Amazon FBM (Fulfillment by merchant)

What does Amazon FBA mean? FBM stands for “Fulfillment By Merchant”, and it is an option for sellers using the Amazon marketplace to choose to handle and manage the packing, shipping, storage, customer service, and returns of their products themselves, rather than paying for the Amazon FBA service.

Good candidates for Amazon FBM include smaller businesses and sellers with exclusive products. Sellers should employ the service of an Amazon fee calculator to understand best which products will work best for their specific needs. Using proprietary algorithms to analyze the data, the Algopix engine produces valuable insights for each market including a “recommended” or “not recommended” indicator for sellers looking to make decisions quickly.

Advantages of being an FBM seller:

  • Inventory control: Sellers have complete control over their inventory and don’t need to split their inventory between Amazon’s warehouse and their own. This can help during Black Friday or Prime Day as they do not have a limit in how much they can sell.
  • Fewer Amazon fees: By being an FBM seller, you do not have to pay storage or fulfillment fees to Amazon; however, you will still have the referral and closing fees.
  • Higher profit margins: As you will no longer be paying those fees to Amazon for your orders, it is likely that your profit per product will be slightly higher than if Amazon were to fulfill the orders; however, as an FBM seller you will likely have fewer sales overall. This is because over half of products on Amazon are prime and customers often prefer the free two-day shipping as they are paying for it with their prime-membership fee.
  • Returns: In contrast to FBA sellers who receive merely a box of returned items from Amazon, FBM sellers can match returned products with the customer, therefore lowering the risk of fraud.

Disadvantages of being an FBM Seller:

  • Inconvenient: As an FBM Seller, you are responsible for all packaging, shipping, and management of inventory. While some sellers might prefer to have this control, this might be overwhelming for high volume sellers as you must fulfill orders fast or Amazon will penalize you by lowering your chances of winning the Amazon Buy Box.
  • Lower Selling Price: To be competitive with other sellers who are FBA sellers, frequently FBM sellers will need to price their items lower to be in the Buy Box.

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