If you’re selling your own items to consumers, or even handling your own inventory, you’ll want to look into FBM. But what is FBM anyway?
Fulfilled by Merchant (FBM) is a way of selling on Amazon as a third-party seller. You’ll manage your own inventory and shipping, and you’ll need to rely on your own processes for customer service. Amazon will help make sure the logistics work out for you, but the day-to-day management of things is going to be on you.
In a nutshell, FBM is a service where the seller is responsible for handling and fulfilling their inventory.
How does FBM work?
After setting up an account on Amazon and creating a listing, a merchant has two fulfillment options: Fulfilled by Amazon (FBA) or Fulfilled by Merchant (FBM). Once you make sales on Amazon, the next thing to do is to fulfill the orders.
When you work with FBM, you can customize your shipping options, choose your preferred carriers and shipping speeds, and even offer multiple shipping options to your customers. You’ll also have complete control over when your packages are shipped and when they reach their destination.
In addition to Fulfillment by Merchant, there is a new, rapidly growing FBM fulfillment method — Seller Fulfilled Prime (SFP). If your seller account is Professional and you meet the minimum requirements, you can apply for SFP so that your products will display the Amazon Prime badge on orders fulfilled via your own warehouse or third-party logistics providers.
There are some Requirements to be Eligible for SFP, Including:
– A Professional Seller account
– A pre-fulfillment cancel rate of less than 1.5%
– Same or one business day shipping
– An on-time delivery rate of at least 92%
-Sellers must work with approved Buy Shipping Service carriers.
Amazon FBM Fees
There are 3 main fees associated with FBM: referral fees, a monthly subscription fee, and a fee for each item sold.
- Monthly Subscription Fees – a USD $39.99 fee per month when you have active listings for Professional Selling Plan. No subscription fee for Individual Selling Plan.
- Per-item Selling Fees– There’s a $0.99 fee for each item sold for Individual Selling Plan and No per-item fee for Professional Selling Plan.
- Referral Fees– The referral rates vary in each category. For the complete list of fees, you can check it on the Amazon referral fees table.
Aside from the fees above, there are more fees you’ll encounter if you decide to partner with Third-party logistics to handle and fulfill your inventory.
What is Third-party Logistic?
In a nutshell, a Third-party Logistic (3PL) provides services such as warehouse storage, prep & pack, fulfillment, and distribution of items to end-user.
Looking for 3PL to handle your inventory? Here’s a list of 3PL companies I personally recommend:
To know more about these 3PL providers, click here to read.
Is FBM the right one for your Amazon Journey?
Selling through Amazon’s Fulfillment by Merchant option has a few perks and drawbacks.
Let’s take a look at some advantages and disadvantages of FBM programs so you can make a decision if this is the right one for your business:
- You don’t need to pay additional Amazon Fees
- More control with packaging
- You can provide better customer service and make sure your products are up to spec.
- Your products will be eligible for Prime shipping.
- If you meet the minimum requirements for SFP, you can compete for Buy Box with other FBA sellers.
- Lower cost as there are no long-term storage fees
- Higher Profit Margin as you are not paying monthly FBA fees
- Avoid Amazon FBA’s strict requirements and compliance
- More responsibility on the part of the seller
- Overhead cost
- Difficult to join SPF
- Heavy competition with FBA sellers
When you should use FBM?
FBM is the right choice for you if:
- You are selling high-end products that are oversized and heavy
- You want to have control over your customers
- You want more control over your inventory
- If you have your own warehouse and logistic
Amazon FBM is a program that allows you to have control over your inventory and fulfillment as well as build customer relationships.
It is a great way to start your Amazon journey if you want to be in control of your business. If you’re willing to put in the extra work, Amazon FBM can be a great way to get started with selling on the world’s largest marketplace.
However, always remember that choosing the right fulfillment program for your business will depend on the type of products you sell, your costs, and the profitability of your items.
We hope this blog post has helped you make a more informed decision about FBM and if it’s the best service for your Amazon Journey.
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