FBA vs FBM // Fulfilled by Amazon VS Fulfilled by Merchant

What's the different between FBA and FBM? Which one should you choose to get into? What are the Pros of each? What are the Cons?

We're breaking down ALL of this and more in today's episode.

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FBA vs FBM Breakdown:

FBA Pros:

Prime Eligibility. Having your products eligible for Prime will likely increase the amount of inventory you sell, simply from the associated with Amazon. Customers almost EXPECT to see products with Prime, 2-day shipping (if not QUICKER now).

Hands-Off Fulfillment. This is HUGE. FBA allows you as a seller to not have to worry about any hassles that come with fulfillment.

Buy Box advantages. The Buy Box is the CTA (Call to Action) that leads Amazon shoppers to purchase the product on the product listing. One of the biggest factors in determining who wins the Buy Box is fulfillment method. Generally, an FBA seller can set a slightly higher price than an FBM seller and still win the Buy Box.

Multi Channel Fulfillment: FBA allows Amazon to also handle fulfillment, shipping, packing etc. from sales made on sites outside of Amazon.

Low Shipping Rates. Amazon has some pretty steep discounts on shipping, and has an incredible network dedicated to fulfillment that would be pretty difficult to replicate on your own At-scale, shipping lots of inventory through Amazon makes everything a WHOLE lot more cost-effective and efficient.

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FBA Cons:

Additional Fees. There are actually a decent amount of fees that come from utilizing everything FBA has to offer, which should be expected.

Limited inventory access: Because you’re inventory is in Amazon’s warehouses you won’t have easy access.

Tax obligations. Amazon does not automatically collect sales tax for the seller in a LARGE majority of cases.

Multi-Channel Fulfillment Cost: YES, Multi-Channel Fulfillment here is possible through Amazon FBA, however at the same time it is EXPENSIVE.

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FBM Pros:

Hands-on fulfillment: When you’re working through FBM, you have control over inventory. Some sellers definitely see this as a benefit.

Fewer Amazon Fees: Saving money, like I said before, is a huge aspect of selling via FBM. Fulfilling yourself means escaping most of the fees that come from fulfilling through Amazon.

Prime Opportunity: FBM also gives sellers the opportunity to have that Prime badge and FBA benefits without the increased FBA fees.

Higher Margins: A huge aspect of selling on Amazon is competing with Price. The more room you have to compete on Price, the better. Going with FBM gives you the opportunity to work with higher margins and gives you a greater price flexibility, simply because you’re spending less on those FBA fees.

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FBM Cons:

More responsibility. When selling FBM, responsibility falls on you. Packaging, shipping, managing inventory… It’s all you.

Buy Box is harder to win: Because fulfillment method is a major factor in determining who gets the buy box, FBM sellers will have a harder time getting and keeping the buy box than FBA sellers. FBM sellers may have to set a lower price to win.

Overhead costs: While you won’t pay fulfillment and storage fees selling FBM, you will likely have more overhead costs, including your own storage, fulfillment, and shipment expenses.

Missing out on Prime members: Because over half of Amazon shoppers are Prime, 2-day free shipping with Prime is often a purchase criteria. Without being Prime, you’re missing out on many customers who many have purchased your product if it were Prime. Again, you can enroll in Seller-Fulfilled Prime, but it’s a sizable task.

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