What is Amazon FBM and How Does it Work?

All Amazon sellers know about the benefits of Fulfillment by Amazon. However, there's another way to store and ship your inventory called Fulfillment by Merchant. 

FBM is often overlooked by sellers who don't want to store products, ship them to customers, and take care of customer service. They prefer to delegate all these tasks to Amazon FBA. Yet, in some cases, FBM may be a better option. There are some distinct benefits to Amazon FBM that you might not be aware of. 

This post will discuss how to sell FBM on Amazon, its pros and cons, and its cost.

Related: FBA vs FBM: Which is Better for Amazon Sellers in 2023?

What Is Amazon FBM?

Fulfillment by Merchant (FBM) is a fulfillment method in which sellers list their products on Amazon but manage all storage, shipping, and customer support themselves or through a third-party fulfillment center. Sometimes, FBM is also called Amazon MFN or Merchant Fulfilled Network.

FBM, alongside Fulfillment by Amazon (FBA), is one of the fulfillment methods applied on Amazon. Unlike FBA, where Amazon handles fulfillment on behalf of a seller, with FBM, you, as the seller, handle all fulfillment process yourself. You also have to address customer service questions or issues.

With FBM, Amazon is just the place where you list your products, but everything else is up to you. Amazon FBM is a good option for sellers who want more control over their inventory and packaging or who want to sell on multiple channels.

Note. You can select and change a fulfillment method for each listed product. You can use both FBA and FBM fulfillment in your Amazon account.

Related: How Does Amazon FBA Work. Is Amazon FBA worth it?
Amazon 3PL - Complete Guide for Sellers

How Does Amazon FBM Work?

Amazon FBM puts you, the seller, in charge of the entire fulfillment process on Amazon. 

Steps to sell on Amazon FBM

• Step 1. List your products

Just like any other seller on Amazon, you create product listings for the items you want to sell. These listings include details like product descriptions, images, and prices.

• Step 2. Choose fulfillment options

When setting up your listings, go to Inventory > Add a product, and select the "I will ship the item myself" option in the Fulfillment Channel section. That indicates that you will take care of the shipping process instead of using Amazon's FBA service.

• Step 3. Store your inventory

With FBM, you are responsible for storing your own inventory. You need a place to keep your products until they are sold. It could be your own warehouse or even your home.

• Step 4. Pack and ship orders

When a customer purchases your product, it's your job to pack and ship it to them. You must ensure the package is well-prepared and sent out on time.

• Step 5. Handle customer service

As the seller, you are also responsible for dealing with any customer inquiries or issues that may arise. Whether it's answering questions or resolving problems, you are the one who handles it all.

When to Choose FBM for Product Fulfillment?

You should consider using Amazon FBM in the following situations.

Exclusive products

If you have exclusive products that don't sell frequently, FBM can be a good option.

Small-volume products

When you have products with low sales volume, managing them through FBM can be more cost-effective.

Low-profit products

If your products have low-profit margins, FBM allows you to have more control over costs and potentially increase your profits.

Hard-to-ship products

For items that are difficult to ship, such as oversized or fragile items, FBM allows you to handle the shipping process according to your specific requirements.

Handmade products

Many sellers of handmade products prefer using FBM because it allows them to ensure that the orders are delivered according to their requirements.

Temperature-sensitive products

If you sell items that require specific temperature control during storage and shipping, FBM allows you to have direct control over maintaining the necessary conditions.

3PL provider is cheaper

If you have a fulfillment service other than Amazon FBA that is more cost-effective, FBM can be a better choice for your business.

Sufficient storage space

If you have enough storage space, you can utilize FBM to store your inventory on-site without relying on Amazon's storage facilities.

In-house customer service capability

If you have the resources and capacity to handle customer service inquiries and support internally, FBM enables you to provide direct and personalized customer service to your Amazon customers.

Pros and Cons of Amazon FBM

Although you have to do all the fulfillment yourself, FBM has distinct benefits. At the same time, it has some downsides.

