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Mastering Fulfillment By Merchant: Your Guide to FBM Success

Nearly two-thirds of Amazon sellers use FBA as their chosen fulfillment method, but that doesn’t mean FBA is the best fit for everyone. If you’re exploring other alternatives, Amazon FBM could be the right choice for you. It’s important to understand its unique characteristics and benefits to help you determine if it’s the best option for your business.

In this article, we’ll guide you through the steps of setting up Amazon FBM and share tips on managing it effectively.

What is Amazon Fulfilled by Merchant (FBM)?

Amazon FBM is a fulfillment method where the seller handles every aspect of the entire order process. This includes storing products, packaging them, shipping orders directly to customers, and handling the return process or customer service inquiries. In contrast, FBA sellers outsource these tasks to Amazon’s fulfillment centers for a fee.

Another difference between FBA and FBM is the type of seller who typically uses each method. FBA is suitable for wholesalers with larger order volumes, making their fulfillment fees more manageable. FBM is typically preferred by online arbitrage sellers with lower inventory turnover, as well as dropshippers, since suppliers ship their orders directly to customers.

Amazon sellers need to evaluate FBM carefully to determine if it’s the right choice for their business. Let’s explore what FBM can offer as an alternative to Amazon FBA, beyond just avoiding FBA fulfillment fees.

Pros and Cons of Amazon FBM

To determine whether Amazon FBM is worth it, it's important to understand the specifics, including both the pros and cons.

Pros

Here are some of the key advantages of using FBM as a fulfillment method:
  • No FBA fees: FBM sellers only pay a referral fee to Amazon for each sale, which helps them avoid the additional storage and fulfillment fees associated with FBA.
  • Inventory control: Sellers have greater control over their stock, so it’s easier to manage items that require special attention and avoid running out of stock or having excessive inventory.
  • Expanded product options: FBM allows sellers to offer products that may be restricted in FBA or those that may not be profitable due to FBA fees.
  • Potentially lower costs: By managing shipping independently, sellers can choose couriers with lower rates or store inventory at home to reduce costs.
FBM can be a great option for those looking to reduce their dependence on Amazon and gain more control over their business. However, this method also comes with significant disadvantages that require careful consideration.

Cons

The cons of FBM include the following:
  • Order processing: FBM sellers are responsible for handling all aspects of order fulfillment, which can be time-consuming as order volumes grow.
  • Customer service: FBM sellers must manage customer inquiries themselves, and prompt responses are crucial in order to maintain quality service. Additionally, handling returns and reimbursement can be quite challenging.
  • Less visibility: FBM sellers do not have access to Prime customers, limiting their reach. FBM products are also given lower priority by Amazon's algorithms than FBA listings, which decreases their chances of winning the Buy Box and generating sales.
Despite these disadvantages, FBM can still be profitable and cost-effective for specific types of products. Let's explore which kinds of items make FBM a worthwhile option.

What to Sell as an FBM Seller

By strategically selecting products that align with the benefits of FBM, sellers can leverage this fulfillment method to enhance their business success. The meaning of this model is that you would be processing orders yourself. Therefore, you might want to consider the following types of products:
  • Products not accepted by FBA: FBA doesn’t allow certain items (like HAZMAT products) without obtaining special certification. With FBM, you can sell these items with less competition and restrictions.
  • Slow-moving goods: Products with limited demand—such as seasonal items, those from unknown brands, or niche products—may not be profitable with FBA due to storage fees. In these cases, FBM is a more effective option for managing inventory.
  • Special-handling items: Fragile, high value items or products with expiration dates are often better suited for FBM, where you can ensure careful handling and packaging to reduce the risk of damage.
  • Large products: Bulky or heavy items can lead to high fees with FBA. FBM allows you to store these products at home, so you can avoid storage fees and find the most cost-effective shipping options.
If you're thinking about selling items in these categories but haven’t decided on a product yet, it’s essential to confirm its profitability first and ensure that it doesn’t face significant competition. This requires thorough product research and market analysis, which can be achieved using analytical tools that take time to learn.

To save time and gain insights more easily, sellers can take advantage of professional product research services from Sellerhook.

