One of the major fulfilling methods on Amazon is known as Fulfillment by Merchant (FBM). In this process, the seller has to manage and handle almost everything including the listing of products, storage handling, and all other aspects of fulfillment on Amazon.
In order to understand the working of this process, we have carried out a strong analysis of benefits and drawbacks for you to read and get a sound understanding of the overall technicalities associated with this process.
In simple terms, we can say that FBM requires you to first create listings for your products. Then you have to store the products, pack and ship them to buyers on Amazon. All responsibilities for any damaged arrivals, missing, or late arrivals.
FBM Benefits on Amazon:
- Manual fulfillment – By using the Fulfillment by Merchant process, sellers tend to have more access and control over the inventory, which according to many sellers is a benefit. This allows you to store, pack and then ship the products by yourself, whenever you need to. As a result, more ownership of the fulfillment process is handed over to the sellers.
- Lesser fees on Amazon – Using the process of FBM, you can easily avoid paying the storage and fulfillment fee which was considered to be compulsory on FBA. However, you will still have to pay the various referral fee and the closing fees.
- Slightly higher margins – Another major benefit provided by the FBM process is that sellers can make more from each of their sales as lesser fees have to paid on fulfilling of orders. However, this can lead to less sales, and can further worsen if you’re not on Prime as 50% of the buyers on Amazon are prime and mostly require prime items as they are annually paying for free-of-cost two-day shipping on Amazon.
- Increase in responsibility – After choosing FBM, one must be willing to handle all the responsibility which means to exclusively pack, ship, and manage the inventory. Some sellers might consider it as a benefit, but it can become an extremely excruciating task where the seller needs to be attentive to the Amazon account every day, even on holiday and weekdays. If anything goes wrong, the entire blame is on the seller and not on Amazon.
- Difficult to win Buy Box – As the process of fulfillment plays a major role in the determination of winning the buy box; therefore, the sellers using FBM face an immensely difficult time getting the Buy Box and then keeping it. For this purpose, the sellers using FBM would have to set lower prices in order to win the Buy Box.
You’ll Miss out on Prime members – FBM process can lead to less sales and can further worsen if you’re not on Prime. This is primarily because 50% of the buyers on Amazon are prime and mostly require prime items as they are annually paying for free-of-cost two-day shipping on Amazon. However, one can enroll in the Seller-Fulfilled Prime, which is realistically a very difficult and comprehensive task.