Pros of Amazon FBM

Full control

With Amazon FBM, you have full control over your inventory, shipping, and customer service. That allows you to maintain a closer customer relationship.

Cost-saving

FBM can be cost-effective, especially if you have low-volume or low-profit products. That is because you can avoid the Amazon FBA fees associated and reduce storage and fulfillment costs.

Flexibility

FBM offers flexibility in handling unique, oversize, or temperature-sensitive products, allowing you to maintain specific storage and shipping requirements. That may not be possible with Amazon's FBA or can be more expensive.

Cons of Amazon FBM

Time and effort

FBM requires more time and effort as you manage inventory, pack and ship orders, and handle customer service. That can be demanding and time-consuming.

Limited Prime eligibility

FBM orders are not eligible for Amazon Prime's two-day shipping. That may be a disadvantage compared to sellers utilizing FBA since Prime is a popular choice for many customers.

Limited Amazon support

With FBM, you may have less access to benefits and resources provided by Amazon, such as customer reach and support. That can impact your visibility and growth potential on the platform.

What Are FBM Amazon Fees?

Amazon FBM comes with specific fees. As an FBM seller, it's essential to factor in FBM fees when determining the profitability of your business on Amazon.

Subscription fee

Amazon has two pricing plans. If you choose to be a Pro FBM seller, there is a monthly subscription fee of $39.99. If you sell more than 40 units per month, it's more cost-effective to switch to the Pro package.

If you opt to be an individual seller, there is no subscription fee, but you will be charged a fee of $0.99 for each unit you sell. 

Referral fee

Amazon charges a referral fee. This fee is a percentage of your total sales price, typically around 15%, but it can vary from 6% to 45% depending on the product category. You can find the specific fees for your product category on the Amazon website.

Shipping fees

Since you handle packing and shipping orders yourself, you must consider the costs involved. 

Related: Amazon FBA Fees 2023

How to Calculate Amazon FBM Fees?

Calculating your FBM fees may be challenging for sellers. To do it quickly, you can use Seller Assistant App. You can simply check the numbers in the FBA&FBM calculator.

With the FBA&FBM calculator you can see separate figures for Profit, ROI, and Margin for both FBA and FBM. It also helps you determine your fees and logistics costs.

In the FBA&FBM calculator, you will find information on various costs, such as FBA or FBM costs, total Amazon commissions (referred to as 'Fees'), the Amazon Referral fee (15%), monthly storage costs ('Sto') for goods in Amazon warehouses, third-party logistics costs ('3PL'), and the shipping cost ('Ship') of the item.

FAQ

Are there any packaging requirements for FBM Amazon sellers?

Yes, as an FBM Amazon seller, you are responsible that your products are properly packaged to meet Amazon's packaging requirements. They include using appropriate packaging materials, securing items to prevent damage during shipping, and other Amazon guidelines.

Is FBM better than FBA?

Your choice of FBM or FBA depends on your specific Amazon business and product. FBM offers more control and cost savings, while FBA provides convenience and access to Amazon's fulfillment services.

Is Amazon FBM free?

Amazon FBM is not entirely free. There are fees involved, such as subscription fees for Pro sellers or per-unit fees for individual sellers, as well as referral fees and shipping costs that sellers need to consider.

Final Thoughts

In conclusion, FBM is a method of selling on Amazon where sellers handle various aspects themselves, including inventory storage, order fulfillment, and customer service. It provides sellers with control and flexibility but also includes responsibilities and fees. 

You must consider your business needs and preferences to determine if FBM is the right choice for your Amazon selling journey.

Also, you must accurately calculate your FBM fees to ensure your business is profitable. Seller Assistant Аpp can effectively and reliably help you with this task. This all-in-one extension shows your product’s profit, margin, and ROI. It also lets you immediately see if a product has any sales restrictions or has previously triggered problems with account health. It combines an FBM&FBA profit calculator, Quick View, Stock Checker, and Restrictions Checker in one tool.