Amazon is the largest ecommerce marketplace, with over 1.9 million selling partners and over 300 million active customers worldwide, shopping via their stores. Competition via their store is high, therefore you must select the right fulfilment method when selling via their stores.
In this article we will explore the advantages and disadvantages of two of those fulfilment options; Fulfilled by Amazon and Fulfilled by Merchant, which we believe should be considered when choosing how to fulfil orders placed via Amazon’s marketplace.
What is Fulfilled by Amazon?
Fulfilled by Amazon (FBA) is a method of order fulfilment via Amazon’s own fulfilment centres. As a seller, you ship your stock to one of their fulfilment centres where Amazon will store, pick and despatch orders on your behalf and charge you for the storage, handling and shipping.
We have further written about the advantages and disadvantages of Fulfilled by Amazon in a separate article, the following are some of the considerations.
Pros of Fulfilled by Amazon
1. Order and returns management
As an FBA seller, you can expect to hand over both order and returns management for Amazon to handle on your behalf, which can free up time in your own warehouse for fulfilling orders from other sales channels.
2. Speedy shipping times
Amazon has a strong existing shipping network which can offer customers quick delivery options such as Prime two-day shipping, next day or same day delivery.
Cons of Fulfilled by Amazon
1. Cost
As an Amazon FBA seller, you will expect to pay fees for storage, handling and shipping of your stock, held at their fulfilment centres. These fees should be considered in your sale prices.
2. Visibility
When using any outsourced fulfilment centres, you may have concerns over the lack of visibility of your inventory levels, orders and returns, and this can be true when using FBA for your order fulfilment.
What is Fulfilled by Merchant?
Fulfilled by Merchant (FBM) is the method of fulfilment where you, as an Amazon seller, are responsible for order management and fulfilment of products sold on Amazon, whether managed directly by the seller or through a 3PL.
The following advantages and disadvantages of FBM should be considered before deciding whether FBA or FBM is the right fulfilment method for your business:
Pros of Fulfilled by Merchant
1. Fewer fees
By managing order fulfilment through your existing methods, you can minimise the fees payable to Amazon. While you’ll still encounter overheads and need to pay fees for selling on their platform, you will avoid the additional storage, handling and shipping costs of fulfilled by amazon.
2. Maintain control
In addition to fees, by managing fulfilment of Amazon orders yourself, you also maintain full control and visibility of the fulfilment process. This can ensure visibility of inventory levels, order status, time to dispatch, shipping and returns.
Cons of Fulfilled by Merchant
1. Responsibility
While maintaining control can be a benefit of the Fulfilled by Merchant method, it could also be considered a disadvantage if your order volume via Amazon is considerably large. The responsibility of processing a large volume of orders will be yours.
You will be required to receive orders, pick, pack and ship them, all in a timely manner that meets the consumers buying options, and you should consider whether your current processes and warehouse team can support that alongside your other sales channels and responsibilities.
2. Returns management
Much like orders as mentioned earlier, you will also be responsible for managing your own returns, processing them as they arrive and issuing the appropriate refunds to your customers, with little delay.
Amazon FBA vs. FBM – which to choose?
Both Amazon FBA and Amazon FBM have their own merits and we cannot advise which is best for your business; however, we hope our analysis provides some areas to consider when making your choice.
Order management and fulfilment through any method can be a difficult task when done manually, and the use of order management software can assist you in saving time efficiencies and money. Whether you choose to use Fulfilled by Amazon or Fulfilled by Merchant to manage your Amazon sales, Mintsoft’s OMS system could help you to effectively manage your fulfilment.
Mintsoft integrates with Amazon’s marketplace to receive and manage orders through to despatch, and also offers a Fulfilled by Amazon module, should you choose to use that method.
If you’d like to learn more about Mintsoft’s capabilities and see it in action, book a personalised demo with one of our product experts.
