Amazon Fulfilled by Merchant (FBM): How it Works and How it Compares to Fulfillment by Amazon (FBA)

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Amazon Fulfilled by Merchant FBM

Amazon is the largest e-commerce site on earth. Amazon Fulfilled by Merchant FBM. Having your products listed and sold in the market can assist you in front of a massive audience. Amazon gives vendors the chance to fulfill orders themselves or let Amazon manage fulfillment.

Actually, Amazon sellers can use a combination of the next satisfaction methods:

  • Fulfilled by Merchant (FBM) — also known as Merchant Fulfilled Network (MFN)
  • Fulfilled by Amazon (FBA)
  • Multi-Channel Fulfillment (MCF)
  • Seller Fulfilled Prime (SFP)

While every acronym is different, all options enable Amazon vendors to receive their orders to customers’ doors. Though FBA is the most common method, it has become less effective recently. Considering that the COVID-19 pandemic started, many Amazon sellers have been rethinking their ecommerce fulfillment strategy.

Not just have Amazon sellers seen sales fall in addition to significant flaws in the replenishment and fulfillment of non-essential things, but many also have had Prime badges — and even listings — eliminated and been unable to get in contact with Amazon support.

Between multiple glitches because of Amazon’s algorithm and Amazon temporarily shutting down its retailer service telephone number, ecommerce brands have unsurprisingly appeared for options to FBA.

Together with Amazon FBM, goods lose Prime standing but may ship using a faster delivery date compared to Amazon can do in this moment. And shoppers who check out with all the default alternative that Amazon provides in the Buy Box (that used to primarily be for Prime-eligible, Amazon-fulfilled alternatives ), will currently see products with faster shipping choices from third-party merchants — no matter fulfillment method.

In this informative article, we will go into the details of the way Amazon Fulfillment by Merchant functions, the pros and cons of Amazon orders that a retailer are fulfillment, alternatives to Amazon FBM, and whether Amazon Fulfilled by Merchant (or other Amazon satisfaction services) can actually grow your business.

What is Amazon Fulfilled by Merchant FBM?

Fulfilled by Merchant works just as it sounds: The merchant meets orders when their products are sold on Amazon, either through self-fulfillment or a 3PL.

Amazon FBM is usually the only fulfillment method available to new merchants selling on Amazon, as FBA requires a couple of approvals, demonstrated stock turnover, also takes time to establish. Small sellers can often fulfill orders , while bigger sellers are more likely to utilize a logistics network to fulfill orders.

Listed below are a Couple of Actions to getting Amazon FBM up and running (and Make Sure to read the following frequent Amazon mistakes you should avoid):

List your products on Amazon

As soon as you create an account with Amazon Seller Central, you may start listing your products. Make sure to include the info needed on your listings to help improve your chances of conversion using the right vision, videos, replicate, and much more.

Be sure to have the proper Amazon marketing strategy. In these uncertain times, many Amazon sellers are cutting back on ad spending, which may be an opportunity to have your ad dollars go a lot farther. Amazon Fulfilled by Merchant FBM

Warehouse products on your own fulfillment center

Based on the number of fulfillment centers you’ve got at your disposal, you may have the ability to distribute your goods to strategic places so that you may save shipping prices and reduce your average shipping zone. If your organization is still small, a storage center or even your house can be a short-term alternative to warehousing.

Ship orders out on time

Once you get an order notification, you must ship the product based on the selected delivery timeframe from the client. Amazon supplies an estimated delivery time to buyers on the offer and checkout pages so clients know when to anticipate a product they have ordered from you. This takes transit and handling times into consideration. It is possible to modify your transport and handling period and transit time to set customer expectations.

It is possible to buy shipping labels through Amazon or by yourself. In any event, you must always offer e-commerce order tracking for the client.

Finally, make sure to upgrade your Amazon selling account with legitimate directions for e-commerce yields for many Fulfilled by Merchant orders. When you approve a purchaser’s petition to return an item, Amazon sends the purchaser that a return tag with your default return address, which must be a legitimate return address.

Fulfillment by Merchant vs. Fulfillment by Amazon

To maintain COVID-19 e-commerce sales speed, many Amazon sellers are turning their FBA listings to be Fulfilled by Merchant.

Natural deodorant brand PiperWai has been going back and forth between FBM and FBA, as everything throughout the coronavirus seems to change hour by hour. They have to track it continuously and adapt quickly. Men’s grooming company BAKblade has witnessed exactly the exact same issue with Amazon.

