Home » Amazon FBM Fulfillment – A Comprehensive Guide | How It Works and Advantages?

What is Amazon FBM Fulfillment?

Fulfillment by Merchant (FBM) is one of the two main fulfillment methods that Amazon offers sellers. The other one is Fulfillment by Amazon (FBA). In the Amazon FBM fulfillment model, sellers are responsible for completing the fulfillment process once a customer has placed an order. This means that you’re responsible for storing your inventory, picking the correct items, packaging them securely, and, finally, shipping them directly to the customer.

While Amazon FBA offers a fast Prime shipping badge and convenience, Amazon FBM can be a cost-effective option for many sellers, especially those who are new to the platform and selling lower-volume, high-margin items.

How Does Amazon FBM Work?

When you choose Amazon FBM fulfillment and start listing your products on Amazon, you’re basically becoming your own fulfillment center, managing the entire order lifecycle from start to finish. To understand better how the whole process works, here’s a step-by-step breakdown:

1.    Inventory storage

The first step is storing inventory. You can either decide to store everything in your own space, like a garage, basement, or storage unit, or you can partner with a 3PL provider who will store your inventory in their warehouses for a price.

Self-storage gives you complete control over your inventory but requires you to invest in storage space and management systems. 3PL providers, on the other hand, take care of the storage and handling, provided you cover the fees for the services.

2.    Order processing

You’ll receive a notification through Seller Central once a customer places an order. The notification will include key details like shipping address and product quantities.

Consider using order management software to streamline your order processing. It will help you manage inventory levels, generate packing slips, and track the fulfillment status.

3.    Picking and Packing

Picking and packing orders accurately is crucial to avoid customer dissatisfaction and potential returns. Nearly 30% of products ordered online are returned for one reason or another, which leaves a bad customer experience and costs the brand as well.

Develop a packing process to ensure you’re picking the correct items and packaging them in high-quality materials like boxes and bubble wrap to keep them protected.

4.    Shipping

Now is the time to ship the products to their respective customers. Amazon MFX is a discounted shipping program for Amazon FBM sellers. It helps merchants reduce costs and ensure the delivery of their products.

If you’re not sure about MFX, you can also compare rates from different shipping carriers like FedEx and UPS to choose the one best suited for your business.

5.    Returns and Customer Service

It’s important to remember that returns are a normal course of business. How you handle customer complaints and process returns is what makes you stand out from the competition. According to a survey, 92% of customers who returned their products said that they would have ordered them again if the return process was simpler.

Set clear and efficient precedents for returns to manage customer queries and anger. Providing excellent customer service before, during, and after sales is a great way to increase customer retention.

Advantages and Disadvantages of Amazon FBM Fulfillment

The pros and cons of Amazon FBM fulfillment are detailed below.

Advantages

●      Cost-effective

Amazon FBM fulfillment is significantly cheaper than FBA fulfillment for certain products. For low-cost products, the FBA fulfillment fees will cut into your profit portion, while with FBM, you only have to consider the storage and shipping costs. Similarly, for high-profit margins, FBM services can maximize your earnings.

FBA charges fees according to the weight and dimension of the product, while FBM gives you the flexibility to choose your own cost-effective shipping solution.

●      Greater control

With Amazon FBM fulfillment, you are in complete control of the fulfillment process. You decide how much inventory to store and where to store it. You can customize the packaging to include your branding elements and enhance the customer experience. Depending on the order, you can also choose different shipping methods that are most cost-effective.

●      Increased profits

Since you are managing the fulfillment process on your own, you have the flexibility to keep a larger profit margin. You can increase or decrease prices to maintain a healthy profit margin, no matter what you sell. This is particularly beneficial for new sellers or those with low sales volume.

●      Flexibility

Adjust your FBM services strategy based on the specific needs of the products you sell. Depending on your inventory levels or capacity, you can add or remove products from Amazon’s listing. If the business is experiencing fluctuations in sales, FBM allows you to scale the operations up or down as needed.

Disadvantages

●      Time commitment

FBM requires a significant investment of time for effective management. Tasks like inventory management, picking and packing orders, shipping, handling returns, and customer service can be exhausting and time-consuming tasks, especially if your business is growing.

●      Logistics complexity

As the order volume increases, picking, packing, and shipping orders become logistically complex. Keeping track of inventory levels, managing returns, and ensuring timely shipping can become challenging if you don’t have proper systems and resources in place.

