Amazon Fulfillment: Understanding the Different Types of Fulfillment

Fulfilled by Amazon (FBA)

As an online marketplace, Amazon has become a popular platform for businesses to sell their products to customers. However, with the increasing demand for fast and reliable shipping, fulfilling orders in-house can become a challenge for many businesses. This is where Amazon Fulfillment comes in, and Fulfilled by Amazon (FBA) is one of the most popular options.

Overview of FBA

FBA is Amazon's most popular fulfillment option. With FBA, sellers send their inventory to Amazon's fulfillment centers, where Amazon takes care of picking, packing, shipping, and handling customer service and returns. In other words, Amazon handles the entire fulfillment process on behalf of the seller.

Advantages of using FBA

FBA has several advantages that make it an attractive option for sellers. Some of these advantages include:

1. Prime eligibility: FBA products are eligible for Amazon Prime, which can increase sales. With Amazon Prime, customers can receive their orders within two days or even the same day in some locations.

2. Customer service: Amazon handles all customer service inquiries and returns. This means that sellers don't have to worry about dealing with customer complaints or returns, saving them time and resources.

3. Shipping speed: FBA products are eligible for Amazon's fast shipping options, including Prime, which can help businesses offer faster shipping to their customers without having to handle the logistics themselves.

4. Improved visibility: FBA products are eligible for the "Fulfilled by Amazon" badge, which can increase a product's visibility and credibility among potential customers.

How FBA works

To use FBA, sellers create a shipment plan and send their products to Amazon's fulfillment center. Amazon receives the products, stores them in its warehouse, and ships them to customers when orders are placed. Amazon also handles all customer service and returns related to FBA products.

Sellers are charged fees for using FBA, which includes storage fees, fulfillment fees, and other optional services. However, for many businesses, the cost of using FBA can be outweighed by the benefits it provides.

Fulfilled by Amazon (FBA) is a popular and convenient fulfillment option that can help businesses save time, improve shipping speed, and increase sales. By understanding the advantages and workings of FBA, sellers can make informed decisions about whether it's the right fulfillment option for their business.

Fulfilled by Merchant (FBM)

Overview of FBM

Fulfilled by Merchant (FBM) means that the seller is responsible for fulfilling their own orders. They store their products in their own warehouses and are responsible for picking, packing, shipping, and handling customer service and returns. FBM is an alternative to FBA, where Amazon takes care of the entire fulfillment process on behalf of the seller.

Advantages of using FBM

FBM has several advantages that make it an attractive option for many sellers, including:

1. Control: Sellers have complete control over the fulfillment process with FBM. They can ensure that their products are being handled according to their standards and can make any necessary changes or adjustments to the process as needed.

2. Cost: FBM can be less expensive than FBA for some sellers, as they are not paying fees for storage and fulfillment services to Amazon.

3. Flexibility: FBM allows sellers to use their own branding and packaging, which can help build brand recognition and customer loyalty.

How FBM works

Sellers who choose FBM receive an order, pick, pack, and ship the product to the customer. They are responsible for handling any customer service inquiries and returns. FBM sellers can choose their preferred shipping carrier and have the flexibility to adjust their shipping rates to reflect their actual costs. It's important to note that FBM sellers must meet Amazon's performance standards for shipping and handling, customer service, and returns, or risk losing their selling privileges on the platform.

Fulfilled by Merchant (FBM) is an excellent fulfillment option for sellers who want more control over their fulfillment process, are looking to save on costs, or want to use their own branding and packaging. While it requires more work on the seller's part, FBM can be a viable option for sellers who want to maintain complete control over their sales and customer service.

Comparison of FBA vs FBM

Amazon offers multiple fulfillment options, including Fulfilled by Amazon (FBA) and Fulfilled by Merchant (FBM). In this section, we will compare these two options based on cost, control, convenience, and sales.

