In the ever-expanding world of e-commerce, Amazon has emerged as a global powerhouse, revolutionizing the way people shop online. As part of its commitment to providing a seamless shopping experience, Amazon offers various fulfillment options, including Amazon Fulfillment by Merchant. If you’ve ever wondered about the inner workings of Amazon FBM and how it operates, you’re in the right place.
In this article, we will delve into the intricacies of Amazon FBM, exploring what it is and how it works. We’ll uncover the fundamental principles behind this fulfillment method, its benefits and drawbacks, and shed light on the factors to consider when deciding whether it’s the right choice for your business.
What is Amazon Fulfilled by Merchant (FBM)?
Amazon Fulfilled by Merchant (FBM) is a fulfillment method offered by Amazon that allows sellers to handle storage, packaging, and shipping of their products directly to customers. Unlike Amazon FBA (Fulfillment by Amazon), where sellers store their inventory in Amazon’s fulfillment centers and Amazon takes care of the shipping and customer service, gives sellers greater control over the entire fulfillment process.
When a seller opts for Amazon FBM, they are responsible for storing their products in their own warehouses or facilities. They also handle the packaging and shipping of orders when they are received. This means that the seller must have efficient logistics and shipping capabilities to ensure prompt and accurate delivery.
How does Amazon Fulfilled by Merchant ( FBM ) work?
Amazon Fulfilled by Merchant operates on a simple yet effective process that allows sellers to handle their own inventory, packaging, and shipping.
Here’s a step-by-step breakdown of how Amazon FBM works:
Seller Account Setup
Sellers create an Amazon seller account and list their products on the Amazon marketplace, specifying that they will fulfill orders through it.
Inventory Management
Sellers are responsible for storing their inventory in their own warehouses or facilities. They must ensure that they have adequate stock levels to fulfill customer orders promptly.
Order Placement
When a customer places an order for a product listed by an FBM seller, the seller receives a notification through their seller account.
Packaging and Shipping
The seller is responsible for packaging the product according to their own standards and requirements. They use their own branded packaging and can include promotional materials or inserts if desired. Once the package is ready, the seller chooses a shipping carrier and generates a shipping label.
Order Fulfillment
The seller then ships the package directly to the customer’s address, using the shipping label provided. They must ensure that the package is dispatched within the specified timeframe and that it meets Amazon’s delivery standards.
Order Updates and Tracking
Sellers update the order status and provide shipment tracking information through their seller account. This allows both the customer and Amazon to track the progress of the package and provide timely updates.
Customer Service and Returns
FBM sellers are responsible for handling customer inquiries, providing support, and managing returns or refunds. They must address any customer concerns promptly and maintain a high level of customer satisfaction.
Performance Metrics
Amazon evaluates FBM sellers based on various performance metrics, including order defect rates, shipping time, and customer feedback. Maintaining a good performance record is essential for the seller’s success on the platform.
By following these steps, Amazon FBM sellers can efficiently manage their inventory, handle order fulfillment, and provide a seamless buying experience for customers. While the process requires more direct involvement from the seller compared to Amazon FBA, it offers greater control and branding opportunities for their business.
The pros and cons of Amazon Fulfilled by Merchant( FBM)
Amazon Fulfilled by Merchant offers several advantages and disadvantages for sellers. Here are the key pros and cons of using Amazon FBM:
Pros of Amazon Fulfilled by Merchant (FBM):
Control over Fulfillment
FBM allows sellers to have full control over their inventory, packaging, and shipping processes. They can customize the packaging, include promotional materials, and maintain a consistent brand experience.
Flexibility
FBM provides sellers with the flexibility to handle unique or large-sized products that may not be suitable for Amazon’s standard fulfillment centers. Sellers can choose their own storage and fulfillment locations based on their specific needs.
Cost Management
With FBM, sellers can potentially save on storage and fulfillment fees charged by Amazon FBA. They have the opportunity to explore more cost-effective warehousing and shipping options that align with their business requirements.
