What is Amazon FBM? How does it work?
FBM stands for Fulfilment by Merchant, where the seller is in full control to store your own stock, pack and ship orders, and deal with all customer service queries. Instead of paying Amazon for storing inventory and service fees, the seller uses their own resources and delivers the order to the buyer. FBM can be managed directly by the seller or by partnering with the third-party logistics service provider.
You can create your FBM listing the same way as you would create for Amazon product listing, and in the fulfillment channel selection, you need to select “I will ship the item myself” (Merchant fulfillment).
Who fits into Amazon FBM
Anyone can decide to use Amazon FBM, but the one who fits most for the FBM is,
- The seller who are exclusive products with low sales frequency
- Who are having small volume products
- Who are selling low-profit products
- Who is selling hard to ship products i.e oversized or fragile
- When the seller is having a third-party fulfillment service (other than Amazon) that is cheaper than Amazon FBA.
- When the products are handmade. The handmade sellers mostly prefer FBM to ensure the orders arrive as intended.
How much does Amazon FBM cost?
Amazon FBM fee is nothing but the cost of the seller will spend if they decide to ship the order by themselves. These fees will vary greatly from the seller to seller based on their shipping and delivery options. There are some fixed charges that the seller will incur. They are,
- Monthly subscription fee — 39.99$ for pro plan and no fees for individual selling plan
- Per item selling fee — Pro plan no fee and if individual selling plan then 0.99$ per item.
- Referral fee — It is a percentage of your total sales price. In most product categories it is 15% but does vary from 6% to 45%.
Advantages of Amazon FBM
1)Can understand how your Amazon business works
Sometimes it is good to have control of your business by yourselves than handing it over to third-party service providers.
2) Freedom to easily expand your Business
By handling all your orders by yourselves you will have full control of your stock levels at all times. This helps you to take a decision of when to increase or decrease the inventory without the worry of extra shipping fees and increased storage fees from Amazon FBA.
3) Online and offline retail store opportunity
With Amazon FBM you can maintain online and offline retail stores with a single inventory. Since the inventory is stored in the warehouse which is chosen by the sellers, they have complete control of the inventory and it allows to use of the same inventory stocks to run the offline retail store as well.
4) No strict requirement like FBA
Though Amazon FBA takes away many of the tasks and process involved in the running of the seller business, they have strict requirements for handling your orders. Sometimes it is harder for a seller to adhere to the FBA rules. You will have no such rules in FBM as you are handling your own orders.
5) Direct interaction with your customers
As you are shipping your orders to the customers you can mention your brand name and logo on the packaging. It helps to build your brand awareness to the customers.
Disadvantages of FBM
1)Order fulfilling is time-consuming
Fulfilling your own orders will take time as you are going to pick, pack and ship the order to the customer.
2) Higher shipping fees
As you need to handle your inventory, the storage will cost you more, and managing resources for fulfilling the order also will cost you.
3) Customer service
All customer-related queries, returns, and refunds are all down to you. You will have to manage all these things on your own.
4) Not eligible for Amazon Prime
Amazon FBM sellers are not eligible for Amazon prime badge as it is only applicable for Amazon FBA sellers.
Summary
Though Amazon FBM seems to have a lot of hard work it does have some amazing benefits. The key factor to increase your sales is by overlooking your business, Amazon FBM does provide this option to you.
Your brand reputation and awareness are all your responsibility as Amazon FBM sellers. In this way, you can think of new innovative ideas to build your brand awareness. Also, this will push you to fulfill all your customer orders on time.
No matter whether you’re selling on FBA or FBM, reports and insights are paramount. Check your reports and insights on time to understand the profitability of your business. KwickMetrics supports reports and insights of FBA and FBM sellers. Checkout KwickMetrics for more details.
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Happy Selling! 😄