Amazon FBM as an alternative for online retailers?

For a long time, many online retailers regarded Amazon FBA as a the variant. The advantages of the fulfillment service are obvious: you do not operate your own warehouse and therefore place the management of logistics and shipping processes in the hands of Amazon. However, especially during the Supply bottlenecks During the pandemic, the volatility of Amazon FBA unsettled many companies and sometimes caused a rethink in the industry. Even today, the counter-model to FBA, namely the "Fulfillment by Merchant" service (FBM), attracts retailers with more independence, freedom of choice and control over their own logistics. We took a closer look at the advantages and disadvantages of this fulfillment option and for whom a switch would make the most sense.

From FBA to FBM - what's the difference?

Whether inventory, packaging or shipping - with Amazon FBM, the management and control of logistics and shipping processes is still the responsibility of the retailers and companies themselves. As an online retailer, Amazon FBM still allows you to organize your own inventory, storage and picking, as well as the packaging and shipping process independently. This is particularly useful if your company already has established Logistics processes and implement them efficiently. This means you can simply use Amazon as an additional sales channel for incoming orders without having to change your structure or pay unnecessary storage fees for FBA. In this case, incoming orders on Amazon are automatically forwarded to your company and the rest of the process continues as usual. But what other advantages does Amazon FBM offer?

The advantages

Amazon FBM offers the option of outsourcing order fulfillment to external logistics companies, thereby reducing dependency on Amazon. This is particularly useful if you are dealing with particularly fragile or valuable products. This option is also more suitable for storing and shipping oversized products, as Amazon FBA would otherwise incur high storage and shipping costs for these products. What should also not be forgotten: Amazon FBA charges long-term storage fees on your goods. This means that if you operate a slow sales cycle and have to store your goods or products for a longer period of time, long-term costs are included in the calculation, which in turn could be avoided with Amazon FBM.

By choosing an external logistics company, you can ensure that you are assigned a direct and personal contact person. Due to Amazon's size, you often only get through to support hotlines with long waiting times or automated intercom systems. Keyword Customer serviceIt's true, of course, that you have to put in extra work to fulfill orders and provide the service that you and your team continue to provide at Amazon FBM. But on the other hand, you and your team are the first point of contact for your customers. You can take advantage of this and create a satisfied Customer:inside trunk maintain. This is because with Amazon FBA, requests are automatically and directly forwarded to an Amazon employee. In case of doubt, this could in turn damage your company's reputation due to the lack of expertise.

The independent management of your order also includes the Design of your packaging and branding. Again, with FBM you are not obliged to use Amazon's packaging design, so you can better position your brand and possibly even establish a recognition value.

Ultimately, you remain unaffected by any changes to the FBA requirements, such as the correct and uniform labeling of your goods or changes to the shipping requirements.

The disadvantages

As a company, you have to ask yourself whether the Amazon FBM system is tailored to your own store or not: Do you operate your logistics process in-house? This means that returns, for example, must also be processed independently. This usually requires an already functioning logistics system with automated processes. In terms of costs, you also have to reckon with additional ancillary costs - for example for heating or cooling a warehouse - in addition to the extra work and personnel expenses.

Conclusion

When does Amazon FBM really make sense? At the end of the day, it's up to each company to decide for itself. However, in order to benefit from all the advantages of Amazon FBM, your company should already have functioning logistics and automated processes in place. Only then will the real impact of Amazon FBM unfold - in the form of an additional sales channel and thus the expansion of your customer base.