Find Profitable FBM Product Ideas

Sellerhook's specialists perform personalized research to identify the best opportunities for your business, utilizing advanced tools and extensive experience. To receive a tailored list of profitable products suitable for the FBM fulfillment method, simply follow these steps:
1. Place your order. On the Sellerhook website, choose whether you want to receive either one or five top product recommendations.
2. Answer a few questions. Share your preferences for product categories, price range, and any specific requirements (such as the FBM shipping method) to help Sellerhook’s specialists customize their research to meet your needs.
3. Receive your report. You will receive a detailed report via email within 10 business days.
Sellerhook simplifies the process of product research by providing in-depth insights and recommendations for your Amazon business. This ready-made solution enhances your chances of running a profitable venture by identifying products that align with your fulfillment method and are in high demand among customers.
See what your research report would look like.

How to Sell on Amazon FBM

Now that we have an idea of what kind of product to sell, let's review the setup process for starting with Amazon FBM. While it may vary depending on the specifics of your business, here are five general steps to help you get started:

Step 1: Access Your Amazon Account

To sell on Amazon, one of the key requirements is having an Amazon seller account. If you don't have one yet, here's how to register:

1. Choose your selling plan on Amazon’s website. The Individual plan charges $0.99/sale, while the Professional plan has a monthly fee of $39.99.
2. Enter your details. Provide your personal information (name, contact info, address) and business information (store name, etc.).
3. Submit your documentation. Upload a bank statement and a photo of your ID.

Amazon will schedule a verification video call to review your documents. Once the verification is complete, you'll be able to start your FBM business.

Step 2: List Your Products

Once your Amazon account is live, you can start listing products. The process varies, depending on whether a product exists yet on Amazon. If the product is already listed, just join the existing listing through your Amazon Seller Central account. Then set your price and specify the delivery speed.

If the product is new (e.g., your own brand), you’ll need to create a new listing. Follow these steps:

1. Go to the "Inventory" section in your Amazon Seller Central dashboard and select “Add Products”.
2. Enter product details like the title, description, and bullet points. Set your price, specify quantity, and upload photos.
3. Choose your fulfillment method (FBM) by adjusting the default FBA setting.
4. Click “Save and Finish” to upload your listing.

If you want your listing to stand out, you need to ensure it’s optimized for SEO, follows Amazon's guidelines, and appeals to customers. This process can be complex and time-consuming, so outsourcing it to professionals like those at Sellerhook can be a smart option to save time and drive traffic to your store.

Order a Professional Product Listing

Sellerhook's expert team uses precise keyword data to choose the most effective keywords, which ensures that your listing is prioritized by Amazon's algorithm. This boosts visibility and increases your chances of making a sale. The team’s extensive experience ensures that your listing adheres to all of Amazon’s rules while making the text appealing to customers.

To use Sellerhook's service, simply follow these steps:

1. Place an order. Choose whether you want to order one or three product listings on the Sellerhook website.
2. Complete a brief questionnaire. Answer a few questions about your product to help the experts tailor the listing to your specific business needs.
3. Receive your listing. You’ll get the completed product listing via email within 10 business days.

The product listing comes complete with a catchy title, cohesive bullet points, and an attractive description, plus backend keywords, which increase your chances of ranking higher in search results. The experts will also identify relevant keywords for your PPC campaigns, further boosting your visibility.

This approach allows you to save time and focus on other important business tasks. Let’s take a look at some of those key areas below.
Check out a sample of a ready-to-use listing

Step 3: Set Up Fulfillment Process

To make the most out of FBM, it's essential to optimize your order fulfillment process. Key aspects to focus on include:
  • Packaging: Ensure that your packaging complies with Amazon's strict rules. If you're dropshipping, make sure your supplier understands these packaging rules to prevent account suspension or penalties.
  • Delivery: Choose a courier that offers both reliable and speedy delivery. While services like USPS may be cheaper, they also have higher risks of delays or lost packages.
  • Inventory management: Efficiently organize your storage and track inventory levels regularly to avoid stockouts or overstocking. Consider using software to help you automate the process.
Avoiding mistakes like sending wrong products, shipping delays, and canceled orders helps ensure a positive customer experience. However, to truly enhance this, implementing a strong customer service strategy is essential. Let’s explore this further.

Step 4: Develop an Efficient Customer Service Strategy

FBM sellers handle customer support themselves, unlike FBA sellers who outsource this task to Amazon. To keep customers satisfied, it's vital to respond to their messages promptly (within 12-24 hours). You can also reduce the number of queries you receive by providing detailed product information, such as size charts or certifications, to address common concerns upfront.

