Amazon Fulfillment By Merchant (FBM): All You Need To Know

When you think of online shopping, you probably think of Amazon. Amazon is an industry giant, setting the bar for e-commerce businesses with its incredible range of available products, affordable pricing options, and expedited shipping. Fulfillment by Amazon (FBA) has long been the go-to choice for many sellers — that’s changing, though, as more and more people discover the benefits of Amazon Fulfillment by Merchant (FBM).

Amazon FBA was the top program for sellers looking to simplify the fulfillment process. Unfortunately, that changed in 2020 when the coronavirus pandemic swept across the United States and disrupted the world of online shopping. Amazon’s response was to create a pecking order for sales categories. Some had priority, while others faced restrictions. Sellers quickly realized the e-commerce behemoth had more control than they would have liked.

That’s when we saw the rise of Fulfillment by Merchant (FBM). FBM has many advantages over other Amazon fulfillment options, which we’ll discuss in this article. Let’s get to it!

What Is Amazon Fulfillment by Merchant (FBM)?

Fulfillment by Merchant (FBM) is a fulfillment option that allows sellers to manage the process of storing, packaging, and delivering items purchased through Amazon. Customers can find your products and checkout on Amazon, but you are ultimately responsible for fulfilling the order. You can handle it all yourself or outsource to a reliable third-party logistics (3PL) company for e-commerce fulfillment services.

In a sense, Amazon works more like a fancy display case for FBM businesses. It allows you to showcase your products, build your reputation as an online seller, and reach a much larger audience. But the real items your customers purchase are in the back room — or (more accurately) your private warehouse.

Other Amazon Fulfillment Options

Amazon has multiple fulfillment options when it comes to selling products through its online store. Fulfillment by Amazon (FBA) allows you to sell with Prime eligibility without having to deal with customer complaints, returns, and inventory management. Amazon FBA frees you up to focus on other more important aspects of your business, but it means paying for inbound shipping and relinquishing control.

Another popular fulfillment program is Seller Fulfilled Prime (SFP). Many businesses prefer this option because it allows you to sell products through Amazon, have Amazon handle customer service, and offer Prime benefits while maintaining control of warehousing and shipping. However, only select sellers are eligible for SFP. You must continually perform at a high level to qualify and comply with strict standards.

You’ll want to review all your options before settling on one fulfillment program. Amazon FBA and SFP might work well for some sellers, but there are many reasons to choose Amazon Fulfillment by Merchant.

What Are the Pros of Fulfillment by Merchant?

When it comes to order fulfillment options through Amazon, you have several options. However, only one will work best for your brand. As you weigh the pros and cons of each program, here are a few reasons to go with Amazon FBM:

  • Full control of the orders and shipments: With Amazon FBM, the products your customers purchase stay in your hands. You don’t have to send items to a different company’s storage facility, rely on them to answer customer questions and concerns, or meet their rigid guidelines. You can enjoy full control of the fulfillment process from start to finish.
  • Your brand on the packaging: Building your brand is essential to growing your business and reaching your goals in a competitive industry. With Amazon FBM, you can put your own brand on the packaging to introduce yourself to customers and encourage them to buy more products. This increases visibility while boosting brand recognition.
  • Zero costs for inbound shipping: Inbound shipping costs can add up over time. However, you’ll never need to worry about these expenses when you choose Amazon FBM. This program allows you to distribute products straight from your company’s warehouse and keep them from bouncing between fulfillment centers.
  • More consistent shipping and handling: Inconsistent order fulfillment and delivery times were a major grievance against Amazon FBA during the pandemic. Fulfillment by Merchant allows you to handle the shipping and handling, ensuring that customers get their items on time and on target.
  • No limits on inventory stock: You can only fit so much in an Amazon warehouse, and hundreds of companies are vying for storage space. For this reason, Amazon has put limits on inventory stock. However, this won’t affect your business if you store inventory in your own warehouse or through a reputable 3PL.
  • Less dependence on Amazon: Dependency is often unavoidable and even beneficial for most start-up businesses just getting off the ground. The more you grow, though, the less you’ll want to rely on others. Amazon FBM enables you to be more self-reliant and stay at the helm while utilizing valuable connections.
  • Potentially higher profit margins: Another reason to choose Amazon Fulfillment by Merchant involves profit margins. With FBA and SFP, you could end up with lower overall revenue after paying for inbound shipping, storage, and other fulfillment fees. Amazon FBM removes these costs, potentially increasing your profit margins.

