If you’re selling on Amazon, choosing between Fulfilled by Amazon (FBA) and Fulfilled by Merchant (FBM) is one of your most important business decisions. This choice affects your operational costs, brand control, shipping speed, and customer experience.
With FBA, Amazon handles storage, shipping, and customer service for your products. With FBM, you manage fulfillment yourself or through a third-party logistics provider (3PL). Each model has distinct advantages and challenges:
FBA works best when you:
Sell small, lightweight items
Want automatic Prime eligibility
Prefer Amazon to handle customer service
FBM makes more sense when you:
Sell large, custom, or slow-moving products
Want control over branding and packaging
Need flexibility in inventory management
This guide helps you understand the key differences between FBA and FBM so you can choose the right fulfillment method for your business.
PRO TIP: If you sell big, heavy, or bulky items on Amazon, Red Stag Fulfillment can offer a great middle ground between FBA and self-fulfilling FBM.
We offer Seller-Fulfilled Prime services for big items, which means you can get the Prime badge without paying Amazon’s high fees.
If you prefer to use FBA, we also offer FBA prep services for products of all sizes. Ship your inventory to us, and we’ll prepare and forward it to Amazon’s fulfillment centers according to their strict requirements.
Interested in either of these services? Reach out today and let us know what you need.
Important differences between Amazon FBM vs. FBA for Amazon sellers
| Criteria | Amazon FBM | Amazon FBA |
|---|---|---|
| Fulfillment responsibility | Seller or 3PL manages fulfillment | Amazon handles fulfillment |
| Costs and fees | $ (Variable; depends on seller or 3PL) | $$ (Fixed fees based on item size and weight) |
| Shipping speed | Varies based on carrier and service level | Prime-eligible 2-day shipping available |
| Customer service | Managed by seller or 3PL | Amazon manages customer service for FBA orders |
| Prime eligibility | Available through Seller Fulfilled Prime (SFP) | Automatic Prime Badge eligibility; higher probability of winning the Buy Box |
| Product suitability | Better for larger, custom, or slow-moving items | Ideal for small, fast-moving, standardized products |
| Inventory management | Full control over inventory location and stock levels | Managed within Amazon’s system |
Understanding the cost structure of FBM vs. FBA
Costs are a major factor in deciding between FBM and FBA because they can be vastly different based on the model you choose. While FBA provides convenience, it can be expensive due to Amazon’s tiered fee structure.
Amazon FBA costs:
Storage fees: Amazon charges monthly storage fees based on the volume of your inventory, with additional long-term storage fees for items held for more than 365 days. This makes FBA less suitable for sellers with slow-moving or seasonal products.
Fulfillment fees: Fees are calculated based on the size and weight of each item. Lightweight, small products benefit from lower fees, while big or heavy items face significantly higher charges.
Returns processing fees: If an item is returned, sellers incur a return processing fee, making it crucial to factor in potential returns when using FBA.
Amazon FBM costs:
Shipping and packaging costs: FBM sellers need to cover the costs of packaging materials and shipping, which can vary widely based on the carriers and service levels chosen.
Storage and fulfillment costs: Sellers may use their own warehouse or outsource to a 3PL for storage and order fulfillment. While these costs are variable, they provide greater flexibility and control compared to Amazon’s standardized fee structure.
Hypothetical cost breakdown: FBA vs. FBM
Consider a scenario involving 100 small, lightweight items stored for three months and sold through Amazon:
FBA: Storage fees might be $60, with fulfillment fees of $3 per item. Total = $360 for fulfillment + $60 storage = $420.
FBM: Assuming $2 per item shipping through a 3PL and $50 for storage, total costs would be around $250.
Pros and cons of Amazon FBM
In the FBM model, sellers manage their fulfillment operations. This can be done in-house or with the help of a 3PL like Red Stag Fulfillment, providing flexibility and control over every aspect of the shipping process.
PROS:
Cost savings: Avoiding Amazon’s storage and fulfillment fees can lead to significant savings, especially for large or custom products. Sellers can choose more cost-effective shipping methods and packaging designed for their needs.
Control over branding: FBM allows sellers to maintain their branding by using custom packaging and managing customer service, creating a consistent brand experience.
Fewer inventory limitations: Because FBM sellers can control and maintain their inventory on their own or with the help of a 3PL, they aren’t subject to the same inventory requirements that FBA sellers are.
CONS:
Complex logistics: Managing inventory, packing, and shipping independently requires time and resources. Sellers need to establish reliable processes or partner with a 3PL to manage these aspects efficiently.
