In the competitive world of e-commerce, Amazon has become one of the undisputed giants. In order to meet the needs of both sellers and customers, the platform offers different logistics options, including Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) .
In this article, we will explore in detail what FBM means, the key differences between FBM and FBA, when it is more advisable to use FBM instead of FBA and how we can combine the two with the help of other logistics partners to help us reduce costs.
What does FBM mean
FBM, or Fulfillment by Merchant, is a logistics option in which sellers are responsible for managing and shipping their own products directly to customers.
FBM is often the alternative to FBA (discussed below), but most vendors are not able to handle all the logistics of warehousing and distribution. So why don’t they choose FBA instead of FBM? We solve this question later in the article, but first let’s look at the most significant differences between FBA and FBM.
Differences between Amazon FBM and FBA
The main difference between Amazon FBM and FBA lies in who handles the logistics. With FBA, Amazon assumes responsibility for storing, preparing and shipping the products on behalf of the seller, while with FBM, the seller manages all of these tasks.
This implies that with FBM, sellers need to have storage space and do the packaging and shipping themselves.
Another important difference is in the associated fees. With FBA, sellers pay a logistics fee, which covers warehousing and shipping services provided by Amazon.
However, with FBM, vendors do not incur these fees, which can be beneficial for those with tight profit margins or slow-moving products.
Combining FBA and FBM through another logistics partner
As mentioned above, with Amazon FBA, Amazon itself manages all the logistics of storage and distribution, but at what cost? Often the margins on products are low, and Amazon’s costs can be somewhat high, especially on occasions when the product does not sell as quickly as we would like and remains in its warehouses for a long time.
A good option is to combine FBA and FBM with another logistics partner. By working with an external logistics partner, an efficient just-in-time shipping system to Amazon can be established. Instead of shipping large volumes of inventory to Amazon and bearing the associated warehousing costs, the logistics partner can coordinate periodic, scheduled shipments of the minimum products needed to meet demand in a specific period.
This helps to avoid unnecessary inventory build-up and reduces storage costs at Amazon.
Across Logistics as a 3PL provider for your digital business
At Across Logistics we offer 3PL services to help you in your Amazon business. How can we help you?
- Manage and coordinate imports from the supplier’s warehouse/factory at origin to our logistics platform.
- Stock buffer warehouse for periodic deliveries on Amazon, avoiding the stock limitations and high storage costs offered by Amazon.
- Review of products upon receipt and report/blocking of damaged products to prevent them from being delivered to customers in poor condition, thus avoiding negative reviews.
- Relabeled and repackaged if required.
- Creation of bundles/packs of products joining different items previously received, with creation of packaging and labeling according to customer requirements.
- Picking per product unit, per case and per pallet
In addition, in case you also have an e-commerce, or you are thinking of creating your own online store to diversify your sales channels, Across also offers warehousing, shipping and delivery services through technological solutions that improve delivery speed and reduce shipping costs for your e-commerce.
- Direct connection with online sales portals (Shopify, woocomerce, magento, etc…). Automatic reception of customer orders, instantaneous synchronization of actual stock and order status.
- Last mile deliveries throughout EuropeThe tracking page can be used to connect with transport providers and offer a personalized tracking page where you can display the online store’s social media accounts, product offers, or any other information (high opening rate as it contains the order delivery tracking information) ideal for FBM mode or for sales via Shopify and similar.
- 3PL (Third Party Logistic). What it is and advantages
- Distribution Logistics and its importance in companies
- Fulfillment in logistics and its importance in e-commerce
When is FBM more advisable than FBA?
While FBA is a popular and convenient option for many vendors, there are situations where FBM may be more advisable.
For example, vendors who handle large, heavy or fragile products may prefer FBM, as they have more control over the packaging and handling of their products. Also these types of products can carry quite high costs on Amazon.
Or sellers who do not have a high sales rhythm, and their products may spend a few months in the warehouse.
In addition, those who already have their own logistics infrastructure in place or have their own reliable logistics partner with lower costs can opt for FBM.
Advantages of Amazon FBM over FBA
As you may have already guessed throughout the article, FBM has certain advantages over FBA. Let’s see what they are:
Greater control over the logistics process
One of the main advantages of Amazon FBM is the greater control sellers have over the logistics process. Unlike FBA, where Amazon handles the storage, packaging and shipping of the products, with FBM sellers have full control of these tasks, or at any rate, they do outsource to a trusted and more accessible third party than Amazon, which allows for more control and offers a more personalized service
Cost savings on compliance fees
Another key advantage of Amazon FBM over FBA is the savings in logistics fees. With FBA, sellers pay a logistics fee that covers warehousing and shipping services provided by Amazon.
However, with FBM, vendors do not incur these fees. This can be beneficial for those with tight margins or slow-moving products, as they avoid additional costs associated with Amazon warehousing.
Higher profit margin
By avoiding FBA fees, FBM sellers can enjoy a higher profit margin on their sales. By taking on warehousing and shipping tasks directly, or outsourcing them to a more cost-effective and trusted logistics partner, vendors have greater control over the associated costs and can seek more economical and efficient solutions. This allows them to maximize their profits and adapt their pricing strategy according to their business needs and objectives.
Compatibility with other sales channels
An additional advantage of FBM is its compatibility with other sales channels outside of Amazon. While FBA is specifically designed for Amazon logistics, FBM allows sellers to use their own logistics infrastructure and fulfill orders from other online marketplaces or even from their own online store.
This gives sellers greater flexibility to expand their reach and diversify their sales channels, without being limited exclusively to Amazon’s platform.