Amazon provides the best services to facilitate its online sellers to sell their products and help them earn high revenues. However, whether you want Amazon to handle the process of your product delivery to the customer after a certain sale is a choice that you have to make.
You have two options: You could either keep an inventory of your own and ship the product as per your customers’ needs individually or have Amazon manage your inventory, and ship and deliver the products automatically.
The former is called Fulfillment by Merchant (FBM) – the seller manages everything on their own –, while the latter is known as Fulfillment by Amazon (FBA) – Amazon handles storage, shipping, and delivery.
It is important, therefore, to understand which one of these two processes enhances your business better. The key is to understand the process, the best way to keep inventory, and having your products delivered in a timely manner for a satisfied customer experience.
FBM –Pros and Cons
Fulfillment by Merchant allows Amazon sellers to decide on how the inventory is managed, how it is packaged, what are the means of delivery, and regulate all the costs and overheads. Practically, everything is in your hands and this allows you to have complete control over how a product will reach the customer.
- Complete control over product from production to delivery to the customer
- Micromanage the storage, packaging, and shipment of the product
- May prove to be cost-effective
- Allows you to alter procedures to fix errors
- No eligibility for Amazon Prime
- Maintaining Seller-Fulfilled Prime is difficult
- Buybox is generally unattainable, and if you get it, keeping it is difficult
- Creates time constraints to bring in innovation
- Time taking and may prove expensive in terms of unexpected overheads
- Smaller profit margins to fight for buybox and make your product market competitive
FBA –Pros and Cons
Fulfillment by Amazon simply means that you are free of all the hassle of getting the product to your customers. Having provided the product listing on your FBA account and making your products eCommerce-ready, all you need to do is to focus on increasing your sales. Amazon picks up the products from your doorstep and takes them to its fulfillment facility, where they are stored until sales are made. Once a product is ordered, Amazon packages the product in the fulfillment facility and delivers it to the customer.
- Allows you to focus on keeping your sales up and marketing your products for better exposure
- Provides you time to work on innovating your products
- Allows you to overlook and improve your processes
- No overhead charges added to overall costs
- You cannot micromanage your processes – complete removal of stock would be required to fix a glitch
- No access to storage facilities
- Complicated processes and fee structure may be intimidating for some sellers
What to Choose?
FBA or FBM, the choice depends on the kind of business you have and the infrastructure you have in place. If you have the resources to streamline your processes and make timely deliveries without having to compromise on other aspects of your business, FBM is the right option for you. If you lack such resources and infrastructure, FBA is the best choice.