Gain full control over your logistics and customer experience with Amazon FBM - an alternative to FBA offering lower costs and greater flexibility.
Jens Vittrup
As an Amazon seller, you face key decisions about how you want to manage your logistics. Amazon offers two main fulfilment models: Fulfilled by Amazon (FBA) and Fulfilled by Merchant (FBM). While many focus on the FBA model, it is vital to understand how FBM works and what advantages it can bring to your business. In this guide, we cover everything you need to know about Amazon FBM – from basic definitions to practical benefits and challenges.
Amazon FBM (Fulfilled by Merchant) means that you as the seller handle all aspects of the fulfilment process yourself. With this model, you are responsible for storing products, packing, shipping, and customer service – including managing returns. As the name suggests, it is the “merchant” (that is, you as the seller) who fulfils orders, not Amazon.
You might also come across the term MFN (Merchant Fulfilled Network), which is another name for the same concept. So when you see “what is mfn in amazon” as a search, it refers to exactly the same fulfilment model as FBM.
With fulfilled by merchant, you retain complete control over the entire process from the moment a customer clicks “buy” until the product is delivered to their door. This involves the following responsibilities:
To gain a deeper understanding of what Amazon FBM means for your business, it is helpful to compare it with the alternative model, FBA (Fulfilled by Amazon). The two models differ fundamentally in who takes responsibility for logistics after a sale:
The difference between fulfilled by merchant and FBA affects not only your costs and workload, but also how your products are displayed and ranked on Amazon, and which customer segments you primarily reach. Therefore, the choice between the two models should be based on your business strategy, product type, and resources.
Although FBA is often highlighted as the easiest route to Amazon success, fulfilled by merchant offers significant benefits that many sellers find valuable. Here are the main advantages of choosing Amazon FBM:
One of the most apparent benefits of FBM is saving on Amazon fees. With FBM, you avoid:
These savings can be significant, especially for low-margin products, large items, or goods with slow turnover. For larger products, FBA fees can sometimes amount to 30-40% of the product price, making selling on Amazon via FBM a more profitable choice.
With FBM, your products remain under your own roof, offering several advantages:
This control is especially valuable for sellers who prioritise quality assurance or sell fragile or high-value items.
FBM gives you the opportunity to create a more personalised connection with your customers:
Amazon has strict rules about which products can be stored in FBA facilities:
This flexibility allows you to expand your product range without worrying about what Amazon permits in their warehouses.
Although it requires more work, managing returns through FBM provides you with more benefits:
For products with high return rates or items that require inspection before resale, this control can be crucial for protecting your profitability.
Despite the many advantages, Amazon FBM also comes with significant challenges that every seller should be aware of before choosing this model:
FBM requires considerably more work from your side compared to FBA:
These operational demands can be overwhelming for new sellers or small businesses with limited resources.
FBM products often perform less well in Amazon’s search results:
This reduced visibility can lead to lower sales volume, even with competitive prices and good product quality.
Amazon holds FBM sellers to strict metrics, which can be challenging to meet:
If you do not meet these requirements, you risk:
These strict requirements mean that FBM only works well for sellers with reliable shipping processes and strong operational control.
If you wish to sell internationally, FBM comes with additional challenges:
For many sellers, Amazon FBA is a more practical solution for international marketplaces, even if they use FBM for their home market.
One of the key areas where FBM differs significantly from FBA is in handling returns. When you use what is Amazon FBM, you are responsible for managing the entire return process in accordance with Amazon’s rules.
As an FBM seller, you must comply with the following basic requirements:
It is important to note that you may offer more generous return terms than Amazon requires, but not more restrictive terms.
Amazon protects buyers through their A-to-z Guarantee, which allows customers to file claims if they are dissatisfied with a transaction. As an FBM seller, be aware that:
In practice, handling returns with fulfilled by merchant involves:
Effective return handling is not just an Amazon requirement but also an opportunity to improve customer experience and reduce future returns through better product descriptions and quality control.
After understanding both the advantages and disadvantages of FBM, let’s look at which types of sellers and products typically benefit most from choosing what is FBM on Amazon:
FBM is ideal for businesses that already have established:
If your business already sells products through other channels such as your own webshop or other marketplaces, FBM can be a natural extension of your existing business model.
FBM is particularly advantageous for these product types:
FBM is ideal for sellers who emphasize:
Many premium brands choose FBM specifically to retain control over the full customer experience, even though it requires more work.
Many successful Amazon sellers use a strategic combination:
This hybrid approach provides flexibility to optimize your Amazon marketing strategies based on each product’s specific characteristics and sales patterns.
If you have decided that FBM is the right model for your business, here is a step-by-step guide to getting started:
The first step is to create or configure your seller account:
To sell via fulfilled by merchant, you need to configure your shipping settings in Seller Central:
It’s crucial to be honest and realistic about your handling and delivery times, as Amazon will hold you accountable to these promises.
In accordance with the Amazon FBM return policy, configure your return settings:
To ensure efficient FBM operations, you should have the following in place:
When creating product listings, select FBM as your fulfillment method:
With thorough preparation and the right systems, you can establish a well-functioning FBM operation that gives you control over the entire customer experience.
Once you have established your basic FBM operations, you can optimize your strategy to maximize results and minimize challenges:
The more efficient your logistics are, the more profitable your FBM operations become:
Streamlining not only reduces your costs but also improves delivery times and customer satisfaction.
