Everything You Need To Know About Amazon FBM

When you sell on Amazon, it's essential to consider your fulfillment method carefully. This method concerns how you get goods out to customers and where you store them while the goods wait. There are two forms that Amazon offers: FBA and FBM. 

FBA refers to "Fulfilled By Amazon," requiring you to pay more fees to Amazon.

Those who keep a small inventory, have heavy products, or have unique shipping needs will find this fulfillment method more effective. 

So, what about the alternative? This is known as Amazon FBM, which provides a bit more flexibility.

Check out our short guide to find out everything you need to know about this method.

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What is Amazon FBM?

Amazon FBM stands for "Fulfilled By Merchant," which means you handle your products' storage and shipment.

FBM members are considered part of Amazon's Merchant Fulfilled Network (MFN) but won't send their goods to Amazon directly.

FBM sellers will create listings and advertise their products like other sellers.

So, FBM sellers still rely on the same platform as FBA sellers. The difference when using the Amazon platform comes when you create different shipping templates. 

If you want to know more about making money on Amazon, check out this guide.

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How Does Amazon FBM work?

Amazon FBM works differently for individual and professional sellers. The difference is that professional sellers have more flexibility.

Individual sellers use Amazon's pre-set shipping rates for all products. They also have to pay $0.99 per product sale. So, with these two costs in mind, it's essential to set your rates based on profits. 

Professional sellers can create their own shipping rates. They use shipping templates that can be customized based on different shipping regions, handling factors, and transit times. 

The extra customization lets professional sellers set specific shipping costs for their products.

They don't have to rely on preset rates that don't fit their unique shipping costs. 

Regardless, professional and individual sellers must be aware of referral fees. Referral fees are based on a percentage of the total cost of the product (shipping included).

So, the higher your shipping rates are, the more Amazon will take from your profits. 

Whether you have an individual or professional account, how you ship the products is entirely up to you.

This increased flexibility highlights the most crucial aspect of FBM: managing your own fulfillment.

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FBM fulfillment considerations include the following:

• Setting up a warehouse for the storage of your goods (both long- and short-term)
• Hiring additional staff to pack and prepare your goods for shipment 
• Connecting with shipping entities (like USPS or FedEx) to get your goods from the warehouse to the customer
• Adjusting your storage and fulfillment needs depending on peak seasons (Black Friday and Prime Day)
• Managing returns and customer service needs yourself and managing the staff needed to meet those needs 

The examples above show an oversimplification of what some FBM sellers consider when choosing this path. 

Your business model might decree some of these needs to be unnecessary.

For example, if you keep a small inventory, you might use your garage as temporary storage and handle everything yourself. If the work is overwhelming, FBM sellers might consider outsourcing (like customer service).

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Advantages of FBM

Amazon talks a lot about the advantages of FBA, but what about FBM? Below, you'll see a quick list of reasons why you should consider FBM over FBA:

• No FBA fees - The most prominent reason people prefer FBM is because of Amazon's FBA fees. On top of the referral fee, Amazon charges extra for using FBA. If your profit margins are already small, adding more costs can hurt.
• Logistical experience opportunities - When managing more aspects of your business, you give yourself more learning opportunities. Understanding the logistical side of things helps you better grow your business through experience. 
• Easier to manage large or heavy items - FBA isn't built to manage large or heavy products. It's often more cost-effective for sellers of large and unwieldy products to handle the shipping themselves. 
• More control over customer service - FBM sellers have complete control over customer service, letting them establish policies unique to their business. Alternatively, FBA sellers don't have the luxury to set their policies, as they rely on Amazon to handle communications. 
• Scalability is easier outside of Amazon - Growing a complete business without relying on a third party provides opportunities outside of Amazon. Logistically speaking, you can scale that part of your business easier if you understand how to do it and create your systems. FBA sellers can still transition to this eventually but might struggle more, given they have less experience doing it. 

Of course, FBM does come with some unique challenges. Keeping those challenges in mind can help you better prepare for different outcomes. 

When everything is up to you, you must hire a staff to manage it. Extra staff members cost money, which is something FBA sellers can delay. 

FBA sellers also leverage Amazon's impressive logistical network. Amazon Prime sellers use Amazon's FBA system, giving them higher priority than their FBM counterparts. 

However, FBM can overcome this natural advantage through Seller-Fulfilled Prime.

This means you can qualify for top ranking, regardless of whether Amazon holds your inventory. You'll most likely use this for nearby locations, but you can expand it as your logistical capabilities grow. 

But this brings us back to the ultimate weakness of FBA: lack of experience.

There are fundamental aspects of the business they will need help understanding in retail, which you'll have a deeper understanding of as an FBM seller.

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Amazon FBM Fees

FBM sellers have to consider their own list of fees. When choosing this selling method, consider these costs:

• Referral fees - Amazon's referral fees vary from 8 to 15% depending on the item sold. This includes the overall cost (after shipping), so you'll have to pay more referral fees if shipping your products is more expensive. 
• Selling plan - The individual plan has no monthly cost but requires you to pay a $0.99 fee for each product sold. The professional plan costs $39.99 per month but removes the referral fee and gives you more flexibility as a seller. 
• Fulfillment costs - The cost of customer service, shipping, and storage are all factors FBM sellers must face. FBA sellers have these costs built into FBA fees, while FBM sellers need to address their COGS (cost of goods sold) to ensure they are making a profit. 

ShipSaving can help you address the fulfillment costs by providing discounts and connecting you with the most cost-effective options.

The tool can find the best local shipment groups, print the labels, and add them to your package. You can also integrate the tool directly with Amazon. 

Besides that, ShipSaving can offer shipping rate discounts of USPS up to 89% off, UPS up to 72% off, and DHL up to 70% off. 

Get started for free to discover how it can help your business grow. 

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Conclusion

Amazon FBM sellers have a few distinct advantages over FBA sellers.

Mainly, those advantages culminate in the form of greater flexibility, experience, and control. So, if those three things appeal to you, consider FBM over FBA. 

Those with established logistical networks or experience can also benefit from FBM. You might ship a complex product that most fulfillment centers can't handle. Heavy products, for example, often don't work well with FBA selling.

So, if you consider FBM, look at ShipSaving as your FBM selling support provider. 

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