New to Selling on Amazon? What you need to know about FBA vs. FBM

There are over 9.7 million third-party Amazon sellers globally. In 2020 these sellers made over 300 billion dollars. A staggering 60% of the products sold on Amazon are from 3rd party sellers. It is no wonder that many e-commerce sellers are choosing to sell on Amazon. 

If you are ready to expand your business on Amazon you will have to decide whether you will sell FBA or FBM. (Or both!)

FBA

FBA is an acronym for “fulfilled by Amazon.” Amazon acts as your warehouse providing storage and fulfillment services. 

1. Your products are sent from the manufacturer to a 3PL.
2. The 3PL inspects products and prepares them for Amazon. This may include quality inspection, counting, sorting, labeling, bagging, repackaging, and kitting.
3. You acquire shipping labels from Amazon and give them to your 3PL.
4. All or a portion of your inventory is shipped by the 3PL to Amazon.
5. Amazon stores the inventory shipped to them. The remainder of your inventory is stored by the 3PL.
6. A customer places an order and it is fulfilled by Amazon.
7. Amazon also handles any customer service or returns.
8. When you need to replenish your inventory at Amazon your 3PL will send it in.

There are several advantages to FBA.You can offer super fast shipping, fantastic customer service, and let Amazon manage returns. 

In return, you will be paying high storage fees for the products in an Amazon warehouse. This is why it is often helpful to only ship a portion of inventory at a time. Storage fees with your 3PL will cost less.

A 3PL can receive large amounts of inventory, prepare it for Amazon quickly, store it long term, and ship it in to Amazon as needed. Many FBA sellers find this a helpful arrangement.

FBM

FBM is an acronym for “fulfilled by merchant.” Orders will be placed on Amazon, but will be fulfilled by you or your warehouse.

1. Your products are sent from the manufacturer to a 3PL. 
2. The 3PL prepares the products as needed, and stores them.
3. Your Amazon store is integrated with the 3PL.
4. An order is placed and the 3PL fulfills it. 

As an FBM seller you will set up an Amazon store and connect it to your 3PL. As the 3PL receives orders they are fulfilled and sent out. This allows you access the potential of the Amazon marketplace without relying on Amazon for storage and fulfillment. 

Less preparation is needed, since you do not have to meet the requirements necessary for FBA. You also will not have to rely on Amazon for storage and fulfillment. However, you will not have access to Amazon’s shipping service, customer service, or returns management. 

Conclusion

Selling on Amazon has the potential to increase your sales and help you reach more customers. Whether you decide to try FBA, FBM, or both, you will need a 3PL who can provide the services you need. 

Here at Gorman Haulage we ship FBA and FBM orders daily. Let us know how we can help you reach your goals. 

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