Most Amazon sellers prefer to subscribe to the FBA (Fulfillment By Amazon) program because of its various perks and hassle-free fulfillment assistance. Of course, the services that Amazon renders under the FBA come with a certain fee, making it difficult for some sellers. Fortunately, you have another option. It is the Amazon FBM (Fulfillment By Merchant).
Amazon FBM is a fulfillment option where the seller (merchant) manages everything that pertains to running the business or account, including the inventory, storage, delivery or shipment, and customer service. Online sellers sometimes fail to see what the FBM program can offer. So, we compiled the essential things you should know about Amazon FBM, especially if you are a new online seller.
Let’s begin.
FBM Amazon: How Does It Work?
Amazon’s Fulfillment By Merchant needs sellers or merchants to enlist their goods on the platform, manage their storage, packaging, process the shipment of all orders, and finally, handle customer support. To simply put it, Amazon is where you put your listing for buyers to see and order, and the rest is your responsibility.
Amazon FBM subscribers place their listings the same as Amazon FBA users. However, you need to choose the “I WILL SHIP THE ITEM MYSELF’ button in the Fulfillment area. Amazon FBM is also commonly known as MFN or Merchant Fulfilled Network.
Quick Tip: Amazon FBM is all about managing your Amazon fulfillment by yourself. You may want to pick this option first if you are a newbie. It is suitable for those who are first looking at establishing their position in the market before paying for more fees and submitting more requirements, as in Amazon FBA.
When Should You Go for the FBM?
You can always choose FBM if you want to. Why? It is because managing an Amazon business is unique for every seller. FBM might be practical to some sellers, but not to everyone. So, who can possibly be successful with this program?
Generally speaking, you may want to consider selling through Amazon FBM if you have:
- exclusive items that have low selling rates
- a small volume of goods
- products with little profit
- oversized items
- fragile goods
You may want to proceed with Amazon FBM if there is a third-party provider near you, and it costs cheaper than going for Amazon FBA. Moreover, if you offer handmade products, you should handle the fulfillment service to ensure that the order arrives at your buyer the way you want it to be.
The Perks of Amazon FBM
You indeed have to put lots of effort and time if you choose to proceed with Amazon FBM. But, did you know that various advantages go along with it? Here are some perks that might convince you to go with this option.
- Full Grasp of Running Your Amazon Business
More often, business experts advise that having a good grasp of how your business works are better rather than depending on a third party to do the leg work. This business aspect is critical if you are an e-commerce beginner as it will help you gain insight into how the business works. In return, a full understanding of your business will allow you to formulate better strategies and techniques, which will help you raise your ranks slowly but steadily.
- Higher Chance to Expand Your Business
Through personally doing the fulfillment of your orders, you can control your inventory at all times. You can choose which item you should increase in stock and if you are already ready to add new things – all these without the worry of additional fees for shipment and storage.
- Dodge FBA’s Stringent Requirements
Yes, enrolling in Amazon FBA will help you take most tasks off your shoulders. However, before you can be eligible for the services, you need to follow specific rules and regulations. Do not be surprised when Amazon requires you to follow particular packaging rules before your item can be accepted in their Fulfillment Center.
If you will go with Amazon FBM, what you need to do is to keep an eye on your orders to carry out the fulfillment duties as the merchant promptly. Every time you successfully fulfill an order, you will gain more positive reviews, which will increase your seller rating and reputation as an Amazon merchant.
- Garner Better Gains
Note that this benefit does not come in easy. Like any other business, you need to invest your time, effort, money, and usage of the right seller tools to get higher profits. However, as there are lesser fees with Amazon FBM than in FBA, your profit margins might improve.
Better gains will happen if your shipper, storage, and inventory management cost less than FBA fees. You will also save costs for storage fees on oversized items with low-profit margins.
- Better Customer Interaction
With Amazon FBM, you are responsible for answering all customer service-related tasks, including answering inquiries and mitigating complaints. Customer service is challenging, but regular customer interaction can be the best way to build your brand.
Moreover, being in charge of customer service, you can also monitor all feedback, positive and negative. This feedback will give you a better insight into how your business performs.
- Additional Storage Fees No More
With Amazon FBA, there are additional fees for storing products that stay longer than six months and those that are oversized. Choosing to be an FBM seller will remove this burden from your list of expenses.
The Downside of Amazon FBM
As much as we would like to focus only on the Amazon FBM’s benefits, it would be best for you to know its downside as well. Why? Knowing its disadvantages will help you prepare and mitigate risks and mistakes before they turn into a problem.
- The fulfillment process is time-consuming.
The process involves checking the item’s quality and integrity, packing according to Amazon’s guidelines, and shipping using your own means or through a third-party provider. As it entails physical work, you need to dedicate ample time and effort to complete the fulfillment process.
- Paperworks. Paperworks. Paperworks.
You might find yourself doing business paperwork or administrative tasks, such as tracking down receipts, documentation, etc. It might seem like little stuff coming in a large number of tasks, but remember, these little details are what keeps your business in place.
- Volatile Shipping Fees
Ideally speaking, Amazon sellers under the FBM program should have lesser expenses when it comes to packing and shipping expenses than FBA subscribers. With this idea in mind, FBM sellers should save and, as a result, have a higher profit. You have to be dedicated to searching for a reliable and cost-effective shipping provider that can handle the delivery without the hassle.
However, with the current pandemic situation, many FBM sellers are reporting volatility in shipping prices due to varying risks. Make sure to monitor any changes with your chosen provider, or you won’t notice that you are earning less than your expected amount.
- Customer Service is Everything
This aspect is one of an Amazon FBM seller’s sole responsibilities. Amazon cannot assist you in this part. You must make sure to never miss out on responding to client queries and feedback. Even with a busy schedule, especially if you have lots of items for shipment (which is good, right?), you must keep your composure when dealing with customer returns and refunds.
- Disqualified for Amazon Prime
Amazon Prime badge is one of the most coveted features in Amazon, given its benefits. Sadly, FBM sellers are disqualified for it.
Amazon FBM Fees: Updated for 2020
The Professional FBM Amazon subscription stays at $39.99 monthly. If you choose to have an Individual account, there is no need to pay the monthly fee, but you have a $0.99 price for every item sold. Therefore, if you are already selling over 40 articles each month, it may be a good idea for you to upgrade your account to Pro.
Referral Fee
The referral fee also applies to all FBM transactions. It is a percentage of the full sales price. For most product classifications, it is 15%. It may differ from 6% to 45%, depending on the items you have.
Shipping Fee
The shipping cost is a crucial factor for FBM users. It is your responsibility to prepare the orders and ship them to your buyers. You must ensure that the third-party shipper you choose is reliable, can deliver the orders on time, and carefully handle packages. Ultimately, their costs should be reasonable and not too costly.
Takeaway Thoughts
Amazon FBM has lots of perks, and you can earn a good profit. However, like other e-commerce types, you need to invest your time, money, and dedication to make it work. The freedom to run your business is the best advantage of FBM. You must ensure proper fulfillment of all orders and prompt response to your customers to boost your reputation.
Overall, this do-it-yourself program offered by Amazon is a perfect option to be a spring-board to improve your e-commerce journey. Just remember to find the best Amazon repricer tool, pack your goods according to Amazon’s guidelines, and choose a cost-effective shipper. Then, you are good to go!
