Amazon FBM — What Is It and How Does it Work? (2021)

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Amazon Selling Strategies

7 min readAug 2, 2021

FBA is a popular method for Amazon sellers. You may be one of them. However, there are other methods of selling on Amazon and fulfilling orders. This is called Amazon FBM (Fulfillment by Merchant). It involves you, as the seller, handling all aspects of your Amazon business, including shipping and customer support.

Amazon success is dependent on your ability to understand how to set up your Amazon business correctly and make it efficient and streamline.

Many Amazon sellers use Amazon FBA (Fulfillment by Amazon) to store their orders and ship them. This allows them to focus on research, sourcing, and marketing their products.

Amazon sellers often overlook FBM. They think that it is unnecessary to deal with these issues yourself, when Amazon can do it for them with their FBA service.

It’s a great question. But Amazon FBM has more to it than you may realize. Let’s begin at the beginning.

What is Amazon FBM?

Amazon FBM requires that you list your products on Amazon and store your stock. You can also pack and ship orders, and handle all customer service inquiries yourself or through a third party. Amazon is your listing platform, but everything else is up to you.

FBM listings can be created in the same manner as regular Amazon product listings. In the Fulfilment Channel section select “I will ship this item myself” (Merchant Fulfillment).

Sometimes, it is called Amazon MFN (Merchant Fulfilled Network).

Amazon FBM is an Amazon self-fulfillment option that’s more commonly used by newbies than established sellers. This is mainly because FBA requires more time to set-up than Amazon FBM.

When Should You Use Amazon FBM?

Anybody can choose to go through Amazon FBM, but it is not possible to run an Amazon business that fits everyone. FBM is only suitable for certain Amazon sellers.

If you are selling:

Low sales frequency for exclusive products
Products in small quantities
Low-profit products
Products that are difficult to ship (e.g. Fragile or oversized products

If you already have Amazon FBM, you might also consider it.

An existing third-party fulfillment service, other than Amazon FBA, is more affordable than Amazon FBA.
You can have handcrafted products in your inventory. FBM is a popular method for handmade sellers to make sure that orders arrive on time.

Amazon FBM is the best option for you if your business is new, has limited volume, exclusive products, difficult to ship products, or handmade products.

What Are the Advantages of Using Amazon FBM?

Surprisingly though, even though you’ll need to do all the work, Amazon FBM has many advantages. This is especially true if you’re new to Amazon selling or have limited inventory.

1. Understand How Your Amazon Business Works

Sometimes, it is better to manage your business than leaving everything to a third party. If you’re a start-up, this is important because it allows you to understand your business and helps you create better strategies and practices. It also gives you a sense control.

You can manage your inventory, profits and administration to get a complete picture of your business, which will allow you to make better business decisions.

2. Freedom to Easily Expand Your Amazon Business

You can control your stock levels by fulfilling all orders yourself. You can increase your stock quickly without worrying about additional shipping fees or increased storage costs by Amazon FBA.

3. Avoid Strict FBA Requirements

Amazon FBA may take out many of the processes and tasks involved in running your Amazon business. However, you must still follow its rules and regulations. Amazon FBM will not have any issues as long as you adhere to your standards. To maintain your good name, all you have to do is to expedite shipping orders.

4. Yield Greater Profits

This isn’t a guarantee, but if you have calculated all other costs accurately and negotiated the best shipping and stock prices, your profit margins will be higher. FBA will cost you less for fulfilment and storage fees, especially if your products are large with low profit margins.

5. Direct Interaction with Your Customers to Build Your Brand

You will need to be a customer service representative as an Amazon FBM seller. Amazon does not do this for you. Although it may seem like a lot of work (and headaches) it is actually quite beneficial.

This will allow you to gain a better understanding of customer needs and help you deal with any feedback, both good and bad. You can gain valuable insight into your company’s performance and make sure your brand is well-respected.

6. No Long Term Storage Fees

Amazon may charge additional storage fees if you have a slow-selling item and you use FBA. This will not be an issue as you will have your stock as an FBM seller.

