Fulfillment by Merchant (FBM) Encyclopedia in 2024

What is Amazon FBM?

The short form for Fulfillment by Merchant on Amazon is Amazon FBM. In this fulfillment method, sellers list their products and decide to manage their business operations. They do all steps from storage and shipping to customer support. Alongside the FBA method, about 43% of Amazon sellers use the FBM business model. However, 9% of Amazon sellers only use FBM. Mostly, newbies use this method rather than established sellers because the initial setup is straightforward.

How Does Amazon FBM Work?

As it sounds, in Amazon FBM business model, when a product is sold on Amazon, the merchant fulfills the order.

Here are a few steps to run Amazon FBM:

1) Initially, you need your business information as below to create an account in Amazon Seller Central.

• Business information (your business name, address, and contact information)
• Email address
• Credit card
• Phone number
• Tax ID (Federal and State)
• eCommerce return address

2) With the above information, register on Amazon, and pick one of the Amazon plans: professional or individual seller.

Read More: Amazon Individual vs. Professional Seller Plans

3) The next step would be product listing. You need to list the products you want to sell. To help improve your chances of conversion, you can use the right imagery, videos, copy, and more.

4) Now, it is time two choose between two ways of fulfillment: FBA or FBM. When you opt for FBM, you need to look for shipping/delivery partners that are cost-efficient and reliable. The charge must be lower than FBA, which doesn’t impact your margins.

5) Now, it’s time to store your products in your own warehouse or fulfillment center. Your home is the best choice as a short-term solution if you’re a small business owner. The bigger businesses may require several fulfillment centers. Depending on the fulfillment center numbers at your disposal, distributing the products to the strategic locations will be easier. Besides, you can reduce your average shipping zone and save shipping costs.

6) Delivering the received orders on time is the next important point. Amazon determines the estimated delivery time to buyers on checkout pages, which indicates handling and transit times. It is possible to modify shipping and handling time to better customer expectations. You have to provide eCommerce order tracking for the customer by buying shipping labels through Amazon or on your own. Amazon sends a return label with your default info.

When Should You Use Amazon FBM?

Obviously, not all sellers can be successful by using one method for their business. So, running an Amazon business is never going to be a one size fits all scenario. If you are a seller who sells exclusive products with low sales frequency, FBM is the best choice for you.

Consider that you can use both FBA and FBM, which double your exposure and sales opportunities, but new sellers with minimal inventory usually go for an FBM business model.

Here, we nail down the best conditions for FBM:

• Small volume products
• Low-profit products
• Exclusive products with low sales frequency
• Handmade products in your inventory
• Hard to ship products (oversized, fragile, or heavy items)
• Having a decent storage facility or small inventory
• Having a third-party fulfillment service that is cheaper than Amazon FBA

Ultimate Guide About Amazon Freight Forwarder

Pros & Cons of FBM

Bearing in mind that you decide to do all of the work by choosing the FBM fulfillment method. But, it is vital to know the advantages and disadvantages of using this method.

Pros:

• Less paperwork to deal with when working directly with the buyer
• Have control over every aspect of the business
• No need to pay additional fees to Amazon; therefore, margins are greater

• Freedom of running the business as desired
• A greater grasp of inventory in stock: what sells, and what changes may need to be made for tremendous success
• No need to worry about any unavoidable losses due to policy changes at Amazon
• No unexpected costs; the seller is aware of all finances every step of the way
• Brand building is more attainable
• FBM sellers can continue their sales even in an emergency case, such as the Covid-19 pandemic when Amazon stopped shipping-certain product

Cons:

• Not allowed to use the Amazon prime
• Need more money for marketing
• Need more spending time to manage your business
• Shipping fees may be higher
• Costs of warehousing and in-house fulfillment (if outsourcing) is high
• Customer service is your responsibility

Amazon FBM vs. FBA

Actually, comparing Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) is tricky. In FBA, sellers send their products directly to Amazon’s warehouses, while FBM stores products in sellers’ storage.

Besides, in FBA, picking, packing, shipping, and customer service are a part of Amazon’s service. In addition, your customers are eligible to use the two-days Amazon Prime service for free on eligible orders.

But, in the FBM method, apart from product listing, handling shipping, customer support, and all aspects of order fulfillment are sellers’ responsibilities.

You can find more details here: Amazon FBA vs. FBM

Amazon FBM Fees

Sellers face some costs when they decide to use fulfillment by Merchant on Amazon. Depending on their shipping/delivery options, this charge may vary from seller to seller. The fixed expenses that all sellers incur are breakdown below:

• Monthly subscription fee: Individual plan is free of charge, but sellers have to pay $39.99 per month for a professional plan.
• Per Item Selling Fee: Individual seller – $0.99 for selling each product unit and no charge for the Professional plan.
• Shipping fee: For each sale, you need to pay costs for shipping.
• Referral fee: For each sold product, Amazon deducts a referral fee. It is 15% of the total sale price in most product categories. But, it varies between 6% and 45%. Here is the referral fee table (applied on a per-unit basis unless otherwise noted):

Is Amazon FBM Worth It?

Increasing your profit margin is the main benefit of using FBM. When you are selling large or heavy products, there is no hesitation that the FBM method is the best choice. Besides, when you run out of FBA inventory, FBM is a good backup plan. FBM could be a profitable decision as a side hustle if you have access to an empty space.

How Much Do Amazon FBM Sellers Make?

There is no promised amount for the number of your earnings. It depends on many factors, especially the amount of time and effort that you put into your business.

Generally, FBM sellers launch their business on Amazon faster than FBA sellers. About 33% of FBM sellers can make $25,000 per month in revenue.

In this post, there is more information about Amazon FBA Business.

Final Thought

Even if Amazon FBM might seem like hard work, it has a lot of benefits. The FBM method gives you precise control over your business. Besides, it is known as a good backup for Amazon FBA. In this post, you can read the pros and cons of Amazon FBM.

Amazon FBM FAQ