FBA vs FBM – Which Amazon Fulfilment Method is Right for You?

Hi. So welcome to another Amazon mini episode that I'm recording just for you. And today we're going to talk about FBA and FBM.

So what on earth do they mean? Which one should you choose? What are the pros and cons of each? We're going to cover all of that today. So let's start off right away with FBA.

So FBA stands for fulfilled by Amazon. And this basically means that Amazon manage your fulfillment for you.

So you would send your products into an Amazon fulfillment centre and Amazon would store them for you and then ship them out to customers when a customer makes a purchase. And if a customer has prime membership, then it's going to be very quick.

So you've probably, if you have prime membership yourself, you've probably seen that you can get some products delivered next day, sometimes even same day. And if you have a membership that cost is included. FBM stands for fulfilled by merchant and this basically means you manage your own shipping.

And we'll talk a little bit more about how we do that a bit later on. So let's go back to FBA and talk about how it actually works.

Because as I mentioned, FBA means you send your products into Amazon and they fulfill them for you. So in order to do this, to actually send your products into Amazon, you set up what is called an FBA shipping plan.

And this is where you tell Amazon what you're sending them and how you're sending them. So to give you an example, let's say you have five different products that you're selling on Amazon and you want to offer them all via FBA.

So you want to send in FBA stock for all five products. And let's say you're starting out and you're going to send three of each. So that's the first thing Amazon need to know.

You're sending three of each of these products and they also need to know what each of these individual, what the dimensions are and the weight are going to get my words out then of each of these individual products. And if you remember, Orlando hope you listened to last week's episode about the cost of selling on Amazon.

This is so that they can figure out the FBA cost per item. So for each individual item, Amazon need to know the weight and dimension and then they need to know how you're sending them in.

So we said you had five products and you were sending in three of each. I think so they will need to know. Is that 15 items? That is a total, I've worked out in my head, 15 items in one big box or is it two separate boxes?

And if it is two separate boxes, what goes in each? So is it six products in one and nine in the other? And which are they? Amazon needs to know all of this.

And they also need to know the weight and dimensions of those boxes that you're sending in. You enter all of this into Amazon and by the way, you can save templates as well.

So if you, if you know that actually I'm always going to send this product in in quantities of three or five or ten or whatever it is, or it makes sense for me to send a big box. It's got 20 in or however it is.

You can set up templates and you can set up more than one template per product as well to make it really easy for you to do this again and again.

And once Amazon knows what you're sending and how you're sending it, they will then figure out which fulfillment center you're sending your products to. Sometimes people will say to me, okay, Vicky, I want some products to FBA, but which warehouse am I sending it to?

Until you give Amazon this information, I can't tell you. They can't tell you.

They will figure out the nearest Amazon warehouse to, usually it's the nearest warehouse to you or the nearest one with space for your products. And then you will generate shipping labels and then you will arrange for the shipping into Amazon.

I usually recommend using Amazon's shipping provider because that's fast. It's usually quite free. Not quite free. It's fast. It's usually quite cheap. It's definitely not free. There is a cost, but it's not actually that much.

And then it takes a couple of weeks. I won't go into the whole process in detail unless you want me to. If you do, let me know. We can do a whole episode just on that.

I do have a YouTube video on sending stock into Amazon so you can have a watch of that as well. And as I mentioned before, there's plenty of content on YouTube now. So do go over there and, and take a good look.

And then it takes a couple of a week to ten days depending on the time of year and how busy the warehouses are for your products to go from wherever you're sending them from into the Amazon warehouse on the shelves available for customers to buy. And that's basically the process for FBA in a nutshell because we are trying to keep these episodes quite short.

So for FBM, so fulfilled by merchant, you set up your own shipping plans on Amazon. And what this means is you set out where you'll ship your products to.

So if you're selling in the UK, of course you're going to ship your products to the UK, but you might actually say, okay, I also want to ship them to these other countries or regions and that's what it will cost. So you tell Amazon where you want to ship to the shipping service that you'll be using, what the costs are and it can be free.

Of course, shipping will always be a cost to you, but it might be that you want to offer free shipping to the customer.

Actually, on an aside, I actually think if you can, it's quite good to offer free shipping on Amazon if you are not using prime, because then customers who get kind of the same deal. So if you're planning on not using FBA and so customers are going to have to, some of us can't use Amazon prime, they're buying directly from you.

