Amazon FBA vs. FBM: What retailers should bet on in the current situation

If retailers sell their goods through the Amazon marketplace, they will sooner or later have to opt for a fulfillment system. On the marketplace, the retailer can choose between Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM).  Over the years, Amazon’s fulfillment method has established itself among marketplace retailers. However, Fulfillment by Merchant, especially in the current situation, is gaining more and more interested parties and supporters.  As Amazon announced, the in-house capacity for warehouse and logistics is no longer sufficient and it is advised to rely on FBM. We have summarized in our blog which fulfillment system now is the best for merchants and how to perform successfully on the marketplaces through automated solutions.

FBA vs. FBM – Fulfillment Solutions in Comparison

Fulfillment by Amazon

This fulfillment method provides a shipping service, Amazon is taking care of all the logistics. This means that Amazon manages shipping, storage and all contractual obligations arising from the sale of goods to the consumer.  Merchants only pay for the services they use. There are no subscription fees, contracts or minimum inventory requirements. The goods are sent by the merchant to the corresponding logistics center, whereby the billing is carried out via the dedicated shipping services and the storage areas. Amazon is billing the merchant automatically depending on the services used for FBA.

Fulfillment by Merchant

If the marketplace trader chooses the Method of Fulfillment by Merchant, they take over all these duties himself. The merchant is responsible for storing, shipping and customer service of their items. Seller Central is used as a platform to sell the goods, but you have to take care of the logistics for every single order yourself.

Pros and Cons of Fulfillment Methods

Of course, both fulfillment methods have their advantages and disadvantages. While the merchant has full  control and responsibility over the flow of goods and value in the Merchant method, the Amazon method requires him to rely entirely on the fulfillment provider Amazon. Here, for example, goods are not always optimally packaged or an FBA error can occur, an increasing number of merchants reported in the past weeks. If traders opt for the Merchant method, they may have to deal with the fact that their goods end up less frequently in the BuyBox, as the algorithm still emphasizes the traders who use FBA.  Here, however, it is likely that the preferred showcasing of FBA products will be more balanced in the future.

Note: Especially in the current pandemic and the resulting delivery freeze for non-essential products by Amazon, retailers who opt for the Merchant method (FBM) benefit. They can continue to ship their goods regardless of the fulfillment provider.

FBA or FBM – What should merchants choose?

The way retailers work with Amazon should be an individual decision. If a retailer is already represented on a large scale in e-commerce, for example through its own online shop, the existing shipping system can be a major factor in the process of being able to map its fulfillment internally. Another decisive factor in the choice of the fulfillment method should be the product type. While the solution by Amazon is best suited for the sale of bulk goods, shipping by the Merchant makes sense when selling products that are custom-made or individual items. Considering the reversal of the sale, this can also be an important factor for the choice of the fulfillment solution.

Automating Fulfillment – How to Succeed

No matter how you choose as a retailer, selling on Amazon needs time and labor on order management, customer support and product management. So automate your Amazon processes. With our Amazon Marketplace solution for FBA and FBM, you can connect one of the strongest e-commerce platforms to the cloud-based ERP system Microsoft Dynamics 365 Finance.

Our Amazon Marketplace Connector provides a fast, flexible, and targeted way to position your entire assortment of items in Amazon. On top of that,  management is simplified for you. The transfer of product lists, stocks and prices from the ERP system to the Amazon Marketplace takes place automatically. Sales and customer data is also automatically transferred from Amazon accounts to the ERP system. The Amazon job can be easily continued in Dynamics 365 Finance with your existing workflow. This way, you always keep track and minimize the administrative burden.

Your advantages at a glance:

  • Auto-import of Amazon orders
  • Auto product transfer to Amazon
  • Synchronization of inventories
  • Books all Amazon fees
  • Dealer-specific products and prices
  • Imports Amazon Returns Orders

Please arrange a consultation with us at info@esyon.de. For more information, please visit: https://www.esyon.net/solutions/amazon-marketplace-connector-for-microsoft-dynamics-365/