Cost

One of the most significant differences between FBA and FBM is cost. FBA can be more expensive than FBM, as Amazon charges storage and fulfillment fees. These fees can vary based on the size and weight of the product, time of the year, and storage duration. On the other hand, FBM sellers are responsible for their own storage and shipping costs, which can be less expensive for some sellers. However, for sellers who want to take advantage of Amazon's Prime eligibility, FBA can be more cost-effective, as Prime members receive free two-day shipping, and FBA products have a higher chance of appearing in the Buy Box.

Control

FBM gives sellers more control over the fulfillment process. With FBM, sellers are responsible for their own inventory, packaging, and shipping. This option allows sellers to use their own branding and packaging, which can help establish their brand identity. Additionally, FBM sellers can handle customer service inquiries and returns on their own terms. In contrast, FBA sellers have less control over the fulfillment process, as Amazon takes care of picking, packing, shipping, and handling customer service and returns.

Convenience

FBA is more convenient for sellers, as Amazon takes care of all fulfillment-related tasks. This option allows sellers to focus on other aspects of their business, such as marketing and product development. FBA also enables sellers to take advantage of Amazon's fast shipping options and Prime eligibility, which can increase sales. In contrast, FBM requires sellers to handle all of these tasks themselves, which can be time-consuming and may require additional resources.

Sales

FBA products are eligible for Amazon Prime, which can increase sales. Amazon Prime members tend to have higher purchase rates and spend more than non-Prime members. Additionally, FBA products have a higher chance of appearing in the Buy Box, which can increase visibility and sales. In contrast, FBM products are not Prime eligible, which can be a disadvantage for some sellers. However, FBM products can still be successful if the seller has a strong marketing strategy and establishes a loyal customer base.

Choosing between FBA and FBM depends on the seller's business goals, resources, and preferences. FBA may be more cost-effective and convenient for some sellers, while others may prefer the control and branding opportunities that come with FBM. By understanding the differences between these options, sellers can make informed decisions that align with their business objectives.

Other Fulfillment Services Offered by Amazon

In addition to FBA and FBM, Amazon offers several other fulfillment services that can help sellers streamline their operations and reach more customers. Let's take a look at some of these services.

Multi-Channel Fulfillment (MCF)

Multi-Channel Fulfillment (MCF) is a service that allows sellers to use Amazon's fulfillment services to fulfill orders from other sales channels, such as their own website or other marketplaces. This means that sellers can leverage Amazon's extensive fulfillment network to ship products to customers, regardless of where the order was placed. MCF can help sellers save time and money by consolidating their fulfillment processes into a single system.

Seller Fulfilled Prime (SFP)

Seller Fulfilled Prime (SFP) allows sellers who fulfill their own orders to offer Amazon Prime shipping to their customers. This means that customers who have Amazon Prime memberships can receive the same fast and free shipping benefits when they order from sellers who participate in SFP. SFP can be a good option for sellers who want to maintain control over their fulfillment process while still offering the benefits of Amazon Prime to their customers.

Amazon Custom

Amazon Custom is a service that allows sellers to offer customizable products that are fulfilled by Amazon. This means that sellers can offer a wide range of customizable options to their customers, while still taking advantage of Amazon's fulfillment network to manage shipping and handling. Amazon Custom can be a great option for sellers who specialize in personalized or custom products.

Amazon Subscribe and Save

Amazon Subscribe and Save is a service that allows customers to subscribe to products they use frequently, and have them automatically shipped on a regular schedule. Sellers can offer their products through Subscribe and Save, which can help boost sales and encourage repeat business. This service is particularly useful for products that customers tend to purchase regularly, such as household goods or pet supplies.

Amazon offers a range of fulfillment services that can help sellers streamline their operations, reach more customers, and boost sales. Whether you choose to use FBA, FBM, or one of Amazon's other fulfillment options, it's important to understand the advantages and disadvantages of each service, and to choose the option that best fits your business needs and goals.