I do think offering free shipping can be an incentive because it looks the same, because there's no shipping cost, even if it takes a little bit longer.

And if you are setting up your products where you're going to be offering both FBA and FBM fulfillment, which we'll talk about a bit later in this episode, again, I think it can be really good to make those offers look comparable and we can talk about that a bit in a bit more detail. So how you actually do that. But yes, you can offer free shipping on Amazon if you want to and you cannot.

And you can set up your, you can vary your shipping cost if you are charging for shipping. So you can say if the order price is over, x amount shipping will be free. But if it's under, then there'll be a cost. You can do all kinds of things.

You can set up different costs per product or per product type. There is actually quite a lot of flexibility. And then the other thing you need to tell them is how long delivery takes.

So that when a customer looks at your product page on Amazon, they can see the price of the product, the price of shipping if applicable, and then importantly if you're using FBM, the estimated timeframe for them to actually receive the product.

Because as a customer, when the product arrives, you know, might be a real, really important factor in whether they choose to buy from you or whether they choose to buy a different way or look at different products altogether, depending on how quickly they need to receive that product. You can also add in handling times.

So this is really important for handmade products because there is Amazon handmade, as you may or not may not be aware, or any product that needs a little bit of preparation or even just to give yourself a little bit of breathing time.

If you know you can't always dispatch orders on the same day, you can set up a handing time and you can do this for every product you sell, and you can also do different handling times per product. So maybe most of your products you can ship the same day, but some of them need an extra two days for some reason. No problem.

You can build all of that in. You can also tell Amazon if there are days that you don't dispatch orders.

So let's say you don't do shipping weekends, you can have that set up as well. So that will factor in when Amazon is showing a customer the estimated delivery time.

And if you go away and you can't ship products for any reason, you can put your account on holiday mode. And any FBM offers you have won't be visible to customers, which will mean your listings can't be found.

So keep that in mind as well because we'll be talking in a moment about the pros and cons of each method.

And I guess one of the cons of it as FBM is if you can't sell, you have to turn your listings off or you will get penalized for not delivering on time. Because if you use FBM, you need to make sure you use a shipping method. Amazon can track as they will monitor your performance.

And actually that is one of the biggest performance metrics I see brands struggling with and sometimes getting penalized for is late delivery because Amazon will track your delivery rates and track how often you are delivering products in the timescale you said that you would. So let's talk a little bit about the pros and cons of FBA versus FBM.

So I guess the big pro of FBA is that Amazon does the fulfillment so you don't have to. I've spoken before about the fact that I don't like fulfilling my own products. I never have.

So for me, when I was selling via tiny chipmunk and I was using Amazon, the biggest thing for me, the reason I chose to use FBA is that I didn't have to fulfill orders myself. And also customers with prime receive orders really quickly, so often the next day or the same days we've spoken about before.

So that's for customer a really big advantage. But it's a big advantage for you because that might be a reason that customer choose to buy from you.

And another advantage is Amazon obviously likes it when you do prime.

So having a Prime offer can help slightly where you show up in the rankings as well, because obviously if you're using prime, you're making Amazon more money. They like that. They're going to show your offer a little bit more prominently.

In terms of the cons of using FBA, I suppose the first one is the fees, although having said that, it may or may not be as expensive as you'd expect. And remember the FBA calculator where you can go on and have a look at what the fees might actually be. Also, not every single item can be FBA.

There is a list on the Amazon website that explains what they cannot fulfil for you.

And for some products, Amazon can fulfill them, but they might need some safety data for you so they know exactly what it is that they're storing in their warehouse, which is fair enough.

And I think if you are selling a product where Amazon requires safety data, you will probably know that you're selling a product that requires safety data. And so why I say it's a con, of course it's something you can still do and it's more of something to be mindful of and just to consider.

And it's not necessarily a negative about using FBA in terms of, oh, actually I have one other con that I should have mentioned using FBA, which is, or it could be a positive for using FBM, however you want to see it is that, let's talk about it actually as being a positive for using FBM. You can keep control of the customer experience.

If you are dispatching orders yourself, you can make sure you're taking really good care of the products. You can package them however you like. You can put a hand written note inside if you like. You can, you know, you have complete control.

So on the, so on the flip side, negative, obviously using FBA is we've probably all received packages from Amazon that have been left out in the rain, that have been damaged, that, you know, you order a nail varnish and it comes in a massive box.

