FBM Amazon Canada 2024 Guide
FBM Amazon Canada (Fulfilled by Merchant) has become an increasingly attractive fulfillment method for sellers on Amazon Canada in 2024.
Recent fee hikes implemented by Amazon have prompted many sellers to re-evaluate their fulfillment strategy, and the inherent control and flexibility of FBM are proving to be significant advantages. With FBM Canada, sellers have more control over their shipping costs, which can allow them to offer more competitive pricing to customers.
What is Amazon FBM?
FBM Amazon Canada, which stands for Fulfilled by Merchant, is a fulfillment model where the seller takes complete responsibility for storing, picking, packing, and shipping products to customers on Amazon Canada.
This includes FBM shipping costs and FBM delivery times, all of which directly impact customer experience and seller metrics.
How does Amazon FBM work?
When a customer places an order on your Amazon Canada listing fulfilled by FBM, you’ll receive notification through Seller Central. You’ll then need to fulfill the order yourself.
This typically involves a streamlined workflow to ensure efficient order processing and timely delivery.
Order Processing
Upon receiving notification, the first step is to verify inventory availability.
Using your inventory management system (IMS) or a similar method, confirm that the ordered item is in stock and readily available for fulfillment.
If you have multiple storage locations, you’ll also need to determine the optimal location to pick the item from, considering factors like distance and shipping costs.
Picking and Packing
Once inventory verification is complete, the picking process commences.
This involves retrieving the correct item from your designated storage location. Ensure careful and accurate picking to avoid fulfillment errors that can lead to customer dissatisfaction.
Once retrieved, the item needs to be securely packaged to withstand transportation.
The packaging should be appropriate for the size, weight, and fragility of the item. You’ll want to consider using high-quality packaging materials to minimize the risk of damage during shipping.
Shipping
With the order picked and packed, you’ll need to choose a shipping carrier and service level.
Consider factors like cost, delivery speed, and tracking capabilities when making your selection. Once you’ve chosen a carrier and service, purchase postage or a shipping label online and securely affix it to the package.
Drop the package off at the designated carrier location or arrange for a pickup, depending on the carrier’s services.
Tracking and Communication
Throughout the fulfillment process, it’s crucial to maintain clear communication with the customer.
Provide them with tracking information once the order is shipped.
This allows them to stay informed about the delivery status and anticipate their purchase arrival. If any delays or issues arise during shipping, proactively communicate these to the customer and offer solutions whenever possible.
What Are The Key Differences Between Amazon FBM And FBA?
The primary alternative to FBM is Amazon’s Fulfillment by Amazon (FBA) program. Here’s a breakdown of the key differences:
- Fulfillment Responsibility: FBM Canada puts you in charge of the entire fulfillment process, while FBA entrusts it to Amazon.
- Inventory Storage: With FBM, you manage your own inventory storage, whereas FBA requires sending your products to Amazon Fulfillment centers.
- Shipping Costs: FBM pricing costs are your responsibility, while FBA includes fulfillment fees that cover storage and shipping.
- Control: FBM offers greater control over branding, packaging, and shipping decisions.
- Seller Metrics: You are directly responsible for fulfilling orders on time and maintaining positive customer feedback with FBM.
What are the Amazon FBM fees?
FBM pricing differs from FBA fees.
You’ll have to pay standard Amazon selling fees for your product category, along with any variable closing fees.
However, the biggest cost factor in FBM Canada is FBM shipping. You’ll need to factor in the cost of packaging materials, postage, and any additional services you choose (e.g., tracking, insurance).
How do I set up Amazon FBM in Canada?
There’s no specific setup process for FBM Canada. As long as you have a professional seller account on Amazon Canada and products listed, you’re automatically enrolled in FBM. However, there are important steps to consider:
1. Choose a Fulfillment Location
Decide where you’ll store your inventory. This could be your home officer, a dedicated warehouse, or a third-party logistics (3PL) provider.
2. Research Shipping Options
Compare rates and services offered by different shipping carriers in Canada. Negotiate volume discounts if possible.
3. Develop a Fulfillment Process
Establish a system for efficiently processing, picking, packing, and shipping orders. Consider investing in packing supplies and shipping software.
How does Shipping for FBM in Canada work?
Once you’ve fulfilled an FBM Canada order, you’ll need to choose a reliable shipping carrier and service level.
Compare Amazon FBM shipping rates from different carriers like Canada Post, FedEx, or Forceget.
Consider offering expedited shipping options for faster deliveries and potentially higher customer satisfaction. Keep in mind that there are other shipping methods such as air freight or sea freight depending on your budget and time,
Choose a service with tracking capabilities to provide transparency to your customers.
