How does FBA Works on Amazon- Complete details

Introduction

On Amazon, FBM stands for Fulfilled by Merchant. This means that when a customer buys a product, the merchant (seller) is responsible for storing, packaging and shipping the product directly to the customer, rather than Amazon handling the logistics.

This contrasts with FBA (Fulfilled by Amazon), where Amazon stores products in its own warehouses, manages shipping, and provides customer service for orders. With FBM, the merchant has more control over inventory and fulfillment, but also bears responsibility for on-time delivery and customer service.

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Keywords

what is FBA and FBM?
How does FBM work on Amazon?
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(2):FBM on Amazon (Completed by Merchant):

Storage and Shipping: The seller is responsible for storing, packing and shipping the products directly to the customer.

Customer Service: Merchant handles all customer service and returns.

No Prime Eligibility: FBM on amazon products are generally not eligible for Amazon Prime, which can affect delivery speed and customer appeal.

Fees:

There are low fees, as Amazon is not involved in logistics.

How does FBM work on Amazon?

FBM Amazon as a Merchant (FBM) allows a full seller to take full control of storage, packaging, shipping, and customer service for their products.

Here’s how FBM works step-by-step:

(1): The seller lists the product on Amazon:

A seller creates a listing for their product on Amazon like any other product, providing details such as price, quantity and shipping options.
The seller selects FBM as the fulfillment method, indicating that they will handle all logistics.

(2): Order received:

When a customer orders an FBM product, the seller receives a notification from Amazon.
Amazon acts as a platform to process the transaction and transmit the order details to the seller.

(3): Seller handles fulfillment:

Inventory Storage: The seller stores the product in its warehouse, home, or other storage facility.

Packing: Seller is responsible for packing the product properly for shipping.

Shipping: Seller selects the shipping carrier (for example, USPS, FedEx, DHL) and manages the shipping process. Seller must provide tracking information to customer through Amazon.

Shipping Costs: The seller can decide whether to charge the customer for shipping or offer free shipping, but they are responsible for the cost.

(4): Customer receives the product:

The seller must ensure that the product reaches the customer within the promised delivery time.

Fast and reliable shipping can affect customer satisfaction and seller ratings on Amazon.

(5):Customer Service and Returns:

Customer Service: Seller is responsible for handling all customer inquiries, complaints, and product or shipping related issues.

Returns: If a customer wishes to return a product, the seller directly manages the return process, including issuing a refund and providing a return label (if applicable).

(6):Seller’s Fees:

Sellers using FBM still pay Amazon a referral fee for each sale (a percentage of the product’s price), but they don’t pay Amazon for storage, shipping, or fulfillment services (as FBA does). is the case).
This results in lower fees for sellers, but they must absorb the cost of shipping and logistics on their own.

(7):SELLER’S PERFORMANCE:

Amazon monitors the performance of FBM sellers through metrics such as order error rates, late deliveries, and customer feedback.
Poor performance can lead to penalties, such as suspension from selling on Amazon.

Key Responsibilities for FBM Sellers:

Inventory Management:

Keep track of stock and update lists to prevent overselling.

Order Fulfillment:

Ship orders quickly and accurately to maintain a good seller performance rating.

Customer Service:

Handle customer inquiries and issues, including returns and refunds.

Shipping:

Directly manage shipping methods, costs and logistics, including providing tracking information.

Advantages of FBM on Amazon:

Low Fees:

No need to pay Amazon for warehousing or fulfillment.

More Control:

Complete control over inventory, shipping, and customer interactions.

Suitability for unique products:

FBM can be beneficial for customized or large products that may not fit well in Amazon’s fulfillment centers.

Challenges of FBM:

No Prime Eligibility:

Most FBM listings are not eligible for Amazon Prime, which can reduce sales.

Logistics Responsibility:

The seller handles all shipping, which can be time-consuming and expensive if not managed effectively.

Difficult to scale:

It can be difficult to scale a business without Amazon’s infrastructure to support high order volumes.

Is FBM is better than to FBA?

When FBM may be better:

Low sales volume:

If you are a small seller with low monthly sales or you sell less than 40 items per month, FBM may be more cost-effective because you avoid Amazon’s storage and fulfillment fees.

Products with higher shipping costs:

FBM may be better for heavy, bulky, or oversized products because Amazon’s FBA storage and fulfillment fees increase significantly for larger items. FBM can be more profitable if you can negotiate cheaper shipping rates yourself.

Greater control over completion:

FBM allows you to maintain complete control over inventory, shipping methods, and customer interactions. It’s ideal for sellers who customize packaging, offer personalized products, or manage their own fulfillment.

Avoiding Amazon’s Storage Fees:

With FBA, Amazon charges long-term storage fees for products that sit in warehouses for long periods of time. FBM is ideal if you want to avoid these fees or if your products don’t sell quickly.

Low Margin:

If your profit margins are low, avoiding FBA fees can help you stay profitable. FBM has lower costs associated with Amazon’s services, which can help with tighter margins.

When can FBA be better?

Higher sales volume:

FBA is best for high-volume sellers because Amazon’s fulfillment network can efficiently handle large orders and manage logistics for you, allowing you to focus on growing your business.

Basic Qualifications:

Products fulfilled by FBA are eligible for Amazon Prime, which gives them faster shipping options and makes them more attractive to Prime customers. Prime Eligibility can significantly increase your sales.

Improved shopping box functionality:

FBA products have a better chance of winning the Buy Box, which is the section where customers can click “Add to Cart” or “Buy Now.” Winning a buy box can dramatically increase sales.

Time saving and scalability:

With FBA, you don’t have to worry about storing products, packing, shipping, or managing returns. This frees up time for other aspects of your business, making it easier to scale.

Amazon Managed Customer Service:

Amazon handles all customer service and returns for FBA orders, reducing your workload and simplifying the after-sales process.

Fast and reliable shipping:

Amazon’s shipping and fulfillment infrastructure is highly reliable and can deliver products faster, improving customer satisfaction.