Learn how Amazon FBM works, its costs and benefits, and how to manage inventory, shipping, and customer service.

When you sell on Amazon, you need to decide how your products will reach customers. One option is Fulfillment by Amazon (FBA), where Amazon stores your products and handles order fulfillment. Another option is Fulfilled by Merchant (FBM), where you manage the process yourself.

With Amazon FBM, you store your products and when a customer places an order, you pack them, arrange delivery, and manage customer service and returns. You can handle these tasks on your own or work with a warehouse or shipping company.

FBM gives you more control over your stock, shipping methods, and daily operations. However, it also means you are responsible for meeting Amazon’s delivery and customer service requirements.

In this guide, we will explain what Amazon FBM is, how it works, its main advantages and disadvantages, and how to set it up. We will also share practical tips to help you manage costs, maintain good seller performance, and decide whether FBM is right for your business.

What Is Amazon FBM?

Amazon FBM stands for Fulfilled by Merchant. It is a fulfillment method in which the seller takes responsibility for storing products and delivering orders instead of using Amazon’s fulfillment service.

You can keep your inventory at home, in your own warehouse, or at a third-party storage facility. When a customer places an order, you prepare the package and arrange delivery through a courier or shipping service.

You also need to manage stock levels, answer customer questions, and handle returns according to Amazon’s policies.

FBM can work well for sellers who already have a reliable shipping setup or want more control over their inventory. It can also suit businesses selling large products, customized items, or goods that need special storage conditions.

However, FBM does not automatically cost less than FBA. Your total expenses depend on your storage costs, packaging, shipping rates, order volume, and the time you spend managing fulfillment.

Key Things to Know About FBM

• You list your products on Amazon and manage them through Seller Central.
• Your inventory stays with you or a storage partner.
• You are responsible for preparing orders and shipping them on time.
• You manage customer service and seller-fulfilled returns.
• You can use FBM for your full catalog or combine it with FBA for different products.

Amazon also offers tools that can help FBM sellers manage orders, purchase shipping labels, track inventory, and improve delivery performance. These tools can reduce manual work, but you remain responsible for fulfilling your orders correctly.

How Does Amazon FBM Work?

The FBM process starts when you list a product and ends when the customer receives the order. You also need to manage any questions or return requests that follow. Here are the main steps involved:

1. Create Your Product Listing: First, log in to Amazon Seller Central and add your product. If the product is already available in Amazon’s catalog, you may be able to add it to the existing product page. Otherwise, you may need to create a new listing.

Use a clear title, accurate product details, and good-quality images. Include important information such as size, color, material, and product features.

Set a selling price that covers your expenses and leaves room for profit. When setting up your offer, choose the merchant-fulfilled option so you can manage the order yourself.

Also Read: How to Write an Amazon Product Listing That Ranks High and Wins More Customers

2. Store and Organize Your Inventory: Unlike FBA, FBM does not require you to send your stock to Amazon’s fulfillment centers. You can keep your products at your business location or use a warehouse or storage partner.

Choose a clean, secure place where your products will remain in good condition. Protect them from dust, moisture, heat, and other factors that could cause damage.

Keep your stock organized so you can find products quickly when orders arrive. Update your inventory regularly to avoid selling items that are no longer available.

3. Receive Customer Orders: When a customer buys your product, the order appears in Seller Central. Check your orders regularly so you can prepare them within the handling time you have set.

Review the product, quantity, shipping address, and expected ship date before packing the order. Make sure your inventory records are correct. If you sell the same product on Amazon and other platforms, keep stock levels in sync to reduce the risk of overselling.

4. Pack and Ship the Order: Pack the product carefully so it can travel safely. Choose packaging that suits the product’s size, weight, and fragility.

For example, breakable items may need extra padding, while large products may require stronger boxes or special packaging.

Next, choose a reliable shipping service that fits your budget and delivery promise. You can compare courier rates and available delivery options before deciding which service to use.

Amazon Buy Shipping is another option for purchasing shipping labels. Amazon says its pre-negotiated rates can help sellers reduce shipping costs, although actual savings depend on the shipment and service selected.

5. Confirm Shipment and Add Tracking: After handing the package to the carrier, confirm shipment in Seller Central and provide valid tracking information when required. 

If you purchase a shipping label through a supported Amazon tool, some shipment details may be added automatically.

Accurate tracking helps customers follow their orders and reduces questions about delivery status. It also helps you monitor whether your shipping process is working as expected.

