Last Updated: December 10, 2024
What is the difference between FBA and Seller? Is Amazon Seller and FBA the same thing?
When you start selling on Amazon, one of the biggest decisions you’ll need to make is choosing between Amazon FBA and Seller (FBM). This decision affects how your products are stored, shipped, and delivered—and ultimately, how your business runs day to day.
Both options have their own pros and cons, so it’s important to figure out which one fits your goals and resources. In this post, we’ll break down what FBA and FBM actually mean, highlight their differences, and go over the pros and cons of each.
Table of Contents
What Is Amazon FBA (Fulfillment by Amazon)?
Fulfillment by Amazon is a service where Amazon takes care of storing, packing, and shipping your products. When a customer places an order, Amazon handles everything from picking up the item to delivering it to the customer’s door.
Many sellers choose FBA because selling on Amazon can be time-consuming and overwhelming. Instead of managing logistics, they let Amazon handle the fulfillment process, saving them time and effort.
FBA also makes sense for sellers whose businesses have grown too large to manage on their own. Instead of hiring staff or dealing with storage and shipping, they use Amazon’s infrastructure to scale without the extra overhead.
What Is Amazon FBM (Fulfillment by Merchant)?
Amazon Seller or Fulfillment by Merchant is when the seller handles all aspects of order fulfillment themselves. This means you’re responsible for storing, packing, and shipping your products directly to customers.
With FBM, Amazon still handles the platform and payment processing, but you’re in charge of fulfilling orders and managing customer service. This gives you more control over the shipping process, but it also means you’ll need to handle any customer inquiries, returns, and issues related to your products.
Sellers often choose FBM if they have the resources to handle fulfillment on their own or if they want to maintain more control over their inventory and shipping costs. It can be a more cost-effective option, especially for smaller businesses or those selling unique products that require special handling.
Amazon FBA Pros and Cons
Like any business model, Amazon FBA has its benefits and drawbacks. Understanding these pros and cons is crucial for sellers to decide whether FBA is the right choice for their business.
Pros of Amazon FBA
- Amazon is a well-known and trusted platform. By using FBA, you can benefit from Amazon’s reputation, which can make customers more likely to buy from you, knowing their orders will be fulfilled reliably and can be easily returned.
- FBA products automatically become eligible for Amazon Prime, which gives you access to millions of Prime members who expect fast, free shipping. This can increase your chances of making sales, especially during busy shopping periods.
- The Buy Box is where most Amazon customers click to make a purchase. FBA sellers have a higher chance of winning the Buy Box, which can result in more sales and better visibility for your products.
- With FBA, you don’t need to worry about packaging, shipping, or customer service. Amazon handles these tasks for you, allowing you to focus more on growing your business.
- As the world’s largest online retailer, Amazon gives you access to a massive customer base. By using FBA, your products are listed alongside other FBA sellers, which increases your chances of getting seen and making sales.
Cons of Amazon FBA
- FBA charges fees for storage, shipping, and other services. These fees can quickly eat into your profit margins, especially for smaller sellers or products with low prices.
- Once your products are with Amazon, they handle customer service for FBA orders. This means you lose some control over how customer issues are handled, which can be frustrating if you prefer a more personal touch.
- Amazon charges long-term storage fees for products that don’t sell quickly. If your items are sitting in Amazon’s warehouses for too long, these extra fees can cut into your profits.
- Before sending products to Amazon, you must follow their strict guidelines for packaging and labeling. This can be time-consuming and may require extra effort to get your products ready for shipment.
- Sales tax can be tricky to manage with FBA, especially if you have inventory stored in multiple states. You need to make sure you’re charging the right tax rates for each location, which can be complicated to navigate.
Amazon FBM Pros and Cons
Just like Amazon FBA, Seller Fulfilled or FBM comes with its own set of advantages and challenges. By weighing the advantages against the challenges, you can make an informed decision about whether to use the FBM program or explore other options.
Pros of Amazon FBM
- With FBM, you maintain complete control over how your products are stored, packed, and shipped. You can decide how often to restock your inventory and ensure that your products are packaged according to your brand’s standards.
- Unlike FBA, FBM doesn’t require you to pay for storage or fulfillment services. This can result in higher profit margins, especially if your shipping and storage costs are lower than FBA fees.
