Amazon FBM: How to successfully make the move from FBA

Operating your own online store strengthens your e-commerce brand and creates a personalized customer experience for your customers. But when it comes to effectively reaching new audiences and driving sales growth, multichannel selling is essential.

As an additional sales channel, many online retailers rely on Amazon. Those who use Fulfillment by Amazon and leave fulfillment to the marketplace are often disillusioned to find that the brown shipping boxes with Amazon lettering are far removed from branding and personalization.That’s not the case with Amazon FBM, because here, you handle fulfillment yourself.

In this article, you’ll learn why the switch from Amazon FBA to Amazon FBM makes sense and what the benefits are. We’ll also show you what you need to consider when making the transition.

When people think of online shopping, they automatically think of Amazon: Six in ten U.S. online shoppers start their product search on the U.S.-marketplace, making it the most important product search engine, ahead of Google.

Companies can now also make their purchases via Amazon’s own B2B marketplace called Amazon Business. In 2022, the Amazon will generate a total of almost $514 billion with business and private customers.

To ride the wave of e-commerce success and benefit from Amazon’s high brand awareness, you can sell products on the e-commerce giant’s marketplace in addition to your own shop and other sales channels.

Sellers can choosehow they want to manage fulfillment of their Amazon orders. Specifically, they have the option to

• completely outsource fulfillment (Fulfillment by Amazon = FBA) or
• handle fulfillment themselves (Fulfillment by Merchant = FBM).

Anyone involved in selling on Amazon – especially with FBM – will come across another buzzword: “Prime by Seller” (Seller Fulfilled Prime = SFP). SFP allows online merchants to ship to Prime customers from their own warehouses.

Prerequisite: If you want to use SFP, you must be able to meet Amazon’s Prime requirements – for example, you must have an order cancellation rate of no more than 0.5 percent and an on-time delivery rate of at least 90 percent.

For the purposes of this article, however, we will focus on Amazon FBM and FBA.

If a merchant chooses FBA, Amazon handles all aspects of fulfillment for the business. This includes among other things:

• Storing and packing goods in Amazon’s logistics centers
• Shipping products sold through Amazon
• The returns management
• Customer Service

Selling through Amazon is particularly useful for retailers who want to conserve resources and focus on their core business. The online shop only has to ship the products to an Amazon logistics center, and the company takes care of the rest.

One advantage of FBA is that products shipped through Amazon are often listed higher in search results than FBM products. It also gives stores direct access to Amazon’s Prime program.

A downside – especially if you rely on multiple sales channels, such as your own store, other marketplaces, and Amazon – is that you have to split your inventory. FBA users must also follow strict labeling guidelines and are subject to additional fees, including:

• Shipping costs
• Storage Fees
• Additional fees for long-term storage
• Returns and disposal fees

From this perspective, FBA is more suitable for merchants with small, low-volume, high-margin products, otherwise the cost of FBA may be too high.

While Amazon FBA provides an all-inclusive fulfillment package, Amazon FBM allows you to use the marketplace as a sales platform. However, you retain control over the warehousing and shipping of your goods, as well as customer service.

To use Amazon FBM, you either need your own warehouse or simply use a fulfillment service provider to store, pack, and ship your goods according to your specifications.

Fulfillment by Merchant is a good option for e-commerce professionals who sell product bundles, for example. Only FBM offers the flexibility in packaging required. In addition, with FBM, businesses are independent of Amazon’s FBA policies, which can change at any time.

Are you already using FBA or are you deciding between FBA and FBM? Then there are two important reasons that speak for (switching to) Amazon FBM.

Having full control over the fulfillment of your Amazon listings has a positive impact on the visibility of your e-commerce brand and improves your interactions with your customers.

From your customers’ perspective, FBA means:

• They receive shipping boxes in the typical Amazon design that are indistinguishable from those of other merchants.
• Boredom also reigns in the box – personalization through inserts or flyers is not possible.
• By giving up control of the fulfillment process, you have no influence on the customer experience, which is an important part of your brand.

If your customers are annoyed by shipping problems, it is more likely to reflect on Amazon – but conversely, you have no chance to shine with outstanding service and a strong post-purchase experience to build and enhance your brand.

With Amazon FBA, service is a black box for you. You have no visibility into the returns process or Amazon’s communication with your customers. Even the handling of your inventory in the Amazon warehouse is out of your control.

The FBM approach, on the other hand, brings five key benefits to your e-commerce business and your brand:

1. You have the ability to ship your goods in your own custom packaging with your own logo, reinforcing your brand identity. Your products will not get lost in a sea of brown Amazon boxes but will create anticipation for their contents before they are even unpacked.
2. Amazon FBM gives you access to the large number of shoppers who use Amazon as a product search engine without having to comply with the strict rules of the FBA program or relinquish control of your brand.
3. When you handle fulfillment yourself, you have a better understanding of return reasons. With FBA, you miss out on this valuable customer feedback.
4. f you let Amazon ship your goods, you have to follow their rules – and they can change at any time. With FBM, you are more independent of Amazon’s policies.
5. Both FBA and FBM come with costs that vary depending on the program. With FBA, you pay fulfillment fees to Amazon, which may increase from time to time. In addition, you must consider that you must ship your goods to Amazon in the first step, which also has a cost. With FBM, your fulfillment costs my be lower It is always worth doing a comparison.

More control and creative freedom sound good? Then the only question is how your company can most effectively set up FBM workflows. Often the biggest obstacle is a lack of capacity to handle fulfillment independently of Amazon.

Many companies rely on the experience of fulfillment providers such as Alaiko to handle important tasks such as warehousing, picking, shipping, and efficient returns processing for them – regardless of whether it is an Amazon order or an order from your own shop.

You benefit from all the advantages that Amazon has to offer and save yourself FBA fees and the loss of control in shipping and returns processing. The entire shipping process remains in your hands – for a great unboxing experience and an even stronger bond with your customers.

With Alaiko and Amazon FBM you’ll get

• Complete visibility into your warehouse,
• Customized shipping options,
• Valuable insights into fulfillment and return reasons, and
• Direct communication with your customers.

And all this without draining your resources.

Competition in e-commerce is fierce – it’s often the little things that make the difference between winning and losing. Amazon FBA allows you to reach a large audience, but you cannot shine with custom packaging, goodies, and an exceptional unboxing experience.

If you are already using FBA and want to switch to FBM or decide to use FBM from the beginning, Alaiko will support you. You get efficient fulfillment workflows and as much control over the shipping process as in your own online shop – garnished with the advantages of Amazon as a marketplace.

The title image is by Erik Mclean on Pexels, the other image by Mildlee on Unsplash.