●      Shipping costs

As a new seller who’s also responsible for managing their online store and processing orders every day, negotiating shipping rates with different suppliers can be challenging. Not getting the desired quotes can increase your fulfillment costs and decrease overall revenue.

●      Customer service

You have to assume the role of customer representative and handle customer service inquiries and potential returns. This not only takes time away from managing the store but can also impact your seller metrics if not handled efficiently.

Which Amazon Fulfillment Method should sellers use?

Deciding which fulfillment method to use depends on the specific needs and resources of your business. Here are a few factors that you should keep in mind while deciding:

Major Factors to Consider when Choosing a Fulfillment Method on Amazon

Choosing the right fulfillment method on Amazon is crucial for the success of your business. Both choices have their own advantages and disadvantages, and the ideal choice depends on several key factors specific to your situation. Here are some major factors that you should consider:

• Inventory management: The toughest task is to store and manage inventory. If you have the resources and systems to manage your own inventory efficiently, you can opt for FBM Amazon. While FBA takes care of inventory storage and management, FBM gives you more control over your inventory levels.
• Order fulfillment time: If fast delivery times are crucial for your customers, FBA is the option to choose. However, fast delivery times are not impossible in FBM. With efficient planning and reliable shipping partners, FBM can still achieve competitive fulfillment times.
• Shipping expertise: Negotiating competitive shipping rates and handling shipping can be challenging for new sellers with FBM, especially if they aren’t working with a 3PL provider.
• Scalability: While FBA and FBM both provide scalability options for your business, FBM gives you more control over inventory levels, product pricing, and when to sell more products or push back.
• Customer service capabilities: In Amazon FBM service, in addition to processing and shipping orders, you have to handle customer inquiries and reviews. Evaluate the resources at your disposal and your ability to provide excellent customer service before choosing a fulfillment method.

When Should You Select Fulfillment by Merchant?

When the products being sold are unique to the seller’s shop, selling them using the Amazon FBM fulfillment method benefits the seller. This will increase the credibility of the product and the Internet store. For small volume enterprises, using Amazon FBM is especially advantageous when the delivery procedure doesn’t get too complicated and might not compromise the quality that customers and Amazon expect.

How to Sell and Ship Your Own Products at Amazon FBM?

You can sell and ship your private label or handmade products on Amazon utilizing the Amazon FBM fulfillment method. The steps involved are:

1. After you have identified the right products to sell as white-label products, add them to your catalog. If you are planning to sell handmade products, list them.
2. Partner with an experienced supplier or manufacturer for sourcing the products.
3. Choose the packaging, product design, and logo for your brand.
4. Request product samples from suppliers for testing quality.
5.  Select Amazon FBM as your preferred fulfillment method.
6. Create an Amazon Seller Central account
7. List your products
8. Receive orders and fulfill orders by handling and shipping the consignments yourselves.

Why Should you Choose us for FBM services?

While Amazon FBM fulfillment offers a cost-effective and flexible solution to let you manage your own store and the entire fulfillment process, it can be time-consuming and complex at times. Partnering with PowerSCM can help you streamline the FBM Amazon operations and gain more time to focus on growing your business. Here’s how we can empower your FBM Amazon success:

• Strategic warehousing and storage: We have strategically located warehouses across the US to ensure efficient storage and distribution of your inventory. It also helps in reducing fulfillment times and shipping costs.
• Seamless order processing and fulfillment: Our advanced technology and experienced staff ensure that your products are processed, picked, packed, and shipped seamlessly and accurately.
• Discounted shipping rates: We collaborate with major carriers in the US, allowing us to offer affordable rates. This will help reduce your shipping costs and increase profit.
• Efficient returns management: Not just delivery, we efficiently handle the returns process as well. This includes everything from picking up the products, issuing refunds, quality assessment, and restocking the inventory.
• Technology integration: Our systems seamlessly integrate with your Amazon Seller Central account, allowing effortless order management, real-time inventory tracking, and data visibility.

Conclusion

Choosing the right Amazon fulfillment method is crucial for your business’s success. While there are two good options, Amazon FBM fulfillment offers a cost-effective and flexible option for sellers who are just starting out or selling specific product types. By carefully considering the advantages and disadvantages of both methods, along with your business goals and resources, you can make an informed decision.

If you do decide to go with the FBM Amazon route, PowerSCM is a reliable fulfillment service provider that can help streamline your operations and enable you to focus more on growing the business rather than shipping items to customers.