What is FBM Amazon (Fulfillment by merchant) and how does it work?

FBM (Fulfillment by Merchant) is a method of selling on Amazon where the seller takes full responsibility for fulfilling orders made by the buyer. Sellers are required to ensure order fulfillment, product storage, customer service, and returns. They can manage the FBM process themselves or collaborate with a third party to provide logistics and warehouse services, such as through outsourcing centers. FBM allows sellers to have complete control over the process of delivering products to the buyer, which is an advantage of this selling method on Amazon.

When Amazon sellers decide to use FBM, they must be prepared to fully organize the logistics process, which involves several steps.

• First step

Receiving goods at the warehouse and storing them. Goods must be placed in warehouse locations, labeled, and entered into the accounting system. If necessary, the goods must be checked for defects. The storage location of the goods can be any premises, depending on the characteristics of the goods. For sellers who are not residents of the USA, it is more convenient to use the services of prep centers.

• Second step

Processing, picking, and packing the order. After receiving information about the purchase of the goods, it is necessary to assemble the order, pack it, and apply the necessary markings.

• Third step

Shipping and delivery of the order. In most cases, specialized transportation companies handle order delivery. It is necessary to choose a reliable partner for delivery. It is very important that the order is delivered intact and without delays.

• Fourth step

Returns. If the goods are returned, it is necessary to accept them, check and, if necessary, correct any damage. If the goods are in good condition, they should be returned to the warehouse.

However, the most important thing is to take into account the total cost of all logistics stages. The cost must be reasonable. If the costs for FBM are higher than the commission charged by FBA, sellers may not find it worthwhile to handle order fulfillment themselves.

For sellers who care about the safety of their goods, especially during transportation, Amazon FBM is the best choice. This service allows them to control every stage of delivery, from packaging to delivery, ensuring the safety of goods throughout the journey.

But that's not all the advantages of using Amazon FBM. Choosing this service is also advisable in cases where the seller already has their own established system of storing and delivering goods to customers. In this case, using FBM becomes not only more economically viable but also allows the seller to maintain control over the delivery process.

Ultimately, using Amazon FBM gives sellers more freedom and opportunities in managing their business, especially when it comes to selling unique, rare, exclusive items, or large-sized products with specific transportation requirements.

• Full business control

Sellers can fully control their business and efficiently manage all aspects of inventory, giving them an advantage in the long run. This makes expanding the business easier since there's no need to worry about additional shipments to warehouses and fulfillment centers, as well as unnecessary expenses on FBA services.

• Enhanced selling opportunities

Sellers can efficiently manage their inventory thanks to a unified product database. This allows them not only to sell their products on Amazon but also on other popular marketplaces, online stores, and even offline retail outlets. Moreover, sellers can fully control their inventory by storing it in chosen warehouses, without the need to spend extra money on shipping.

• Promotion of own brand

Handling customer orders by the seller provides greater control and flexibility in adding gifts, promotional materials, and other marketing materials to each order. Direct interaction with customers also gives sellers a better understanding of their needs, problems, and preferences, which in turn helps create a more successful brand. Additionally, sellers receive valuable information, feedback, and ideas from customers that can help them improve their business.

• Higher margins and no extra expenses

High FBA order fulfillment fees can significantly reduce sellers' profits. Using FBM allows reducing commission costs, choosing a more economical storage and delivery option, which is particularly relevant for large-sized products with low profitability. This gives sellers more control over their business, the opportunity to achieve higher margins, and fewer unexpected expenses, which overall positively impacts the success and profitability of their business.

• Buy Box placement and Prime participation

Getting access to the Buy Box on Amazon is a challenging task, and becoming part of the Prime program is impossible. Due to limited partnership with Amazon, the items sold cannot meet all the requirements of the Prime program. As a result, getting into the Buy Box on Amazon will require more effort. It's possible but considerably more labor-intensive than using FBA services.

• Shipping costs

High shipping costs can deter a buyer's desire to purchase a product. It's recommended to consider including the cost of shipping in the price of the product and selling it as a product with free shipping. In the absence of this option, offering the buyer several shipping options with different costs and delivery times can increase the likelihood of a purchase and customer satisfaction.

• Handling a large volume of orders

Handling a large volume of orders can be a problem for sellers. Sellers using FBM handle order fulfillment themselves. However, with a large number of orders, managing the entire process can be physically challenging. In this situation, assistance from a prep center in processing and shipping orders may be necessary. In such a center, orders will be assembled, packed, and shipped to customers.