The 2022 Guide to Fulfilled by Merchant for Amazon Sellers
Amazon has proven to be one of the most complicated and competitive markets in the world. When selling on the market, sellers have to figure out how to not only compete with the millions of other retailers, but also handle their fulfillment processes.
Fulfillment by Amazon (FBA) and Fulfillment by Merchant are two ways for sellers to take care of their customers’ orders on Amazon (FBM). In this article, we’ll look at Amazon FBM and how it can help you with your business.
What is FBM on Amazon?
Fulfilled By Merchant, or FBM, is when a seller lists a product on Amazon but decides to ship it to each customer themselves. In other words, sellers have to take care of their own orders and can’t depend on Amazon to do so.
Even though it’s a good way to sell low-margin items, FBM Amazon isn’t used as much as it could be because FBA makes shipping, handling, and other tasks easier.
How does Amazon FBM work?
After setting up a seller account on Amazon and making listings, sellers have two options for getting their products to customers: they can use Amazon’s fulfillment network to ship orders on their behalf (Amazon FBA), or they can do it themselves (Amazon FBM).
The merchants are in charge of sending the orders to the delivery address given by the customer from their warehouse or the place where they have stored the products. The MFN (Merchant Fulfilled Network) seller is also in charge of customer service and returns.
Amazon sellers who go this route need to think about FBM shipping. They need to find shipping and delivery partners who are reliable and, most importantly, cheap. If the shipping costs for FBM are higher than the fees for FBA, it doesn’t make sense for merchants to fulfill orders on their own because it will hurt their margins.
When to choose FBM to ship your product
FBM works better for products that are unique, sell in small quantities, or have low profit margins.
FBM is better for:
- Exclusive products are products that don’t sell as often.
- For a relatively small number of product units, shipping costs go down a lot when there are fewer of them.
- Products with lower profit margins help FBA save money on storage and warehousing fees.
There are times when FBM is a better deal than FBA. FBA fees are mostly based on the size and weight of the product. If sellers can ship their orders through their delivery partners or network for a cheaper price than with FBA, it is possible for them to choose FBM.
What’s good about FBM
The seller has the freedom to run the business however they want
Self-fulfillment of products gives you a better handle on your inventory levels and gives you the chance to grow. It can be easy and simple to grow your Amazon business. You don’t have to worry about extra shipping to warehouses and fulfillment centers or higher FBA fees.
Run both in-person and online stores
Having a single inventory for both online and offline stores is more than possible. Since sellers store their stock in warehouses they choose, they have full control over the stock and can also use the same stock to run a store in person. All of this can be done without worrying about extra shipping or delivery costs.
More profits (potentially)
If there are no FBA fees, sellers get a bigger share of the profit margins. They save money on fulfillment costs, find the best and cheapest warehouse option, and cut down on shipping costs. This is especially true for big items with small profit margins.
Chance to build a brand on your own
The customer and the FBM seller have to talk to each other. Since they work directly with their customers, they can better understand what they want and what they are upset about. When they talk to clients, they learn important things, get feedback, and get ideas for their business.
Few avoidable losses due to changes in Amazon policies
Amazon’s fulfillment prices and rules change often. It also charges fees for long-term storage for items that have been in Amazon’s warehouse for a long time. A FBM seller doesn’t have to worry about any of these problems.
Less paperwork, especially in states that don’t charge sales tax
An FBA seller will always have to deal with two headaches. One is the taxes that Amazon charges for fulfillment, and the other is the huge amount of paperwork. A FBM seller doesn’t have to worry about either of these things.
Amazon FBM fees broken down
The Amazon fulfillment by merchant fees are just the costs that sellers will have to pay if they decide to ship the orders themselves. These fees are not simple, and they will vary a lot from one seller to the next depending on the shipping and delivery options they offer. But, as we’ll talk about below, they will have to pay some fixed costs.
- The monthly fee for the Pro plan is $39.99.
- Individual Selling Plan – No Charges
- Fee for Selling Each Item Pro Plan: No Fee
- $0.99 for each product unit sold by a single seller
Every time a product is sold, Amazon takes out a referral fee. The referral fee is a percentage of the total sale price and is usually 15% in most product categories. In a few categories, like Amazon Device Accessories, it can be as low as 6% or as high as 45%. Check out the table below to see the referral fee for your type of product.
With Amazon FBA, the shipping fee is included in the fee, but with FBM, each customer/seller has to pay for shipping separately.
Amazon has strict rules about how all goods that are sent to its warehouse must be labeled. FBA sellers could also use Amazon’s FBA labeling service to have their products marked.
FBA packaging fee
There are rules about how Amazon packages things. FBA sellers could choose to pay Amazon to package their items or pay the Amazon packaging fee and package the items themselves. If your products aren’t packed right, you may have to pay FBA unplanned prep fees so that Amazon can repack them according to their needs.
Fee for processing returns
Amazon doesn’t charge anything to process returns in most categories, but they do charge for the ones where they offer free returns. Also, Amazon charges FBA sellers a repackaging fee if the returned items need to be repacked.
Amazon also charges extra fees for stock that hasn’t been sold in more than six months.
Stock removal fee
If you want to take inventory out of Amazon’s warehouse, you will also have to pay to get rid of any items that haven’t sold.
If you want to switch from FBM to FBA, you should know about these fees. If you don’t, they will show up on your bills at some point in your selling cycle. A lot of comparisons and personal preferences go into choosing the right fulfillment. .
Amazon FBA calculator
The Amazon FBA calculator can help you figure out upfront costs, FBA costs, and sales estimates.
When is the right time to use Amazon FBM?
Anyone can choose to go the Amazon FBM route, but running a business on Amazon will never be a “one size fits all” situation. FBM won’t work for all Amazon sellers; only some will be able to use it.
In general, you should think about Amazon FBM if you sell:
- Unique products that don’t sell very often
- Small volume products
- Products with low profits
- Items that are hard to ship (e.g. oversized or fragile)
Also think about Amazon FBM if:
There is already a third-party fulfillment service that is cheaper than Amazon FBA.
You sell things that were made by hand. Many people who sell handmade items like to use FBM to make sure the order gets to the right place.
No Amazon Prime badge
The main problem with using Amazon FBM instead of FBA is that you can’t sell items that are eligible for Prime. The point of Amazon Prime is to get your orders in two days. During the coronavirus pandemic, however, there are still long lines for non-essential items, and people don’t want to wait more than a month.
You can get a similar effect to Amazon Prime if you fulfill these orders yourself or work with a 3PL like ShippingTree that is fully operational at all fulfillment centers and doesn’t stop shipping non-essential products.
Amazon sellers who want to switch from FBA to FBM fulfillment must be aware and ready to drive organic traffic without the Prime label, which helps them do well on the Amazon marketplace.
Let ShippingTree handle Amazon orders
Looking to ship to Israel from the USA? ShippingTree can help you out.
Done for you fulfillment
ShippingTree offers fulfillment services – we’ll manage your entire fulfillment process from initially receiving inventory to shipping orders and managing reverse logistics.
Reduced shipping costs
ShippingTree has a network of strategically positioned distribution centers and a team of fulfillment experts. Thanks to our in-house experience and strategic infrastructure, we can help you scale your operations while reducing shipping costs. Thanks to our partnerships with carriers, we can ship your products at a discounted rate.
ShippingTree is a tech-enabled 3PL provider, so our systems integrate seamlessly with your ecommerce store and all major platforms. This helps us streamline your ecommerce fulfillment, optimizing key processes such as inventory management.
Contact us to learn more about how ShippingTree can help you with your ecommerce fulfillment.