Amazon has nearly 2 million active sellers on its platform. Among them is a diverse combination of FBA and FBM sellers. Each has unique reasons for becoming that type of seller, but they have rake in the rewards.
But which option is better for you?
In this article, I will compare FBA and FBM to help you make that decision.
Table of Contents
How Does Amazon FBA Work?
FBA, or Fulfillment By Amazon, is Amazon’s preferred method of shipping goods. Why? Because Amazon gets to handle all of the logistics for you.
Using Amazon FBA, you create your store, list your items, label them, and send them to a nearby fulfillment center. Then, that fulfillment center sends it to various other centers around your preferred country.
Amazon FBA shipping is perfect for new sellers who lack the warehouse space to store extensive inventories. In addition, it helps people who would typically not be able to sell products start their store.
FBA sellers get to have the “prime” label on their product listing. As a result, Amazon Prime items almost always receive priority over other merchants. If you have a fast inventory turnover or handle light and small things, FBA selling is a better option.
Taking the cost out of your hand can make it somewhat tricky to track expenses. However, you can use various expense calculators, like this tool, to help you track the per-unit cost.
Also, FBA sellers are subject to Amazon’s incredibly high standards for packing and shipping. So if there’s a single problem with the stuff you ship to a fulfillment center, Amazon will have no problems sending it back.
You can address this problem by working through preferred characters (like UPS). In addition, people often use FBA prep services to handle this problem. Still, the limitations can be somewhat frustrating to businesses that already have an established network.
How Does Amazon FBM Work?
Amazon FBM, or Fulfillment By Merchant, is the alternate form of Amazon seller. Things like shipping costs, fulfillment fees, and other general costs are left to the merchant. However, you also have the freedom to handle shipping however you want.
If you find yourself struggling with Amazon’s rules, FBM shipping might be a better option for you. However, you’ll consistently be outsold by competition who use FBA shipping.
FBM is also more suitable if you haul large, unwieldy items. However, shipping heavy and bulky items is a bit more complicated through Amazon’s systems.
There’s a chance you might find cheaper warehouse options locally. So if you need to save money over getting fast shipping, you might prefer FBM.
To get the best of both worlds, NextSmartShip Fulfillment Service provides FBA standard shipping. For a good FBA alternative, see about using us as a one-stop-service for your shipping and servicing needs.
Comparisons Between FBA and FBM
Amazon’s fees might look far heavier under FBA, but remember they handle all logistics for you. Use these rates below to determine what is more cost-effective for you.
| Fees | FBA | FBM |
| Shipping Costs | $2.16 to $157.91+ | $0 (from Amazon) |
| Per Item Selling Fees | $0.99 per item or $0 | $0.99 per item or $0 |
| Referral Fees | $0.30 to 20% | $0.30 to 20% |
| Standard Storage Fees (Jan-Sept) | $0.75 per cubic foot | N/A |
| Oversized Storage Fees (Jan-Sept) | $0.48 per cu ft | N/A |
| Standard Storage Fees (Oct-Dec) | $2.40 per cu ft | N/A |
| Oversized Storage Fees | $1.20 per cu ft | N/A |
| Long-Term Storage Fees | $6.90 per cu ft or $0.15 per unit | N/A |
| Removal Orders | $0.50 per standard item. $0.60 per oversized item | N/A |
| Returns Processing Fee | $2.12 to $75.08+ | $2.12 to $75.08+ |
| Unplanned Service Fees | $0.20 per unit to $150 | N/A |
All fees are dependent upon a wide variety of factors. Some expenses, like referral fees, storage fees, unplanned service fees, and removal orders, don’t apply to FBM sellers because they involve using fulfillment centers. NextSmartShip offers 90 days of free warehousing in its China Fulfillment center. So if you choose NextSmartShip as your fulfillment partner, you save a lot in storage fees.
Shipping Costs
Shipping costs vary depending upon weight, size, and the danger of shipping the item. Risk can refer to fragile glass items or knives.
Also, FMB sellers handle their logistics, which is why Amazon does not bill them.
Per Item Selling Fees
FMB or FBA sellers have the potential to have the same per item selling fees. That’s because this fee comes from whether you are a professional seller.
Professional sellers pay a flat monthly rate of $39.99. Individual sellers pay a per-item selling fee of $0.99.
Referral Fees
Referral feels refer to the payment you give to affiliates who link to your items. There is no avoiding this fee, as someone can refer to you regardless of FBA or FBM.
Removal Orders
Removal orders are when you put in a request to have your inventory taken from a fulfillment center. Because FBM sellers handle their warehousing, they don’t have to pay Amazon to remove it.
Returns Processing Fees
Amazon’s return policy applies to all types of sellers. A returns processing fee is a combination of administrative and logistical expenses to the seller. If there are issues with the order, you are required to pay this.
In some cases, you can charge a restocking fee to your customers to recoup the total shipping costs. However, that fee is dependent on whether you or the consumer is to blame for shipping issues.
Unplanned Service Fees
Unplanned service fees refer to the cost you accrue due to making a mistake on an FBA shipment. You can have missing labels, and safety issues are two of the most common reasons for this fee showing up.
Because this fee comes from fulfillment centers, FBM sellers need not worry about this.
Conclusion
There’s no one correct answer to the “which is better” debate. To determine that answer, you have to break down your costs and determine what your tolerance is.
From an overall perspective, know those small light products are easy to work best for FBA sellers. Meanwhile, large bulky and heavy items that are complicated to manage are best for FBM sellers.
It would be best to consider other factors like meeting FBA requirements, dealing with local shipping companies, and everything in between. Whatever you choose, you might not have the correct answer the first time. So just keep on trying until something fits.
