Fulfilled By Merchant(FBM): What Is Amazon FBM?

Time: Dec 10,2024 Author: SFC Source: www.sendfromchina.com

Amazon sellers face a crucial decision: Fulfilled by Amazon (FBA) or Fulfilled by Merchant (FBM)? For those looking to take charge of their logistics, FBM provides a cost-effective, flexible solution. This guide covers everything you need to know about FBM, from its workings and costs to its benefits and drawbacks. Whether you’re new to Amazon or a seasoned seller, this resource will help you succeed with FBM.

1. What Is Amazon Fulfilled By Merchant(FBM)

Amazon Fulfilled by Merchant (FBM) is an order fulfillment option where the seller manages the storage, packaging, and shipping of their products directly. Unlike Amazon’s FBA program, where Amazon handles these tasks, FBM sellers are fully responsible for their inventory and shipping logistics.

FBM allows sellers to maintain more control over their operations while reducing fees associated with Amazon's storage and fulfillment services. However, it requires a dedicated effort to ensure customer satisfaction.

2. How Does FBM Work

FBM allows sellers to list and sell products on Amazon while managing inventory, shipping, and customer service themselves. Here's how it works, step by step:

Step 1. Sign Up for a Selling Account

- Create a seller account or log in to Seller Central.
- Opt for a Professional Selling Account to access a broader range of services.

Step 2. List Your Products

- Match your products to existing listings on Amazon or create new product detail pages for items not already in the catalogue.
- If you own a brand, enroll it with Amazon to access additional tools and protection.

Step 3. Configure Shipping and Return Settings

- Set up handling times, transit times, and capacity limits that align with your operations.
- Use tools like Shipping Settings Automation and automated handling time to optimize delivery dates.
- Review and adjust return settings to ensure they align with your policies or exceed Amazon’s requirements.
- Consider creating custom return policies tailored to your business.

Step 4. Manage Inventory and Fulfill Customer Orders

- Use the Manage Inventory tool to keep product information up-to-date.
- Synchronize inventory stored across multiple locations using Multi-Location Inventory.
- For orders:
- Review, confirm shipping, and provide tracking information via Manage Orders.
- Purchase and print shipping labels using Amazon Buy Shipping for automatic tracking.
- Alternatively, use tools like Veeqo, Amazon’s Shipping API, or multi-channel integrators for label management.

Step 5. Handle Cancellations, Returns, Refunds, and Customer Service

- Monitor cancellation requests through Manage Orders.
- Address return requests:
- Amazon’s prepaid return label program handles most returns for US sales.
- Return requests outside Amazon’s policy are sent to you for review; respond within 24 hours using Manage Returns.
- Use Buyer-Seller Messaging to handle customer inquiries and ensure smooth order fulfillment.

Step 6. Monitor Your Shipping Performance

- Use the Fulfillment Insights Dashboard to track promised vs. actual delivery times and identify improvement areas.
- Regularly review the Account Health Dashboard for metrics like order defects, late shipments, cancellations, and valid tracking rates.

Step 7. Try Advanced Shipping Options

- If you meet performance standards, consider joining programs like:
- Premium Shipping to offer one- and two-day delivery.
- Seller Fulfilled Prime to display the Prime badge on your products, boosting visibility and customer trust.

3. FBM vs FBA: What's the Difference

To better understand FBM, it’s essential to compare it with FBA(Fulfilled By Amazon).