- FBM sellers have the freedom to choose their own carriers and shipping methods. This allows you to offer customized shipping options to customers, which can be important for businesses that want to offer unique delivery services or faster shipping.
- If you qualify for Seller Fulfilled Prime (SFP), you can offer the Prime badge and compete for the Buy Box, even though you’re not using FBA. This can increase the visibility and sales potential of your listings.
- With FBM, you handle customer service directly, allowing you to interact with customers and address their concerns firsthand. This can help you build stronger relationships and gather insights to improve your business.
Cons of Amazon FBM
- FBA sellers generally have an advantage when it comes to the Buy Box, which is responsible for a large portion of sales on Amazon. FBM sellers can improve their odds by offering Seller Fulfilled Prime, but FBA still holds an edge.
- FBA listings tend to rank slightly higher in Amazon’s search results compared to FBM listings. Without this small SEO boost, FBM sellers may have to work harder to optimize their listings for search visibility.
- FBM sellers are responsible for managing customer inquiries, handling returns, and resolving issues. This can be time-consuming and requires a strong commitment to customer service.
- Although you save on Amazon’s storage and fulfillment fees, managing your own warehouse, staff, and packaging can lead to higher overhead costs. These expenses need to be carefully considered when choosing FBM.
- With FBM, you’re in charge of shipping and delivery. This can lead to delays or issues with damaged products, which can hurt your seller reputation and result in negative customer feedback.
The Key Differences Between FBA and Seller (FBM)
Choosing between FBA and FBM depends on several factors, including the nature of your business, your resources, and how much control you want over fulfillment. Below are the key differences between the two fulfillment methods.
1. Shipping Logistics
FBA: Amazon Manages Shipping
FBA sellers send their inventory to Amazon fulfillment centers, where Amazon takes care of all aspects of shipping, including storage, packaging, labeling, and delivery. This hands-off approach is ideal for sellers who want to offload logistics and customer service tasks to Amazon.
FBM: Shipping Responsibility
With FBM, the seller is responsible for every step of the shipping process. Meaning, that the sellers have the freedom to choose their own shipping methods and negotiate rates with different carriers, giving them more control over delivery timelines and shipping costs.
2. Scalability
FBA: Effortless Scaling with Amazon
FBA offers seamless scalability by tapping into Amazon’s vast global fulfillment network. Sellers can store their inventory in multiple fulfillment centers across the world, ensuring faster shipping and lower delivery costs.
Amazon’s infrastructure is designed to handle high volumes of orders, making it an ideal choice for sellers who want to scale quickly without investing in additional resources or infrastructure.
FBM: In Charge of Inventory and Fulfillment
FBM offers scalability for sellers who already have the infrastructure in place to manage their own fulfillment. Sellers can expand their inventory storage as needed, optimize their fulfillment processes, and negotiate better shipping rates with carriers.
However, scaling FBM requires more effort and investment in logistics.
3. International Expansion
FBA: Global Fulfillment Network
FBA simplifies international expansion by using Amazon’s global fulfillment network. Sellers can store their products in Amazon fulfillment centers worldwide and Amazon will handle everything, so this is ideal for sellers who want to enter multiple international markets without the complexities of cross-border logistics.
FBM: Control Over International Shipping
FBM gives sellers complete control over international shipping. Sellers can choose their own carriers, negotiate rates, and handle customs and duties. This flexibility is beneficial for experienced exporters who want to manage international logistics themselves.
4. Time and Effort
FBA: Less Time and Effort Required
FBA allows sellers to focus on growing their business while Amazon takes care of fulfillment. Since Amazon handles all the aspects, sellers save time and can allocate their resources to other important tasks like product sourcing or marketing.
FBM: Time-Intensive and Hands-On
FBM requires more time and effort from sellers because they are responsible for the entire fulfillment process. Sellers need to have the resources to manage these tasks efficiently and may need to invest in additional staff or systems to support fulfillment.
5. Cost, Payment, and Earnings
FBA: Higher Fees, Greater Earnings
FBA charges sellers for storage and fulfillment, but these fees are offset by the increased potential for sales. With Prime eligibility, faster shipping, and Amazon’s trusted customer service, FBA products often attract more customers, which can lead to higher sales volumes and improved profit margins.