One night during quarantine when I was in the process of shipping a bunch of products to Amazon, I saw that all of our products no longer had the Prime badge. We were able to transition from FBA listings to FBM right away. With Amazon FBM, our delivery times were much shorter than what FBA was showing on all of our products and we didn’t see a huge drop in orders.”
Marc Fontanetta, Logistics Manager at BAKblade

When BAKblade obtained their Amazon Prime badge back after being gone for a month and due to the COVID-19 pandemic, they chose to keep both FBA and FBM open, knowing Amazon can change again at any time.

Think Crucial, that sells replacement components, wants to be diversified on as many channels as possible and does both FBM and FBA. Together with many Amazon sellers pivoting to FBM, let us dive into the benefits and pitfalls.

The pros and cons of Amazon Fulfilled by Merchant

Amazon Fulfilled by Merchant is often the fulfillment method of choice for sellers just getting started on Amazon and even common for those whose primary sales are made on their ecommerce store.

Advantages of Amazon FBM

With Fulfilled by Merchant, Amazon sellers can still take advantage of the valuable real estate on Amazon’s high trafficked site.

Access Amazon’s customers with fewer fees

Amazon FBA fees are far heftier than FBM. With Amazon Fulfilled by Merchant, sellers primarily have a monthly subscription fee, a small fee per order placed, and a referral fee for each order.

Avoid Amazon’s strict FBA requirements

Amazon is known for changing its FBA requirements without giving sellers enough time to adapt to changes (and they get much higher during Q4). These requirements can be a hassle for merchants fulfilling on Amazon. With FBM, there are fewer rules and penalties for failing to hit their strict standards for each Amazon Prime order.

Retain greater control of your business

With Amazon FBA, your branding takes a hit. Customers receive a box with Amazon’s branding — not yours. Customers may associate your products with Amazon and will communicate with Amazon’s customer support if there are issues. When you use FBM for the order fulfillment process, you can better ensure you are providing the customer experience you want.

Canned water brand Open Water moved to FBM from FBA and has fulfilling all of their orders. They found not only did a better job of packing it all correctly (their water comes in aluminum cans, which dent easily) and had better rates, but Amazon was putting too much plastic in their orders, which doesn’t align well with their eco-friendly brand.

Get better support

For support, Amazon is hard to get in touch with a human being. Canned water brand Open Water really likes having direct contacts with their retail fulfillment provider. While they lost some sales moving to FBM, they now have better service and reduced lead times.

Disadvantages of FBM

Amazon is the best at fulfilling Amazon orders, so giving up their perfected process may be tough. Additionally, FBA sales do not always translate to Amazon FBM sales.

No Amazon Prime badge

The main downside to using Amazon FBM over FBA is not having Prime-eligible products. The point of Amazon Prime is to get orders delivered in two days. However, during the coronavirus pandemic, long delays for non-essentials are still present. Consumers don’t want to wait over a month.

If you fulfill these orders yourself or work with a 3PL. Who is fully operational at all fulfillment centers and not suspending the fulfillment of non-essential products. You can get a similar effect to Prime.

Of course, Amazon sellers that want to switch fulfillment options from FBA to FBM. Must know, aware and prepared to drive organic traffic without the Prime designation. That helps them succeed on the Amazon marketplace.

Spend more time on fulfillment (if self-fulfilling)

If you’re managing your Amazon FBM orders, you can end up spending a lot of time packing boxes. You will find some hidden fees in self-fulfillment including the opportunity cost of you not completing higher-value tasks.

Costs of warehousing and in-house fulfillment (if outsourcing)

Outsourcing fulfillment to the pros can be costly, especially if you have a lot of inventory sitting and not selling. You can potentially reduce shipping costs by splitting inventory to multiple strategically located fulfillment centers.

Amazon FBM fees

Amazon FBM works on a fee-based structure. There are three main fees: referral fees, a monthly subscription fee, and a fee for each item sold.

Referral fees

Since you list your products on Amazon. And not on your own site, each sale made is considered a referral. The total referral fee will depend on the type of product you sell and can range from 6% to 45%. To view the fees for each product type, you can check out the referral fee table on Amazon’s website.

Monthly subscription fee

Amazon offers a subscription fee for the Pro FBM service that costs $39.99 per month. By subscribing to this plan, you can waive additional fees when a product is sold.

Per-item selling fee

The per-item selling fee is $0.99 for each item you sell. You can waive this fee if you sign up for the Pro FBM plan.

Other fees you’ll encounter

If you partner with a 3PL to handle Amazon FBM, there are costs like storage and fulfillment costs. If you do it yourself, you may think you’re saving money. But there are always opportunity costs with the amount of time you’re spending. Spending on packing boxes and running to the local UPS store.

Conclusion

Amazon Fulfilled by Merchant FBM is a good option for Amazon sellers. Working with a 3PL to fulfill high-demand products. Can benefit your business — especially if you can offer an Amazon Prime experience.

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