Amazon FBA vs. Amazon FBM
Amazon FBA vs. Amazon FBM
The Amazon marketplace is a great place to get your brand and indeed products in front of new and ever-growing global audiences that might otherwise be impossible to reach.
For those brands working through Amazon there are two options, namely: Fulfilment by Amazon (FBA) and Fulfilment by Merchant (FBM). When brands initially register as a company, they are asked to choose what kind of seller they are.
For many start-ups the difference isn’t perhaps immediately clear, knowing they want to work through the Amazon Marketplace is one thing but choosing the type of seller you are is a daunting task without knowing the key differences.
So what are Amazon FBA and Amazon FBM?
Amazon FBA is an approach that allows organisations to send stock to Amazon, who in turn will store and ship orders to customers on your behalf. Amazon FBM, however, is the reverse. It allows for organisations to sell via the marketplace in the same way but the storage and handling and fulfilment of stock and orders is the requirement of the organisation or a contracted third-party (such as Mosaic)
Whilst FBA can be seen a hassle-free approach, Amazon FBM offers an alternative approach that itself comes with added considerations that have to be thought through before listing yourself as an FBA or FBM seller, so we’ve asked the question – What are the key differences between Amazon FBA and Amazon FBM?
With Amazon FBA handling every aspect of the order fulfilment for you, you will inevitably lose that product control, a factor that must be considered in the current context of environmentally-conscious markets. With wasted materials and single-use plastics dominating consumer focus, this could be a very risky approach for brand reputation.
In recent surveys, as many as 68% of those polled said they felt the quality of a product’s packaging directly affects that brand perception. Under FBM your organisation will retain this control, ensuring your customer knows it’s from you and receives the product exactly as, and indeed when you want them too.
At Mosaic, we have taken significant steps to address this concern, introducing plastic-free packaging alternatives and replacing wasteful plastic void fill, with a recycled card alternative.
Amazon FBA is a service that typically costs anywhere between 5 and 25% of the product sale price. By the exact opposite Amazon FBM removes this fee and places the control back in the hands of the retailer improving the sellers overall profit margin. At this stage an important factor to consider is, however, scale.
For smaller retailers, fewer orders can be handled with the required efficiency but as the business grows and the quantities increase so too the demands on order fulfilment – herein third-parties such as Mosaic Fulfilment Solutions can help support through our flexible, adaptive approach to fulfilment services.
Finally, on the issue of storage, it’s important to consider the wider impact FBA has on stock levels and in turn the impact utilising the full-service FBA has on wider marketing channels. For retailers selling exclusively via the Amazon Marketplace channel then this will not be felt as severely, however, for those omnichannel retailers losing control of stock levels could create a shortfall in both stock and profit, as omnichannel customers have the potential to bring in more value.
Being in control of your own inventory and order fulfilment processes requires one of two things – option a) a fully staffed, functional warehouse and management system a costly outlay, or option b) outsource these services to a fulfilment house like Mosaic whereby costs are transferred to transitional ones and retailers receive the latest services, products and materials all in a modern and secure environment.
Mosaic act as an FBM alternative, giving retailers access to the market, and through outsourcing your fulfilment with us, provides the hassle-free of nature of Amazon FBA, with the accuracy, visibility and control of managing it yourself, leaving you to focus on the more important things – such as growing the business.
All Mosaic’s software is ready to integrate with your Amazon marketplace store and can be set up in next to no time. If you want to know more about our award-winning e-fulfilment solutions or are interested in working with Mosaic’s Amazon FBM model, get in touch today.
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Mosaic has provided dynamic outsourcing solutions since 2009. Our industry-leading combination of dedication towards, and innovation in state-of-the-art systems has delivered significant and measurable benefits across our broad range of clients.
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