Always confirm shipments within the required time. Late shipment confirmations can affect your seller performance.

6. Manage Customer Service and Returns: With FBM, you are responsible for many customer service tasks related to your orders. You need to respond to customer messages, resolve delivery problems, and follow Amazon’s return and refund rules.

If a customer receives a damaged or incorrect item, review the issue and take the appropriate action under Amazon’s policies.

Check Seller Central regularly for return requests. For US seller-fulfilled orders, Amazon automatically authorizes many returns covered by its return policy, while some requests may need the seller’s review. Requirements can vary by marketplace and product category.

Providing helpful service and resolving problems quickly can improve the customer experience and help you avoid preventable account issues.

Advantages of Amazon FBM

FBM offers several benefits for sellers who want to manage fulfillment themselves. The main advantage is greater control over inventory and daily operations. However, the value of these benefits depends on your products and how efficiently you can fulfill orders.

1. More Control Over Inventory: With FBM, you decide where your products are stored and how your stock is managed. This can be useful if you want to recheck products before shipping or need special storage conditions. It also makes it easier to access inventory when you need to prepare orders or move stock between sales channels.

You can check stock levels directly and restock when needed. However, you must keep accurate records and update Amazon when inventory changes.

2. More Control Over Fulfillment Costs: FBM lets you choose your storage space, packaging materials, and shipping provider. This can help you find a fulfillment setup that suits your products and budget.

For example, sellers with large or heavy items may find that using their own warehouse and a suitable courier works better than sending every product to an Amazon fulfillment center.

You also avoid FBA-specific storage and fulfillment charges for orders you handle yourself. However, you still pay Amazon’s applicable selling fees and must cover your own storage, labor, packaging, and shipping expenses.

Tip for Sellers: FBM is not always cheaper than FBA. Compare all costs before choosing a fulfillment method.

3. Suitable for Special and Slow-Selling Products: Some products are easier to manage outside Amazon’s fulfillment network.

FBM may be worth considering if you sell:

• Large or bulky products that take up a lot of storage space.
• Customized or handmade products prepared after an order.
• Slow-selling items that may remain in storage for a long time.
• Products that need special handling or storage conditions.
• Low-margin items for which fulfillment costs make a big difference to profit.

Before choosing FBM, calculate the full cost of storing and shipping these products yourself.

4. Easier Inventory Management Across Multiple Channels: If you sell on Amazon, your own website, and other marketplaces, FBM can help you manage inventory from a shared location. You do not necessarily need to send separate batches of stock to Amazon’s fulfillment centers for products you plan to ship yourself.

However, selling across several channels requires careful inventory tracking. An inventory management tool or a reliable system can help you keep product count updated and prevent overselling.

5. More Control Over Packaging and Branding: FBM gives you more freedom to choose how your products are packed and presented. You can use suitable branded packaging, clear product instructions, and other materials that help customers recognize your business. A well-prepared package can also help protect the product during delivery.

However, packaging inserts and customer messages must follow Amazon’s policies. Do not use inserts to offer rewards for reviews, request only positive reviews, or pressure customers to change their feedback.

6. Greater Flexibility in Shipping: With FBM, you can choose shipping services based on your product type, order destination, and operating needs.

You can work with local couriers, compare delivery rates, or use different carriers for different products. You can also set handling times and shipping options that match your actual fulfillment capacity.

This flexibility is useful when different products need different delivery methods. Still, your shipping settings must be realistic, and you must meet the delivery promises shown to customers.

7. More Flexibility in Storage Capacity: When you use FBM, you manage your own storage space instead of relying entirely on the capacity available at Amazon’s fulfillment centers. This can help if you need to hold large quantities of stock or prepare for a busy sales period.

However, your own storage space is not unlimited. You must plan for rent, handling, stock organization, and the risk of holding products that do not sell well.

8. Direct Control Over Returns: FBM gives you more direct involvement in the return process. Depending on the applicable return rules and the type of request, you may be able to inspect returned products and decide whether eligible items can be restocked.

This can help you understand why customers return products and identify recurring problems.

However, you cannot freely choose whether to accept a return or issue a refund. You must follow Amazon’s return policies and any applicable legal requirements for your marketplace.

Disadvantages of Amazon FBM

Although FBM provides more control, it also adds work and responsibility. Before choosing it, consider the following challenges.

