Compare FBA and FBM to understand the costs, benefits, and challenges of each option for your Amazon business.

When you sell on Amazon, you need to decide how your orders will be stored, packed, and shipped to customers. Two common options are FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant). With FBA, Amazon handles most of the fulfillment for you. With FBM, you handle the process yourself.

Both options can work well. The better choice depends on what you sell, how much you sell, your costs, and how much control you want over your orders.

Let’s look at how FBA and FBM work and what you should consider before choosing one.

What Is Amazon FBA?

Fulfillment by Amazon (FBA) is a service where Amazon handles much of the order fulfillment process for you. You send your inventory to Amazon, and Amazon stores the products in its fulfillment centers. 

When a customer places an order, Amazon picks, packs, and ships the product. Amazon also handles customer service and returns for FBA orders.

How FBA Works

The process is simple:

1. You send your products to an Amazon fulfillment center.
2. Amazon stores your inventory.
3. A customer places an order.
4. Amazon picks, packs, and ships the product.
5. Amazon handles customer service and returns when needed.

FBA can be useful if you do not want to manage shipping yourself or if you want to make your products available to Prime customers. It can also be a good fit for products that sell regularly and in larger volumes.

What Is Amazon FBM?

Fulfillment by Merchant (FBM) means you handle the fulfillment process yourself. You keep your inventory at your home, warehouse, or another storage location. When someone orders your product, you pack it and ship it using your chosen carrier. You are also responsible for customer questions and returns.

How FBM Works

Here is what the process looks like:

1. You list your product on Amazon.
2. You keep the inventory yourself.
3. A customer places an order.
4. You pack and ship the product.
5. You handle customer service and returns.

FBM can be useful if you already have your own warehouse or shipping setup. It can also make sense for products that are handmade, customized, bulky, or do not sell very often.

FBA vs. FBM: What Is the Difference?

The biggest difference is simple: Amazon handles fulfillment with FBA, while you handle it with FBM.

Pros of Amazon FBA

FBA can take a lot of work off your shoulders. Here are some of the main benefits.

1. Amazon Handles Most of the Fulfillment Work: This is one of the biggest reasons sellers choose FBA. You do not have to pack every order, print shipping labels, or deal with every customer question about delivery.

Amazon handles storage, picking, packing, shipping, and much of the return process. That gives you more time to work on things like product research, listings, advertising, and growing your business.

2. Your Products Can Be Available to Prime Customers: FBA can make eligible products available with Amazon Prime benefits. Fast delivery is important to many Amazon shoppers. Some customers also prefer to shop for Prime-eligible products.

This can make FBA useful for sellers who want to reach customers who value quick delivery.

3. Amazon Has a Large Fulfillment Network: Amazon has fulfillment centers in different locations, which can help get products to customers quickly.

For sellers, this means you do not have to build your own nationwide shipping network. You can send your inventory to Amazon and let its fulfillment system handle the orders.

4. Amazon Handles Customer Service for FBA Orders: With FBA, Amazon handles customer service related to many parts of the order.

If a customer has a question about delivery or needs help with a return, Amazon can handle it. This can save sellers a lot of time, especially when they have a large number of orders.

Also Read: Amazon Prime for Sellers: Pros, Cons, and What You Need to Know

Cons of Amazon FBA

FBA is convenient, but it also has some disadvantages.

1. FBA Fees Can Reduce Your Profit: FBA is not free. Depending on your products and inventory, you may have to pay storage and fulfillment fees. There can also be other costs related to returns and inventory.

These fees can be a bigger problem for low-priced, large, or slow-selling products. Before choosing FBA, calculate your expected profit after all major Amazon costs.

2. You Have Less Control Over Fulfillment: Once your inventory is in Amazon’s fulfillment network, you do not control every part of the process. 

You have less control over how products are stored, packed, and shipped. This can also make it harder to use your own packaging or create a specific unboxing experience.