Are There Downsides to Fulfillment by Merchant?

Like most things, Amazon FBM has a good side and a bad side. Don’t just look at the pros and sign the dotted line — a smart business owner will carefully consider the cons before finalizing any decision. Sellers have found a few disadvantages of Amazon FBM, including the following:

  • Taking on more responsibility: Amazon FBM gives you more control of the fulfillment process, but with that comes added responsibility. You can’t just sit back and allow someone else to deal with inventory, processing, packaging, delivery, returns, and customer complaints. You’re in charge of the details and ensuring that every job goes right.
  • Handling customer complaints: Building relationships with customers can be fun and exciting, but it can also be a challenge. Customer service gets especially tough when it comes to handling complaints. With Amazon FBM, the seller is responsible for handling customer complaints and looking after customer satisfaction.
  • Dealing with returns: Have you ever ordered something and realized it wasn’t what you wanted? Amazon offers free returns on many items and takes care of the entire process for FBA sellers. However, you must deal with returns and refunds yourself if you go with Amazon FBM.
  • Not getting a Prime badge: One reason why many sellers do not choose Amazon FBM has to do with Prime eligibility. You can qualify for Amazon Prime through the FBA program or by hitting certain performance metrics with SFP. But you cannot get a Prime badge with Amazon Fulfillment by Merchant.
  • Having less time for other business aspects: Handling your business’s order fulfillment process takes a lot of time and energy. Amazon FBM puts the ball in your court, meaning you have more responsibility and less time to focus on other matters. This can pose a significant dilemma for many budding businesses.

How To Know If Amazon FBM Is Right for You

Amazon FBA, Amazon SFP, Amazon FBM — how do you know which is right for you? Even after thinking through all the pros and cons, it can be challenging to choose a fulfillment method that meets your business preferences and needs.

Here are some steps you can take to make an informed decision:

  • Decide whether having full control of the fulfillment process is a high priority. Amazon FBM might be your number-one option if the answer is a resounding yes.
  • Determine whether the products you’re selling are unique and exclusive. If so, you may want to keep your brand attached to them through Amazon FBM.
  • Calculate the cost of storing inventory, processing orders, delivering packages, and handling customer complaints. Paying Amazon to deal with everything might be nice, but it can lower your profit margins.
  • Understand how much time you have to focus on the fulfillment process. The more time you spend on this aspect of your business, the less time you’ll have for other responsibilities.

Grow Your Business With Streamline Fulfillment

Amazon Fulfillment by Merchant (FBM) has gained traction as more and more sellers look to regain control of the order fulfillment process. Letting a different company take care of it can be freeing, but you may end up with less say-so and lower profits. You’ll also have to contend with other businesses for storage space and worry about late deliveries.

Handling order fulfillments on your own or working with a third-party logistics company is an excellent way to take charge of your business and grow your brand. Amazon Fulfillment by Merchant gives you full control, cutting out the go-between so that you can connect with every customer. You can manage orders while relying on the person you trust most: yourself.

Are you looking to take your fulfillment process to the next level? At Streamline Fulfillment, we’re here to help. We offer reliable warehousing and fulfillment services that tailor to your business’s specific needs, so you can get back to doing what you do best. Call us at (509) 888-2880 to get started today!

Schedule Your Consultation Today to Save Time and Money

While Shopify offers an excellent way for small business owners to get into the digital market and expand their networks, focusing on packing and shipping alongside increasing your customer base can be stressful.

Running a business takes a lot of time and money, and whether you want to streamline the process so you can focus on other crucial business components or save a drive to the post office, our team is ready to assist.

To schedule a consultation and discover how Streamline Fulfillment can help, give us a call today!