Amazon FBA vs FBM — Which one should I choose? If this is the question bugging you — I’m here to help.
There was a case study done in the year 2021 where they found nearly three million active sellers on Amazon. What’s more, as per the State of Seller Report of Jungle Scout, it is evident all Amazon sellers have different methods of selling on Amazon.
The basic key difference between Amazon sellers is the fulfilment methods they choose — Amazon FBA or FBM.
Let me be very honest; I use FBA and FBM, depending on what products I sell. No worries, this detailed comparison of — Amazon FBA vs FBM helps you decide which one is better for you.
In this post, we will take a look at some of the basic differences between FBA and FBM. By the end of the post, you will get to know which one to choose Amazon FBA or FBM.
So let’s dive in.
What’s The Difference: Amazon FBA vs FBM?
Before rushing to any conclusion on which one is better, let me explain the basic key takeaway between FBA and FBA.
What is Amazon FBA?
Amazon FBA is Amazon’s warehousing and fulfillment service provided for Amazon sellers. Well, I’m not going to emphasize more on FBA because I did a detailed guide on — what is Amazon FBA?
It’s the most popular way to sell on Amazon, in which a seller (or the supplier of the seller) mainly sends the products directly to the Amazon warehouse. After that, Amazon stores all the inventory and then ships it directly to the customers when you get orders. Mostly Amazon uses the two-day shipping method to ship the products. What’s more, in FBA, Amazon also manages customer support.
All in all, I will say with FBA — the Amazon fulfillment center picks products, packs, ships, and even provides customer support as well. Everything is automated with FBA.
What Is FBM?
With the FBM selling method, the seller mainly lists all the products on Amazon. And the seller also manages — storage, support, shipping, and even customer support as well. With FBM, mainly sellers take the complete responsibility of selling on Amazon.
With Fulfillment by Merchant, you have to ship the products using your logistics and manage other operational processes. Also, with FBM, sellers need to store products in their warehouses or even use third-party companies. FBM makes sense for those sellers looking to sell some specific items that are large and heavy, and it also doesn’t have a fast turnover.
Verdict: FBM and FBA models are different, and it depends on the size of the business. For example, the items in your catalog and your individual goals and business model.
The Key Takeaways — FBA vs FBM
Regardless of the bookish definition, let me introduce a few key differences which you can use to bifurcate between FBA and FBM. You will get to know some of the point black subtle differences between FBA and FBM.
Which Is Profitable: FBA vs FBM?
As per the reports, the FBM sellers tend to get more conversions whereas the FBA sellers have better margins.
- Around 33.5% of FBM sellers make money compared to 26.8% of FBA sellers.
- Around 37% of FBA sellers get better sales margins, over 20% versus the FBM sellers out there.
Now you have the idea of which is more profitable among FBA and FBM.
Which is Better for Selling Faster: FBA vs FBM?
In comparison to FBA sellers, the FBM sellers get started quickly.
- More than 51% of the FBM sellers took around five weeks to start selling on Amazon compared to the Amazon sellers.
- 29% of the FBM sellers saw the conversions and profit rolling in the first three months. At the same time, the FBA sellers tend to be 20% there.
Which Method is Flexible— FBA vs FBM?
FBA sellers mainly spend less on managing their business compared to FBM sellers.
- More than 20% of the FBM sellers invest around 40 hours weekly managing their Amazon business compared to the 16% of the Amazon sellers.
Source: Jungle Scout Blog Reports.
When Should Sellers Choose FBA?
If you’re looking to get started with FBA, here’s the reason why you should get started with FBA.
FBA Is Better If You’re:
- For high volume sellers
- For the retailers preparing to drop the cost right to the lowest possible profit point.
Benefits of Choosing FBA:
- FBA prioritizes sellers as they get the Buy Box, which is typically the best ideal situation for any product.
- The best part, Amazon takes care of customer service and shipping.
- All the retail operations are open 24/7.
- FBA serves a broader audience.
- With Amazon FBA, the conversion rates are even higher because Amazon takes care of everything.
- Simplified returns without any hassle.
- It gives sellers more time to grow their business.
- FBA also comes with Super Saver and Amazon Prime Membership shipping benefits.
When Should Sellers Choose Amazon FBM?
If you’re looking to get started with FBM, I have listed a few reasons for getting started with Amazon FBM.
FBM Is Better For Your If:
- You’re selling exclusive products
- Looking to sell small volume or one-offs
- If you’re looking to use the — SFP (Seller Fulfilled Prime)
The Benefits of Amazon FBM
- Sellers has control of their selling on Amazon business
- Profits margins are better with FBM.
- FBM allows building your brand, which is good in the long run.
- FBM comes with less paperwork while dealing with non-sales tax states.
- FBM gives more control over your inventory.
- FBM doesn’t come with any hidden or unexpected cost.
- FBM gives the freedom to run the business the way the seller wants.
- FBM gives an easy way to maintain offline and online retail activity with one manageable inventory.
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FBA vs FBM: Which Option Is The Better Choice?
Now you have a better idea of how Amazon FBA and FBM works. As per my understanding and experience selling on Amazon, Amazon FBA is preferred. Amazon FBA is better for getting good turnover if you have a popular product to sell.
With Amazon FBA everything will be managed by Amazon, such as fulfillment and other aspects. However, it would help if you made sure the products you’re selling are not bulky or heavy — it would lead to higher FBA fees. No doubt, with Amazon FBA, you’re going to get the benefits of Prime Badges along with Buy Box advantages as well.
On the other side, you should get started with Amazon FBM or SFM (Seller Fulfilled Prime) if you have products with low sales velocity. Low sales velocity products will not have frequent orders, so there is no point paying FBA storage free. You should choose FBM if your items are large and require extra packaging.
I am sure now you got the idea of which one to choose among — FBA vs. FBM. Overall, choosing between these two depends on the scale of your business as well as the type of product you’re trying to sell. To get more accurate results, I will suggest you use FBA calculators to do the maths and know which is suitable for your Amazon business model.
Over to you! Share your thoughts in the comments section below.
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