FBM or FBA? – The better choice for Amazon Marketing Services
Posted by Oodles Marketing on November 13th, 2020
Order fulfillment has been one of the biggest challenges in the ecommerce sector. But Amazon was able to take charge of it and turn it into its unique selling point. With its effective fulfillment program, Amazon was able to reach 280.5 billion U.S. Dollars as net sales in 2019. Amazon Marketing Services provides two options for completing an order process - Fulfillment By Amazon (FBA) and Fulfillment By Merchant (FBM).
What is Amazon FBA and FBM?
Amazon has the most advanced fulfillment networks in the world. Fulfillment By Amazon (FBA) is a service under the Amazon buy box. It is a service for Amazon sellers for shipping, packaging, and storage of products and goods. FBA takes the burden off sellers by taking over the supply chain operations in exchange for a fee. Amazon offers another fulfillment program as Fulfillment By Merchant (FBM). Under this, sellers take responsibility for fulfilling orders. Merchants opting for FBM under Amazon Listing optimization services list their products in Amazon and ship them to their customers by themselves. Sellers with FBM are not liable to pay any shipping fees and hence reduces an extra cost for products with lower profit margins. Direct sellers (1P) on Amazon are obligated to FBA. Third-party (3P) sellers have an option to choose between FBA and FBM. FBM is still popularly overlooked by sellers as FBA offers the ease of handling, packaging and other added benefits.
Benefits under Amazon FBA and FBM-
With the fulfillment expenses amounting to 40.23 billion U.S. dollars in the last fiscal year, FBA offers the following benefits-
Despite the benefits of FBA, it still might not be a viable option for every seller. FBA can be expensive for sellers dealing with -
Also, there are instances where FBM tends to be cheaper than FBA. FBM benefits include-
Changes in Amazon Marketing Services due to COVID 19
Lockdown brought many unprecedented changes for sellers over Amazon. Amazon went on to restrict inbound shipping and Prime delivery of non-essential items. This pushed a lot of sellers towards FBM. COVID caused changes in the following aspects of Amazon fulfillment program-
The differentiation between essential and non-essential items caused limited operationality for FBA. FBA prioritized essential items like baby products, health and household items, grocery and food, industrial and scientific materials, and pet supplies. Sellers falling out of these categories are not the priority. Amazon considered them only under specific circumstances like-
In contrast, FBM methods are currently operating as normal.
Amazon FBA is operating delayed delivery times and is currently not guaranteeing Prime deliveries. Amazon FBM methods are operating as normal, depending on your carrier or fulfillment provider. Governments are considering shipping carriers and warehousing as essential operations. Therefore, most postal services and third-party fulfillment providers remain operational.
FBA’s restrictions on inbound shipments of non-essential items mean that you may be unable to introduce and fulfill new product lines via FBA. FBM sellers can use their in-house or outsourced fulfillment solution to source, stock, and fulfill new products to suit the current market.
Amazon FBA practices a competitive pricing strategy for fast-moving, small, and lightweight items. Further, there are high costs occurring from additional fees for long-term storage, inventory removal, and multi-channel fulfillment fees. While there’s no Amazon fee for FBM, sellers need to still consider the in-house and outsourced fulfillment costs.
Delay across Multi-channels
FBA also offers multi-channel fulfillment options. However, this comes at an additional cost. Also, currently, Amazon Marketing Services aren't guaranteeing any delivery speeds. It is largely due to the pandemic, COVID-19. This delivery uncertainty can cause an impact on being eligible on other channels for fast delivery. FBM empowers a unified fulfillment operation for multi-channel eCommerce business.
The battle between FBA and FBM is everlasting. Depending on the type of products and their saleability, each has its own merits. Due to COVID-19, nothing is clear anymore. Businesses must be flexible and adapt to their business requirements. Nothing is static in an economy. A professional online marketing agency can guide a seller through the dynamics of the market to make appropriate decisions. FBA is still operating restrictions that could bar sales and even cease a business. FBM right now can sustain customer service while adapting a seller’s product lines to meet changing customer needs
About the AuthorOodles Marketing
Joined: May 28th, 2019
Articles Posted: 10
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