Amazon FBA and FBM: What are they and differences
The Amazon platform currently has millions of active sellers and is one of the most used resources by users to find all kinds of items. Part of its good reputation is due to the efficiency in its logistics and the punctuality of its shipments, for which the merchant will have two options.
These are Amazon's FBA and FBM, two models that have some notable differences. In this article we will show you what exactly they are and what distinguishes them, which option is more interesting for your business?
What is FBA and FBM on Amazon?
Selling on Amazon FBM or FBA can offer great advantages, since you can easily reach a really large market and start with a minimum investment. Although it gives almost everything done and proposes different facilities, the truth is that there are some decisions that the seller must make and one of them is which shipping option to choose between the FBA and FBM system on Amazon.
The FBA Amazon is the Fulfillment by Amazon program through which the platform itself is responsible for delivering the merchandise to the user, while the Amazon FBM is the Fulfillment by Merchant model in which the seller is responsible for the process. It is estimated that most businesses opt for the first alternative and one third prefer the FBM program.
What is Amazon FBA and how does it work?
With the Amazon FBA option, the possibility of creating a store as a seller in the application is opened. To do this, you must register a professional seller account and then a list of the products available on the Amazon seller central platform. Finally, the merchant's mission will be to check that the products are ready to be transported safely, since the preparation and shipment of the same will be done by Amazon.
By betting on this model, Amazon offers certain services to the seller, which are the following:
● They receive the products from the store.
● They are in charge of storing them.
● They make the shipment of the articles.
● They take charge of the management of returns.
● They provide the final service to the client.
With all these services, the platform greatly facilitates the seller's commercial work, especially in the logistics part of the business. This is the main reason why many of them opt for this system.
Register as a professional seller on Amazon
Registration as an Amazon seller is an essential requirement to access this shipping model. For this, two options are available called Individual and Pro. The latter is the one recommended for those who estimate more than 40 sales per month and has a monthly cost.
When it comes to registering on the Seller Central platform, it is convenient to be as complete as possible when entering the information, the product lists and their photographs. This is going to be essential to stand out from other sellers.
Sales in FBA mode
Once in the list of platforms, it is essential to change the modality to Amazon FBA. Next, there is a complete shipping plan that takes inventory and determines which company warehouse the products will travel to. So that all the steps are carried out correctly, Amazon makes different examples of how to present the packages and detailed instructions available to sellers.
What is Amazon FBM and how does it work?
The Amazon FBM option is the one managed by the seller, in which the platform is not so involved. This means that the merchant maintains their own inventory and handles the distribution through a courier service other than Amazon.
In order to be eligible for this independent seller modality, Amazon sets certain standards that must be met and which are the following:
● Respond to customer chat messages in less than 24 hours.
● Have a low rate of defective orders.
● Adjust to product delivery times.
The platform sets these requirements to maintain the quality of the service at all times, and in this case makes the seller responsible for meeting the objectives.
A low rate of defective orders
Amazon measures this condition with its own parameters. The first is the accumulation of negative evaluations, since it requires that there are few complaints about the product or service. In addition, it takes into account the complaints that users make about products that do not arrive on time or that are defective. Finally, it will assess the number of claims for chargeback.
delivery times
To measure this requirement, Amazon values that the shipping preparation time is in accordance with the one that the seller has previously selected. Also those orders that are canceled by the seller when he does not have the stock with which he has committed to carry out the service.
Differences between FBA and FBM
The differences between FBA and FBM seem remarkable knowing the details of each of the shipping methods. They can be summarized in the following points:
With Amazon FBA
● It is Amazon that takes care of the shipments.
● The platform stores the products.
● Amazon is responsible for distributing and managing customers.
● It is the platform that resolves the claims.
With Amazon FBM
● The seller is responsible for shipping.
● Maintains its own inventory and storage.
● Is in charge of the packaging and distribution of the products.
● It is the seller who does the customer service.
What is better FBA or FBM?
When opting for the FBA or FBM system on Amazon, it is convenient to analyze the advantages offered by each of the programs.
Advantages of Amazon FBA
● Products in this program fall into Amazon's premium selection, known as “Amazon Prime” and have more visibility.
● The platform takes care of the logistics.
● The seller takes advantage of the A9 search algorithm.
● Amazon takes care of customer support.
● Does not have too many access requirements.
● Provides effortless international brand expansion.
Advantages of Amazon FBM
● Buyer information and statistics provided by Amazon are available.
● Access to choose the most economical or profitable transportation options for the seller.
● A more direct relationship with customers to evaluate the business itself.
● Ease of analysis of product failures when managing claims.
● Greater independence in processes.
Since both programs offer certain benefits, it is necessary to analyze each particular case to know which would be the best option. It is probably more strategic for a new seller to start with an Amazon FBA system that they can rely on for their logistics deployment, however, a merchant who already has their own third party company may be interested in Amazon FBM alternative to do grow your business or give it greater visibility.
The important thing for this platform is always to maintain its quality standards and avoid
users are dissatisfied with the service. Therefore, whenever one takes into
account this maxim you can create a profitable business on Amazon with any of the
proposed modalities.
