As an Amazon agency, many clients ask us about Fulfilled by Merchant (FBM) versus Fulfilled by Amazon (FBA). There are certain circumstances where we recommend FBA, and others where we recommend FBM; it really depends on a brand’s internal capabilities and the brand’s goals for Amazon. In this article we’ll dive into what you should consider when exploring both fulfillment methods for your product listings.
Using Amazon fulfillment and warehousing services (ie. Fulfilled by Amazon; FBA) is great way to leverage Amazon’s scale. FBA sellers get Prime badges on their products, often resulting in a higher Buy Box percentage. The Prime badge also implies faster delivery speeds, which is a helpful lever in boosting conversions. It’s also typically cheaper (and less hassle) for a brand to use FBA as opposed to 3PL or fulfilling themselves. Despite all this, Fulfilled by Merchant (FBM) is another lever that Amazon sellers can use. FBM can reduce out of stocks, reduce risks when discovering demand, and is the best fit for certain products that would otherwise not work in Amazon warehouses. But, due to the benefits of both fulfillment models, many Amazon sellers choose to duplicate listings to be able to leverage both FBA and FBM simultaneously.
What You Should Know About FBM
Profitability & Internal Costs
When using FBM, the increased customer support, fulfillment and warehousing costs will replace FBA costs. With an FBM model, the seller is paying the shipping cost to deliver products to customers.
FBA, on the other hand, has a fixed fee based on the size and weight of each product. Amazon FBA is attractive because of its competitive shipping and support costs, in addition to the vast number of locations of Amazon fulfillment centers.
Shipping Templates
Shipping templates allow FBM sellers to define how fast and where they are willing to ship to. Sellers can also use templates to pass shipping costs forward to customers.
All FBM offers need to be assigned a shipping template. Up to 20 templates are allowed on a seller account. For more information on shipping templates visit your Seller Central account.
For the highest conversion rates, FBM sellers need to ship the same day or next day, and be prepared to ship 2nd day air. However, if fast shipping times are not operationally or economically feasible, FBM provides flexibility in choosing a processing time and shipping time that works for you.
Buyer & Customer Messaging
When selling FBM, anticipate an increase in customer messages that will need responses, as you are responsible for the entire fulfillment process for the customer. Customers often ask about delivery timelines, returns, and other general questions regarding your brand’s order fulfillment abilities.
Failing to respond to buyer messages promptly (ie. within 24 hours) could result in dissatisfied customers, potential negative reviews, and even impact your sellers rating on Amazon. Depending on the level of messages you receive and the complexity of answering them, you may benefit from hiring someone to monitor and respond to all messages, ensuring none fall through the cracks.
On the opposite end, using an FBA model would place this responsibility on Amazon. Generally, anything shipping or fulfillment related is handled through Amazon as part of the FBA fee.
Inventory Available for Purchase
The quantity of units you want to be available for purchase in FBM needs to be maintained. Overselling and needing to cancel orders will have a negative impact on your sellers rating.
It is best practice to block inventory that is listed on FBM from being sold on other channels for easy inventory management. If the inventory is not blocked, it needs to be updated regularly.
Inventory management is a complex but necessary process for any Amazon seller, regardless of their fulfillment method. However, we’ve seen that for brands using FBM specifically it can be an even greater challenge as they must also consider how much space they will need for inventory storage, and entirely manage their own fulfillment and warehousing (a question that brands using FBA don’t need to worry about).
Now that we’ve gone through some of the pros and cons of using FBM, let’s compare it to FBA in the table below.
