Amazon FBM stands for Fulfillment By Merchant. The Amazon seller is responsible to take care of product delivery to the customer. Unlike Amazon FBA, you are saving monthly storage fee and Amazon FBA fees through FBM business. In short, you have a full control from product listing to order fulfilling.
Amazon FBM is a good business model for new sellers who want to start Amazon business with no money. It is a good fit for small businesses as well who want to make a market for their own products.
How does Amazon FBM business work?
Amazon FBM is quite simple process to start than FBA. You will need a seller account and a product to start with. The product can be anything that fits to Amazon guidelines.
Step 1
Create a seller central account Amazon marketplace.
Step 2
Create a product listing. Add images, bullet points, product description content to optimize Amazon listing, fill inventory details and make listing live.
Step 3
The customers will see your listing and make an order.
Step 4
Once you receive the order, pack and wrap the unit box. Call the shipping company, they will pick and parcel it to the customer’s destination.
Advantages of FBM (Amazon merchant fulfilled business)
You have full control over the business
The merchant fulfilled business on Amazon gives you full control over the business. You will manage shipping, inventory, and other vital things. Change the inventory details, shipping carrier when required.
Gain experience
The seller will deal with all steps itself. From product listing to PPC ads, order receiving to processing, and handling the returns and refund cases. You will gain experience and in the upcoming months you can start your eCommerce service agency for other sellers as well. Think big, think positive.
Good profit margin
Amazon FBA business involves order fulfillment fees and monthly storage fees. They have a fixed standard rate based on product weight and dimension. Also, you need to bear the shipping fees to send the inventory to Amazon warehouse.
With FBM, you keep inventory at your end. So, you are saving much margin on products. It is possible, you might find an affordable shipping carrier than Amazon shipping service in the market. So, you could save on shipping fees as well.
Save Big money
Amazon charges customers storage fees, FBA fees that I have covered in the last point. But, do you know, if your inventory does not stock out in a year, you have to pay add-on monthly storage fees on the remaining inventory. Yes, it is. Also, during the month of October-December, Amazon charges big storage fees to customers.
Secondly, when a customer return an item in FBA, Amazon deducts FBA fees and referral fees that sellers does not get it unless they defend the return is not seller’s fault. For returned item, Amazon asks the seller to get that back to their address else after a month, the returned item gets eligible for disposal. For both, inventory sending to your address and product disposal, Amazon charges a fee to the seller.
All such cases does not associated with FBM sellers.
Explore your business
Keeping inventory in hand is always a good idea when you can manage the things. You can plan both online and offline business together. Setup a shop in the local area, keep your inventory in the mall or nearby vendor shops or sell on multiple online platforms. It is up to you. You have your inventory, you can do anything. You can update your inventory in the seller central anytime.
Disadvantages:
Manual order processing
When a customer orders a product, you need to process it. Pack the product in a box. Take a print of packing slip and wrap it to the box unit. Make a shipment order on the shipping carrier website.
It is ok for limited order in a day. But, if you are getting numerous orders then you will need to hire a VA or staff. This will ensure business steadiness.
Manage Returns
Amazon provides returns services to FBA customers only. But, FBM sellers need to deal with returns and refunds by themselves.
Customer support
The seller has to provide customer support to Amazon customers. You need to coordinate with the shipping company regarding parcels not received on the desired time. Take updates from the carrier company and convey to customers.
Buy box
Buy Box refers to “Add to cart” and “buy now” button. For new FBM sellers, it is hard to unlock the buy box option on their listing. This happens because Amazon does not have assurance that you will deliver customer’s order on time.
Though a customer can buy your product visiting “see all buying options” section. With time and on time deliveries you can have buy box unlocked on your listing page.
No Prime badge
For an FBM seller, getting a prime badge is a hard and toughest job. You need to maintain fast deliveries up to three to four months regularly. This may help you get prime badge active on your listing.
Merchant fulfilled fees structure
Referral fees
Amazon charges a standard FBM fees (15-45% depends on category) on every order. It deducts the referral fee directly from the payment received by the customer.
Other fees:
Amazon has two plans for sellers to sell on Amazon. Individual seller plan and professional seller plan. A seller can select any of the two plans based on needs:
Individual seller plan
A) No monthly fees.
B) Amazon charges referral fee + $1 on every order.
C) No advertising beneifts (coupons, PPC etc)
Professional seller plan
A) 39.99 USD monthly fees
B) Unlimited listings
C) Advertising benefits (Coupons, Buy 1 get 1 free, PPC etc)
How to ship FBM orders?
FBM involves manual shipping. The merchant has to take care of the shipping and delivery to the customer. So, it is necessary to learn how to ship the Amazon FBM product.
Step 1
When customer place an order, you will receive the order details in the seller dashboard.
Step 2
Print the packing slip and seal it to the unit box you are sending to the customer.
Step 3
Open a shipping carrier website (UPS, USPS) whichever you are using to fulfill the order. Provide the box dimension, box weight, and item type. You will get expected shipping fees, ship date, tracking id and expected delivery date.
Step 5
Once you make a shipment request to the shipping company, confirm shipment in the seller central. Add ship date, shipping service name, and tracking id. The next step is to hit “Confirm shipment button”.
Step 6
You have two options, either process the box to the shipping company office or ask them to pick the parcel. The shipping company will pick the product from your warehouse or home and deliver it to the customer.
When to do merchant fulfilled business?
Low budget
Amazon FBM is an ideal way to start an online Amazon business on tight budget. It is because, Amazon FBA business involves FBA fees, seller fees (39.99 USD), & storage fees (every month) on the inventory stored in their warehouse. As a micro business owner, you can save this money in the initial phase doing FBM business.
Exclusive product
An antique pieces, and exclusive products falls under those categories where one cannot predict or estimate good sales volume. So, it is ideal to do FBM for such products.
Heavyweight products
Amazon FBA fees depends on product category and its weight. A low weight product incur low shipping fees while a heavy product incur heaving shipping fees. So, it is suggested that heavyweight products above 5-6 pounds should be sold via FBM. You will find much affordable shipping carriers than Amazon for heavy products processing.
Handmade products
Selling handmade goods via FBM saves you more profit on every sale. You can save shipping fee you paying to courier company to forward the inventory to the Amazon warehouse for storage.
Large dimension products
Amazon charges a standard monthly storage fees starting from $3.90/cubic feet. The higher the box dimension, the more cubic feet area it covers. It will affect the profit margin.