by Amazon FBA, you:
- Send inventory to an Amazon fulfillment center.
- Pay fulfillment fees for storage and handling.
- Benefit from the Prime badge, which increases product visibility and appeals to Prime customers.
- Let Amazon handle shipping costs, customer inquiries, and returns.
Fulfillment by Merchant FBM
With Fulfillment by Merchant FBM, you:
- Store inventory at your own facility.
- Manage the order fulfillment process, including packing and shipping.
- Avoid paying Amazon’s long-term storage fees.
- Handle customer service directly.
FBA vs FBM: Key Differences
| Feature | Fulfillment by Amazon (FBA) | Fulfillment by Merchant (FBM) |
| Fulfillment Process | Managed by Amazon | Managed by the seller |
| Prime Badge | Automatically included | Not guaranteed |
| Fulfillment Fees | Includes storage, packing, shipping | No Amazon fulfillment fees |
| Customer Service | Handled by Amazon | Handled by the seller |
| Shipping Costs | Included in FBA fees | Paid directly by the seller |
| Control Over Inventory | Limited once sent to Amazon’s warehouses | Full control over inventory |
| Service Fees | High Amazon FBA fees | Lower service fees |
Pros and Cons of Fulfillment by Amazon (FBA)
Pros of FBA
- Prime Badge: Your products get the coveted Prime badge, increasing sales potential.
- Customer Trust: Amazon handles shipping and customer service, offering a seamless buying experience.
- Time-Saving: The fulfillment process is entirely outsourced.
- Improved Rankings: Products with the Prime badge often rank higher in search results.
Cons of FBA
- Fulfillment by Amazon Fees: These include storage, picking, packing, and shipping fees, which can add up quickly.
- Long-Term Storage Fees: Keeping inventory in Amazon’s warehouses for too long incurs extra charges.
- Less Control: Once your inventory is at an Amazon fulfillment center, you have limited oversight.
- High Service Fees: You’ll be paying Amazon for every step of the process, including handling returns.
Pros and Cons of Fulfillment by Merchant (FBM)
Pros of FBM
- Lower Fulfillment Cost: You avoid Fulfillment by Amazon fees and other associated costs.
- Full Control: You oversee the entire process, from inventory management to customer service.
- No Long-Term Storage Fees: You store inventory in your own facility, eliminating Amazon’s storage charges.
- Flexible Shipping Costs: FBM sellers can choose shipping carriers and negotiate better rates.
Cons of FBM
- No Automatic Prime Badge: Unless you qualify for Seller Fulfilled Prime, your products won’t have the Prime badge.
- Time-Intensive: Managing order fulfillment takes significant time and effort.
- Customer Expectations: FBM sellers must meet Amazon’s high standards for customer satisfaction.
- Limited Exposure: Products without the Prime badge may have less visibility on Amazon.
Understanding Fulfillment Costs
Both FBA and FBM come with their own fulfillment costs. Here’s a breakdown:
Fulfillment by Amazon Fees
Amazon charges for:
- Storage Fees: Based on the volume of space your products occupy.
- Referral Fees: A percentage of each sale, based on product category.
- Service Fees: For handling returns and customer service.
Example: A small item might incur $3–$4 in FBA fees, but larger items can cost much more due to higher shipping costs and storage needs.
Fulfillment by Merchant Costs
FBM sellers handle their own expenses, including:
- Shipping materials (boxes, labels, etc.).
- Labor for packing and shipping orders.
- Warehouse storage costs if using a third-party facility.
While FBM avoids many of Amazon’s charges, the cost of running your own operation can add up, especially for smaller businesses.
When to Choose FBA
Fulfilled by Amazon is ideal if:
- You want to target Prime customers.
- You sell small, high-volume products that won’t rack up excessive storage fees.
- You want Amazon to handle customer service and returns.
- You’re scaling up and need to save time on logistics.
When to Choose FBM
Fulfillment by Merchant is better if:
- You sell large or slow-moving items that would incur high long-term storage fees with FBA.
- You already have a reliable logistics setup for storing and shipping products.
- You want full control over your inventory and customer service.
- You’re looking to save on fulfillment fees.
How Amazon Seller Central Helps with Both
Regardless of whether you choose FBA or FBM, Amazon Seller Central is your hub for managing your business. It allows you to:
- Monitor sales and performance metrics.
- Adjust product listings and pricing.
- Track customer feedback and reviews.
By mastering Seller Central, you can optimize your order fulfillment process and keep your business running smoothly.
FBA vs FBM: Making the Right Choice
The choice between FBA vs FBM ultimately depends on your business model and priorities. If convenience, scalability, and customer trust are your main goals, Fulfillment by Amazon FBA is a great option. On the other hand, if you value control and lower costs, Fulfillment by Merchant FBM might be the better fit.
Questions to Ask Yourself:
- Can I manage inventory and shipping on my own?
- Do I want to target Prime customers with the Prime badge?
- How much am I willing to spend on fulfillment costs and Amazon charges?
- What are my product sizes, volumes, and storage needs?
By evaluating these factors, you’ll be able to choose the fulfillment option that aligns with your business goals and budget.
The Bottom Line
Choosing between fulfilled by Amazon and fulfillment by merchant is a big decision for any Amazon seller. Both options come with distinct benefits and challenges, but understanding your business’s needs and priorities will help you make the best choice.
Whether you go with Fulfillment by Amazon FBA for convenience and the Prime badge or stick with Fulfillment by Merchant FBM for control and cost savings, the key is to optimize your fulfillment process and deliver a great experience to your customers.
Which option will you choose to grow your Amazon business?
