What Does Fulfillment by Merchant Mean, and What Are the Restrictions?

About two-thirds of Amazon sellers use Fulfillment by Amazon (FBA) for their eCommerce fulfillment. Amazon FBA provides many advantages but also has some significant downsides, particularly for companies that sell oversized products. For many sellers, Fulfillment by Merchant (FBM) or a combination of FBM and FBA serve their customers better.

No matter what you sell, you probably need to sell on Amazon. Here’s our guide to help you decide whether Fulfillment by Merchant is the right choice for your Amazon* orders.

*Nothing in this article is meant to imply a legal relationship between Red Stag Fulfillment, LLC and and any company mentioned. Red Stag Fulfillment, LLC does not own any other company’s trademarks referenced or included in this article. Information gathered for this article came from a mix of publicly available news and websites, websites of the companies mentioned, and direct communication with named companies.

What is Fulfillment by Merchant (FBM) vs. Merchant Fulfilled Network (MFN)?

Confusingly, Amazon has two terms for eCommerce sellers who ship their own products: Fulfillment by Merchant and Merchant Fulfilled Network (MFN). Amazon also refers to this as Fulfilled by Merchant (also shortened to FBM). FBM and MFN refer to a seller who packs and ships their own orders in-house or through an independent fulfillment company.

Do Amazon sellers need to use FBA?

While most Amazon sellers choose FBA for the simplicity and ease of having order handling and selling in one place, you can sell on Amazon without using FBA. Creating a Fulfillment by Merchant product listing is the same as creating a Fulfillment by Amazon listing.

If you don’t use Amazon’s fulfillment services, you’ll need to meet specific standards for fast order processing. If you have an Individual plan, you’re locked into Amazon’s shipping rates, but sellers with the Professional plan can set their own shipping costs.

Do Fulfillment by Merchant sellers need to work with a 3PL?

You don’t need to partner with a fulfillment company to ship Amazon orders outside the FBA network. Many small businesses start out doing self-fulfillment from a spare room or a garage.

Be aware, however, that Amazon’s high standards for fulfillment to be cost-effective, accurate, and efficient put a lot of pressure on small businesses that manage their own pick and pack operations. If your Amazon store is a side hustle, FBA or a 3PL might be a better choice to keep fulfillment from eating up your time. And, for larger businesses, outsourced fulfillment frees you to focus on marketing your brand.

And what’s the deal with Amazon Seller Fulfilled Prime?

One of the advantages of FBA is that it makes your products eligible for Prime shipping, which is a terrific purchase incentive for Prime members. Fulfillment by Merchant shipping is not eligible for the Prime badge, but Amazon has another self-fulfillment category: Seller Fulfilled Prime.

To qualify for Seller Fulfilled Prime, you must prove that your fulfillment process is as fast as Amazon’s. You must meet strict 1-day and 2-day Prime delivery deadlines and demonstrate a very high order accuracy rate.

There’s a catch, however: Amazon’s webpage for Seller Fulfilled Prime states that it isn’t open to new applications and invites merchants to get on a waitlist. Unfortunately, that’s been the case for much of the time since Amazon introduced Seller Fulfilled Prime, so it’s an option that isn’t truly an option for most Amazon merchants.

However, you can still dazzle your Amazon customers with fast, accurate fulfillment when they order your products through the Marketplace. Excellent Fulfillment by Merchant won’t win you a Prime badge, but it will get you 5-star customer feedback and loyal customers.

Steps in the fulfillment process with an independent 3PL

Working with a 3PL is an ideal fulfillment method for many eCommerce companies, particularly those that market across many sales channels. Amazon FBA offers multichannel fulfillment services, but a 3PL can give you an omnichannel fulfillment process that helps promote your brand and provide a better customer experience.

If you choose Fulfilled by Merchant for your Amazon orders, here’s the process.

Set up integrations to send orders and track inventory

One of the first and most critical steps to prepare your business for Amazon Fulfilled by Merchant shipping is to set up an integration between your order management system and your 3PL.

You can use a plugin, middleware, or build an API to connect Amazon Marketplace directly to your 3PL’s warehouse management system. If you use ERP software such as NetSuite to manage multichannel selling, you’ll connect Amazon to the ERP and then connect the ERP to your 3PL.

Red Stag Fulfillment commonly uses DropStream middleware, which has a prebuilt connection to many eCommerce platforms. DropStream also directly connects to Amazon Marketplace, including support for Seller Fulfilled Prime.

Ship stock to the 3PL warehouses

Rather than shipping stock to Amazon warehouse locations dictated by Amazon, you can choose your warehouse locations when you work with a 3PL. You get more control over where your merchandise is stored, which can help you manage sales tax obligations and reduce shipping zones.

Your inventory will go directly from your manufacturer to the fulfillment center. The receiving team will log your items into inventory in the warehouse management system. Your stock is ready to pick at that point, and your 3PL can start filling Amazon orders.

Work with your 3PL to ensure the service level that Amazon customers expect

When people place an order on Amazon, they expect fast delivery. If your 3PL isn’t equipped to clear incoming orders daily, it could get behind, leading to extended delivery times. Amazon takes customer complaints about poor service very seriously, so ensure that your 3PL can handle the demand before onboarding with a new fulfillment company.

