1. What is Amazon FBM (Fulfilled by Merchant)?

Amazon Fulfilled by Merchant (FBM) is a fulfillment approach wherein an Amazon seller assumes full responsibility for fulfilling the orders made on Amazon. FBM can be overseen directly by the seller or in collaboration with a third-party logistics service provider.

Unlike the scenario where your products possess Prime status and you leverage Amazon's fulfillment centers for inventory storage while entrusting their team with the fulfillment process, with FBM, the merchant takes charge of inventory storage, placement, order fulfillment, returns, and customer service.

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2. How does Amazon FBM work?

Once sellers have set up their Amazon seller accounts and created product listings, they face a crucial decision regarding how they want to fulfill customer orders. They can either leverage Amazon's fulfillment network and have Amazon handle order shipping on their behalf, a method known as Amazon FBA, or they can opt for the FBM (Fulfillment by Merchant) approach, where they manage the entire fulfillment process themselves.

Merchants following the FBM route take on the responsibility of shipping orders to the customer's specified delivery address directly from their warehouse or storage location. The MFN (Merchant Fulfilled Network) seller is also in charge of managing returns and providing customer service.

For Amazon sellers choosing the FBM method, it's essential to consider the cost of FBM shipping. They must seek out reliable and, most importantly, cost-effective shipping and delivery partners. If the expenses associated with FBM shipping outweigh the fees incurred with FBA, it may not be a financially viable choice for merchants, as it could negatively impact their profit margins.

3. When should one opt for FBM as the method of product fulfillment?

FBM (Fulfillment by Merchant) can be a suitable choice for product fulfillment on Amazon in these scenarios:

• Unique or customized products.

• Frequent changes or updates to listings.

• Cost-effectiveness.

• Large or bulky items.

• Serving a local or niche market.

• Brand control.

• Testing new products or markets.

• Low sales volume.

• Perishable or seasonal items.

• Direct customer engagement.

Evaluate these factors to determine if FBM aligns with your specific business needs. You can also combine FBA and FBM for flexibility in fulfillment.

4. The advantages and disadvantages of utilizing Amazon Fulfilled by Merchant

Before delving into the specifics of shipping products through Amazon's Merchant Fulfilled Network, let's explore some advantages and disadvantages of using Amazon FBM, as per data from partner of Worldcraft Logistics 2022 - State of the Amazon Seller Report.

Pros of Amazon FBM:

• Higher Revenue: FBM sellers tend to earn more revenue, with 33% generating over $25,000 per month compared to 26% of FBA sellers. Additionally, 53% of FBM sellers have total lifetime sales exceeding $100,000, in contrast to 46% of FBA sellers.
• Lower Initial Investment: FBM sellers often require less capital to start their businesses, as 37% began with less than $1,000, while only 27% of FBA sellers did. Conversely, 35% of FBA sellers initiated their businesses with over $5,000, compared to 27% of FBM sellers.
• Faster Business Setup: FBM sellers can establish their businesses more swiftly, with 51% getting started on Amazon in less than six weeks, in comparison to 34% of FBA sellers. Moreover, 47% of FBM sellers achieved profitability in under three months, while the figure for FBA sellers was 38%.
• Business Continuity: FBM sellers maintain greater business continuity during events such as holidays when FBA inventory replenishment times may lag. Additionally, in emergencies like the COVID-19 pandemic when Amazon restricts the shipment of certain products, FBM sellers can still receive orders and ship goods.

Cons of Amazon FBM:

• Increased Time Commitment: FBM sellers typically invest more time in their Amazon businesses, with 20% dedicating over 40 hours per week, while only 16% of FBA sellers do.
• Competition Concerns: FBM sellers are more apprehensive about intensified competition affecting pricing (72% vs. 70% of FBA sellers) and Amazon selling products that directly compete with their own offerings (57% vs. 51% of FBA sellers).
• Higher Costs for Beginners: For newcomers to Amazon, FBM costs can sometimes exceed those of FBA when considering the overall expenses associated with shipping products. Using Amazon's FBA calculator can help compare costs and profits between self-shipping and utilizing Amazon's FBA services.

5. A comparison of Fulfillment by Merchant and Fulfillment by Amazon (FBM vs FBA)

FBA and FBM are two prominent fulfillment methods on Amazon, and understanding their differences is crucial for making informed decisions in your e-commerce business. Here's an in-depth comparison to help you grasp the nuances between these two approaches:

6. Various fees associated with Amazon FBM

Amazon FBM (Fulfillment by Merchant) involves several fees that sellers should consider when managing their fulfillment. These fees can impact the overall cost and profitability of your Amazon business. Here are the various fees associated with Amazon FBM:

6.1 Referral Fee

This is a percentage of the item's sale price and varies by product category. It is typically around 15%, but it can be higher or lower depending on the category.