Seller Fulfilled Prime (SFP) requirements: Sellers who wish to offer Prime benefits through FBM must meet Amazon’s strict SFP requirements, which can be challenging without an efficient logistics system.
PRO TIP: Want to eliminate one of these cons altogether? Red Stag Fulfillment offers Seller Fulfilled Prime for large items, and you’ll get better pricing than if you go with Amazon.
Pros and cons of Amazon FBA
Amazon FBA sellers send their inventory to Amazon’s fulfillment centers. Amazon then manages storage, packing, shipping, and customer service. While convenient, this model has its own set of challenges.
PROS:
Prime eligibility: FBA provides automatic Prime eligibility, giving sellers access to Amazon’s large customer base and boosting visibility and sales potential.
Simplified operations: Amazon manages fulfillment, returns, and customer service, freeing sellers from logistical headaches and allowing them to focus on business growth.
CONS:
High storage fees: Amazon’s storage fees can become costly, especially for slow-moving or big and bulky products. Long-term storage fees reduce profitability.
Limited branding opportunities: Sellers must use Amazon’s standardized packaging, which limits branding opportunities. This makes it difficult to differentiate FBA products and create a unique unboxing experience.
Restock and inventory limits: According to Jungle Scout, Amazon enforces restock and inventory limitations, leaving many sellers with the belief that “they just aren’t given the necessary storage space needed to prevent their products from always going out of stock.”
Less authority over returns: Jungle Scout also makes the point that sellers “have no control over whether a product is accepted as a return, even if it’s clearly the buyer’s fault that that product was damaged.”
Top factors to consider before choosing your Amazon fulfillment method
Product type and size
Larger items often incur higher storage fees with FBA, making FBM a more viable option. FBM also offers flexibility for products that require special handling or packaging, which may not be compatible with FBA’s standardized processes.
Here are some examples to consider:
| Product Type | Size/Weight | FBA Suitability | FBM Suitability | Rationale |
|---|---|---|---|---|
| Electronics (e.g., smartphones) | Small, lightweight | High | Moderate | Low storage fees, fast turnover ideal for FBA |
| Books | Small to medium | High | High | Both methods work well; choose based on sales velocity |
| Furniture | Large, heavy | Low | High | High FBA fees; special handling often required |
| Clothing | Small to medium | High | Moderate | FBA’s standardized processes work well for most apparel |
| Fragile items (e.g., glassware) | Varies | Moderate | High | FBM allows for custom packaging and handling |
| Big or bulky items (e.g., kayaks) | Very large | Low | High | Prohibitive FBA fees; better managed through FBM |
| Handmade or custom products | Varies | Low | High | FBM offers flexibility for unique items and packaging |
Shipping speed and customer expectations
Shipping speed directly influences customer satisfaction and business growth. Shoppers today prioritize fast and reliable deliveries, and meeting these expectations is key to building brand loyalty and increasing sales.
In fact, customers are more likely to choose sellers that offer quicker delivery options, and it often becomes a deciding factor when comparing multiple sellers offering similar products.
68.41% of surveyed consumers said that fast shipping was their second priority (behind free shipping) when it comes to receiving orders, according to data from Digital Commerce 360 and Bizrate Insights.
Reliable and speedy shipments, like shipping options available through Amazon Prime, help establish trust, encouraging repeat purchases. When customers receive products on time and as expected, they’re more likely to return for future purchases.
Branding control
With FBM, sellers have the ability to design the entire unboxing experience from start to finish, using their own packaging, branding, and marketing materials.
This allows for a consistent brand experience that matches the seller’s online presence and messaging.
Here are some important things to consider:
Personalized packaging: FBM allows sellers to use custom packaging materials, which can include branded boxes and eco-friendly alternatives. This enhances brand perception and gives businesses the opportunity to stand out in a crowded market.
Inserts and promotions: Sellers using FBM can include promotional materials or loyalty programs directly in the package. For instance, they can add discount codes, limited-time offers, or information about upcoming product launches. Such tactics are not possible with FBA, where sellers have little control over what goes into the box besides the product itself.
Consistency across channels: With FBM, sellers can ensure that their branding remains consistent, whether customers buy from their website, social media platforms, or Amazon. Maintaining the same packaging and messaging helps build a stronger brand identity, which is often diluted when using FBA’s standardized approach.
Customer service and returns management
Amazon FBA’s customer service and returns management can be highly beneficial for sellers who prefer to outsource these responsibilities.
FBA manages all customer interactions related to order issues and returns, reducing the operational burden for sellers. This is especially helpful for small businesses or solo entrepreneurs who may not have the resources to manage a dedicated customer service team.
