As an Amazon seller, our prime concern is making money. For better sales and profits amazon offers its sellers many plans that can help them to reach the top ranking from the bottom line,

In this article, we will compare both the plans and consider the precise one that suits your online business. 

Amazon FBA

FBA (Fulfillment by Amazon) is a prime plan for the sellers to initiate their sales on amazon. As if you are a newbie in the amazon marketplace amazon helps you to make your sales more effective with this plan. 

Furthermore, FBA creates product lists, pack and ship products to Amazon fulfilment centres. From there amazon takes care of your products till it reaches to the customers and will do all the back end processes on behalf of you.

In short, Amazon gives its sellers more space for engaging themselves in the business by handling all the back end processes.

 Advantages of FBA

  • Multi-channel fulfilment

FBA helps amazon to integrate business from other channels effortlessly. Through fast access and reliable shipping orders, amazon makes the multi-channel fulfilment easier. 

  • Prime eligibility

Through this plan, your products will become eligible for prime automatically. Being prime gives sellers the benefit of shipping their products in two days or free shipping.

In addition to free shipping, it also offers a great chance of winning the buy box. 

Furthermore, with prime, you can sell more inventory as it’s associated with amazon.

  • Hands-off service

With Amazon, you don’t have to worry about the products all around your workspace. Amazon stores your products in its fulfilment centres until an order is placed.

So you can engage in your business without worries as amazon ensures the order fulfilment more simplified by offering hands-off packing and shipping.

  • Buy box advantages

Buy box is an option that can be located on a product page which holds the information such as the price, shipping information, seller information and adds to the cart button.

Hence, the products in the buy box have an increased chance to get noticed by the customers to make a purchase. All other products will be listed beyond the buy box.

Winning position in the buy box is determined by some major factors like the seller rating, customer response time and the fulfilment method.

  • Low shipping fees

For shipping your products amazon charges a fee according to the size and weight of the product. 

However, Amazon is the largest online marketplace all the sellers who have signed up with the FBA  service can expect many discounts in shipping.

 

Disadvantages of FBA

  • Additional fees

Even though there is a fixed amount for the FBA  plan sign up we have many additional fees too. According to the product, criteria we have to pay a few additional charges like fulfilment fees, monthly inventory storage fees and order handling fees.

  • Limited access to inventory

As Amazon takes care of the inventory, sellers will be given limited access. In addition, it will be tough to track the products in the centres.

 If any problem arises we have to wait for Amazon to resolve the issue.

  • Listing products

Labelling products is a tiresome process. There are two kinds of barcodes to identify the products. Amazon provides barcodes for the eligible items by charging an FBA label service charge. 

  • Pricey multi-channel fulfilment

There are many hidden hefty charges if you are using FBA multi-channel fulfilment.

Amazon FBM

FBM (Fulfillment by Merchants) is a seller oriented plan. Here the seller has more access to their products. After listing of products on amazon they have to take care fo the storage and order fulfilment.

In this case, you have to take care of the back end processes and the other business activities which will be more tiresome.

Advantages of FBM

  • Prime opportunity

The seller fulfilled prime offers its sellers all FBA benefits without the increased FBA fees. But the selection criteria for the seller fulfilled prime is very extensive and solely depends on the performance basis.

  • Low amazon fees

In FBM you have to take care of only the referral fees and closing fees. You can skip the fulfilment and storage fees as they are the seller’s headache.

  • Hands-on fulfilment

In FBM its solely the seller who takes care of the storing, packing and shipping of the products so the manufacturer or seller has more access on the inventory.

This process also ensures ownership of the actual fulfilment process.

  • Higher margins compared to FBA 

Even though you can make slightly higher margins compared to the sellers with the FBA plan its tough for these sellers to enter the prime criteria.

Without the prime option on the products, the sales will be less compared to the other sellers in the FBA plan.

 

Disadvantages of FBM

  • More responsibilities

In the FBM process, the seller or the manufacturer will be the sole responsibility holder for the packaging, shipping and inventory management.

If you are a pro seller it will be an easy process but for most of the sellers with more products, it will be tough to do all by themselves.

  • Lacking automatic prime eligibility

For staying in the prime list you have to work hard. For FBA plan sellers it’s easy to be on the prime list.

  • Hard to win the buy box

The buy box option is solely determined by the fulfilment method it is hard for the sellers in FBM to win the buy box.

FBM sellers have to set their product price at the lowest for buy box winning.

  • High costs

Even though you won’t be paying the fulfilment fees and storage fees you will have to foresee many charges that will cost more than that. 

The cost may include the fulfilment, storage and shipment expenses.

  • Missing prime membership

The prime membership will be missing for the FBM sellers so the sales will be diminished. 

FINAL THOUGHTS

In short, we can conclude that both plans have their own drawbacks and advantages. But in many cases, we came across sellers who are using both the plans simultaneously and making profits.

These sellers also claimed that this tactic has doubled their sales opportunities and exposure. So it is our duty to select the precise plan that suits our products and services