Fulfillment by Merchant (FBM)

Fulfillment by merchant – According to Statista, in 2024, retail ecommerce sales are estimated to exceed 4.1 trillion US dollars worldwide, and this figure is expected to reach new heights in the coming years. This surge in ecommerce activity has placed increased pressure on sellers to delivery orders promptly and accurately. 

Fulfillment by Merchant can be a viable option for sellers who want to maintain control over their brand and customer experience, but it is essential to weight the benefits and challenges before making a decision. 

Fulfillment by Merchant

What is Fulfillment by Merchant (FBM)

Fulfillment by Merchant (FBM) is a fulfillment model where sellers handle the entire order fulfillment process independently, which includes storing inventory, packing orders, shipping products, and managing customer service. 

Unlike Fulfillment by Amazon (FBA), Fulfilled by Merchant sellers are responsible for all aspects of order fulfillment. 

Learn More: FBA vs FBM: Which Fulfillment Method is Better for Amazon

Benefits of Fulfilled by Merchant

Merchant fulfillment offers sellers complete control over their inventory, packaging, and shipping processes, allowing for greater flexibility and customization. 

For instance, sellers can choose their preferred shipping carriers, negotiate rates, and implement custom packaging solutions. This level of control enables them to tailor their fulfillment operations to meet specific customer needs and optimize their supply chain. 

FBM fulfillment generally involves lower fees compared to FBA, as sellers avoid paying storage, picking, packing, and shipping fees charged by Amazon. By handling fulfillment in-house or partnering with a 3PL, sellers can reduce costs and improve their profit margins. 

FBM fulfillment enables sellers to maintain full control over their brand image, packaging, and customer experience, allowing them to create a consistent brand identity and build stronger customer relationships. Sellers can customize their packaging, insert branded marketing materials, and personalize the customer experience to enhance brand loyalty. 

FBM allows sellers to scale their operations gradually, as they can adjust their inventory levels and fulfillment processes according to their business needs. As their business grows, sellers can increase their inventory capacity, hire additional staff, or partner with a 3PL to handle increased order volume, enabling them to adapt to changing market conditions and seize new opportunities.

Do Fulfillment by Merchant Sellers Need to Work with a 3PL?

While it’s possible to manage FBM operations in-house, many sellers choose to partner with a third-party logistics (3PL) provider. 

A 3PL can handle various aspects of fulfillment, including warehousing, FBM order management fulfillment, and shipping, which can be particularly beneficial for sellers who experience high order volumes or require advanced fulfillment capabilities. 

When to Choose Fulfillment By Merchant

FBM is well-suited for sellers with a small to medium-sized product catalog. Smaller inventories are easier to manage in-house, and FBM allows for greater control over the fulfillment process. 

Sellers who prioritize brand control and customer experience may also benefit from FBM. Sellers can customize packaging, insert branded marketing materials, and personalize the customer experience to enhance brand loyalty. 

Fulfillment by Merchant can be a cost-effective option for sellers looking to avoid the high fees associated with FBA, and handling fulfillment in-house or partnering with a 3PL, sellers can reduce costs and improve their profit margins. 

Sellers need a strong understanding of shipping logistics to successfully implement FBM. They must be familiar with shipping carriers, rates, and regulations to efficiently manage the entire fulfillment process. 

FBM requires significant resources and expertise. Sellers need adequate warehouse space, staff, and technology to handle order processing, packing, and shipping. Additionally, a dedicated team is necessary to manage the day-to-day operations of fulfillment. 

Sellers who want to maintain complete control over their operations and build a strong brand presence may find FBM to be a suitable option. By controlling the entire customer experience, sellers can create a strong brand identity and foster customer loyalty.

Fulfillment Steps with an Independent 3PL

  1. Inventory Storage: The seller ships their inventory to the 3PL’s warehouse, where it’s stored securely and efficiently. 
  2. Order Receipt: Once an order is placed on the seller’s website, the order information is transmitted to the 3PL’s system, initiating the fulfillment process. 
  3. Order Picking and Packing: The 3PL’s warehouse team accurately picks the required items from the inventory and packs them securely for shipping. 
  4. Shipping: The 3PL handles returns and exchanges on behalf of the seller, processing returns, issuing refunds, and restocking returned items. 
  5. Customer Service: The 3PL may provide customer service support for order inquiries, tracking, and returns, enhancing the overall customer experience.