In the fast-moving world of e-commerce, the right fulfillment strategy can make all the difference to your success on Amazon. Two models are at the centre: Fulfillment by Merchant (FBM) and Fulfillment by Amazon (FBA). But which one is right for your business? In this guide we look at the pros and cons of both options and help you make the best decision for your business.
1. What is Fulfillment by Merchant (FBM)?
With Fulfillment by Merchant, you as the seller take responsibility for storage, shipping and customer service yourself. All logistics processes are handled either in-house or by specialised external providers such as FulFy Logistics.
Advantages of FBM:
- Cost control: Full control over storage and shipping costs
- Flexibility: Free choice of shipping methods and partners
- Brand building: Direct customer contact for personalised experiences
- Lower fees: No additional fees to Amazon for storage and shipping
Disadvantages of FBM:
- Workload: Managing all logistics processes yourself
- Scaling problems: Potential difficulties as order volume grows
- Shipping speed: Possibly longer delivery times compared with Amazon Prime
2. What is Fulfillment by Amazon (FBA)?
With Fulfillment by Amazon, you store your products in Amazon’s fulfillment centres. Amazon then takes care of storage, shipping and customer service for your items.
Advantages of FBA:
- Prime status: Products are listed as Prime items, which increases visibility
- Fast delivery: Amazon offers fast shipping for higher customer satisfaction
- Scalability: Efficient handling of large order volumes
- Customer service: Amazon handles customer service and returns
Disadvantages of FBA:
- Costs: Additional storage and shipping fees
- Less control: Limited control over the shipping process and storage
- Brand building: Limited direct customer contact for building your brand
3. FBM vs. FBA: A detailed comparison
| Criterion | FBM | FBA |
|---|---|---|
| Cost structure | Lower direct costs, higher indirect costs | Higher direct costs, lower indirect costs |
| Control | High control over all processes | Limited control, Amazon takes care of many aspects |
| Scalability | Challenging with rapid growth | Easily scalable thanks to Amazon’s infrastructure |
| Customer experience | Can be personalised, but potentially slower | Standardised, but fast and reliable |
4. Decision guide: which model suits you?
The choice between FBM and FBA depends on various factors:
FBM could be better for you if:
- you want to keep full control over your logistics processes
- you sell custom or bulky products
- direct customer contact is important for your brand
- you sell on several platforms
FBA could be better for you if:
- you want to benefit from Amazon’s logistics infrastructure
- you have a high order volume and want to offer fast delivery times
- you want to list your products as Prime items
- you want to focus on product development and marketing
5. Conclusion and next steps
The decision between FBM and FBA is not an either-or question. Many successful Amazon sellers use a combination of both models to maximise the advantages and minimise the disadvantages.
Whatever you choose, it’s important to review and adjust your fulfillment strategy regularly. The e-commerce market is constantly evolving, and what is the best solution today may be outdated tomorrow.
Next steps:
- Analyse your current sales figures and logistics costs
- Create forecasts for different growth scenarios
- Test both models with part of your product range
- Get professional advice for your individual situation
Need support optimising your Amazon fulfillment strategy? Get in touch with us for personal advice. Together we’ll find the right solution for your e-commerce business.