Amazon’s marketplace thrives on third-party sellers, with these independent businesses generating most of the platform’s sales. You will be genuinely shocked at the amount of items that you purchase, that come from FBA Sellers.
It’s something I never noticed for years, but noticed as soon as I started checking which FBA sellers were on my listings. If you buy anything from razors to dog food on Amazon, there’s a chance that it could come from a reseller.
Now, if you are just a general consumer, you won’t mind because you need an item and the reason that you purchase is probably the next day delivery via prime.
But if you sell on FBA and ever buy an item as a consumer, I can guarantee you will be scouring over the package for the FBA label… it’s quite funny and we have a laugh about this in our household.
Small and medium-sized enterprises form the backbone of the Amazon ecosystem, with sellers giving Amazon an income via fees, but also giving consumers items they need.
The two main fulfilment methods, Fulfilment by Amazon (FBA) and Fulfilment by Merchant (FBM), give sellers distinct ways to manage their businesses.
Most sellers choose FBA as their primary method, whilst some opt for FBM or use both systems together. These choices affect everything from daily operations to profit margins, making it essential for sellers to pick the right approach for their specific needs.
FBA vs FBM: Key Differences Between Amazon’s Fulfilment Methods
Amazon sellers can choose between two main ways to handle their orders.
With Fulfilment by Amazon (FBA), sellers send their products to Amazon’s warehouses. Amazon takes care of storing the items and shipping them to customers. They manage customer service too.
Fulfilment by Merchant (FBM) works differently. Sellers keep their stock in their own storage space. They pack and post orders themselves when customers buy their items. Some sellers use other companies to help with storage and shipping.
The biggest difference lies in who does the work. FBA puts Amazon in charge of the daily tasks, whilst FBM gives sellers more direct control. Each method suits different business needs and sales volumes.
Choosing the Right Amazon Fulfilment Method
When to Choose FBM
FBM works best for sellers who want full control over their operations.
Sellers who already have robust shipping systems and warehouses in place can benefit from managing their own fulfilment.
Products that are large, heavy, or move slowly through inventory fit well with FBM. This method saves money on storage fees for items that might sit in warehouses for longer periods.
Businesses with strong customer service teams can excel with FBM. These sellers handle all buyer communications and returns directly, creating personalised experiences for their customers.
When to Choose FBA
Small, lightweight products work perfectly with FBA. Amazon’s vast network of warehouses can store and ship these items efficiently.
Sellers focused on rapid growth should consider FBA. The programme offers the coveted Prime badge, which can boost sales and visibility in search results.
FBA takes care of storage, shipping, and customer service. This setup helps new sellers who lack established logistics networks or those who want to focus on product development and marketing.
Using Both FBA and FBM Together
Many successful sellers use both methods to maximise their profits.
This mixed approach offers great flexibility and risk management.
A mixed strategy works well for diverse product lines. Large items might ship through FBM, while smaller products go through FBA.
Sellers can list the same product with both fulfilment methods. This creates a backup plan if FBA stock runs low.
Key Benefits of Each Method:
FBA
- Prime badge eligibility
- Amazon handles storage and shipping
- Professional customer service included
- Better search visibility
FBM
- Complete control over shipping
- No Amazon storage fees
- Direct customer relationships
- Flexibility with inventory
Smart sellers choose their fulfilment method based on:
- Product dimensions
- Sales velocity
- Storage costs
- Shipping capabilities
- Customer service resources
7 Important Considerations for Amazon Fulfilment Methods
1. Product Dimensions and Mass
The size and weight of items play a major role in fulfilment costs.
Small, light products work best with Fulfilment by Amazon (FBA). Large, heavy items often cost too much to store and ship through FBA.
The Amazon Revenue Calculator helps sellers compare costs between different fulfilment options.
A large item like a kayak might cost £305 in FBA fees alone. Self-shipping could save £100 per unit, plus avoid monthly storage charges of £27 per unit.
2. Managing Customer Interactions
FBA sellers let Amazon handle storage, shipping, and customer service. This creates a hands-off approach to order management.
