Amazon FBA vs. FBM: Which Is Better for Your Business?

Helpful Summary

• Overview: We compare Amazon FBA and FBM, highlighting their benefits and drawbacks to help you decide which method best suits your business needs.
• Why you can trust us: Merch Jar specializes in automating Amazon ads, enhancing performance, and saving time for sellers using either FBA or FBM. Our proven strategies and tools complement both fulfillment methods.
• Why this is important: Choosing the right fulfillment method can impact costs, scalability, customer service, and inventory control, directly affecting your business's efficiency and profitability.
• Action points: Evaluate your business needs. If you prioritize time savings and scalability, opt for Amazon FBA or Amazon FBM if you want cost control and customization.
• Further research: Explore Merch Jar’s tools—such as bid management and keyword management—to automate your Amazon ad campaigns, regardless of the fulfillment method chosen, and enhance your overall business strategy.

Amazon offers a range of powerful features and solutions to help sellers like you succeed, including its fulfillment methods. Two of the most lucrative are Fulfillment by Amazon (FBA) and Fulfilled by Merchant (FBM). Deciding which is better for your business depends on your needs and preferences. 

Nearly all Amazon sellers employ strategies to succeed on the e-commerce platform and dedicate much time to deciding on the best fulfillment method. Customers may need a good fulfillment strategy to receive their orders.

In this comparative guide by Merch Jar, we’ll take a closer look at Amazon FBA and FBM, learn how each works, compare their pros and cons, and weigh in on which is better by considering some key differences. Let’s get to it. 

Why Listen To Us?

We excel in helping clients automate their Amazon ads, vital ingredients for a successful Amazon business, whether they opt for Amazon FBA or FBM. Our tools help sellers save time and enhance ad performance, complementing either fulfillment method.

Merch Jar’s automation has reduced manual workload, allowing businesses to focus on growth. Our proven strategies guarantee that you have a top-notch Amazon ad automation tool that partners well with the fulfillment method you go for.

What Is Amazon FBA?

Let’s start with Amazon FBA, the platform's program for outsourcing order fulfillment to Amazon. It also offers customers free, two-day shipping via Amazon Prime. 

To help you understand FBA better, it works like having your team handle your products. You send them to Amazon, and they will store, pick, pack, and ship them to your customers. It’s like your online store has its own personal assistant.

How FBA Works

Amazon FBA works in four steps:

• Sellers get set up: Before you can enjoy the benefits of FBA, you must first create your selling account on Amazon and login to Seller Central, where you’ll set up FBA. 
• Create your product listings: Once you’ve added your products to the Amazon catalog, you must specify the FBA inventory.
• Prepare your items: Prepare your products for safe and secure transportation to a fulfillment center. They must adhere to Amazon’s packing policies and shipping and routing requirements. 
• Finally, ship your products to Amazon: This last step entails creating a shipping plan, printing Amazon shipment ID labels, and sending the shipments to Amazon’s fulfillment centers. 

FBA Pros & Cons

Pros

• Gain your customers’ trust: When Amazon ships your products, your listings automatically earn the Prime shipping badge. This helps your customers trust your products more since they know shipping with Amazon Prime is quick and reliable. 
• Lower operating costs: With Amazon FBA, you don’t need to worry about organizing storage, hiring staff, or managing logistics since this service covers everything. 
• Improve your Amazon ranking: Amazon sellers using the FBA program allow your products to show higher up on product search pages. 

Cons

• Exorbitant fees: This service charges various fees, including storage, fulfillment, and long-term storage fees, which can significantly eat into profits.
• Inventory management: With FBA, sellers may lose control over their inventory, which relies on Amazon for storage and handling. This can lead to issues like lost or damaged items.
• Intense competition: Amazon's popularity means high competition, often bringing about price wars and reduced profit margins, making it extremely difficult for new sellers to stand out.

What Is Amazon FBM?

Meanwhile, Amazon FBM is exactly what it sounds like. It is the fulfillment method in which the seller becomes responsible for fulfilling the products their customers purchase. 

With this, you won’t have to pay a service fee, and there’s no shipping inventory that Amazon should handle. You use your own resources to send the products directly to the buyer. Therefore, you control the entire process, from purchasing to shipping and receiving. 

How FBM Works

Here’s how Amazon FBM works:

• List your products: You start by creating an Amazon Seller Central account and then listing your products there. 
• Warehouse the items in your own fulfillment center: This lets you save on shipping costs and reduce your average shipping zone. Want to save more? Even your home can be your warehouse, albeit short-term. 
• Ship out orders on time: As soon as you receive an order notification, you must ship the product depending on your customers' selected delivery timeframe.