1. More Daily Work: With FBM, you need to manage stock, prepare orders, purchase shipping labels, pack products, and arrange deliveries. You also need to monitor order status and handle customer questions and returns.

This workload can become difficult when order volume increases. Without an organized process or suitable tools, you may spend too much time on fulfillment instead of growing your business.

2. No Prime Badge by Default: FBM offers do not automatically receive the Amazon Prime badge. This means you cannot assume that customers will see your products as Prime-eligible simply because you ship them yourself.

Eligible sellers may be able to apply for Seller Fulfilled Prime (SFP), a program that allows sellers to fulfill qualifying orders themselves while offering Prime delivery. Sellers must meet the program’s current requirements.

If Prime eligibility is important to your business, review the latest requirements before planning your fulfillment strategy.

3. You Manage Customer Service: FBM sellers must handle the customer service tasks assigned to them, including order questions and many return-related issues.

You need to respond professionally, keep track of open requests, and resolve problems within Amazon’s required time frames. This can be challenging if you receive many messages or work without a dedicated support team.

4. Shipping Delays Can Affect Account Health: When you fulfill orders yourself, you are responsible for preparing and handing over packages on time. Delays can lead to customer complaints, late deliveries, and account performance problems.

Amazon’s US seller performance policy includes these targets for seller-fulfilled orders:

• Late Shipment Rate: Below 4%.
• Pre-fulfillment Cancellation Rate: Below 2.5%.
• Order Defect Rate: Below 1%.

Amazon also sets an On-Time Delivery Rate requirement for relevant seller-fulfilled offers on Amazon.com. Its published policy requires at least 90% without promise extensions, and Amazon recommends aiming for 95% or higher. Check the current Account Health dashboard and policy details for your marketplace because requirements can change.

5. Storage and Packaging Expenses: FBM does not remove fulfillment costs. Instead, you pay for the storage and shipping setup you use.

Your expenses may include warehouse rent, staff, packaging materials, shipping labels, courier charges, and returns. If you store products at home, you should still account for the space and time used.

For this reason, compare your total FBM costs with the full cost of FBA before making a decision.

When Should You Use Amazon FBM?

FBM can be a good choice for some products and business models. Here are situations where it may make sense.

1. You Already Have a Warehouse or Shipping Setup: If you already store products and ship orders for your business, using the same setup for Amazon may be practical.

You may be able to use your existing staff, packaging supplies, and courier agreements. Just make sure your operation can handle Amazon’s order volume and delivery requirements.

2. Your Products Sell Slowly: Products that sell only occasionally may not need to be stored at an Amazon fulfillment center.

Keeping them in your own storage space could help you manage inventory differently. However, compare the cost of your storage space and the effort required to ship each order before deciding.

3. You Sell Large, Heavy, or Fragile Items: Some large or delicate products need special packaging or careful handling. FBM lets you decide how to store and pack such items.

It may be a suitable option if you can find a reliable shipping service at a reasonable price. Make sure you account for shipping costs, damage risk, and any special delivery needs.

4. You Sell Customized or Handmade Products: If products are made to order or customized for each customer, keeping them in your own facility may be easier.

You can prepare each item based on the order details before packing and shipping it. Make sure your stated handling time gives you enough time to complete the work.

5. You Sell on Multiple Platforms: If you also sell through your own website or other marketplaces, FBM may help you manage stock and shipping from one location.

A multichannel inventory system can make this process easier by updating quantities and organizing orders from different sales channels.

6. You Want More Control Over Packaging: If your brand needs specific packaging or instructions, FBM can give you more control over how products are prepared for delivery.

Just make sure your packaging meets carrier requirements and Amazon’s policies.

How to Set Up Amazon FBM

If you decide that FBM is right for your business, follow these steps to get started.

Step 1: Create an Amazon Seller Account

Visit Amazon Seller Central to register for a seller account or sign in if you already have one. Amazon offers two main selling plans in the US:

• Individual plan: $0.99 per item sold, plus applicable selling fees.
• Professional plan: $39.99 per month, plus applicable selling fees.

The Individual plan may suit sellers who expect to sell fewer than 40 items per month. The Professional plan may be more suitable for sellers who need advanced selling tools or expect higher sales volume. These are US plan prices; fees and options can differ in other Amazon marketplaces.

Choose the plan that fits your business needs. During registration, provide the requested identity, business, payment, and tax information.

Step 2: Add Your Products

After your account is ready, create your product listings or add your offers to existing product pages.