Direct Customer Interaction
FBM sellers have the opportunity to establish a direct relationship with their customers. They can provide personalized customer service, handle inquiries, and address concerns directly, potentially fostering customer loyalty.
Less Dependence on Amazon
By utilizing FBM, sellers are not as reliant on Amazon’s fulfillment infrastructure. They have more autonomy and are not as vulnerable to potential disruptions or policy changes within the FBA system.
Cons of Amazon Fulfilled by Merchant (FBM):
Logistics and Operational Challenges
FBM requires sellers to manage their own inventory, packaging, and shipping. This can be a complex and time-consuming process, especially for sellers with limited resources or without efficient logistics capabilities.
Customer Expectations
Amazon customers have certain expectations regarding shipping speed and service quality. FBM sellers must ensure they can consistently meet these expectations to maintain customer satisfaction. Failure to do so may result in negative feedback or a decline in sales.
Higher Workload
FBM demands more hands-on involvement from sellers. They are responsible for order fulfillment, customer service, returns, and other related tasks. This increased workload may be challenging for sellers with limited manpower or time constraints.
Limited Prime Benefits
FBM sellers do not have access to the Prime badge, which is a key driver of sales on Amazon. Prime members prefer products eligible for Prime shipping, so FBM sellers may face reduced visibility and may struggle to compete with Prime-eligible listings.
Returns and Refunds
FBM sellers have to handle returns and issue refunds directly. This can be a complex process, requiring efficient systems for handling returned items, processing refunds, and managing customer satisfaction.
Overall, Amazon Fulfilled by Merchant (FBM) offers greater control and flexibility for sellers but comes with the responsibility of managing the entire fulfillment process. Sellers should carefully consider their resources, capabilities, and customer expectations before deciding whether FBM is the right fulfillment method for their business.
What are the differences between Amazon FBA vs FBM?
Amazon FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant) are two different fulfillment options offered by Amazon for third-party sellers. Here are the key differences between Amazon FBA and FBM:
Inventory Storage and Shipping
With FBA, sellers send their inventory to Amazon’s fulfillment centers, where Amazon takes care of the storage, packaging, and shipping of the products. On the other hand, with FBM, sellers handle their own inventory storage, packaging, and shipping.
Prime Eligibility
FBA enables sellers to offer their products with Amazon Prime’s fast and free shipping benefits. This can lead to increased visibility and sales as Prime members tend to prefer Prime-eligible products. FBM does not automatically provide Prime eligibility unless the seller qualifies for Seller Fulfilled Prime (SFP) by meeting Amazon’s strict shipping performance requirements.
Shipping and Handling
FBA handles all aspects of shipping and handling, including picking, packing, and customer service for returns and exchanges. FBM sellers are responsible for these tasks and need to manage the logistics themselves.
Shipping Speed
FBA typically offers faster shipping speeds since Amazon has a vast network of fulfillment centers and can leverage its logistics infrastructure. FBM shipping speed depends on the seller’s capabilities and chosen shipping methods.
Costs and Fees
FBA charges fees for storage, order handling, and fulfillment services. These fees vary based on factors such as product size, weight, and duration of storage. FBM sellers avoid FBA fees but bear the costs of storing and shipping products themselves.
Inventory Management
FBA sellers have the advantage of leveraging Amazon’s inventory management system. They can track and manage their inventory through Amazon’s Seller Central. FBM sellers must handle their own inventory management and ensure they have sufficient stock to fulfill orders.
Control and Flexibility
FBA offers convenience and scalability, as Amazon handles most aspects of fulfillment. However, it reduces the seller’s control over the fulfillment process. FBM provides more control and flexibility, as sellers can manage their own shipping methods, packaging, and customer experience.
Choosing between FBA and FBM depends on various factors, including the nature of your business, inventory size, shipping capabilities, cost considerations, and desired level of control. Many sellers opt for FBA to leverage Amazon’s logistics and Prime benefits, while others prefer FBM for more control over the fulfillment process.