FBM Pros & Cons

Pros

• Cost control: Using FBM allows you to avoid the high fees of FBA, providing you with better control over expenses, which means higher profit margins for you. 
• Inventory management: This solution also gives you better control over your inventory, paving the way for more personalized customer service and reducing the risk of lost or damaged items. 
• Flexibility: FBM's flexibility includes shipping options, packaging, and branding, allowing you to differentiate your products and provide a better customer experience.

Cons

• Shipping burden: Managing shipping logistics with FBM can be time-consuming and complicated, requiring you to handle packaging, postage, and delivery tracking yourself.
• Lower visibility: FBM products often have lower visibility than FBA listings, as Amazon prioritizes FBA items for Prime and Buy Box eligibility.
• Storage costs: Though the high fees from FBA are not in FBM, you’ll be charged storage costs since you must manage and store your own inventory. This leads to additional storage costs and space management challenges, especially for high-volume sellers.

Key Differences Between Amazon FBA & FBM

1. Scalability

Amazon FBA: Since Amazon handles most of the logistical process, you’ll have more time to focus on what matters more in your business. While it may be true that the onboarding process here can take a bit more time, it can offer you a larger customer base to sell so you can generate consistent sales. Furthermore, reliable and fast shipping is what customers like, so they keep coming back, and you attract more buyers. 

Amazon FBM: To scale successfully with FBM, you’ll have to exert more effort as you manage all aspects of inventory, shipping, and even customer service. This can consume your time, which you could use for other essential matters. However, with solid systems or third-party logistics providers, you can mend FBM’s downside with scaling, allowing you to maintain control and flexibility. 

Winner: FBA

2. Marketing 

Amazon FBA: Marketing with FBA benefits from the Prime badge, which increases visibility and conversion rates. However, while this enhances marketing efforts, it comes with higher fees that impact profitability.

Amazon FBM: FBM allows for more branding control and external marketing strategies. Though it lacks the Prime badge, it avoids FBA fees and balances money-saving and marketing flexibility.

Winner: FBA

Launching Amazon ads is one of the best ways to market your Amazon products. But, manually running ads on the e-commerce platform can take time and effort. You won’t be able to find time for other vital matters in your business.

The solution is to try tools like ours, such as Merch Jar. This tool is all about Amazon ad automation, bringing in features like effortless bid management, hands-free keyword management, and simplified bulk operations, enabling you to automate your ads in minutes. 

3. Cost Structure

Amazon FBA: FBA is notorious for charging high fees, covering fulfillment, storage, and long-term storage fees. These can add up, especially if you have slow-moving inventory or need to store large items. 

Amazon FBM: FBM doesn’t charge fees like FBA, making it more profitable for most sellers. However, you must pay for your own storage, packaging, shipping, and labor. 

Winner: FBM

4. Shipping and Handling

Amazon FBA: Amazon takes full responsibility for storage, packing, and shipping, ensuring reliable and quick delivery. The e-commerce platform also handles customer service and returns, providing a seamless experience for buyers. FBA products are also eligible for Amazon Prime, attracting more customers who prefer faster shipping.

Amazon FBM: Sellers handle their shipping and logistics, which can be both an advantage and a challenge. They can customize packaging and shipping methods, but managing them requires significant time and effort. Shipping times might be longer than FBA, impacting customer satisfaction and sales.

Winner: FBA

5. Customer Service

Amazon FBA: Amazon handles customer service, and they do it right. They provide 24/7 customer support for all FBA orders, including handling returns and refunds, significantly reducing your workload. The platform's inquiries and concerns can also help you obtain better reviews and encourage repeat business. 

Amazon FBM: Choosing FBM will allow you to manage all aspects of customer service, including handling returns. This can be time-consuming, and one mistake can lead to a negative customer review and decreased sales. 

Winner: FBA

6. Control and Customization

Amazon FBA: Choosing FBA does not allow you to have complete control over the fulfillment process since Amazon dictates the packaging, shipping, and returns policies. This may guarantee consistency, but it limits your ability to create a unique unboxing experience or use branded packaging.

Amazon FBM: If you want better control over and customization of your inventory and fulfillment processes, FBM is the way to go. You can design the packaging based on your liking and even include promotional materials like brochures. This level of control helps your business build a stronger brand identity and boost customer loyalty, but it also means you’ll have to spend more time and effort working on these things.

Winner: FBM

So, Which Is Better? FBA or FBM?

Answering that question depends on your preferences. Sellers who want to save more time and use this time on other essential business matters can choose Amazon FBA, as Amazon handles the fulfillment process here. 

However, those who want to save on costs and customize the package their customers receive with their branding should opt for Amazon FBM. 

Whatever fulfillment method you go for, Amazon FBA and FBM work hand in hand with Amazon ad automation tools like Merch Jar. Our tool can significantly reduce the time and energy you put into launching and managing your Amazon advertising campaigns. We make this possible by automating your targeting efforts and analyzing your ad performance. This way, you can focus on what matters most for your business. 

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