Shipping costs and times can greatly impact your competitiveness:
Effective inventory management is critical to avoiding stockouts and overselling:
Good inventory management practices help you avoid order cancellations that can harm your seller performance on Amazon.
Since FBM products don’t have the Prime advantage, it is even more important to optimize your product pages:
An optimized product page can help compensate for the lack of Prime benefits and increase your conversion rate.
Amazon provides sellers access to various metrics and reports that you should monitor and respond to in order to improve your FBM operations:
Pay close attention to these metrics, which directly impact your account status:
These metrics help you understand the customer experience with your products and service:
These metrics help you understand your overall business performance:
To improve your FBM performance you should:
Regular monitoring and improvement are key to long-term success with fulfilled by merchant on Amazon.
Since FBM products don’t automatically receive the Prime benefit, Amazon advertising can be especially important to increase the visibility of your products:
These pay-per-click ads display your products in search results and on relevant product pages:
Sponsored Products can help your FBM items gain visibility even when competing with Prime products.
These ads highlight your brand and multiple products simultaneously:
Especially for established brands, Sponsored Brands can help differentiate your FBM business from competitors.
These ads target customers based on previous shopping behavior:
Sponsored Display can be particularly effective in capturing customers who have already shown interest in your product categories.
Besides advertising, promotions can help increase FBM product visibility:
With a combination of targeted advertising and attractive promotions, your FBM products can compete effectively even without the Prime badge.
As your FBM business grows, you should consider how to scale operations effectively:
As volume increases, it may make sense to outsource certain aspects of your FBM operations:
Outsourcing can provide many of FBA’s benefits while allowing you to maintain greater control and potentially lower costs.
Technology can help you scale without a proportional increase in staffing costs:
To reduce shipping times and costs, consider:
As your FBM operation becomes more efficient, you might consider:
A well-executed FBM strategy can give you the flexibility to experiment with products that other Amazon sellers find too challenging or costly.
For qualified FBM sellers, Amazon offers the Seller Fulfilled Prime (SFP) program, which allows sellers to earn the valuable Prime badge:
SFP is a program that enables FBM sellers to offer Prime benefits while still managing inventory and shipping themselves. This provides:
SFP has strict requirements that not all sellers can meet:
While SFP offers significant advantages, it also comes with challenges:
Benefits:
Challenges:
For sellers who can meet the strict requirements, SFP represents a golden middle ground between FBM and FBA, combining control with Prime visibility.
As Amazon continues to evolve, it’s worth considering what the future of FBM might look like:
New technologies will likely shape how fulfilled by merchant operates:
Customers continue to expect faster delivery and better service:
Amazon itself continues to develop its policies and capabilities:
FBM will continue to be an important part of the Amazon ecosystem, and sellers who master this model will continue to find opportunities to differentiate themselves and build successful businesses.
After exploring all aspects of what Amazon FBM is, it’s time to consider whether it is the right model for your business. Here is a summary of the key considerations:
The characteristics of your products play a major role in the decision:
Your business’s current capacities are crucial for FBM success:
Your long-term goals also affect which model is most appropriate:
You don’t have to choose exclusively between FBM or FBA:
Many successful Amazon sellers strategically use both fulfillment methods to maximize the benefits of each model. Amazon consultants can help analyze your specific situation and guide you toward the best approach.
To succeed with Amazon FBM, these resources can be valuable:
Amazon offers various tools and resources for FBM sellers:
Various software and services can help optimize your FBM operations:
Learn from others and stay updated through:
By leveraging these resources, you can continue improving your fulfilled by merchant operation and stay ahead of the competition.
Different product categories have unique challenges and opportunities when it comes to FBM:
For electronics products, FBM offers particular advantages:
However, be aware of higher expectations for fast delivery and potentially higher return rates.
Large products in this category are often ideal for FBM:
Fashion products have specific considerations under FBM:
The fashion industry often experiences high return rates, so effective return processes are crucial.
For this category, FBM provides these benefits:
FBM is often preferred for these products:
For each product category, consider the unique requirements and customer expectations when developing your FBM strategy.
Many new FBM sellers encounter these common pitfalls. Learn how to avoid them:
One of the most common mistakes is promising too fast delivery:
It is always better to promise longer delivery and deliver earlier than the opposite.
Failing to upload tracking information promptly can harm your performance:
Ineffective inventory management leads to several issues:
Many FBM sellers underestimate the true costs:
Poor management of returns can lead to negative reviews and A-to-z claims:
By avoiding these common mistakes, you can create a more efficient and profitable FBM operation that complies with Amazon’s strict performance requirements.
Amazon FBM represents a powerful fulfillment model that gives sellers full control over their logistics and customer experience. For the right products and businesses, fulfillment by merchant can offer significant advantages in terms of cost savings, flexibility, and the opportunity for personalized customer contact.
Like any business model, FBM comes with both benefits and challenges. Successful implementation requires careful planning, efficient systems, and constant monitoring of performance metrics. By focusing on customer satisfaction, delivery accuracy, and operational efficiency, you can build a successful FBM business on Amazon.
Whether you are a new Amazon seller considering your first fulfillment model or an experienced seller evaluating options to optimize your business, it is important to understand how fulfilled by merchant works and how it can fit into your overall e-commerce strategy.
Remember, there is no one-size-fits-all approach to selling on Amazon. Many successful sellers strategically use a mix of FBM and FBA for different products and market conditions. The key is to be flexible, data-driven, and always focused on improving the customer experience.
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