Amazon FBM: Everything You Need to Know
Since the implementation of fee increases in 2024, Amazon FBM, fulfillment by Merchant (FBM) has become an increasingly attractive option for sellers on Amazon Canada, particularly when it comes to FBM logistics.
Amazon FBM vs FBA offers sellers greater control over their fulfillment operations compared to Amazon’s FBA (fulfillment by Amazon) program.
This control can manifest in several ways, including selecting appropriate packaging materials, choosing preferred shipping carriers and rates, and managing the customer service experience directly.
While some sellers may find the additional responsibility daunting, others may find the freedom and potential cost savings to be significant benefits.
What Is Amazon Fulfillment by Merchant (FBM) ?
Amazon FBM meaning is a fulfillment method where you, Amazon FBM seller, handle the entire fulfillment process for your products sold on Amazon.ca.
This includes picking, packing, shipping, and customer service related to order fulfillment.
In contrast, Amazon FBA involves sending your inventory to Amazon warehouses, and they handle picking, packing, shipping, and customer service for your orders.
How Does Amazon FBM Work?
To better understand how does Amazon FBM work, it’s necessary to view the below:
1. Customer Orders Your Product
A customer places an order for your product on Amazon.ca. The order details, including the customer’s shipping address and any specific instructions they may have provided, will be displayed in your Seller Central account.
2. Receive Order Notification
You’ll receive a notification through your Seller Central account whenever a customer places an order for one of your FBM products.
This notification will typically include the order details, such as the items ordered, the customer’s shipping information, and the order total.
3. Fulfill the Order Yourself
When receiving the notification, you’ll need to fulfill the order yourself, this include:
Locating the ordered product within your warehouse or designated storage location. Ensure you have the correct item, size, color, and quantity based on the order details.
Package the product securely according to Amazon’s packaging guidelines. These guidelines are in place to ensure products are protected from damage during shipping. Improper packaging can lead to customer dissatisfaction and potential returns.
Amazon provides detailed packaging instructions for various product types within Seller Central. You’ll want to use high-quality packing materials that are appropriate for the size and weight of your product.
Choose a reliable shipping carrier that offers competitive rates and services that meet your needs. You’ll need to factor in delivery speed, cost, and tracking options when selecting a carrier. Once you’ve chosen a carrier, purchase and print a shipping label.
You can purchase shipping labels directly through your chosen carrier or through Amazon Buy Shipping service within Seller Central.
Amazon Buy Shipping can offer you discounted rates on shipping through certain carriers. Place the shipping label securely to your package and ship it to the customer using the carrier’s designated drop-off location or schedule a pickup (depending on the carrier’s services).
4. Track and Update Order Status
It’s important to track your shipment and update the order status on Seller Central to reflect its progress. This allows customers to stay informed about the whereabouts of their order and provides transparency throughout the fulfillment process.
Most carriers offer shipment tracking options through their websites. You can use the tracking information to update the order stats within Seller Central, letting the customer know that their order has been shipped and providing them with the tracking number.
5. Handle Customer Inquiries
You are responsible for handling any customer inquiries related to the order, such as questions about shipment status or returns.
Prompt and professional communication is necessary to maintain customer satisfaction.
Being proactive in addressing customer inquiries can help prevent negative feedback and potentially turn a frustrated customer into a repeat buyer. Seller Central provides tools to communicate directly with customers through your account.
How to Set Up an Amazon FBM Seller Account
There’s no separate signup process for FBM.
When you create a Seller Central account and list your products on Amazon.ca, you automatically opt for FBM fulfillment.
How to Know When Your FBM Product Sells?
You’ll receive order notifications through your Seller Central account whenever a customer purchases one of your FBM products.
When to Choose FBM for Product Fulfillment?
FBM can be a suitable option for sellers in the following situations:
Smaller Inventory: If you have limited product range or low sales volume managing fulfillment yourself might be more cost-effective than FBA fees.
Large or Bulk Products: FBA fees can be high for large or bulky items. FBM allows you to potentially negotiate better Amazon FBM shipping rates with carriers for these products, giving you more control over your shipping costs.
High-Value Items: For high-value items, you might prefer to maintain control over storage and FBM warehouse to ensure proper security. This can give you peace of mind knowing your valuable inventory is securely stored and reduces the risk of loss or damage that could occur in transit through an FBA warehouse.
Custom or Unique Packaging Needs: If your products require special packaging or handling, FBM allows you more flexibility in this area. You can ensure that your products are packaged according to your specific requirements, potentially reducing the chance of damage during shipping and ensuring a positive customer experience.
Pros and Cons of Amazon FBM
Pros
You have more control over the entire fulfillment process, including packaging (adhering to Amazon FBM shipping requirements), selecting shipping carriers (impacting Amazon FBM shipping rates), and managing the customer service experience.
For certain products, FBM can be more cost-effective than FBA, especially for sellers with low sales volume or large, bulky items, due to the flexibility in negotiating shipping rates. You’ll also avoid Amazon FBM fees associated with FBA fulfillment.
You can set your own product pricing and manage profit margins without FBA fulfillment fees impacting your calculations. This allows you to potentially offer more competitive pricing to customers.
Cons
FBM requires more time and effort on your part to manage picking, packing, shipping, and customer service related to fulfillment. This can be a significant drawback for sellers with a high sales volume.
