Amazon is the largest online marketplace, not only in America but around the world. Listing your products online and selling them across the internet opens the opportunity to connect to a much larger audience. As a result, Amazon allows online sellers to fulfill orders by themselves or through the company’s direct fulfillment program.
Amazon offers its sellers various fulfillment options. It includes FBM, FBA, MCF, and SFP.
- FBM: Fulfillment by Merchant
- FBA: Fulfillment by Amazon
- MCF: Multi-channel Fulfillment
- SFP: Seller-fulfilled Prime
Each of these Amazon Fulfillment options allows online sellers to deliver their products to each customer’s location. FBA was the most popular method before the Covid-19 pandemic. Now, most Amazon sellers choose to find alternative strategies to get their products rolling.
The recent turn of events caused sales to drop due to a significant delay in restocking and customer delivery. Those who sell non-essential items got the biggest hit. Many sellers even reported the removal of Prime badges and product listings. According to sellers, other glitches include errors in Amazon’s algorithm and the temporary shutdown of support sites. Due to these unforeseen occurrences, FBM became the favorite option.
FBM: The Basics
FBM or Amazon Fulfilled by Merchant is an option where the online seller is the one completing the delivery of their products that customers bought on Amazon. The Amazon seller can manage it directly or through an association with a 3PL (third-party logistics) provider. With FBM, the items will not have a Prime status, and you (the seller) will handle its storage, order process and delivery, returns, and customer assistance.
Amazon FBM is the sole approach that applies to beginners in Amazon selling. An FBA method needs more requirements, and inventory turnover, and will take time for appropriate approval. Small business owners, especially those on their start-up, can complete the order process by themselves rather than bigger businesses that need large-scare logistics to fulfill orders.
Here is a list of tips to aid you in starting to do Amazon FBM.
1. Create your Amazon product listing.
Once you complete setting-up your Amazon Seller Central account, you can start creating your Amazon product listing. Ensure to put all product information to get your listings up and running in the marketplace. Images, videos, and a detailed description of every item in your list can boost your chance of a conversion.
Moreover, like any other business, formulate and apply a marketing strategy. Keep in mind that this year is a challenging time for Amazon sellers. While others opt to lessen their expenses on ads, it might be a chance for you to invest in yours.
2. Set-up your storage area and do an inventory to convert it as your fulfillment center.
If you are a beginner with Amazon selling or have a relatively small business, you can set-up your storage area or even a vacant room in your home for a short-term answer for your warehousing problem. But if you have a larger business, you may distribute your items to various locations so you can cut the cost for shipping, which are crucial factors to keep customers purchasing yours.
3. Ship out your orders!
Congratulations! If you reached this point, it means you were successful in getting customers to purchase your products. When you receive an Amazon order prompt, it is necessary to ship the item on the specific timeframe that the customer picked based on the options provided. Amazon gives an estimated delivery date to customers on the checkout tab in which handling and travel time are considered. However, you have the opportunity to edit the fulfillment time to set better expectations.
Shipping labels can be purchased through Amazon, as you should give your customer an e-commerce order tracking number. Lastly, ensure to input all FBM information to your Amazon selling account. Aside from keeping a record of your purchase, the information you place is crucial in case of returns.
The Hits and Misses of FBM
Keeping your Amazon retail business up and running during the pandemic and between rallies around the US is challenging. Most Amazon sellers turned to FBM from FBA to solve several concerns on shipment and storage.
Here are some of the benefits why sellers opt to try Amazon FBM.
● Lesser Fees
FBM fees are relatively lower than what Amazon charges for FBA transactions. The only related fees involve the seller’s subscription fee per month, a minimal charge for every ordered item, and an Amazon referral fee for each completed transaction.
● No Tedious FBA Requirements
Over the past years, Amazon added quite a good number of requirements for sellers to complete if they want to be under the Amazon FBA program. Completing the FBA list items can be a burden to sellers, especially with the situation today. As a result, Amazon sellers go for the FBM, which has lesser rules and regulations to follow.
● Better Grasp on Your Business
Choose FBM if you want to sell through Amazon but want to retain your branding. With FBA, your orders are received through an Amazon box – not yours. More often, customers think that the item is from Amazon directly and might remove you from the picture, even if there are any customer-related concerns. FBM, on the other hand, can boost your branding, even with Amazon, as your selling platform.
● Improved Support
Amazon is challenged when it comes to person-to-person customer service. This scenario is a usual occurrence with FBA. If you choose to have FBM as your fulfillment program, you can give your customers better customer support.
Amazon does a great job fulfilling their orders using their polished system through the FBA. So, turning to FBM is a big decision. Here are some of the challenges that an Amazon seller has to overcome if he wishes to proceed with FBM.
● Amazon Prime Badge Removed
One of the cons of FBM compared to other types of Amazon Fulfillment programs is the removal of your product’s Prime Badge. With FBA, if your product has a Prime Badge, your customers can receive their orders within two days. But with the current turn of events in the US, those who ordered non-essential products under FBM are still experiencing significant delivery delays.
Bonus Tip: Instead of doing the delivery yourself, you may form a partnership with a 3PL. Because they have their fulfillment centers, you can get your items, even the non-essential ones, delivered without delay.
● More Time and Effort Needed
Working under the FBM program means you need to dedicate more time and effort in packing boxes for your product orders.
● Added Expenses on Outsourced Warehousing
Setting up storage at home for your items can be taxing. Moreover, if you do not have enough space, you need to allow an extra budget for an outsourced warehouse.
Are There Fees with Amazon FBM?
Yes, of course. Like other types of Amazon Fulfillment methods, FBM has specific fees: a subscription fee, a charge for each product sold, and Amazon’s referral fee.
● Subscription Fee
Amazon collects this fee monthly at $39.99 every payment. When you have a Pro subscription plan, Amazon waives some costs that are usually charged every time you sell an item.
● Referral Fee
All products or items listed on Amazon Marketplace that you successfully sell will have a portion that goes to Amazon as a referral fee. The total payment is based on the category of the product you listed, which can be about 6% to 45%.
● Selling Fee
Other than the Amazon referral fees, Amazon also charges $0.99 for every product sold. Amazon disregards this fee if you have a Pro subscription plan.
If you choose to associate with a 3PL to proceed with the FBM method, other expenses on warehousing and fulfillment fees apply. If you decide to complete the fulfillment by yourself, keep in mind that you will still spend on packing materials and travel to the shipment shop for product delivery.
The Shift of 2020
The Covid-19 pandemic created significant shifts over multiple business models and processes, including online marketplaces like Amazon. It reminded sellers that creating various strategies for marketing and business development over multiple channels is essential to keep your business running even during trying times like this year.
Now, newbie sellers and large brands alike are always on the lookout to make their business better. Through FBM and Amazon as a whole, people are moving forward to adapt to the new normal.
Embrace the Changes: FBM is Your Key to Success!
The Fulfilled by Merchant method of Amazon might be your solution to continue business amidst the chaos from the pandemic and other socio-cultural issues America is facing now. While you can certainly do everything by yourself, you have the option to work with a 3PL company to complete orders. Also, keep in mind that you can use Amazon seller tools to monitor, document, and create reports for your listings. Whatever happens around you, keep moving forward, find ways, and ace your Amazon selling business!