However, this convenience comes with limitations—sellers have little control over the customer service experience, as Amazon uses its own standardized procedures, which may not align with the brand’s values or customer expectations.
On the other hand, Amazon FBM allows sellers to manage customer service and returns directly, which provides opportunities for personalized interactions and building customer loyalty.
Sellers can offer tailored solutions, such as customized return policies, direct communication channels, and specific troubleshooting procedures that fit their product type and brand ethos.
This approach can foster stronger customer relationships and encourage repeat purchases, as customers often value the personal touch and consistency offered by direct brand interactions.
Partnering with a 3PL like Red Stag Fulfillment can enhance the FBM model even further. Red Stag can manage the logistical aspects of returns, including receiving, inspecting, and processing returned items quickly and efficiently. This process allows businesses to maintain high standards without overburdening their internal teams.
How to transition from Amazon FBA to Amazon FBM
Switching from Amazon FBA to FBM can offer sellers more control over their operations and branding, but it requires careful planning to ensure a smooth transition. Here’s a step-by-step guide for making the switch effectively, especially if you plan to work with a 3PL like Red Stag Fulfillment.
Step 1: Assess your product line
Review your product catalog first to determine which items will benefit most from the FBM model. Consider these factors:
High storage fees: Products that incur high storage fees under FBA, especially oversized or slow-moving items, are ideal for FBM, as you can avoid Amazon’s expensive long-term storage costs.
Special packaging requirements: If your products require special or custom packaging that cannot be accommodated by Amazon’s standardized FBA processes, FBM offers the flexibility you need to create a branded experience.
Bulky and fragile items: For large, heavy, or fragile items that require careful handling, FBM supported by a specialized 3PL like Red Stag can ensure the right level of care and minimize damage during transit.
Step 2: Choose your new 3PL partner
Partnering with a trusted 3PL is crucial for a successful transition. The right partner will help streamline the fulfillment process and reduce the complexity associated with FBM. When evaluating 3PLs, consider:
Experience and specialization: Look for a provider like Red Stag Fulfillment that has expertise in handling your specific product types, such as big/bulky, high-value, or fragile goods.
Scalability and support: Ensure the 3PL has the capacity to scale as your business grows and offers strong support services, like inventory management and returns processing.
Step 3: Plan the inventory transfer
Moving your inventory from Amazon’s fulfillment centers to your new 3PL requires careful planning to minimize downtime and prevent stockouts:
Set up the transfer: Coordinate with Amazon and your new 3PL to schedule the inventory transfer. Amazon allows you to create a removal order, which can be fulfilled by your chosen 3PL.
Stagger shipments if needed: If you have a large volume of inventory, consider staggering the shipments to maintain a steady supply of products during the transition period.
Inspect inventory: As inventory arrives at the 3PL facility, work with your partner to inspect products for any damage that may have occurred during the transfer. This is also an opportunity to verify counts and ensure everything matches your records.
Step 4: Update listings and systems
Transitioning to FBM requires updating your Amazon listings and systems to reflect your new fulfillment method:
Update product listings: Adjust your Amazon listings to indicate that the items are now FBM rather than FBA. Make sure you adjust the expected delivery times based on the shipping options you plan to offer through your 3PL.
Sync systems: Ensure your inventory management system and the 3PL’s platform are integrated. This integration helps synchronize stock levels in real time, preventing overselling and ensuring customers receive accurate delivery timelines.
Step 5: Maintain customer experience standards
Establish clear communication channels: If your 3PL offers customer service support, work with them to set up clear protocols for handling customer inquiries, returns, and issues.
Monitor feedback: Pay close attention to customer feedback during the transition phase. This will help you quickly address any concerns and make adjustments to your fulfillment strategy as needed.
Leverage your 3PL’s expertise: Use the expertise of your 3PL partner, like Red Stag, to improve packaging, streamline shipping routes, and reduce costs through negotiated carrier rates.
Maintaining a high standard of customer service during the transition ensures that customers continue to receive a positive experience, even as you adjust your fulfillment approach.
Make the right fulfillment choice for your Amazon business
Deciding between FBM and FBA requires careful consideration of your product type, business goals, and customer service expectations. While FBA offers streamlined fulfillment with Prime access, FBM, especially when paired with a reliable 3PL like Red Stag, provides greater flexibility and control.
Ready to find out how you can improve your fulfillment options as an Amazon seller? Reach out to Red Stag Fulfillment for expert advice and solutions tailored to your ecommerce needs and get started on a solution that fits your business.