6.2 Shipping Fee

The cost of shipping the product to the customer, which is determined by the shipping method, distance, and package weight and dimensions.

6.3 Monthly Subscription Fee

Amazon charges a monthly subscription fee for a Professional Seller account, which allows you to list an unlimited number of products. The fee varies by the marketplace and can range from $39.99 to $39.99 per month.

6.4 Per Item Selling Fee

In addition to the referral fee, Amazon may charge a per-item fee, which is usually $0.99 per item sold. This fee is common for individual seller accounts.

6.5 Shipping Supplies

If you require specific packaging or labeling, you'll incur additional costs for shipping supplies and labels.

6.6 Returns Processing Fee

Amazon charges a fee when processing returns on your behalf, which can vary depending on the size and weight of the returned item.

6.7 Labeling Fee

If your products require labeling and you choose not to label them yourself, Amazon can charge a labeling fee per unit.

6.8 FBA Packaging Fee

If you opt to use Amazon's packaging and prep services for FBM orders, there may be additional packaging fees.

6.9 Long-Term Storage Fee

If your products remain in Amazon's fulfillment centers for an extended period, you may incur long-term storage fees, typically assessed semi-annually.

6.10 Stock Removal Fee

If you need to remove your inventory from Amazon's fulfillment centers, a fee may apply based on whether you want the items returned to you or disposed of by Amazon.

These fees can vary based on factors such as the product category, fulfillment method, and marketplace. It's essential for Amazon sellers to carefully track and calculate these fees to ensure that their pricing and business model remain profitable.

7. Worldcraft Logistics helps you save time and costs while ensuring delivery speed

Worldcraft Logistics is your trusted partner in optimizing your supply chain operations. Our services are designed to not only streamline your logistics but also deliver significant benefits to your business. Here's how Worldcraft Logistics can help you save time and costs while ensuring swift and efficient deliveries:

• Efficient Routing and Planning: We utilize advanced route optimization technology to ensure that your deliveries follow the most efficient routes, reducing travel time and fuel costs.

• Real-time Tracking: Our tracking systems provide real-time visibility into the status and location of your shipments, allowing you to monitor progress and address potential issues promptly.

• Inventory Management: We offer comprehensive inventory management solutions, ensuring that you maintain the right amount of stock on hand to meet customer demand without overstocking, which can tie up capital.

• Customized Solutions: Our logistics experts work closely with you to develop customized logistics solutions tailored to your specific business needs, helping you cut unnecessary expenses.

• Cost Optimization: By consolidating shipments, using cost-effective transportation modes, and minimizing unnecessary handling, we help you reduce transportation costs while maintaining service quality.

• Responsive Customer Service: Our team is committed to providing excellent customer service. We are here to assist you in managing logistics challenges and resolving any issues promptly.

• Delivery Speed: We understand the importance of fast and reliable deliveries in today's market. Our streamlined processes and optimized routes ensure that your products reach your customers promptly.

• Technology Integration: We leverage cutting-edge logistics technology to provide data-driven insights, helping you make informed decisions and continuously improve your supply chain.

By choosing Worldcraft Logistics - Full service for Amazon FBM, you are investing in a partner dedicated to enhancing your operational efficiency, reducing costs, and ensuring that your customers receive their orders promptly. We are committed to helping you gain a competitive edge in your industry while also contributing to a more sustainable and environmentally friendly logistics network.

8. Answers to Frequently Asked Questions about FBM on Amazon

8.1. What packaging requirements must FBM Amazon sellers adhere to?

Amazon FBA has strict packaging requirements, but Amazon FBM places the responsibility of delivering products on the seller. The product must be of high quality and reach the buyer within the designated delivery time. While there are no specific packaging requirements for FBM, sellers must ensure secure packaging to prevent damage and include the shipping label on the package.

8.2. When comparing FBA and FBM, which is the preferable option?

Which Fulfillment Method Suits Your Business Best? FBA shines when dealing with high-volume, higher-margin products, particularly when sellers prefer to offload the responsibilities of storage and shipping. On the other hand, FBM proves more advantageous for smaller-scale ventures, products with slim profit margins, or occasional, unique items, where sellers are willing to manage the warehousing and shipping process themselves.

If you value greater control over your inventory and customer experience, FBM might be the preferred choice. However, if the idea of Amazon shouldering the burden of storage and handling returns appeals to you, FBA is the way forward.