Follow these tips:

• Use clear images that show the product accurately.
• Write a title that explains what the product is.
• Include important features, dimensions, and other relevant details.
• Make sure the description matches the item customers will receive.
• Research competing offers and calculate your costs before setting a price.

A clear listing helps customers understand the product and decide whether it meets their needs.

Step 3: Choose the Merchant-Fulfilled Option

When setting up your offer, select the option that allows you to fulfill orders yourself. Check that the fulfillment method is correct before making the offer available. You will then be responsible for managing the stock, preparing orders, and meeting your shipping promises.

You can also use FBM for selected products while keeping other products in FBA. This lets you choose a fulfillment method based on each product’s needs.

Step 4: Set Your Shipping and Handling Details

Configure your shipping settings in Seller Central. Set handling times, transit times, shipping regions, and other options based on what your business can reliably provide.

Do not promise delivery speeds that your warehouse or courier cannot meet. Include shipping costs in your pricing calculations, even if you offer customers free shipping.

Amazon provides shipping settings and tools that can help calculate delivery dates and manage shipping labels. Review the available options to find what works for your operation.

Step 5: Prepare Your Storage and Packing Area

Before receiving orders, make sure you have enough space to store products safely and prepare packages. Keep stock organized and easy to access. Use suitable boxes, protective materials, labels, and sealing supplies.

Check products for damage before shipping them. This is especially important for fragile, expensive, or customized items.

Step 6: Plan Your Order and Return Process

Decide how you will check incoming orders, prepare packages, confirm shipments, and respond to customer messages.

Set a regular schedule for reviewing Seller Central. Also, make sure someone is responsible for monitoring return requests and other customer issues when you are unavailable.

A clear process can help you manage orders efficiently as your business grows.

Tips for Succeeding with Amazon FBM

Setting up FBM is only the first step. You also need a reliable process for inventory, shipping, pricing, and customer service.

1. Keep Your Inventory Accurate: Incorrect stock levels can lead to canceled orders and unhappy customers. 

Use an inventory management tool or a well-maintained spreadsheet to track the quantity available for each product. If you sell through several channels, update inventory across them to avoid selling the same item twice.

Review your stock regularly and reorder products before they run out.

2. Prepare Orders on Time: Check new orders frequently and prepare them within your stated handling time. Keep packing supplies ready and organize your workspace so you can process orders without unnecessary delays.

During busy periods, plan for extra orders in advance. If your team cannot handle the usual order volume, review your available capacity and settings rather than promising delivery times you cannot meet.

3. Monitor Your Seller Performance: Amazon tracks several performance measures for seller-fulfilled orders. These can include late shipments, pre-fulfillment cancellations, order defects, valid tracking, and on-time delivery.

Review your Account Health dashboard regularly. If you notice any performance issues, identify the problem and take action as soon as possible.

For example, repeated late shipments may mean you need to change your handling time, improve order processing, or work with a more reliable carrier.

Always check the current performance requirements for the Amazon marketplace where you sell.

4. Work with Reliable Shipping Providers: Your shipping provider affects delivery time, cost, and the condition in which products arrive. 

Compare couriers based on price, delivery coverage, tracking, and reliability. For high-value products, consider whether insurance is appropriate.

Add valid tracking information and keep proof of shipment when required. You can also compare available labels through Amazon Buy Shipping with rates offered by other suitable services.

5. Improve Your Product Listings: A clear listing helps customers understand what they are buying. Use relevant keywords naturally in the title and product details. Add accurate images, explain important features, and answer common questions through your listing content.

Review customer feedback and return reasons to identify missing information. For example, if customers often misunderstand a product’s size, make the dimensions easier to find.

6. Provide Helpful Customer Service: Respond to customer messages promptly and politely. Explain the next steps clearly when an order is delayed, damaged, or incorrect.

Use Amazon’s approved communication tools and follow its messaging rules. Keep records of important order issues and resolve them according to the applicable policies.

Good service can help reduce avoidable complaints and support a better customer experience.

7. Set Prices That Protect Your Profit: Your price needs to cover more than the product’s purchase cost. Include Amazon’s selling fees, shipping, packaging, storage, returns, and other business expenses.

Check competitor prices and changes in demand, but do not lower your price without considering the effect on profit.

A repricing tool like ChannelMAX can help you adjust prices based on your rules and market conditions. Set a minimum price that protects your margin and review your pricing strategy regularly.