Self-fulfilled merchants keep their own stock and manage all customer contact. This gives them more control over the buying experience.
3. Merchant Ratings
The merchant rating system lets buyers score sellers from 1-5 stars and leave comments about their service. These ratings focus on shipping speed, product accuracy, and communication.
FBA sellers face less risk with feedback scores since Amazon manages most aspects of fulfilment. If problems occur with FBA orders, sellers can often get negative ratings removed.
Self-fulfilled sellers must carefully manage every part of the sale to maintain good ratings.
4. Stock Movement Speed
The rate at which products sell affects storage costs. FBA charges fees based on how long items stay in their warehouses.
Products that sit for more than 180 days face extra aged stock charges. Slow-moving items might work better with self-fulfilment to avoid these fees.
Stock movement also impacts the Inventory Performance Index (IPI). Low scores can limit a seller’s ability to send new stock to FBA.
5. Order Processing Systems
Self-fulfilment requires time and resources for:
- Picking items from storage
- Packing orders safely
- Arranging delivery
- Managing returns
New sellers often benefit from FBA’s established systems. Experienced merchants with existing fulfilment operations might save money handling orders themselves.
6. Cost Breakdown
FBA Expenses:
- Fulfilment fees
- Storage costs
- Return processing
- Programme fees
Self-Fulfilment Expenses:
- Warehouse space
- Staff wages
- Packaging materials
- Postage rates
Compare total costs between options to choose the most profitable method.
7. Prime Programme Access
FBA items automatically qualify for Prime delivery. This reaches over 200 million Prime members who expect quick shipping.
The Prime badge often leads to more sales.
Self-fulfilled sellers can access Prime through the Seller-Fulfilled Prime programme, but must meet strict delivery standards.
Key Prime Benefits:
- Next-day delivery options
- Prime badge visibility
- Access to Prime shoppers
- Higher conversion rates
Key Contrasts Between FBA and FBM Amazon Trading Methods
Revenue and Income Potential: FBA vs FBM Trading
FBM traders achieve higher monthly sales figures and better profit margins compared to FBA traders.
More than a quarter of FBM traders earn £25,000+ monthly, whilst only 12% of FBA traders reach this mark. The profit margins tell a similar story, with 38% of FBM traders achieving margins above 20%.
Business Launch Speed: FBA vs FBM Trading
Starting an FBM business proves slightly quicker than launching with FBA. Four in ten FBM traders begin operations within two months.
FBM traders also reach profitability faster, with 15% turning a profit in under three months.
Time Management: FBA vs FBM Trading
Both trading methods require similar time commitments. About 22% of traders from each group spend 11-20 hours weekly managing their businesses. Success rates link strongly to time investment for both groups.
Popular Product Categories: FBA vs FBM Trading
Top FBA Categories:
- Home & Kitchen (30%)
- Kitchen & Dining (30%)
- Beauty & Personal Care (24%)
- Health Products (16%)
Top FBM Categories:
- Beauty & Personal Care (26%)
- Home & Kitchen (25%)
- Kitchen & Dining (25%)
- Health Products (18%)
Notable Trading Patterns: FBA vs FBM
Private label sales dominate the FBA sphere, with 55% of FBA traders choosing this model.
FBM traders show more variety in their approaches, with 35% opting for wholesale trading.
Starting Capital:
- Most FBM traders start with modest investments
- FBA traders typically invest more upfront
- 46% of FBA traders begin with £5,000+
- 43% of FBM traders start with similar amounts
The Buy Box and featured offer spots remain crucial for both trading methods. Each approach maintains distinct advantages for specific business goals and product types.
Choosing an Amazon Fulfilment Strategy
Sellers need to pick a fulfilment method that matches their business goals.
Some sellers handle shipping themselves through Fulfilment by Merchant (FBM), which gives more control over inventory and costs.
Fulfilment by Amazon (FBA) lets Amazon handle storage and shipping. Many sellers use FBA for fast Prime delivery and reduced workload.
Third-party logistics (3PL) providers offer another option. These warehouses store and ship products across multiple sales channels, not just Amazon.