Amazon FBA vs FBM Comparison Guide: Which One is Better for Your Amazon Business?

An Amazon business can be a pretty exciting adventure, but choosing the right fulfillment method really makes all the difference in a venture. Here, we look at two of the popular methods that can be considered-FBA and FBM, the pros and cons of which have to be decided on which will best suit us. Let’s compare FBA and FBM to help us decide on which method we’ll be best suited for.

Amazon FBA: What is it?

It is known as fulfillment by Amazon and allows you to get your products sent into Amazon’s warehouses. Once you send them the product, they will take care of its storage for you, pack-and-ship the customers, and even provide customer service. Any time a customer wants your product, Amazon handles everything involved in getting it delivered to them, so you don’t have to bother with anything

Benefits of FBA

  1. Eligibility of Prime: The goods fulfilled by Amazon are eligible for prime, and therefore, these products have greater visibility and exposure, and attract more customers.
  2. Scalability: FBA grants you the ability to scale your business without being held back by logistics as Amazon takes care of this end in terms of storage and shipping.
  3. Customer Service: Amazon will be responsible for customer service and returns, therefore saving you time and effort.
  4. Growing Confidence: The more the customers trust the fulfillment, the higher the conversion rate.

Advantages of FBA

  1. Fees: There are warehouse and fulfillment fees just like in any FBA, which might or might not be eating into your margins.
  2. Less Control: You would have less control over inventory management and shipping times since this is something that Amazon will take care of
  3. Long-term Storage Fees: Should your products take longer than you expect to sell, then they will incur long-term storage fees.

What is FBM on Amazon?

Fulfillment by Merchant means that everything-from the inventory maintenance up to the wrapping and shipping-would be taken care of by the store owner. Basically, it is a method with more control in terms of logistics, but then all efforts have to come from the seller.

Advantages of FBM

  1. Good Fees: It saves all those numerous FBA fees, thus offering a better profit margin.
  2. Control: You have an absolute control over the inventories as well as shipping methods and even the customer services.
  3. Flexibility: It becomes easier to present customized shipping options or bundles which appeals to the niche markets.
  4. No long-term Storage Fees: You don’t incur long-term storage fees because you are in control of your own inventory.

Disadvantages of FBM

  1. Time-Consuming: It will take much time in managing storage, packing, and shipping depending on how big your business is getting.
  2. Less Visibility: FBM products are not eligible Prime of auto approval on Amazon means less visibility and potential sales.
  3. Customer Service Burden: You will be entirely responsible for managing all customer service inquiries and returns, which can be an uphill task.

FBA vs FBM

Important Factors

  1. Business Scale and Size

If you do small quantities or just a few products, FBM is more suitable as it would allow you to have a better grasp and more cost-effective. If you want to scale up quickly or have bigger stock, then FBA would probably be more suitable.

  1. Type of Product

It also depends on the type of products you are selling. FBA is best suited for fast moving consumer goods, whereas items which are large or specialized in nature and may not require same day shipping can suit the model of FBM.

  1. Customer Expectations

FBA will be the way to go if one wants urgent shipping and high-quality customer services from their target market. Conversely, FBM will be good for you if you target a niche market in which you can uniquely position yourself with some offerings and customer services.

      4.  Profit Margins

Study your profit margins carefully. If your profit margins are thin, then FBM will not let you pay more on fees. Products with higher margins so make up the costs of having FBA, and a lot more advantages will pop out.

 

Conclusion: What’s the Best for You?

It all depends on what your business needs, goals, and what one can afford. Many of the most successful sellers use a combination of both methods, thus taking advantage of the strengths of both FBA and FBM.

Review your types of product, goals of the business, and capabilities to determine the one that best suites your business. Whether you are going with FBA, FBM, or using a mix of both, knowing these fulfillment options really will help you go a long way towards optimizing your operations and building your brand on Amazon.