When choosing between FBA and FBM, you should not rule out either option from the outset. Which solution is best for your company depends on a number of variables relating to your experience as a retailer and, above all, the characteristics of your products.
In this article, I would therefore first like to explain the advantages and disadvantages of each option and how you can find out which one is best for you. If it turns out that FBM is your thing, at the end of this article you will also find an overview of the best fulfillment service providers that will make your life as a retailer much easier.
This is the difference between FBA and FBM
FBA stands for Fulfilled by Amazon. This means that Amazon takes care of the packaging and delivery and ships the products directly from its warehouses to the buyer.
FBM stands for Fulfilled by Merchant. Here, the retailer takes care of storage, packaging and delivery. In practice, they usually use a third party to take on these tasks for them.
Advantages and disadvantages of FBA
In the following, I would like to discuss the most important advantages and disadvantages of Amazon FBA.
Advantages of FBA
- Logistics and shipping are taken care of by the retailer. Amazon is a reliable partner that fulfills its obligations at a world-class level.
- Retailers do not need experience with fulfillment, but can concentrate on their expertise in other areas, such as marketing or product development.
- Amazon offers low delivery costs and fast shipping.
- If there are returns or complaints from customers, Amazon takes care of them.
- Amazon takes over customer service.
- Retailers can scale their business at will, as Amazon has large warehouses that offer almost unlimited space and process thousands of products every day.
- FBA can also be integrated into other store solutions such as BigCommerce.
Disadvantages of FBA
- FBA is not cheap. While FBA has strong advantages, cost-conscious retailers can save costs with other fulfillment solutions.
- The fees for long-term storage in particular are high.
- Amazon makes it easy for customers to return goods. This can lead to frequent returns.
- As a retailer, you must adhere to strict regulations when delivering goods to Amazon.
Advantages and disadvantages of FBM
Here are what I consider to be the main advantages and disadvantages of Amazon FBM.
Advantages of FBM
- Retailers can use an individualized fulfillment solution that increases flexibility and reduces costs.
- If you do not manufacture your product yourself, you are dependent on the manufacturer supplying it in accordance with Amazon's guidelines. This can lead to additional costs or the retailer may have to fall back on another manufacturer.
- Taking over fulfillment yourself or using an alternative provider can be significantly cheaper in the end.
- Retailers can strengthen their brand by providing their own customer service. With FBA, Amazon's support contacts the customer directly, which deprives the retailer of the opportunity to score points with particularly good support.
- With FBM, the retailer retains control over fulfillment, whereas with FBA, they hand this over to Amazon entirely. With FBM, you are not affected by Amazon's decisions, such as delivery stops, increased fees, etc.
Disadvantages of FBM
- If you store, pack and ship your goods yourself, you not only need to have the necessary know-how, but also have to make sure that everything runs according to plan every day.
- FBM is particularly difficult for beginners because they have to take care of the entire range of tasks and can make many mistakes in the process.
- Due to the volume discount offered by logistics partners such as DHL, shipping through Amazon is cheaper than for retailers who ship their goods themselves. This means that products with small margins in particular could pay more.
- If it is a small company, it is often not possible to employ a competent customer service team and you have to take care of it yourself.
- Many retailers who handle fulfillment themselves have to do without Amazon Prime. This can lead to lower sales.
Find out which solution is best for you
It is impossible to say which solution is the right one for your company. The decision depends on many factors.
Generally speaking, retailers with high margins or small products that sell quickly are well advised to use FBA. If you have no experience with fulfillment, don't have a warehouse yourself and can't find a third-party provider who can do this professionally and reliably without charging higher fees than Amazon, FBA is also right for you.
On the other hand, experienced retailers with products that often take longer to store or take up a lot of space are better served with FBM. Companies that already have space that can be used for warehousing also save costs. However, it is important to have the capacity for customer service or to be able to outsource this function.
Alternative fulfillment service providers in Germany
Many retailers use a fulfillment service provider for Amazon FBM. Here are some of the best providers in Germany.
Fulfilmentcrowd offers a service package that is specially tailored to marketplaces, including Amazon.
Fulfilmentcrowd's software can be easily connected to Seller Central so that items can be created and managed directly via Fulfilmentcrowd. A special advantage of this service provider is the support of the Seller Fulfilled Prime (SFP) program. This means that, if the retailer has been accepted into the SFP program by Amazon, they can sell their products as part of Amazon Prime.
The Price is made up of a flat rate per parcel, shipping costs and storage costs.
Byrd offers integrations with many different online marketplaces and e-commerce tools, including Shopify, Woocommerce and of course Amazon FBM. Byrd also has access to logistics centers in Germany, Austria and the UK and is therefore also very suitable for shipping outside Germany.
Byrd is connected to the Amazon API and can therefore process orders automatically within a very short time. Byrd works with various shipping partners such as DHL, DPD, FedEx or GLS and selects the cheapest option.
Unfortunately, Byrd is not yet a certified SFP provider, so products cannot yet be offered in Amazon Prime.
Majamo offers both FBA and FBM services.
Pre-FBA services include packing and shipping items according to Amazon guidelines, as well as attaching an FNSKU label, accepting returns and reconditioning them.
The relevant services as an FBA fulfillment partner in this context include majamo In addition to the basic modules such as warehousing and packaging, we also offer individual branding via adhesive tape with logo or print on the package, individual packaging and in-house forwarding and customs clearance for international deliveries.
Majamo enables sellers to be included in the SFP program.
The costs for this service are made up of a monthly flat rate, which is between approx. 50 and 100 € per month depending on the volume processed, incoming goods, storage, pick & pack and shipping by DHL or DPD.
Zenfulfillment is a modern e-commerce logistics and fulfillment service provider that can be easily connected to Amazon. The software gives retailers access to real-time data on orders, stock, returns and more.
With Zenfulfillment you can ship goods worldwide without having to worry about customs formalities. As with majamo, you can customize your packaging with individual branding.
Prices are individual and can be requested without obligation.
With over 40 years of logistics experience in the retail sector Good Stock (part of Nordkurier Logistik) is an established fulfillment partner. Good Stock can be quickly connected to well-known marketplaces such as Amazon, but also Real or Ebay.
With 20,500 square meters of warehouse space and 66,000 storage locations, Good Stock has the capacity to support even the busiest Amazon retailers. Good Stock is also at the forefront of customizing your goods. From branding on the packaging to fan boxes, sets and bundles, everything is possible here.
Due to the reliable and fast processing of orders, SFP membership is possible, but merchant accounts must first be verified by Amazon.
Good Stock offers a free consultation with a price proposal.