	FBM (Fulfilled By Merchant)	FBA (Fulfilled By Amazon)
Fulfillment Responsibility	Seller handles all aspects of fulfillment	Amazon manages fulfillment and logistics
Inventory Storage	Seller stores inventory in-house or through third-party warehouses	Amazon stores inventory in its fulfillment centers
Shipping	Seller manages shipping directly	Amazon handles all shipping processes
Customer Service	Seller handles customer inquiries and support	Amazon provides 24/7 customer support
Return Management	Seller processes and manages returns	Amazon processes returns and refunds
Fees	Lower fees; no storage or fulfillment charges from Amazon	Higher fees due to storage and fulfillment services
Prime Eligibility	Limited; requires Seller Fulfilled Prime (SFP) for Prime eligibility	Automatic Prime eligibility for most products
Control over Branding	High; sellers can use customized branding and packaging	Low; Amazon standardizes branding and packaging
Time Investment	Higher; requires more effort to manage logistics and customer service	Lower; Amazon takes care of logistics and support
Ideal For	Experienced sellers, large/heavy items, or those seeking lower costs	New sellers, small/lightweight items, or those prioritizing Prime benefits

4. Pros and Cons of FBM

Like any fulfillment model, FBM has its advantages and disadvantages.

Pros of FBM

1. Cost Savings: Lower fees since sellers avoid Amazon's storage and fulfillment charges.
2. Inventory Control: Sellers maintain full control over stock levels and storage conditions.
3. Flexibility: Freedom to use custom packaging and shipping options.
4. Scalability: Ideal for businesses with robust logistics infrastructure.

Cons of FBM

1. Increased Responsibility: Sellers are solely responsible for shipping, customer service, and returns.
2. Time-Consuming: Managing inventory and logistics can be labor-intensive.
3. Prime Limitations: FBM listings are not automatically Prime-eligible.
4. Performance Pressure: Sellers must meet Amazon's strict performance metrics, such as on-time delivery rates and low defect rates.

5. Who Should Consider FBM

FBM isn’t a one-size-fits-all solution. It works best for:

1. Sellers with Robust Logistics: Businesses with efficient in-house or outsourced logistics systems.
2. Large or Heavy Products: Items that incur high storage fees in Amazon’s fulfillment centers.
3. Niche Sellers: Those selling unique or low-volume products that don’t justify FBA costs.
4. Cost-Conscious Entrepreneurs: Sellers looking to maximize profit margins by minimizing fees.
5. Experienced Retailers: Businesses familiar with shipping and customer service operations.

6. Tips for Success with FBM

Succeeding with FBM requires meticulous planning and execution. Here are some actionable tips:

1. Optimize Shipping: Partner with reliable carriers and negotiate discounted rates for bulk shipping.
2. Streamline Inventory Management: Use inventory management software to track stock levels and avoid overselling.
3. Maintain Quality Control: Regularly inspect products to ensure they meet customer expectations.
4. Deliver on Time: Set realistic delivery times and consistently meet them to maintain a high seller rating.
5. Invest in Customer Service: Provide prompt and helpful responses to customer inquiries and complaints.
6. Leverage Feedback: Encourage satisfied customers to leave positive reviews to boost your product’s visibility.
7. Stay Compliant: Adhere to Amazon’s performance standards to avoid account penalties.

7. Conclusion

Amazon FBM offers unparalleled control over inventory and shipping, making it an attractive option for sellers with the resources to manage their logistics effectively. While it requires more effort than FBA, the potential for cost savings and flexibility makes FBM a viable fulfillment strategy for many sellers. By understanding its intricacies and implementing best practices, you can harness FBM to grow your Amazon business.

8. FAQs

1. Can FBM sellers offer Prime shipping?

Yes, but only through Seller Fulfilled Prime (SFP), which requires meeting Amazon’s stringent performance criteria.

2. Do FBM sellers need to pay referral fees?

Yes, all Amazon sellers pay referral fees, typically calculated as a percentage of the sale price.

3. Is FBM better than FBA?

It depends on your business needs. FBM is ideal for cost-conscious sellers with robust logistics, while FBA suits those seeking convenience and Prime eligibility.

4. How do I handle returns with FBM?

As an FBM seller, you are responsible for managing returns, issuing refunds, and addressing customer concerns.

5. Can small businesses succeed with FBM?

Absolutely! Small businesses with efficient logistics and a customer-centric approach can thrive with FBM.