3. Inventory Limits Can Be a Challenge: Amazon may place limits on how much inventory sellers can send to its fulfillment centers. 

This can become a problem if you have a product that suddenly starts selling quickly or if you need extra inventory during a busy season. Good inventory planning is important when using FBA.

4. Slow-Moving Inventory Can Become Expensive: Keeping products in Amazon’s warehouse for a long time can increase your costs. If inventory does not sell, you may continue paying storage costs, which can reduce your profit.

This is one reason sellers should regularly check which products are selling and which ones are sitting in storage.

5. Returns Can Add to Your Costs: Amazon makes returns convenient for customers. For sellers, however, returns can create extra costs and work. Some product categories naturally have more returns than others. 

If your return rate is high, you should look at why customers are sending products back and see if you can improve your listing or product.

Pros of Amazon FBM

FBM gives you more control over the fulfillment process.

1. You Can Control Your Fulfillment Costs: FBM can make financial sense for certain products.

For example, if you already have your own warehouse and can ship orders at a low cost, handling fulfillment yourself may be cheaper than paying FBA fees.

It can also work well for bulky or slow-moving products where Amazon storage and fulfillment costs may be high.

2. You Have More Control Over Shipping and Packaging: With FBM, you decide how your products are packed and which shipping service you use. This can be useful if your brand depends on special packaging or if you want to add a personal touch to your orders.

You also have more control over the overall customer experience.

3. You Have More Flexibility With Inventory: With FBM, your inventory stays under your control. You do not have to send your stock to an Amazon warehouse, and you do not have to deal with Amazon’s storage limits in the same way as an FBA seller.

This can be helpful when demand changes or when you sell products that move slowly.

4. FBM Can Work Well for Custom Products: Some products are simply easier to manage yourself. Handmade products, customized products, and items that need special handling may be better suited to FBM.

You can pack these products based on the customer’s order instead of keeping them in Amazon’s fulfillment system.

5. You Can Create Your Own Brand Experience: FBM gives you more freedom with packaging. You can use your own boxes, add approved inserts, and create a more personal unboxing experience.

For brands that want customers to remember them after the purchase, this extra control can be useful.

Cons of Amazon FBM

FBM gives you more control, but that also means more responsibility.

1. Prime Is Not Available by Default: FBM products do not automatically receive the Prime badge. Sellers who want to offer Prime while fulfilling orders themselves need to qualify for Seller Fulfilled Prime (SFP) and meet Amazon’s requirements.

Without Prime, some customers may choose another seller that offers faster delivery.

2. You Have to Handle Everything: With FBM, you are responsible for storing products, packing orders, shipping them, and handling customer service and returns.

This may not be a problem when you have a small number of orders. But as your sales grow, managing everything yourself can take a lot of time.

3. Shipping Problems Can Affect Your Business: FBM sellers are responsible for getting orders out on time. If orders are shipped late or arrive later than promised, customers may leave negative feedback or have a poor experience.

This means you need a reliable shipping process and a good system for tracking orders.

4. You May Have More Competition From FBA Sellers: FBA sellers can offer Prime benefits, which many customers value. 

If another seller offers the same product at a similar price but faster delivery, customers may choose that offer instead. FBM can still work well, especially when your product is unique, customized, or difficult for other sellers to offer.

5. International Shipping Can Be More Complicated: Selling internationally through FBM can require more work. You may need to deal with international shipping, customs, duties, and different rules in different countries.

For sellers who want to expand to multiple markets, this can add both cost and complexity.

FBA or FBM: Which One Should You Choose?

There is no single answer for every Amazon seller.

Think about your products, your profit margins, your sales volume, and how much time you have available to manage fulfillment.

FBA May Be a Better Fit If:

• You sell products that move quickly.
• Your products are relatively small and easy to ship.
• You want to offer Prime benefits.
• You do not have your own warehouse.
• You do not want to manage packing and shipping yourself.
• You are comfortable paying Amazon fulfillment and storage fees.