For example, Red Stag Fulfillment offers same-day fulfillment services with cutoffs at 3:00 pm ET and 5:00 pm ET. Any orders placed before the cutoff specified in your service level agreement are picked, packed, and handed off to a carrier the same day. Our same-day fulfillment service is backed by our famous fulfillment guarantees, which means our fulfillment centers won’t hold up your orders.

Fulfillment by Merchant or Amazon FBA?

Amazon runs an enormous logistics operation supported by big data to increase efficiency. Few, if any, small 3PLs can compete with the sophistication of Amazon’s fulfillment network.

But that size works against many Amazon FBA sellers. Amazon’s primary purpose is to grow Amazon’s business, not yours, and if your business interests conflict with Amazon’s, it’s clear who will come out on top.

For example, FBA stopped shipping items it didn’t consider essential early in the pandemic, leaving many FBA sellers with no way to access their stock or ship orders. Amazon FBA limits the amount of stock you can store in its warehouses during peak season, which can throttle your holiday sales. And in recent years, FBA has been known to kick an Amazon seller out of the program if their items didn’t turn over quickly enough, leaving the eCommerce seller scrambling to find a new fulfillment partner on short notice.

It’s critical to consider the factors that work well for each Amazon fulfillment method. Here are some reasons to choose Fulfillment by Merchant vs. Fulfillment by Amazon.

When to choose Fulfillment by Amazon

Amazon FBA is an excellent choice for eCommerce companies that meet one or more of these criteria:

Your stock turnover rate is high
Paying for fulfillment and marketplace fees in one place is a benefit for your business
You sell small, lightweight items
Your business will benefit from FBA’s accelerated logistics
You can’t source the fulfillment you need from independent 3PLs
It would help your business to have Amazon provide customer service for you

When to choose Fulfillment by Merchant

Fulfillment by Merchant is a better option if your company falls into any of these categories:

You sell heavy, bulky, or oversized products — Amazon admits that FBA doesn’t work well for shipping large packages
Your product doesn’t turn over quickly
Your sales are high-value and low volume
The merchandise you carry needs to be stored in a temperature-controlled warehouse
Branding is vital to your Amazon store and your business (FBA orders only ship in Amazon packaging)
You have an excellent customer service operation in place and don’t need Amazon customer service
A substantial part of your sales happen during the peak holiday season, and you can’t afford to have your warehouse space severely limited

Can you combine Amazon FBM with FBA?

Many Amazon sellers who choose the Merchant Fulfillment Network option also use FBA. Combining FBM with FBA can give you the best of both worlds. You can qualify for Prime shipping on some or all of your products. If FBA warehouses run out of your stock, you can switch fulfillment for your Amazon orders to your 3PL. During the holiday season, you will have expanded storage capacity, so your gift orders won’t be limited by a lack of space in Amazon’s fulfillment centers.

The next step is to find the right 3PL for your Amazon Fulfilled by Merchant order fulfillment.

How Red Stag Fulfillment supports Amazon Fulfillment by Merchant

Red Stag Fulfillment works with many clients to fill orders placed on Amazon. Some of our clients use a combination of FBA and FBM, while others use Fulfillment by Merchant or Seller Fulfilled Prime.

We are a good fit for Amazon Fulfillment by Merchant because our high standards, low fulfillment error rates, and fast turnaround provide the level of fulfillment service that Amazon shoppers expect. Here are just a few ways Red Stag Fulfillment can help an Amazon merchant succeed.

Service levels for shipping orders within 24 hours

Amazon expects its FBM sellers to ship orders quickly. Red Stag Fulfillment’s same-day fulfillment options satisfy Amazon’s requirements. And, when we say same-day, we mean it. If we ship an order late, we pay you $50.

National warehouse fulfillment

Red Stag Fulfillment’s two warehouse locations in Knoxville and Salt Lake City can ship to 96% of U.S. addresses in two days or less. That gives you national fulfillment reach while simplifying your inventory management.

Oversized merchandise experts

Amazon FBA doesn’t handle large or heavy products, but we do. Red Stag Fulfillment is the oversized eCommerce fulfillment leader. We design our fulfillment centers with wide aisles and heavy-duty conveyor belts to safely store and ship bulky and heavy products.

Fast receiving

One of the complaints about FBA is that receiving can sometimes be slow, with shipments sitting on the dock for days or weeks. At Red Stag Fulfillment, we guarantee that we will move inbound shipments from the receiving dock to stock within two business days. We can even skip the shelves and use cross-docking to turn around backorders with lightning speed.

Accuracy levels that meet Amazon standards

In 2021, Red Stag Fulfillment shipped 99.965% of our partners’ orders on time and in full, even as the logistics industry struggled with supply chain issues and pandemic delays. Read our 2021 fulfillment report card to see how we did on a range of fulfillment KPIs. (Spoiler: We mainly got As.)

FBM with RSF: Fulfillment you can count on

You need a Merchant Fulfilled Network partner who can take logistics off your to-do list. When you choose FBM, you control your business and your brand. With a top-notch fulfillment partner like Red Stag Fulfillment, FBM can help you grow and scale your Amazon stores.

If you sell heavy or high-value products, want to take a shot at Amazon Seller Fulfilled Prime, or want excellent order fulfillment for your Amazon orders, try Red Stag Fulfillment.

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