You are responsible for managing your own inventory levels and ensuring stock availability to fulfill orders. Inefficient inventory management can lead to stockouts and lost sales.
Negotiating shipping rates with carriers and managing the shipping process can be complex, especially for sellers who are not familiar with shipping logistics.
Finding the most cost-effective and reliable shipping options can require time and research.
You are responsible for handling all customer service inquiries related to order fulfillment, including issues with shipping delays or damaged products. Prompt and professional communication is essential to maintaining customer satisfaction.
What are Amazon FBM’s Fees?
There is no specific Amazon FBM Fee. However, you will still pay for Amazon selling fees such as referral fees, closing fees, and variable closing fees, which vary depending on the product category.
In addition, you’ll be responsible for all shipping costs associated with fulfilling your orders for Amazon FBM shipping.
These costs can vary depending on the weight, size, and destination of your products, as well as the chosen shipping carrier and service level.
Being mindful of these factors and comparing Amazon FBM shipping rates from different carriers is crucial to keeping your fulfillment costs under control.
Steps to Ship the FBM Order to the Customer
- Locate the ordered product in your storage or warehouse.
- Package the product securely according to Amazon’s packaging guidelines to prevent damage during shipping.
- Select a reliable shipping carrier that offers competitive rates and services that meet your needs. Consider factors like delivery speed, cost, and tracking options when making your selection.
- Purchase and print a shipping label through your chosen carrier or Amazon Buy Shipping service.
- Ship the order to the customer using the purchased shipping label.
What are the Shipping Carrier Options for FBM Sellers?
You have the freedom to choose any reputable shipping carrier for Amazon FBM shipping. This allows you to compare Amazon FBM shipping rates and services from various carriers to find the most cost-effective and reliable option for your needs.
Some popular choices for FBM sellers include national carriers like Canada Post, or private couriers like DHL, FedEx, ForceGet, and regional carriers that may offer competitive rates for specific destinations.
Are There Any Packaging Requirements for FBM Amazon Sellers?
Is Amazon FBM Free?
No, Amazon fulfillment by Merchant is not free. While there is no specific “FBM Fee”, you’ll need to pay for several costs associated with fulfilling orders yourself. These include:
Standard Amazon Selling Fees
You’ll still be responsible for standard Amazon selling fees, such as referral fees, closing fees, and variable closing fees, which vary depending on the product category. These fees are deducted from your total selling price whenever an order is placed.
Shipping Costs
You’ll shoulder the entire cost of shipping your products to customers. These costs can very significantly depending on the weight, size, and destination of your products, as well as the chosen shipping carrier and service level.
Negotiating competitive shipping rates with carriers is crucial for keeping your fulfillment costs manageable.
Packaging Materials
The cost of packaging materials, such as boxes, bubble wrap, and void fill, should be factored in. Selecting the right packaging materials is essential to ensure your products arrive safely at their destination without getting damaged during shipping.
Is FBM better than FBA?
There is no one-size-fits-all answer to whether FBM is better than FBA. The ideal choice depends on your specific business needs and circumstances.
Some factors to consider when deciding between FBM and FBA are:
- Product Volume
- Product Size and Weight
- Profit Margins
- Time Commitment
- Customer Service Expertise.
| Feature | FBM | FBA |
| Fulfillment Control | Greater control over fulfillment process | Less control over fulfillment process |
| Costs | Potentially lower costs (for certain products) | FBA fees can add up |
| Profit Margin Flexibility | More flexibility in setting profit margins | FBA fees impact profit margins |
| Time Commitment | Increased time commitment for fulfillment tasks | Convenient and hands-off fulfillment solution |
| Inventory Management | Responsibility for managing inventory levels | Inventory storage and management handled by Amazon |
| Shipping Logistics | Complex shipping logistics to manage | Amazon handles shipping logistics |
| Customer Service | Responsibility for handling customer service inquiries | Amazon handles customer service inquiries related to fulfillment |
| Shipping Speeds | Potentially slower shipping speeds depending on chosen carrier | Faster shipping speeds (potentially) |
| Prime Benefits | No access to Prime benefits | Eligible products can leverage Prime benefits |
| Packaging Customization | More flexibility for customizing packaging | Limited packaging customization options |
What Can I Sell on Amazon FBM?
You can sell virtually any product category on Amazon FBM that complies with Amazon’s selling policies. However, some product categories might be better suited for FBA due to factors like size, weight, or special storage requirements.
Low-volume or niche products: If you have a limited product range or sell specialized items, FBM can be a cost-effective option.
Large or bulky products: As mentioned earlier, FBM allows you to potentially negotiate better shipping rates for large or bulky items.
High-value products: For valuable products, you might prefer the control and security of storing and fulfilling them yourself through FBM.
Products requiring special packaging: If your products require unique or custom packaging, FBM allows more flexibility in this area.
Which Types of Businesses Will Benefit Most from Opting for Amazon FBM
For businesses with a small product range or low sales volume, managing fulfillment in=house through FBM can be more cost-effective than FBA fees.
As discussed previously, FBM can offer more flexibility in negotiating shipping rates for large or bulky products, potentially leading to cost savings.
Companies selling high-value items might prefer the control and security of managing their own storage and fulfillment through FBM.
If your products require special packaging or handling considerations, FBM allows for greater customization to ensure your products arrive safely at their destination.
By understanding what is Amazon FBM, you are one step closer to managing your business the way you intend and watch your profit margins increase.