On Amazon, there are around 2.4 million sellers, and for them selling on Amazon is immensely profitable, flexible, and a substantial source of revenue. If you have the necessary resources and time to invest, you can sell on Amazon too.
While most of the sellers go for FBA and count on Amazon to store their products in Amazon’s warehouses, there is a second way to consider as well.
FBM (Fulfillment by Merchant) on Amazon allows you to control, manage and fulfill the orders that you get through Amazon’s website. If you decide to fulfill your orders by yourself through FBM, here is what you need to know:
What is FBM on Amazon?
FBM is when sellers offer their items on Amazon and prefer to ship them to each customer by themselves. To put it another way, sellers are entirely responsible for handling all the orders and fulfilling them rather than relying on Amazon to do it. While it is a great option for products with low-profit margins, Amazon FBM is sometimes neglected because of the convenience of handling, shipping, and other highlighted features of Amazon FBA.
How does FBM work on Amazon?
On Amazon FBM, sellers are responsible for sending orders from their warehouse, or any area where they have kept their items to a customer’s doorstep. Dealing with returns is also the responsibility of the seller himself. If you are willing to take this route on Amazon, there are certain factors you must consider. Such as:
· You must find cost-effective and dependable shipping partners to pick your order from your destination and take it to your buyers.
· If you think FBM is costing you more than FBA, then sellers should not fulfill orders directly because it would reduce their profit margins.
· If you choose to go forward with FBM, then make sure to use the best Amazon repricer, inventory management software, and other important tools to get a competitive edge over other sellers, especially because FBA sellers usually have an edge over FBM sellers on Amazon. Ensure that you stand out from them one way or another.
When should sellers choose Amazon FBM?
FBM is a better option for sellers if:
· They sell exclusive products which are only sold on a limited basis.
· They deal with a small number of products. If you have a limited number of product units, it significantly reduces the shipping costs.
· They have items with lower profit margins. You can save your profits instead of spending them on the storage fees of FBA.
· They want to go for a viable option to fulfill their orders. In some cases, FBM is less expensive than FBA. The fees of FBA are mostly determined by the weight of the products and their size. If vendors can fulfill their orders at a much lower rate through partnering with their shipping network, then FBM is the best way to move forward.
What does it cost you to go with FBM on Amazon?
FBM fees on Amazon are the costs that sellers will have to pay if they elect to deliver their products by themselves. Costs of FBM are not fixed and will differ depending on the delivery and shipping choices offered by each seller. However, sellers will be charged with some fixed fees, which are listed below:
1. Subscription charges
– No fees if you choose an Individual selling plan
– $39.99 per month if you go with the Pro Plan
2. Selling fee
– $0.99 for every product unit that you sell; if you have an individual selling plan
– No fee is charged in Pro Plan.
3. Referral charges
– The referral fee is calculated as a percentage of the overall sales price and is typically 15% in most of the categories on Amazon. However, it varies in certain categories, ranging from 6% to a maximum of 45%. Make sure to research and choose your product category wisely, after considering all the costs collectively.
4. Shipping fee
– In the case of FBA, the shipping charges are included in the overall Amazon FBA fee. However, the shipping fee is paid separately by each seller when it comes to FBM.
Benefits of choosing FBM as your fulfillment plan
– You have full authority and control over your business
Sellers manage to keep a sense of command over their business. Maintaining and handling the entire fulfillment process which includes storage, and shipment of orders help them lead a successful business in the long run. You have full control over each aspect of your Amazon business.
– Makes it easier to expand the business
Self-fulfillment of items gives you full control of managing your inventory levels. You can store your inventory where you want to, and expand your business without getting worried about paying high FBA fees or shipping charges for sending your products to the Amazon fulfillment centers.
– Increased profit margin
Sellers gain a better percentage of the profit margins when FBA costs are not factored in. They save money on fulfillment fees, and choose the best and cost-effective warehouse, and save shipping costs. This is more helpful for larger items with limited profit margins.
– Building your brand is easier
Through FBM, sellers get a chance to communicate with their customers and handle their issues directly. They get to know about the complaints and requirements of the customers since they are directly in touch with them. It helps sellers get valuable feedback from customers and come up with better ideas to build their brand image.
– No hidden fees
Sellers know about all the finances as there are no unexpended or hidden costs along the way. The seller has control over what sells, how much inventory is needed and what charges are to be paid.
– You can skip the losses caused by Amazon policies
It’s quite frequent for FBA sellers to deal with the changes in pricing and policies of Amazon. However, an FBM seller can skip all the hassle caused by policy changes on Amazon.
In conclusion,
Most sellers would rather choose FBA and let Amazon handle their inventory and shipping to avoid all the unnecessary burden. However, with FBM, you have an opportunity to save storage and shipping costs and have control over all the business aspects. Using FBM, selling good quality products, and keeping prices competitive with a repricing tool is a formula for success on Amazon.
