What is FBA and FBM?

Fulfillment by Amazon (FBA): A method of selling on Amazon in which a seller (or a seller’s supplier) sends their products directly to Amazon’s warehouses. Amazon then stores the inventory and ships it directly to the customer (often through their 2-day Prime shipping). They also manage customer support.

Fulfillment by Merchant (FBM): A method of selling on Amazon in which a seller lists their products on Amazon, but manages all storage, shipping, and customer support themselves (or through another third-party).

Which one should sellers use?

For both small businesses or at-home sellers to major brands with elaborate supply chains, all sorts of Amazon sellers can benefit from both Amazon FBA and FBM fulfillment methods. But how do you choose what’s right for your business?

First, consider your sales strategy:

• Private label: create own product label/brand
• Wholesale: buying products directly from a brand or from distributors with extra stock in order to sell on Amazon
• Retail Arbitrage: buying discounted products through retailers to sell on Amazon
• Online Arbitrage: buying discounted products online to sell on Amazon
• Dropshipping: buying products directly from a manufacturer who fulfills the order and ships directly to the customer
• Handmade: creating/crafting own products to sell on Amazon

Then, there are six major factors you should consider before you select a fulfillment method on Amazon. 

1. Size and weight of the product
2. Control of customer experience
3. Seller feedback
4. Inventory turnover rate
5. Logistics
6. Expenses and fees

Below, this article goes into detail on those factors. 

Here is a quick overview of which method you should use based on those factors.

You should use FBM if…

• You want more control over your customers
• Your excellent customer service practices are in place
• The products you sell are oversized or heavy
• You already have logistics in place
• You’re able to mitigate the expenses involved in fulfilling your own products
• Your inventory turns over slowly

You should use FBA if…

• The products you sell are small and lightweight
• You’re okay surrendering control to your customers to Amazon
• You want Amazon to handle your customer service
• Your inventory turns over quickly
• You do not have logistics in place
• Your expenses would be higher if you fulfilled your own products

Can you use both FBA and FBM?

Yes. In fact Most successful sellers prefer doing a hybrid strategy and sell on other online platforms like flipkart, Snapdeal etc.