FBA or FBM - Which sales model is right for you?
30 Sept 2024
Sales on Amazon – Choosing between FBA and FBM
Sales on Amazon have become one of the most popular ways to grow an e-commerce business. However, before making a decision to sell on this platform, you must choose the logistics model that best meets your needs: FBA (Fulfillment by Amazon) or FBM (Fulfillment by Merchant). Both models have their advantages and disadvantages, and the choice depends on many factors, such as the scale of operations, costs, shipping speed, control over the order process, seasonality, and market reach.
Scale of operations: When is it worth opting for FBA, and when for FBM?
If you are running a large-scale operation with high sales volume, FBA might be the ideal solution for you. Amazon handles storage, order fulfillment, and product shipping, allowing you to focus on other aspects of the business. With automated processes, FBA can handle thousands of orders daily, which is invaluable for larger sellers.
On the other hand, FBM may be more cost-effective for smaller sellers who have fewer orders and can manage shipping themselves. This means no storage costs and Amazon handling fees, but also the need to manage logistics, returns, and maintain the health of your account.
Costs: Analysis of FBA and FBM expenses
One of the key factors when choosing between FBA and FBM is costs.
FBA – additional fees for storage, fulfillment, and shipping. It may be less profitable with low margins or products sitting in stock.
FBM – no fees for Amazon, but full responsibility for shipping, packaging, and handling returns. A good solution for smaller scale operations.
Shipping speed
FBA: access to Prime and the ability to deliver products within 1–2 days. This translates into better customer reviews and a higher position in search results.
FBM: speed depends on the seller. Achieving FBA levels requires significant investment in logistics.
Control over the order process
FBM: greater control over shipping and direct contact with the customer. Ability to quickly adjust the service process.
FBA: Amazon takes over the handling, which limits control over logistics and customer relationships.
Seasonality: How to choose a model for peak periods?
FBA: ideal for high order volume (holidays, sales). Amazon has the infrastructure to handle high volumes.
FBM: good for stable industries or businesses that can manage increased orders independently.
Market reach: Which model will help you increase visibility?
FBA: greater chance of visibility through the Prime program and easier access to the Buy Box.
FBM: flexibility in selling beyond Amazon and easier inventory management across multiple platforms.
FOMO: Leverage the fear of missing out
Regardless of the model, it’s worth applying the principle of FOMO – inform customers of limited availability or time-sensitive promotions.
With FBA, Prime products are more often perceived as more attractive.
With FBM, you can create unique, personalized offers and messages.
Summary: Which model to choose?
FBA: large scale operations, need for fast shipping and greater visibility on Amazon.
FBM: full control over orders, lower costs, and greater flexibility.
Remember – both models have their pros and cons. It’s worth analyzing your own needs and even testing both to determine which best supports your business.
Contact us to learn more!