8. Plan for Returns: Returns are part of selling online, so decide how you will manage them before orders begin arriving.

Understand Amazon’s return requirements for your marketplace and product category. Check return requests in Seller Central and respond within the required time.

When an item comes back, inspect it when applicable and determine whether it can be resold according to your policies. Also, review the reasons for returns to see whether product quality, packaging, or listing details need improvement.

Amazon FBM vs. FBA: Which Is Better?

FBM and FBA both allow you to sell products on Amazon, but they work in different ways.

With FBM, you manage storage, packing, shipping, and many customer service tasks. With FBA, you send inventory to Amazon, which handles storage, order fulfillment, and much of the related customer service and returns process.

FBM may suit sellers who want direct control over fulfillment or sell products that need special handling. FBA may be more convenient for sellers who want Amazon to manage daily order fulfillment.

Neither option is always cheaper or better. FBA has its own fulfillment and storage fees, while FBM requires you to cover your own storage, shipping, labor, and packaging costs.

Some sellers use both methods. For example, they may use FBA for products that sell regularly and FBM for customized or slow-moving items.

The right choice depends on your product type, sales volume, profit margin, storage setup, and ability to deliver orders on time. Compare the full costs and workload of both methods before deciding.

To summarize, Amazon FBM gives sellers more control over inventory, packing, shipping, and parts of the customer experience. It can be a practical option for businesses that already have a reliable fulfillment setup or sell products that need special handling.

However, FBM also brings more responsibility. You need to manage stock carefully, ship orders on time, handle customer questions, and follow Amazon’s performance and return policies.

Before choosing FBM, calculate your total fulfillment costs and compare them with FBA. Think about how much time your team can spend processing orders and whether your shipping setup can support your expected sales.

You can also combine FBM and FBA to suit different products in your catalog. By choosing the right method for each product, tracking your costs, and reviewing your prices regularly, you can make better decisions for your Amazon business.

Also Read: A Seller’s Guide to Amazon FBA

Disclaimer:
Amazon is the registered trademark of the e-commerce brand.

Frequently Asked Questions (FAQs)

1. Is Amazon FBM cheaper than FBA?

Amazon FBM can be cheaper than FBA for some products, but it depends on your costs. With FBM, you pay for your own storage, packaging, shipping, and labor. With FBA, you pay Amazon’s fulfillment and storage fees. Compare the total costs of both methods before choosing one.

2. Can I sell on Amazon using FBM without a warehouse?

Yes. You do not need to own a warehouse to use FBM. You can store products at home, in a business location, or at a third-party storage facility. Choose a setup that keeps your products safe and allows you to prepare and ship orders on time.

3. Does Amazon FBM qualify for Prime shipping?

FBM offers do not automatically receive the Prime badge. Eligible sellers may be able to join Seller Fulfilled Prime after meeting Amazon’s current requirements. This program allows sellers to fulfill orders themselves while offering qualifying Prime delivery speeds.

4. What fees do Amazon FBM sellers pay?

FBM sellers generally pay Amazon’s applicable selling fees, such as referral fees, along with their own fulfillment expenses. These expenses may include storage, packaging, shipping, labor, and returns. The exact cost depends on the product, marketplace, selling plan, and fulfillment setup.

5. Can I use both Amazon FBA and FBM?

Yes. You can use FBA for some products and FBM for others. For example, you might use FBA for products that sell regularly and FBM for large, customized, or slow-selling items. Using both methods can help you choose the fulfillment option that best fits each product.

6. How do I start selling with Amazon FBM?

To get started, create an Amazon seller account, list your products, and select the merchant-fulfilled option for your offers. Then set up your shipping and return settings, organize your inventory, and prepare a process for packing and sending orders. You must also follow Amazon’s seller policies and delivery requirements.

7. How can Amazon FBM sellers reduce shipping costs?

FBM sellers can compare courier rates, choose suitable packaging, and review shipping costs for different product sizes and destinations. Amazon Buy Shipping may also provide access to pre-negotiated carrier rates. Tracking your expenses helps you identify where you can save without affecting delivery quality.

8. Is Amazon FBM a good choice for new sellers?

FBM can be a good option for new sellers who have a reliable place to store products and can manage packing and shipping. It may also suit sellers who want more control over their inventory and fulfillment costs. However, beginners should consider the time, shipping expenses, and customer service responsibilities before choosing FBM.