You’ll hear a lot about Amazon’s FBA program (maybe you already have). However, as a seller, it’s not the only option available to you. There’s also the merchant-fulfilled route. According to JungleScout’s State of the Seller report, Amazon’s FBA dominates, but 43 percent use Amazon’s merchant fulfilled option.
What are the differences and which is the best for your needs? We’ll explain the details of Amazon’s FBA vs. merchant fulfilled below.
Amazon Merchant Fulfilled
Amazon’s merchant fulfilled option—which is also called Fulfillment by Merchant, or FBM—is ideal for new sellers. However, it’s not suitable for every type of product. You should give it some consideration if you’re selling:
- Unique items
- Low-profit, slow-selling products
- Craft (handmade) items
With FBM, Amazon sellers manage the orders themselves. Sellers list their items the usual way via Amazon Seller Central. Once an order comes through, they’ll pack it and ship it. Merchant fulfilled sellers are also responsible for shipping the item out on time and processing returns.
A difference between Amazon FBA vs. merchant fulfilled is that FBM doesn’t have any packaging requirements, per se. However, we recommend that you:
- Use new, sturdy packaging
- Print the shipping label Amazon provides
- Include a packing slip with return details
As far as shipping goes, FBM sellers must ship sold items within the time specified by Amazon, as your buyer will receive a notification with an estimate of delivery time.
The fees
Whether you open an individual or professional account, naturally, you’re going to attract sellers’ fees, which vary depending on the category.
Using FBM is free for individual uses, and like FBA, there’s a $39.99 monthly fee for professional sellers.
Individual sellers will pay a $0.99 fee when an item sells, as well as a referral fee between 8% and 45%. Before starting to sell, it’s a good idea to calculate your costs to check if profit margins are worthwhile.
Which merchant fulfilled account is right for you?
Amazon recommends using an individual account if:
- You’re selling fewer than 40 items a month
- You’re undecided about product lines
- You don’t want to access Amazon’s wider range of advertising or reporting tools.
For sellers intending to list over 40 items every month, Amazon suggests starting a professional plan. You should also choose this option if you want access to Amazon’s advanced selling tools.
Pros and cons of merchant fulfilled
Pros
- Cheaper than Amazon’s FBA
- More flexibility
- Open to all sellers
Cons
- No Amazon Prime badge in listings
- Difficult to scale if you lack space and don’t have access to a fulfillment center
- Restrictions on the items individual sellers can list
Amazon FBA
Amazon FBA has a simple setup. For a $39 monthly fee plus selling fees, you list items on Amazon. However, unlike FBM, the seller will ship them to an Amazon fulfillment center, and it’s Amazon’s job to pick, pack, and ship the goods.
Amazon also handles the returns side, and any follow-up customer service, reducing admin. The access to Amazon’s storage space also allows sellers to scale up.
Besides providing storage space and dealing with the business’s shipping and administrative side, FBA’s most significant selling point is its cost-effectiveness. However, that might not always be the case for sellers, depending on the profit margins of items and additional costs like long-term storage fees.
Pros and cons of Amazon FBA
Pros
- Amazon manages every part of the shipping and returns process
- There is no need for storage space
- Amazon FBA reduces the amount of admin resources needed
Cons
- Not suitable for new sellers
- Fees can add up, especially if other costs apply
Getting started
Whatever you choose when it comes to Amazon FBA vs. Merchant Fulfilled, you’ll need your financial details (bank account number and credit card). Sellers must also register their tax identification number. For those who don’t have a TIN, obtaining one is free. However, you have to register with the IRS.
To get started, new Amazon sellers need to sign up in Seller Central to establish an account.
AccelerList: Your all-in-one listing tool
Whether you go with Amazon’s FBA or FBM program all depends on the type of products you sell, how often they sell, and the profit margins.
Whichever seller program you sign up for, you could probably use some help with the admin side. That’s where AccelerList comes in.
AccelerList is a product listing, repricing, and accounting application. It even allows eBay cross-listing and streamlines FNSKU labeling.
The best part is, it’s suited to both Amazon FBA and FBM accounts.
To find out more or to get started with your free 14-day trial, visit our website today.
