Learning the ins and outs of FBA, SFP and FBM is as easy as ABC. Well, it gets a little deeper than that, but with help from RepricerExpress, you’ll learn which fulfillment method is the right one for you.
When you get started selling on Amazon, there are essentially three different selling methods you can choose, each with their own benefits and drawbacks. Let’s take a look at what each entails and what their pros and cons are.
1. Fulfillment by Amazon (FBA)
This fulfillment method is when you arrange for products to go to an Amazon fulfillment centre and the Amazon staff take over from there. They’ll take care of everything, from storing your items for any length of time to picking them for orders and delivering them to buyers. This kind of worry-free, hands-off service can be fantastic, but it’s not without its costs.
- Being Prime-eligible opens you to more buyers and sales, as shoppers love the next-day or two-day delivery guarantee.
- It becomes much easier to compete for the Buy Box.
- You don’t have to worry about how to store items, keep them organised, develop a picking and packaging system, and negotiate with delivery companies to send out products.
- Customer service and returns are also handled by Amazon, too, so you can devote that time to something else when starting to sell online.
- You’re automatically eligible to use FBA in Canada, the United States, Europe and Japan, but you can use FBA to ship internationally, too. You can even use FBA on non-Amazon orders.
- This fantastic, hands-off, worry-free service does come with a cost, as you’ll have to pay fees to cover fulfillment (the cost that covers picking, packing, shipping, packaging and processing returns) and monthly storage (be careful of long-term storage fees).This could become an issue if you sell big, heavy or slow-moving items.
- While you’re required to keep track of your inventory and top it up, you don’t actually have any control in how it’s stored, picked, packed and sent out.
2. Seller Fulfilled Prime (SFP)
If you qualify for Seller Fulfilled Prime, then you enter into a trial period where you can store your items in your own warehouse (that meets with certain criteria), then deliver them with the Prime badge and two-day guarantee, using shipping labels from approved carriers.
- You get access to Prime shoppers, which enables you to reach more sales with guaranteed delivery and compete better for the Buy Box.
- Because you can use your own warehouse, you get full control over inventory, delivery, packaging and packaging inserts. This means you get to save more on the fees you pay to Amazon, too.
- If you’re looking to attract more buyers and sales, taking advantage of Amazon’s Lightning Deals is an option with SFP.
- While Amazon will handle post-order customer service, they won’t handle returns. You’ll also be on the hook for those charges — and it might take a bit of time to get reimbursed from Amazon, if that applies.
- You get to choose your own warehouse, yes, but the costs of renting space are entirely on your shoulders.
- The same goes with maintaining FBA-level service. Guaranteeing delivery in two days isn’t always the easiest thing, especially if you’re a one-person show.
- SFP isn’t available in all countries, so you’re limited to the United States, the United Kingdom, Germany and France.
3. Fulfillment by Merchant (FBM)
With this option, you’re responsible for the entire fulfillment process. This can be very beneficial or very onerous, depending on what you sell and your personality as a seller.
- You get entire control over inventory storage and the fulfillment process, which means you can lower your costs significantly if you’re good at finding deals.
- You’ll also pay lower fees to Amazon because you’re in charge of everything.
- If you’re selling on more channels or places than just Amazon, being in charge of fulfillment makes it much easier to stock items and keep track of inventory.
- How you package items is entirely up to you, so you can get really creative with this and further cement your brand imaging.
- Because you have limited involvement with Amazon, your products won’t be Prime-eligible. It’ll also be much harder to compete for a Buy Box. Not impossible, but very difficult.
- Be careful of how you present shipping costs. The best method is to work it into the product price and advertise free shipping, but that’s not always possible. If not, present your buyer with several shipping options and costs.
- You run the risk of buyers being turned off by longer delivery times, unless you make addressing that a priority with whatever fulfillment method you choose.
Sellers who deal with slow-moving items, shipments in multiple boxes, highly personalised or customised items, or without strong industry and logistics know-how would be best-suited for FBM. For sellers who deal with multi-channel retailers; items that are personalised, customised, perishable, seasonal or require traceability; or have strong industry and logistics knowledge, SFP would be a great choice. And for sellers who list items that are small, light, fast-moving and relatively low-priced, FBA could be their top choice.