The aim of Amazon is to serve the global shopping needs. Because of its large scale, many brands and retailers are rushing to participate in this exciting market. While working with Amazon, retailers will have to choose between 2 selling plans: Fulfillment By Amazon (FBA) and Fulfillment By Merchant (FBM).
While FBA offers a comprehensive and efficient order processing service, it also comes with certain terms for businesses. That's why some sellers still choose to process orders themselves (FBM) instead of depending on Amazon. So what is Fulfillment By Merchant (FBM)? How can you decide if it is right for your business? Let’s find out with SANTIFA GO in this article.
Summary:
1. What is Fulfillment By Merchant?
Fulfillment By Merchant is (FBM) a form of sales where sellers themselves track orders, process, and perform packing and shipment to individual buyers worldwide.
When selling goods in the form of FBM, the seller must invest in a warehouse, build a management system, operate it and find suitable shipping units. However, the downside of FBM is that you have little chance of winning over the “Buy box” feature, as Amazon tends to favor FBA sellers.
Buy Box is a priority feature for Amazon sellers who meet certain requirements. With the Buy Box, when a customer clicks on a product detail item, a parameter frame, product value and the "add to cart" feature will appear.
Although the FBM model seems to have many disadvantages, if you can make use of resources and invest in marketing properly, FBM can totally become an effective money-making tool for your businesses.
2. Advantages and disadvantages of FBM
2.1. Advantages
Operation freedom: The seller is in complete control of the business without being involved or dependent on Amazon.
Feel free to expand your business: You can expand your business at no extra cost to Amazon.
No Extra Charges: Amazon has announced that it may increase service or other fees for retailers. However, if you use FBM, you will not incur those additional fees. This will help you reduce storage and maintenance costs as well as increasing profits for your business.
Simple registration procedure: Besides, some states in the US also exempt sales tax, you can take advantage of this to save costs for your business.
2.2. Disadvantages
Investing in a warehouse yourself can cost a lot of money and time
Suitable for small business rather than large scale enterprise
The process of transporting and preserving goods is complicated
Seller needs to pack and control his own order. Because sellers are in Vietnam and customers are located all over the world, packaging and shipping products to customers will take a lot of time, not to mention costs and complicated paperwork.
Summary:
3. Choosing between FBA and FBM
There’s always two sides of a coin, so sometimes it can be difficult to identify whether FBA or FBM will be more suitable for each Amazon seller in particular. Understanding that, SANTIFA GO team summarizes the following:
FBA: It will be suitable for manufacturing enterprises, trading companies, and online businesses. Furthermore, businesses that want to do branding on Amazon and prioritize compact products to save on Amazon storage costs.
FBM: It works if you don't want to use Amazon's FBA service and you have the advantage of an external warehouse. Or if you are confident that operating your own outbound delivery will be more efficient and cost-effective than renting a warehouse from FBA. In addition, if your product has a high value or large volume, this is also a more suitable choice for you.
4. Conclusion
In summary, SANTIFA GO hopes to give you an overview of Fulfillment By Merchant (FBM) and the difference of this business model compared to Fulfillment By Amazon (FBA). Regardless of the form which your business applies to, it is essential to spend time and effort to understand it well. Therefore, sellers should hone their own skills and knowledge in order to find the most suitable business form for their needs.
SANTIFA GO
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