Amazon FBA: Is This Fulfillment Method Worth It?

If you are an Amazon Seller or have considered using the platform before, you've probably heard about Amazon FBA. It's popular with many third-party sellers across Amazon. But is it worth the investment? 

In this article, you'll learn about the basics of FBA, how it compares to doing it yourself, and how ShipSaving works as an excellent alternative. 

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What is Amazon FBA?

Amazon FBA, or Fulfillment By Amazon, is an outsourcing service where you hand shipping, order fulfillment, and returns to Amazon. It starts by sending your inventory directly to Amazon, where they send your goods across their fulfillment center network. 

FBA Sellers are typically marked by their Amazon Prime affiliation. This provides a unique mark for those who use the platform. 

As you might imagine, FBA comes with some notable benefits. It's also an alternative to other sellers that fall under the FBM category.

How Much Does FBA Cost?

FBA shipping fees are a flat rate depending on the weight and size of your product. For example, a small, three-ounce package costs $3.22. 

Costs can go up to $158.49 with an additional $0.83 per pound if you sell special oversized items (108 inches on the longest side) over 150 pounds. So, FBA fees increase incrementally when you sell incredibly large products. 

Shipping rates also vary depending on the type of product you sell. For example, apparel is charged at a slightly higher rate than other kinds of products. 

Sellers can save money by selling products that qualify for their small and light category. Small and light items are below 19 x 12 x 6 inches, weigh less than three pounds, and are $12 or less when sold. 

You might have to page for FBA storage fees for products that linger. These vary from $0.56 to $2.40 per cubic foot. The rates are charged monthly and vary depending on the product size and whether the products are stored during the busy season (October to December). 

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Benefits of Amazon FBA 

Amazon FBA sellers get some advantages over their FBM counterparts. Below, you'll see a breakdown of those benefits:

• Access to more customers. The Amazon Prime program attracts many buyers. By leveraging Amazon's network, you get access to those customers. You are no longer limited to customers in the FBM category. 
• Higher product rankings. FBA sellers tend to receive higher seller rankings compared to FBM sellers. This is because Amazon benefits from these sellers more, as you'll pay FBA fees directly to Amazon. 
• Outsourced logistics. Amazon's huge logistics network covers the entire United States and many international locations. You can focus your business resources elsewhere when you don't have to worry about shipping and handling. 
• Faster shipping. FBA sellers leverage Amazon's wide network, meaning they get speedier shipping times. Sellers can have their products qualify for both one and two-day shipping times. This vastly improves the customer experience. 
• Some expansion potential. MCF, or Multi-Channel Fulfillment, allows sellers to create an off-site store that uses FBA's fast shipping speeds. This way, you can expand to selling outside of Amazon without giving up its logistics network. 

Amazon FBA provides sellers with many advantages over other sellers. These other sellers fall under the FBM category.

However, this doesn't mean you should marry your business to FBA yet. Instead, let's look at how it compares to FBM. 

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Compare FBA vs FBM

FBM, or Fulfillment By Merchant, includes the remaining sellers who do not use the FBA platform. FBM sellers handle all of the fulfillment, meaning that shipping, order processing, and returns are outside Amazon's control. 

Because Amazon benefits more from FBA sellers, FBM sellers typically don't get the same rankings. However, Amazon has leveled the playing field for FBM, as we'll see in our comparison. 

Benefits of FBM over FBA

FBM has a few distinct advantages over FBA. Below, you'll see a breakdown of those benefits. 

• No Amazon FBA fees. FBM sellers do not have to pay Amazon extra for fulfillment because they handle it themselves. Instead, they could direct that income toward other business activities. 
• Seller-fulfilled Prime. Amazon doesn't exclude the Prime label from FBM sellers. They can benefit from this label by using seller-fulfilled Prime, allowing third-party sellers to compete and sometimes outperform FBA sellers. 
• Greater expansion potential. FBA sellers can expand their eCommerce network, but this is limited to platforms that support FBA. Sellers that rely on external shipping platforms will find more opportunities with entities that might not work with Amazon. 
• You get fulfillment experience. By doing it yourself, you can gain experience in fulfillment, which is something Amazon doesn't provide you. This way, you can use that experience to grow your business later, which is valuable.

FBM has the promise of more income in your pocket per product. Not paying FBA fees can free up that income for alternative sources.

But the tradeoff of paying less means you end up paying more time. So, you might value your time on a dollar amount to help decide which option is better. 

Regardless of your chosen fulfillment method, you must find great products. You can check out this guide to find out how to find products to sell on Amazon. 

FBA vs. FBM - which should I choose?

Breaking it down simply, your chosen fulfillment method depends on your priorities. FBA is faster and more direct, while FBM is flexible.

FBA is great for sellers who don't have established shipping channels. This makes it great for people who don't mind sacrificing some income for more potential sales. Beginners can compete using FBA, especially in the short term. 

FBM is better for sellers who already have internal fulfillment methods. If you already have a warehouse or an established partnership, you might not need FBA to lump itself on top of that.  

But what do you do if you want the flexibility of FBM and the speed of FBA? This is where ShipSaving comes in handy. 

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How ShipSaving Can Help Grow your Amazon FBM Business

ShipSaving is an all-in-one shipping software with the best rates for different careers. This means you don't have to rely on a single provider and can ship to multiple eCommerce marketplaces and your customers.

ShipSaving customers can work with shipping companies like USPS and DHL. You can also connect our shipping platform with eCommerce companies like Walmart, eBay, BigCommerce, WooCommerce, and Shopify.

Our shipping partnerships ensure you get access to better shipping rates. You can also pick our starter plan for free, which can benefit new sellers or startups with enhanced savings. 

With our B2C integrations, you can ship at speeds that compete with Amazon while getting discounts of up to 89% off. 

So try ShipSaving today to see how our flexible shipping and eCommerce integrations can benefit your business. 

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Wrap Up

Amazon FBA is a great resource for both new and veteran sellers. If you plan on exclusively selling on Amazon or expanding through their MCF platform, Amazon offers many opportunities. As a huge corporation, companies can find real value from selling on the platform through FBA. 

However, FBM sellers have more flexibility and don't need to pay extra for fulfillment. While this means handling shipping, warehousing, and returns yourself, it's valuable logistics experience you can use. You can also expand to platforms Amazon might not support.

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