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Steffi Greuel 3 Minutes

Amazon FBA vs. FBM: What Sellers Should Consider in the Current Situation

When sellers distribute their products through the Amazon marketplace, they must eventually decide on a fulfillment system. On the marketplace, sellers can choose between Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). Over the years, the Fulfillment by Amazon method has become established among marketplace sellers. However, Fulfillment by Merchant, especially in the current situation, is gaining more and more interest and followers. As Amazon announced, the in-house capacities for storage and logistics are no longer sufficient, and it is recommended to opt for FBM. We have summarized in our blog post which fulfillment system is now best for sellers and how to perform successfully on the marketplaces through automated solutions.

FBA vs. FBM

A Comparison of Fulfillment Solutions

Fulfillment by Amazon

Behind this fulfillment method is a shipping service provided by the corporation. This means that Amazon manages shipping, storage, and all contractual obligations arising from the sale of goods for the seller. Sellers only pay for the services they use. Thus, there are no subscription fees, contracts, or minimum inventory requirements. The seller sends the goods to the respective logistics center, and the billing is based on the shipping services and storage space used.

Fulfillment by Merchant

If a marketplace seller chooses the Fulfillment by Merchant method, they take on all of these responsibilities themselves. The merchant, in this case, refers to the seller who regulates storage, shipping, and customer service for their items.

Advantages and Disadvantages of Fulfillment Methods

Both fulfillment methods have their pros and cons. While the Fulfillment by Merchant method gives the seller full control and responsibility over their goods and value streams, with the Amazon method, the seller must rely entirely on the fulfillment provider Amazon. For example, the not always optimally packaged goods or the unnoticed FBA errors have been criticized by sellers. If sellers opt for the Merchant method, they may have to deal with the fact that their products are less likely to land in the Buy Box, as the algorithm currently highlights sellers who use FBA. However, it is expected that the preferred promotion of sellers will be more balanced in the future.

Note: Especially in the current pandemic and the resulting stoppage of deliveries for non-essential products by Amazon, sellers who choose the Merchant method (FBM) benefit. They can continue to ship their goods independently of the fulfillment provider.

FBA or FBM – What Should Sellers Choose?

The decision on how to collaborate with Amazon should be an individual one for each seller. If a seller is already extensively present in e-commerce, for example, through their own online shop, the existing shipping system can be a major influencing factor in being able to handle their fulfillment internally. Another crucial factor for choosing the fulfillment method should be the type of product. While the Amazon solution is best suited for selling mass-produced goods, shipping through the Merchant is more suitable for distributing products that are custom-made or unique pieces. When considering the reverse logistics of the sale, this can also be an important aspect for choosing the fulfillment solution.

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Automate Fulfillment - How to Succeed

Regardless of how sellers decide, selling on Amazon involves investing time in order management, customer, and product management. Therefore, it is essential to automate your Amazon processes. With our Amazon Marketplace solution for FBA and FBM, you can connect one of the most robust e-commerce platforms with the cloud-based ERP system Microsoft Dynamics 365.

Our Amazon Marketplace solution offers a fast, flexible, and targeted way to position the entire product range on Amazon. Additionally, it simplifies management for you. The transfer of product lists, stocks, and prices from the ERP system to the Amazon Marketplace is automatic. Sales and customer data are also automatically transferred from Amazon accounts to the ERP system. The Amazon order can be easily continued with your existing workflow in D365. This way, you always have an overview and minimize administrative effort.

Your benefits at a glance:

  • Auto-import of Amazon orders
  • Auto-product transfer to Amazon
  • Synchronization of inventory levels
  • Books all Amazon fees
  • Seller-specific products and prices
  • Imports Amazon return orders
  • For more information, please refer to our Amazon connector.
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