Amazon Fulfillment works in two different ways: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). As the names imply, FBA sellers send their inventory to Amazon distribution centers, where it is stored for a fee. When your customers place orders, your products are picked, packed, and shipped by Amazon to your customers for a fee. Conversely, FBM sellers perform their own fulfillment operations or most likely, partner with a 3PL provider, such as Phase V Fulfillment to automate their packing processes, streamline their fulfillment operations and get customers their orders as soon as possible. Whether the seller or Phase V is fulfilling the orders, FBM sellers maintain more control over their products, their packaging, and their customers’ experience. Because Amazon’s fulfillment model charges by weight and size, FBA is usually a money-losing venture for online sellers with large, expensive products, who want to sell on Amazon. FBA vendors often use the FBM platform for heavy, sizable, high-end items that move slower than the small, hopefully high-end, fast-moving items that are ideal for FBA sellers.
Although FBM gives sellers more control over certain aspects of their fulfillment process and customer experience, FBM sellers face stiff competition from FBA sellers due to FBA sellers’ automatic eligibility for Amazon Prime status. Amazon’s Prime badge carries a lot of weight in the online shopping sphere. Recently, Amazon's Seller Fulfilled Prime (SFP) has evened the playing field between FBA and FBM somewhat. However, you can’t just sign up for the SFP program; you must first prove to Amazon that your business can meet Amazon’s Prime standards. These standards include:
- Sellers shipping more than 99% of their orders on time
- Maintaining a cancelation rate of less than 0.5%
- Using Amazon Buy Shipping services for more than 98.5% of orders
- Allowing Amazon to field your customer service calls
- Delivering orders through Amazon’s supported Seller Fulfilled Prime Carrier
FBM sellers can boost sales by adhering to Amazon’s rules without the hefty fulfillment and storage fees but it involves a lot more work by the seller in the fulfillment process. Another option – partner with Phase V Fulfillment’s tech-enabled 3PL services to consolidate all of your fulfillment operations into one manageable source. We streamline your fulfillment process, expertly gaining SFP status for your Amazon orders, as well as all of your other multi-channel marketplace orders for on-time two-day deliveries.
Call Phase V Fulfillment for a consultation and free quote!