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FBM vs. FBA – How to Pick the Best Amazon Fulfillment Model for Maximum Growth
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When selling on Amazon, one of the biggest decisions sellers must make is whether to use Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). Both models offer unique benefits and drawbacks, and the right choice depends on factors like business size, product type, profit margins, and logistics capabilities.
In this guide, we’ll break down FBA vs. FBM, highlighting their differences, advantages, disadvantages, and key considerations to help you determine the best fulfillment method for your business.
1. What is Amazon FBA?
Fulfillment by Amazon is a service where Amazon handles storage, packing, and shipping for sellers. Products are stored in Amazon fulfillment centers, and Amazon takes care of the logistics when a customer places an order.
Source: amazon.com
How FBA Works:
- Sellers send their inventory to Amazon fulfillment centers.
- Amazon stores the products in its warehouses.
- When a customer places an order, Amazon picks, packs, and ships the item.
- Amazon also manages customer service and returns.
Pros of FBA:
✔ Prime eligibility – FBA products qualify for Amazon Prime, giving customers faster shipping and boosting sales potential.
✔ Amazon handles customer service & returns – Amazon manages all aspects of customer inquiries, refunds, and returns, reducing seller workload.
✔ Higher buy box win rate – FBA sellers often get priority in the Buy Box, leading to more sales.
✔ Faster delivery – Amazon’s extensive logistics network ensures 2-day (or faster) shipping, improving customer satisfaction.
✔ Scalability – FBA allows sellers to grow their business without worrying about warehousing and logistics.
Cons of FBA:
❌ FBA fees can be high – Storage fees, fulfillment fees, and additional charges can eat into profit margins.
❌ Less control over inventory – Sellers rely on Amazon’s warehouses, making it harder to access inventory directly.
❌ Long-term storage fees – Amazon imposes extra charges for products that sit in fulfillment centers for too long.
❌ Product prep requirements – Amazon has strict labeling and packaging rules, and non-compliance can lead to extra fees or delays.
2. What is Amazon FBM?
Fulfillment by Merchant means sellers manage their own storage, packing, shipping, and customer service. Instead of using Amazon’s fulfillment network, sellers ship orders directly to customers.
Source: amazon.com
How Amazon FBM Works:
- Sellers list products on Amazon.
- When an order is placed, the seller picks, packs, and ships the item.
- The seller manages customer service and returns.
Pros of FBM:
✔ More control over inventory – Sellers handle their own stock, reducing the risk of Amazon misplacing or damaging items.
✔ Lower fees – No FBA storage or fulfillment fees, which can lead to higher profit margins.
✔ Better for custom or oversized products – FBM is ideal for products that require custom packaging or are too large for FBA’s pricing model.
✔ Faster inventory turnover – Sellers don’t have to worry about Amazon’s long-term storage fees.
✔ Easier to build a brand – Direct fulfillment allows for custom packaging and branding opportunities.
Cons of FBM:
❌ No automatic prime eligibility – FBM sellers don’t qualify for Amazon Prime unless they enroll in Seller Fulfilled Prime (SFP), which has strict requirements.
❌ Logistics responsibility – The seller must handle warehousing, shipping, and customer service, which can be time-consuming.
❌ Harder to compete for the buy box – Amazon often favors FBA sellers in Buy Box placements.
❌ Slower shipping may hurt sales – Customers may choose FBA products with faster delivery over FBM listings.
3. Key Differences Between FBA and FBM
1. Prime eligibility is one of the most significant differences between FBA and FBM.
FBA sellers automatically qualify for Amazon Prime, offering fast shipping and higher visibility, whereas FBM sellers must enroll in Seller Fulfilled Prime (SFP) to access Prime benefits, which come with strict requirements.
2. In terms of storage and logistics, FBA sellers rely on Amazon’s fulfillment centers, while FBM sellers handle their own inventory.
This gives FBM more control, but also requires them to manage warehouse space and shipments themselves.
3. Shipping speed also differs significantly.
FBA utilizes Amazon’s vast logistics network, ensuring fast delivery times, while FBM sellers depend on their chosen carriers, which may not be as efficient.
4. Customer service responsibilities also vary.
Amazon takes care of customer inquiries, returns, and refunds for FBA sellers, whereas FBM sellers are responsible for handling these aspects themselves.
5. Fees are another major differentiator.
FBA sellers pay fulfillment fees and storage fees, which can be high, whereas FBM sellers avoid these costs but must cover their own shipping and handling expenses.
6. When it comes to winning the Amazon Buy Box, FBA sellers have a distinct advantage since Amazon’s algorithm often prioritizes FBA products.
FBM sellers must ensure competitive pricing and fast shipping to remain competitive.
7. Scalability is another factor.
FBA allows for easier scaling as Amazon handles fulfillment, while FBM sellers must invest in warehousing and logistics if they want to expand.
8. Lastly, customization plays a role.
FBM sellers can brand their packaging and include personalized inserts, whereas FBA sellers must adhere to Amazon’s standardized fulfillment process, limiting customization.
4. FBA vs. FBM: Which One To Choose For Your Business?
When to Choose FBA:
- You sell high-volume products and need Amazon’s logistics network to scale.
- Your products are lightweight, small, and high-margin, making FBA fees more manageable.
- You want to qualify for Prime shipping and increase conversion rates.
- You don’t want to manage warehousing, packing, and shipping logistics.
When to Choose FBM:
- You sell low-margin, oversized, or heavy products that would incur high FBA fees.
- You have your own efficient warehousing and shipping processes.
- You want complete control over branding, packaging, and customer interactions.
- Your inventory turnover is fast, and you want to avoid long-term storage fees.
When to Choose The Hybrid Approach – Both FBA & FBM
Many successful Amazon sellers use a hybrid model, leveraging both FBA and FBM based on their product mix.
Here’s how:
- Use FBA for fast-moving, small, high-margin products where Prime eligibility boosts sales.
- Use FBM for oversized, slow-moving, or custom products to avoid high FBA fees and maintain branding control.
- Test both methods to determine which is more profitable for specific SKUs.
Example: If you sell phone accessories and furniture, FBA is great for phone cases, while FBM is better for large desks that have high storage costs in Amazon warehouses.
In the End, Which One Should You Choose?
Deciding between FBA and FBM ultimately comes down to your business objectives, product characteristics, and operational capabilities.
If you prioritize scalability and faster shipping, FBA is the way to go. On the other hand, if you prefer greater control, lower fees, and a hands-on approach, FBM might be the better fit.
For many sellers, adopting a hybrid strategy is the smartest approach—leveraging the strengths of both fulfillment models to balance cost-efficiency, control, and Prime eligibility.
The key to success on Amazon is testing and optimizing your fulfillment strategy. Start by analyzing your product margins, fulfillment costs, and logistics capacity. Whether you choose FBA, FBM, or a combination of both, making an informed decision can maximize your profitability and long-term growth.
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