FBA can be especially convenient for sellers who want to spend more time growing the business instead of managing daily fulfillment.

FBM May Be a Better Fit If:

• You already have your own warehouse or storage space.
• You can handle shipping efficiently.
• You sell bulky, custom, handmade, or slow-moving products.
• You want more control over packaging.
• You want to manage your own customer service.
• You want to avoid some FBA-related costs.

FBM can give you more control, but you also need the time and resources to manage the work yourself.

Can You Use Both FBA and FBM?

Yes. Some sellers use both methods instead of choosing only one.

For example, you could use FBA for products that sell quickly and use FBM for bulky or slow-moving products.

This approach can give you more flexibility. If your FBA inventory runs low, having an FBM option may help you continue fulfilling orders yourself. It can also be useful during busy periods when you want another way to manage your inventory.

Benefits of Using Both

A hybrid approach can help you match the fulfillment method to each product. You might use:

• FBA for small, fast-selling products.
• FBM for bulky or slow-moving products.
• FBM for products that need special packaging.
• FBA for products where Prime delivery is especially important.

This lets you avoid treating every product in your catalog the same way.

Challenges of Using Both

Using two fulfillment methods also makes inventory management harder. You have to track stock in Amazon’s warehouses and your own storage at the same time. You also need separate processes for FBA shipments and FBM orders.

If both options are available for the same product, make sure the shipping times and return processes are clear. A confusing customer experience can create problems.

To conclude, FBA and FBM can both work well on Amazon. The right choice depends on your products, costs, sales volume, and the amount of control you want.

FBA can save you time and make it easier to offer Prime fulfillment, but you need to account for Amazon’s fees and storage costs. FBM gives you more control over inventory, shipping, and packaging, but you have to handle the fulfillment work yourself.

You can also use both. For many sellers, this can be a practical way to use FBA for some products and FBM for others. Before choosing a fulfillment method, look at the actual numbers for your business. Your best option today may also change as your sales and product range grow.

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

Frequently Asked Questions (FAQs)

1. Is FBA or FBM better for Amazon sellers?

Neither option is better for every seller. FBA may suit sellers who want Amazon to handle fulfillment, while FBM can work well for sellers who want more control over storage, shipping, and packaging. The right choice depends on your products, costs, sales volume, and business setup. 

2. Is Amazon FBA more expensive than FBM?

Not always. FBA has Amazon storage and fulfillment fees, while FBM comes with your own costs for storage, packing, labor, shipping, and returns. Compare the total cost for each method before making a decision.

3. Can I use FBA and FBM at the same time?

Yes. Amazon allows sellers to use both fulfillment methods. You can use FBA for some products and FBM for others, depending on what works best for each product. 

4. Can FBM sellers get the Amazon Prime badge?

Yes, but not automatically. FBM sellers can qualify for Seller Fulfilled Prime (SFP) if they meet Amazon’s requirements and successfully complete the required trial. 

5. Is FBA good for new Amazon sellers?

FBA can be useful for new sellers who do not have their own warehouse or shipping setup. Amazon handles storage, packing, shipping, customer service, and returns, which can reduce the amount of fulfillment work the seller needs to manage. 

6. Is FBM good for small Amazon sellers?

FBM can be a practical option for small sellers with a simple fulfillment setup who want to retain control of their inventory and shipping. It may also suit sellers with custom, handmade, bulky, or slow-moving products.

7. Which fulfillment method is better for bulky products?

FBM may be worth considering for bulky products because sellers can sometimes manage storage and shipping more efficiently on their own. Amazon also notes that FBM can be used for heavy and bulky products that may not be suitable for FBA.

8. Can I switch from FBM to FBA on Amazon?

Yes. Sellers can choose a fulfillment method for their products and can use FBA and FBM together. This means you can adjust your fulfillment approach as your products and business needs change.