As a seller on the Amazon marketplace, you have a few options regarding how you get your products to the consumer. The biggest decision you’ll face is choosing between the two main fulfillment methods: Fulfilled by Amazon versus Merchant Fulfilled.
Fulfilled by Amazon (FBA) puts your merchandise storage and fulfillment entirely in the hands of Amazon, while Merchant Fulfilled makes everything your responsibility. When it comes to Fulfilled by Amazon versus Merchant Fulfilled, both have their advantages and disadvantages, but how they weigh out on the scale mainly depends on your business.
Here at Click Fluency, we’re veterans of the Amazon market, and we manage the accounts of some high-profile brands. We’ll fill you in on the advantages of your options so you can make the best choice as you consider Fulfilled by Amazon versus Merchant Fulfilled.
Fulfilled by Amazon (FBA)
If you choose FBA, you will forgo the logistics of managing a warehouse and shipping your products. Instead, you’ll let Amazon do everything for you.
Of course, you will have to pay for storage and fees, which can quickly get very expensive. For some companies, the convenience is worth the cost.
Let’s go over the pros and cons of choosing the Fulfilled by Amazon method.
Pro: Amazon Prime
There are over a hundred million Amazon prime members in the US. These shoppers will be more likely to choose a product listing eligible for Prime shipping. They pay for their membership mainly for the convenience of the two-day shipping, so having your products qualify for Amazon is a massive advantage in the marketplace.
Pro: Higher Sales
When a shopper hits “Add to Cart,” Amazon chooses a seller based on several factors, including fulfillment. If your company uses the FBA fulfillment method, it’s more likely to win the sale.
Pro: Amazon Customer Service
Choosing FBA gives you the benefit of not having to worry about customer service, which is helpful for small businesses. Instead of building a customer service infrastructure, you can focus on other business concerns.
Amazon has highly effective customer service, providing instant responses to consumers and quick resolutions to problems. With FBA, Amazon will handle all of your customer service issues, including returns.
Pro: Multi-Channel Fulfillment
If you sell your products through multiple channels, not just Amazon, you could use Amazon’s multi-channel fulfillment service. It allows you to have all the benefits of FBA, with the added advantage of letting Amazon handle your storage and shipping to fulfill orders on other websites.
Multi-channel fulfillment is more expensive than FBA, but it could be worth the cost depending on your business model.
Con: Costly Fees
You will have to pay to store your stock in the Amazon warehouse, and the fees can increase the longer the items stay there. After six months, you’ll have to start paying long-term storage fees. The price of storage changes, increasing drastically during the holiday months.
The size of your product will also affect the fees you pay.
Con: Lack of Inventory Control
Once Amazon puts your inventory in their warehouse, you won’t have much control over your product. If you run out of an item that you’re selling in a shop or through other channels, you won’t be able to pull the product back from Amazon without fees.
You will have the ability to check your stock using Amazon Seller Central. However, if you want to be able to monitor your inventory closely or if your merchandise requires special handling, FBA might not be the best choice for your company.
If your company has a highly competent fulfillment system or a specific service you use, you can choose the Merchant Fulfilled method when selling on Amazon. It will be your company’s responsibility to pick, package, and ship your products to the customer.
You still have to meet Amazon’s requirements to sell on its platform. You must follow specific shipping and service standards, such as adhering to Amazon’s return policy.
As with FBA, there are some pros and cons to Amazon’s Fulfilled by Merchant (FBM) method. Let’s get into them.
Pro: Seller Fulfilled Prime
For sellers who want to commit to the Merchant Fulfilled method but still experience the significant advantages of Amazon Prime, Amazon has an option. You can join the Seller Fulfilled Prime (SFP) program.
SFP will give you the coveted Prime badge, but as a requirement, you must be able to fulfill orders within the two-day period that Prime shipping offers. The program has other conditions, including a lower than .5% cancellation rate, same-day handling, and agreement to Amazon’s product return policy.
Pro: More Control Over Inventory
You won’t have to worry about splitting up your stock and making guesses on how much goes where. With the Merchant Fulfilled method, you’ll have total control over everything.
Pro: Avoiding Amazon’s Fees
As already mentioned, FBA has the potential for many fees that could wear down your company’s margins. If you can store and ship your products for lower than the cost that comes with FBA, it might be worth it to avoid the fees and do it yourself.
Con: Losing Sale Advantage
We said earlier that FBA makes Amazon more likely to choose your company for a sale when the customer clicks “Buy.” If you go the Merchant Fulfilled route, you may see lower sales than if you had that advantage.
Con: Customer Service Responsibility
Rather than relying on Amazon’s impressive customer service, you’ll have to have your own customer service team to deal with issues and returns. It might be preferable for some companies to interact directly with their customers, but smaller businesses could struggle with the responsibility.
Fulfilled by Amazon versus Merchant Fulfilled can be a tough choice for some companies. FBA boosts sales by increasing visibility on the Amazon marketplace, but there are a lot of fees to keep in mind. The Merchant Fulfilled method lacks that sales advantage but gives the seller complete control of their product and can cost a lot less.
At Click Fluency, we know all about selling on Amazon because we’ve been through it. We’ve weighed the advantages and disadvantages of Fulfilled by Amazon versus Merchant Fulfilled. We took all the knowledge we gained and created an agency to help companies like yours grow by maximizing the potential of your Amazon seller account.
Contact us today to start optimizing your Amazon account with Click Fluency!