How Can Amazon Sellers Take Advantage Of Amazon FBM?
Selling on Amazon Canada can be a good fit for various seller types.
High-Value, Low-Volume Products
For expensive items with low sales volume, the benefits of Amazon FBM are having more control over the entire customer experience. This can be particularly valuable for high-value products where premium packaging and faster shipping options can enhance customer perception and justify higher price points.
You can use FBM Canada to offer unique unboxing experiences or even personalized touches to better enhance brand image.
Products with Unique Packaging Requirements
FBM allows complete control over branding and packaging, which can be important for certain products.
This could be for fragile items that require specialized packaging materials or oversized products that have specific dimensional constraints.
With FBM, you can make sure that your products are packaging securely and comply with carrier regulations without limitations imposed by FBA’s packaging guidelines.
Sellers with Existing Fulfillment Infrastructure
If you already have a storage and shipping infrastructure in place, FBM Canada can make use of the existing set up by allowing you to consolidate your fulfillment operations and potentially achieving greater efficiency.
Maintaining Control Over Brand Experience
FBM allows you to personalize the customer experience and therefore, strengthen brand identity. You can include marketing materials, thank-you notes, or promotional offers with your shipments to build customer loyalty and encourage repeat businesses.
Flexibility in Returns
Amazon FBM shipping gives you more control over your returns process.
You can set your own return policy and decide how you want to handle return shipping costs.
This can be beneficial for sellers who want to offer a more customer-centric return policy that might not be feasible under FBA’s return guidelines.
Key Factors Influencing Profit Maximization in FBM
Selling in Canada Amazon offers greater control over your fulfillment costs, potentially leading to higher profit margins.
FBM shipping costs and operational efficiency significantly impact your bottom line.
Compare rates and services offered by various carriers and negotiate volume discounts whenever possible. Building strong relationships with carriers can lead to significant cost savings.
Use the right size and type of packaging materials to minimize dimensional weight and reduce shipping costs. Consider using eco-friendly packaging options that may be attractive to some customers.
Streamline your fulfillment process to minimize fulfillment time and errors. Invest in tools and technologies that can further automate tasks like order picking and shipping label generation.
With FBM, you have more control over product pricing. Consider factoring in FBM shipping costs when setting prices to ensure profitability.
You may also be able to offer competitive Amazon FBM shipping rates or free shopping above a certain order value to attract customers.
Maintain accurate inventory levels to avoid stockouts that can lead to lost sales and customer dissatisfaction, not to mention, avoid overstocking, which ties up capital and leads to unnecessary storage costs.
Use inventory management software to better gain real-time insights into your stock levels and forecast demand.
What Are The Key Differences Between Amazon FBM And FBA?
The primary alternative to FBM is Amazon’s Fulfillment by Amazon (FBA) program. Here’s a breakdown of the key differences:
- Fulfillment Responsibility: FBM Canada puts you in charge of the entire fulfillment process, while FBA entrusts it to Amazon.
- Inventory Storage: With FBM, you manage your own inventory storage, whereas FBA requires sending your products to Amazon Fulfillment centers.
- Shipping Costs: FBM pricing costs are your responsibility, while FBA includes fulfillment fees that cover storage and shipping.
- Control: FBM offers greater control over branding, packaging, and shipping decisions.
- Seller Metrics: You are directly responsible for fulfilling orders on time and maintaining positive customer feedback with FBM.
Advantages of Using FBM on Amazon Canada
- More Control: FBM Amazon Canada sellers maintain full control over their fulfillment process, such as storage, shipping, and customer service. This control proves advantageous for sellers seeking to provide distinctive or personalized fulfillment choices and for those aiming to establish and nurture stronger customer relationships.
- Lower costs: FBM Amazon Canada sellers usually enjoy reduced costs as they handle their fulfillment expenses independently, resulting in lower fees compared to FBA sellers. This proves advantageous, particularly for sellers dealing with high-value or heavy products.
- No Long-Term Storage Fees: FBM Amazon Canada sellers won’t be charged long-term storage fees that FBA incurs.
Challenges of FBM Amazon Canada
- Higher Workload: FBM Amazon Canada sellers require more hands-on effort, including packing and shipping orders, which can be time-consuming.
- Limited Amazon Prime Eligibility: FBM Amazon Canada may not make your products eligible for Amazon Prime, potentially impacting sales.
- Customer service: Customer service falls under the responsibility of FBM Amazon Canada sellers for their orders. This task can be demanding, particularly for sellers dealing with a substantial volume of products.
- Shipping delays: FBM Amazon Canada sellers are at a higher risk of encountering shipping delays compared to FBA sellers, given that they handle their own shipping processes. These delays can have consequences for their seller rating and customer satisfaction.