FBM: Lower Fees but More Control
FBM sellers often face lower fulfillment fees, but they are responsible for all fulfillment-related costs, including storage, packaging, and shipping. While they have more control over pricing and profit margins, they must invest time and effort to manage these expenses.
6. Customer Service
FBA: Amazon Handles Customer Service
With FBA, Amazon manages customer service, including returns and refunds. This allows sellers to focus on other areas of their business while benefiting from Amazon’s trusted customer support.
FBM: Full Control Over Customer Service
FBM sellers handle all customer service aspects, including returns, refunds, and inquiries. This offers more flexibility and control, allowing sellers to provide personalized support and maintain direct relationships with their customers.
7. Retail or Wholesale
FBA: Retail Growth, Scalable for Wholesale
FBA is great for retail sellers who want to scale quickly without dealing with fulfillment complexities. By sending inventory to Amazon’s fulfillment centers, sellers can offload storage, packaging, and shipping tasks, letting them focus on business growth.
For wholesale sellers, FBA simplifies the logistics of managing large inventories. Amazon’s fulfillment network allows for easy storage and shipping, though it means giving up some control over packaging and the customer experience.
FBM: Retail Control, Wholesale Flexibility
FBM works well for retail sellers who purchase products from manufacturers or distributors and sell directly to consumers. It gives sellers full control over fulfillment, including packaging, shipping, and customer service, allowing for a customized experience.
FBM is also ideal for wholesale sellers who buy in bulk and handle fulfillment themselves. These sellers have flexibility but must manage their own storage, shipping, and customer service.
8. Prime Eligibility
FBA: Automatic Prime Eligibility
FBA sellers automatically gain Prime eligibility, which provides access to Amazon’s fast and free shipping benefits. This can boost product visibility and sales, as Prime members often prefer Prime-eligible items.
FBM: No Automatic Prime Eligibility
FBM sellers are not automatically eligible for Amazon Prime, though they can offer fast shipping options. To get the Prime badge, sellers must use programs like Seller Fulfilled Prime (SFP) and meet Amazon’s strict shipping standards.
9. Dropshipping
FBA: Not Suitable for Dropshipping
FBA is not typically used for dropshipping, as sellers must send inventory to Amazon’s warehouses. This conflicts with the dropshipping model, where inventory is managed by suppliers.
FBM: Ideal for Dropshipping
FBM is a popular choice for dropshipping on Amazon, as sellers don’t need to hold inventory. Instead, they forward orders to suppliers who handle fulfillment directly.
10. Types of Sellers
FBM: Ideal for Experienced Sellers
Experienced Sellers
FBM is ideal for experienced sellers who already have the infrastructure for order fulfillment, such as their own warehouses or third-party logistics (3PL) partners. These sellers can efficiently manage inventory, packing, and shipping while retaining full control.
Niche or Custom Products
Sellers offering unique or custom products may prefer FBM to ensure better control over packaging and presentation. FBM is especially beneficial for items that require special handling or have specific shipping needs.
Cost-Conscious Sellers
FBM can be a more cost-effective choice for sellers who want to handle fulfillment themselves and negotiate their own shipping rates. It’s a great option for small-to-medium-sized businesses looking to save on fulfillment costs.
FBA: Best for New and Scaling Sellers
New Sellers
FBA is perfect for new sellers who want a simple and reliable fulfillment solution. It eliminates the need for warehouses or complex logistics, letting sellers focus on other aspects of their business.
Sellers Without Fulfillment Infrastructure
For sellers who don’t have the resources to handle fulfillment, FBA is a great turnkey solution. Amazon handles storage, packaging, shipping, customer service, and returns, so sellers can focus on growing their business.
Sellers Looking to Scale
FBA is ideal for sellers looking to scale quickly. Amazon’s fulfillment network can handle large volumes, making it easy to expand product offerings without worrying about logistics.
Choosing the Right Fulfillment Method for Your Business
Deciding between Amazon FBA and FBM depends on your business needs and resources. FBA is ideal for sellers looking to scale quickly with minimal effort, while FBM suits those who want more control over fulfillment and costs.
Both options have their pros and cons, but choosing the right one can help streamline your operations and improve profitability. Whether you’re just starting out or already have an established system in place, evaluating your goals will help you make the best decision for your business.
Do you need help with your Amazon FBA or FBM business? Contact our Amazon agency and get expert advice today!