7. Consistent Sales and Shipping

Some Amazon FBA sellers suffered for months during the recent COVID-19 pandemic. Amazon stopped shipping FBA goods that were not essential to their orders for several months.

FBM sellers were able to ship and continue sales without any issues because they had complete control over the fulfillment of orders. Amazon FBM sellers will not be affected if a similar situation occurs.

What Are the Disadvantages of Amazon FBM?

It would be wonderful if there weren’t any disadvantages to being Fulfilled by Merchant Amazon seller. But, as with all concepts, there will always be disadvantages.

1. Picking, Packing and Shipping is Time-Consuming

Your time will be taken up by fulfilling your own orders. Your Amazon business will require you to be extremely hands-on.

2. Prepare to Commit More Time to the Day to Day Running of Your Amazon Business

This could be viewed as either a disadvantage or an opportunity. Spending time in your business can be a great way to get to know it better, which could ultimately lead to your success.

You might find yourself occupied with admin tasks, customer service issues, and other tasks that could distract you from your goal of growing your Amazon business.

3. Shipping Fees May Be Higher

Amazon sellers who choose FBM to pick, pack, and ship their orders themselves should be able to charge less than Amazon FBA sellers.

While Amazon FBM may offer lower storage costs, shipping fees can spiral if you don’t get a great deal from your preferred carrier.

4. Customer Service is Your Responsibility

FBA sellers have access to Amazon’s customer support department. They will handle all queries, returns, and refunds. FBM doesn’t offer such assistance. You will decide.

5. Ineligibility for Amazon Prime

FBM sellers cannot be eligible for Amazon Prime. Amazon Prime is directly tied to helping you achieve higher organic ranks and could be a disadvantage for you unless your qualify for Seller Fulfilled Prime.

You must apply for this program. Current applications have been closed. However, you can still add your name on a waiting list.

How Much Does Amazon FBM cost?

The subscription fee for Pro FBM Amazon sellers is $39.99 per Month.

You do not need to be a Pro seller in order to sell units. However, you will pay $0.99 per unit. To keep costs down, you can switch to the Pro package if you sell more than 40 units per monthly.

Amazon also charges a referral fee. Amazon considers you a seller on its marketplace and will pay you a referral fee.

Referral fees are a percentage of your total sale price. This is usually 15% for most product categories. However, it can vary from 6% up to 45% depending on which product you’re selling. Amazon has all the details.

Shipping fees are also something you need to think about. It is your responsibility to pack and ship orders to your customers on time. It is important to consider not only the shipping and packaging costs, but also the time it takes to pack, pack and ship the order.

Can Amazon FBM Be Used With Amazon FBA?

Yes! FBM and FBA are both possible simultaneously, which is something that many Amazon sellers do not realize. This gives you twice the exposure.

If you have large inventories that contain a variety of products at different prices and profit margins, double up can be very beneficial.

Divide your inventory between FBA or FBM. FBA can fulfill your high-margin products, while FBM can fulfill your slower-selling, lower margin products. Everyone is a winner.

Which is Better — Amazon FBM or Amazon FBA?

This is a difficult question! It will depend on your Amazon business. Here are some tips:

Select FBA when:

You can turn your business around quickly
Your products are small and light.
A decent profit margin is possible
There is a lot of inventory, but not enough storage space.
You can’t fulfil orders
It’s impossible to provide efficient customer service.

FBM when:

Slow turnover
Items are heavy or large
A decent storage space or small inventory is available.
You can either hire staff or manage fulfilment yourself
Effectively deal with customer inquiries.

Final Thoughts

Amazon FBM has many benefits, even though it may seem hard work. FBM provides you with the ability to control your Amazon business.

Your reputation as an FBM seller is your ultimate responsibility. It is crucial to your success. This is why you need to ship all orders promptly. Amazon has a “Buy Shipping” feature that includes tracking. This will ensure that your fulfilment process runs smoothly and reliably.

Amazon FBM is a great option for double-ups, as well as to have a backup plan in case you need to diversify, or even pivot, if needed.