What's the difference FBA from FBM?

What You Need to Know About FBA

FBA is a dedicated program to provide Amazon warehouse space and services to third-party marketplace sellers.

The sequence of the service:

• You ship your goods to the US to one of the Amazon warehouses;
  
• Amazon accepts your goods and distributes them to warehouses throughout the country, for the convenience of internal logistics and ensuring high delivery speed;
• Buyers order your products, along with products from Amazon and other sellers;
• Amazon FBA accepts and processes orders;
• At Amazon FBA warehouses, goods are assembled and packed, and then delivered to the customer's home;
• Amazon provides almost all work with the order, including its return to the warehouse, if for some reason it did not suit the buyer;
• Every two weeks the marketplace transfers profit from sales to your account.

Amazon FBA assumes:

• order processing
  
• packaging
• delivery
• returns service.

The main feature of FBA is that a buyer on Amazon does not even think about whose product he is purchasing: the marketplace itself or a third-party seller. In both cases, he receives the same service: speed of service, delivery and guarantees.

Delivery to Amazon FBA warehouse

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Advantages and Disadvantages of FBA

When choosing fulfillment by Amazon, you get both the advantages and some disadvantages of such cooperation.

Advantages include:

• delegation of all logistical and organizational issues related to the product. 
• increase in sales due to quick order processing and platform recognition. 
• simple return process, as Amazon takes care of all related matters. 
• opportunity to participate in Amazon programs (e.g., Prime), which increases the visibility of your products. 
• fast delivery and improved customer service. 
• process automation. 
• guarantee of service quality. 
• business scalability.

Disadvantages include:

• loss of control over the product, as it is sent directly to the warehouse in the USA and stored there until the moment of sale.
• increase in the number of returns, as Amazon is very lenient with them, compensating the full cost of the product to customers.
• additional costs for fulfillment service payment.
• high commissions.
• strict requirements for packaging and labeling.
• storage fees for long-term storage.
• risks of returns and damages.

What You Need to Know About FBM

The FBM procedure can include several operations:

• acceptance of goods at the warehouse - the products are placed in the warehouse, marked and registered;
  
• storage of goods;
• acceptance and processing of applications (purchase or from a trading platform, for example Amazon);
• picking and packing of orders;
• their delivery to customers or transfer to a transport organization engaged in delivery;
• work on the return of goods (it consists of acceptance at the warehouse, inspection, elimination of defects, storage and dispatch of goods to the buyer in the second sale).

If you want to sell products on the Amazon platform but handle all the work related to selling yourself, the FBM service is available to you. Amazon only provides the sales platform, leaving the seller responsible for all other functions related to storage, packaging, and shipping.

Advantages and Disadvantages of FBM

Advantages:

• Reduction of costs for Amazon services, as the seller only pays a commission on sales, while all other expenses are borne by you.
• Full control over products and the sales process.
• The seller can, at their discretion, offer additional services such as free shipping or gift wrapping. The platform does not prohibit this.

Disadvantages:

• Significant time costs for order processing, packaging, and delivery. Time must also be spent on handling objections and processing returns.
• Slower delivery compared to using established FBA logistics processes.
• Lower visibility in Amazon search.

Which is Better for Your Business: FBA or FBM

In fact, there is no single correct answer, as it depends on a number of factors. For example:

• The scale of your business. If your sales volume is small, FBM may be a more cost-effective option.
• The type of product. Depending on what you are selling, choose the service accordingly. For example, fast-moving goods are more profitable to sell through FBA.
• Your budget. FBA, unlike FBM, is a more expensive option that is not affordable for everyone.
• Your goals. If you want to automate the sales process as much as possible, FBA will be the best choice.

How to Choose Between FBA and FBM

Analyze your situation based on the arguments provided above and make a choice. Do you want to delegate all the current tasks related to selling your products and are you ready to pay for it? Choose FBA. However, if you are just starting to work with Amazon and your budget does not allow you to bear the additional financial burden, but you still want to sell there, FBM will be the optimal choice.

How to Deliver Profitably to Amazon FBA

If you have decided to use the FBA service, it is important to prepare the goods for shipment in full compliance with the platform's requirements. Freight delivery from Ukraine to the USA is possible with the logistics company DiFFreight. We will take care of everything so you can spend more time focusing on your business. Contact us in any convenient way, and we guarantee productive cooperation.