All of these things are out of your control if you're using FBA because you cannot tell someone, unfortunately, how to package your product to send it out to the customer. So if you have something that's very fragile, for example, there is a risk it will be damaged. Now, I'm not saying this happens all the time.

I'm just saying it's something to be, you know, to be mindful of.

Whereas if you're doing your own fulfilment, of course you have absolute control and in a moment, when we talk about which method to choose, I'll give you some more thoughts on that.

But I did want to give you one more sort of negative perhaps for using FBM to try and be a little bit balanced, which is that while there are definitely advantages to doing your own fulfillment, some Amazon customers will want a prime offer.

So if they're looking for a product, some customers will choose to buy something because they have prime and because they can get it same day or next day. I know myself there are some things that I've brought, especially things on, not an impulse, but something you need where I need it to come quickly.

And I'm sure you've been in that situation as well.

So gifts, you know, when you think, oh, I need something for that party tomorrow and haven't got anything, you go on Amazon, you know it's going to be delivered on time, which obviously is an advantage of having FBA because it can get to customers quicker. So hopefully this is fairly balanced because there are pros and cons of each.

So, but I do know this means if you're thinking about which to choose, there is a lot to consider. And I guess the best thing to say is that you can do both.

So if you're really not sure if you've listened to this episode so far and you're thinking, Vicki, this is great, actually, you've not helped because there's pros and cons of both. You can do both. You can set up your offers in a way on Amazon where you, for each product you offer FBM, an FBA.

Not a lot of people know this, but you can.

So if you are worried about damages, for example, you could set up your FBA offer, send a little bit of stocking, and by the way, I always suggest only sending a little bit of stock in for FBA. And you can just see, you can send in some stocks FBA and then order one and see what condition it turns up in.

So you get an idea of how Amazon are treating your products, whether they're arriving intact, whether you're happy with how they're packaging them, for example, you can also see what the impact is on sales if you're doing both.

If you're doing both, you can see, okay, I've got this offered on FBA and FBM, which is the way that most people choose to buy the product, especially if you're offering free shipping on your FBM offer, because then you can compare like for like.

Another advantage of doing both is that an FBM offer means customers without prime can still buy from you and people who choose, you know, so customers can still buy from you. If you have an FBM offer and they don't have prime, especially if you're offering free delivery.

It's kind of, as I said before, it looks comparable, but it also means if your FBA stock goes out of stock so you don't have anything left in the warehouse, your listing doesn't close down due to lack of stock because you can still fulfil orders from the stock. You hold yourself.

If you are only doing FBA and you go completely out of stock, you're out of stock, you can't make sales and you start moving down the Amazon rankings.

So it's actually really important if you do use FBA, especially if you're only doing FBA, that you try your hardest not to go out of stock because you'll do a lot of work on building sales and reviews and moving up the Amazon algorithm and getting shown higher in the rankings as soon as you go out of stock that starts to drop. And I should say as well that please, please, please don't get too hung up on this.

I've tried to give you a really good overview of what's involved in each things to consider the pros and cons. It's been a bit longer than I thought, but then again, it's quite a big topic, but it is relatively simple to change.

You could decide that you're going to use FBA and send some stock in, and then you could decide, this isn't working, I'm going to set up an FBM offer. Or you could decide, I'm going to wait for this FBA stock to sell through and then I'll do that. Or you could do the opposite.

You could start off fulfilling orders yourself and then send a coupling to Amazon just to test. It is so flexible.

And as I mentioned in the previous episode about what it costs to sell on Amazon, there's no additional cost for signing up for FBA, so you can sign up for it and you can send a few products in, decide you don't like it, and that's that. You're not committed to anything. And as I said before, you don't have to send a lot of stock into FBA as well. In fact, I'd recommend you don't.

I would recommend sending in small amounts just to check that it works for you. Keep an eye on the cost coming back to the last episode and see what works for you.

This episode was really intended to be a starting point just to give you some information. I appreciate there's lots of information. Even when I was planning this episode, I didn't quite realize how much there was to say.

But hopefully it's been really useful and given you an idea of how you can fulfill your products on Amazon, what to each option means, and perhaps even you know which might be best for you. But if you're not sure, my best advice is test and find out.

And if you're really, really not sure, as always, you can get in touch with me and I will do my best to help you out.

So have a lovely week, and I look forward to speaking with you again on our usual episode this Friday and then the next Amazon mini episode next Tuesday.