Fulfillment Model Evaluation Table
| Aspect | Fulfillment by Amazon (FBA) | Fulfillment by Merchant (FBM) |
|---|---|---|
| Prime Eligibility Limitation | FBA products are eligible for Amazon Prime, improving visibility to Prime members. | FBM products may not be eligible for Amazon Prime, potentially reducing their appeal to Prime customers. |
| Buy Box Advantage | FBA listings often get a Buy Box advantage, increasing visibility. | Sellers that offer Prime shipping or quicker delivery times often earn the Buy Box, which can be a disadvantage for FBM sellers. |
| Time-Saving | Amazon handles inventory availability tracking, packing, shipping, customer returns, and customer support/messaging. | The merchant handles all packing, shipping, customer returns, and customer support/messaging. |
| Shipping Costs | Amazon fulfillment fees are competitive. | Merchants are often unable to negotiate for rates that beat Amazon shipping costs, however costs can be forwarded to customers if needed. |
| Shipping Reach | FBA ships across the US and internationally based on the seller’s settings. | Merchants may not be able to profitably ship to all locations that FBA ships to, however this can be adjusted using shipping templates. |
| Inventory Management | Inventory limits and other variables may lead to out of stocks in Amazon FBA. Proper management and consistency should help keep out of stocks to a minimum. | Any units at the merchant warehouse can be made available on Amazon. |
| Long-Term Storage Fees | FBA charges long-term storage fees for slow-moving inventory, incentivizing faster inventory turnover. Proper inventory management will keep long-term storage fees low. | FBM has no long-term storage fees, but merchants should be cautious about slow-moving inventory in their own warehouse leading to increasing internal storage costs. |
| Time to Restock | Slower – Packing, shipping to Amazon FBA, and Amazon receiving and approving the inventory takes time. | Quicker -Skipping the step of shipping into FBA can reduce any time spent out of stock. |
| Product Eligibility | Not all products are allowed in FBA. For example, meltable products (chocolates, gummies, etc.) are only allowed in FBA during colder months of the year. | Storage and shipping limitations are set by the merchant. |
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Common Questions
What is the difference between “Delivered by Amazon” and “Fulfilled by Amazon”?
Fulfilled by Amazon (FBA) describes who handles fulfillment: the product is stored, picked, packed, and shipped from Amazon’s warehouses on behalf of a third-party seller. “Delivered by Amazon” describes who carries the package on the final leg: Amazon’s own logistics network rather than UPS, USPS, or FedEx. The two are independent — for example, an FBA order can be delivered by a third-party carrier. For shoppers, “Fulfilled by Amazon” is the badge that signals Prime eligibility and Amazon-handled returns; “Delivered by Amazon” only indicates the carrier.
Can I sell an item in both FBA and FBM?
Yes, you can sell items via FBA and FBM at the same time. Product listings can be duplicated to fulfill orders via both methods.
Keep in mind that FBA products are typically given the Buy Box, allowing them to sell at a faster rate. However, having a second listing via FBM can serve as backup if your FBA listing goes out of stock.
Can I limit the number of orders I fulfill in FBM?
Yes, you can limit the number of orders through FBM by setting a max order count for a time period. In doing so, you can protect your fulfillment warehouse from receiving too much work to process. Reducing the number of offers and inventory available is another way to limit FBM orders.
If I want to sell FBM, how do I get started?
To get started selling via FBM, complete the steps below:
- If the item you want to list as FBM is already listed as FBA, convert or duplicate it for FBM.
- Assign a shipping template to the FBM listing.
- Set an appropriate purchase price.
- Load the quantity available for purchase.
- Monitor orders received and ship them from your fulfillment warehouse within 48 hours.
- Monitor buyer messages and respond to them within 24 hours.
Rinse and repeat the process for new listings and orders received.
Recent Amazon Update:
Amazon announced that beginning October 1, enrollment for their Seller Fulfilled Prime program will open again for the first time in over three years. SFP is a privilege for higher performing FBM sellers that have also taken special steps: sellers apply and need to hit metrics that are uncomfortable for most, set up their warehouse in specific ways, etc. Most sellers won’t and should not pursue SFP (we mainly see large brands and 3PL’s benefiting most). We typically don’t recommend our clients to pursue SFP due to the difficult requirements, however SFP is desirable because it displays a Prime badge on products. This increases a seller’s chance of winning the buy box over non-Prime sellers (ie. FBM sellers who are not enrolled in the program), and these sellers often see higher conversion rates as a result.