Establishing a clear and accessible return policy is equally important, as FBM sellers manage returns directly. Ensuring that customers are aware of your return process can prevent disputes and streamline returns.

Offering excellent customer service not only improves your chances of receiving positive reviews but also boosts your credibility and trustworthiness, helping you attract more customers in the long run.

Step 5: Grow Your Store

Once you launch your business, you might want to focus on growing it. Here are a few effective strategies:
  • Running PPC and social media campaigns: Launch ads and collaborate with bloggers or influencers to drive traffic to your store and boost sales.
  • Competitor analysis: Analyze competitors' product offerings, pricing strategies, and Buy Box positioning regularly. Tools like the Dropshipping, Arbitrage, and Wholesale extension by AMZScout can simplify this process.
  • Expanding product offerings: Add new products or variations to increase your store’s visibility and appeal to a broader audience.
  • Entering new markets: Explore selling in international markets to expand your reach, especially if you can secure reasonable shipping options.
  • Launching discount campaigns: Consider running discount and limited-time campaigns to clear inventory and attract price-conscious customers.
By applying these strategies consistently, you can not only break even but also scale your business, leading many sellers to wonder how much of an investment is needed to start with Amazon FBM and achieve success. Let’s explore the estimated pricing and fee structure for this fulfillment method.

How Much Does it Cost to Run an Amazon FBM Business?

Amazon FBM costs can vary based on several factors, including shipping expenses, marketing strategies, and more. On average, starting an Amazon FBM business requires an investment of around $1,000. However, some sellers launch successfully with less than $500.

Here’s a rough breakdown of the typical expenses:

Amazon Fees

  • Referral fee: Usually 15% per sale (varies by category)
  • Amazon FBM account: $39.99,/month for a professional seller account or $0.99/sale with an individual plan

Shipping and Storage

  • Shipping: Approximately $10/order, depending on destination and size
  • Storage: Costs vary based on whether you store inventory at home or use a third-party warehouse (3PL).
  • Packaging: Materials such as bubble wrap, protective cases and more
  • Additional staffing: During peak seasons like Christmas, additional staffing to process orders may be necessary

Marketing

  • PPC ads: On average, new sellers typically start with a budget of $100-$300/month.
  • Collaborating with influencers: Often involves providing free products in exchange for promotion if you sell a brand new product

Other Business Costs:

  • Hiring accounting services: Necessary for managing sales tax
  • Supply management: Includes delivery from a supplier and customs fees if ordering from abroad
  • Inventory purchase: For dropshipping, this mainly involves a subscription starting at $50, while in other cases, it could be the purchase of single items.
While these costs may seem significant, a profitable product can easily cover them, making Amazon FBM a viable business model.

FAQ

Is Amazon FBM worth it?

Amazon FBM can be beneficial for sellers who prefer to retain more control over inventory management or sell products that aren’t allowed or profitable with FBA. By handling shipping on their own, sellers can potentially save on costs by choosing couriers with the cheapest shipping rates. However, this method demands time and resources for storage and fulfillment, which may not suit everyone.

How can I change from Amazon FBA to FBM?

To switch from FBA to FBM, go to the Inventory section in your Amazon Seller Central account and click ‘Edit’ for the listing you want to update. From there, choose “Change to Fulfilled by Merchant”. You can make this change for individual listings or in bulk. If you have inventory in any FBA centers, you can request that Amazon return it to you, attempt to sell it within a month, or destroy it.

FBA vs. FBM: Which is better?

The choice between FBA and FBM depends on your specific business needs. FBA is best for high-volume sellers, as it streamlines operations, but this model also incurs fees and creates dependency on Amazon. On the other hand, FBM allows sellers to avoid FBA fees and gain more control over fulfillment. However, it also requires managing more tasks and limits benefits like access to Prime customers.

Conclusion

FBM has its pros and cons, but many sellers stick with it because FBA isn't the right fit for everyone. To get the most out of FBM, consider focusing on selling products that align with this fulfillment method and are profitable. Using Sellerhook's professional services can provide personalized ideas for promising products to sell, increasing your chances of business success and future growth.
See what your research report would look like.
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