Posted by Alex Jackson on July 01, 2016
FBA or FBM you might say wth? When you see acronyms like this but don’t worry we are setting out to demystify these Amazon related acronyms and to determine which is right for your business.
Fulfillment by merchant(FBM)- The vast majority of new sellers and small volume sellers will most likely select this route and there are a lot of very good reasons to do so. First and foremost you are in control of your inventory and shipping, no amazon storage fees or overly complicated fees structures. Also if you are doing smaller dollar items then FBA will be prohibitively expensive with their higher fee structures. Now the downside is in order to compete with prime sellers you will have to be very aggressive on pricing in order to win the war for the coveted buy box. Also Amazon can be very strict about fulfilling orders in a timely manner and errors or mis-shipments can lead to a suspension or ban so be aware and stay on you’re A game. Again if you are just getting your feet wet this may be the best option for you. As your business grows and your volume increases you may want to review your sales and inventory and decide if you are ready for FBA.
Fulfillment by Amazon(FBA)- This is great option for higher volume sellers that don’t want to deal with the hassle of processing and shipping. You simply pack and send your merchandise to Amazon and they handle the rest. Doing fulfillment by amazon also automatically enrolls your merchandise into the Amazon Prime program greatly increasing your likelihood of selling. Down sides are complicated fees structures, storage fees based on the dimensions of the item and fees for aging inventory between 6-12 months old. Keep in mind amazon has stacked the deck in favor of FBA sellers. A move from FBM to FBA can lead to significantly increased sales remember Amazon makes money on storing as well as the sale in this case. It’s important to thoroughly review and fully understand FBA’s fee structures before making the move. Bear in mind that you do not have to go full FBA overnight maybe do a test run for some of your more desirable fast moving sku’s, remember Amazon wants to store items that will sell fast and if you send in your dogs they will make you pay for holding them for you.
FBA or FBM that is the question and the answer depends on you and your business model. As your business expands and grows review and determine which route works best for your schedule and your bottom dollar.