Amazon FBM vs. FBA: Which Fulfillment Method Is Best for Your Business?

Written by Shahid R. Khan
Reviewed by Andrew L. Adler & Jonathan M. Adler

Aldridge Traders

Amazon FBM vs. FBA: Which Fulfillment Method Is Best for Your Business?

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Are you deciding between Amazon FBM (Fulfilled by Merchant) and FBA (Fulfilled by Amazon)?

Choosing the right fulfillment method is essential for your e-commerce success. This guide explains the differences, pros, and cons to help you make an informed decision.

What Is Amazon FBM (Fulfilled by Merchant)?

Amazon FBM means sellers handle all order fulfillment, including storage, packaging, shipping, and customer service. This model gives sellers complete control while still leveraging Amazon’s massive marketplace.

How Does Amazon FBM Work?

You list products on Amazon’s marketplace.
When an order is placed, Amazon notifies you.
You package and ship the item directly to the customer.
You handle all customer service inquiries and returns.

Who Should Use Amazon FBM?

FBM is best for:

Small businesses with limited inventory.
Sellers with slow-moving products that would incur high Amazon storage fees.
Brands wanting full control over packaging and customer experience.
Businesses with existing warehouse and shipping infrastructure.

What Is Amazon FBA (Fulfilled by Amazon)?

Amazon FBA is a fulfillment service where Amazon handles storage, packaging, shipping, and customer service on behalf of sellers.

How Does Amazon FBA Work?

You send inventory to Amazon fulfillment centers.
Amazon stores your products in its warehouses.
When an order is placed, Amazon picks, packs, and ships the item.
Amazon manages customer service and returns.

Who Should Use Amazon FBA?

FBA is best for:

Sellers wanting Prime eligibility for higher sales potential.
Businesses with fast-moving inventory requiring quick fulfillment.
Those who prefer a hands-off fulfillment approach.
Companies focusing on scalability and growth rather than logistics.

Amazon FBM vs. FBA: Key Differences

Feature	Amazon FBM (Fulfilled by Merchant)	Amazon FBA (Fulfilled by Amazon)
Storage	Seller’s warehouse or home	Amazon fulfillment centers
Shipping	Seller handles it	Amazon handles it
Customer Service	Seller manages all support	Amazon handles it
Prime Eligibility	❌ No (unless using Seller-Fulfilled Prime)	✅ Yes, includes Prime badge
Fees	No FBA fees, only referral & shipping costs	FBA, storage & referral fees
Returns	Seller processes returns	Amazon handles returns
Control	Full control over fulfillment	Less control, Amazon standardizes
Scalability	Limited by seller’s operations	Easily scalable

What Are the Pros and Cons of Amazon FBM?

Pros of FBM

✅ Lower Fees – No FBA or long-term storage fees. ✅ Greater Control – Customize packaging and branding. ✅ Better for High-Value, Low-Volume Items – Avoid excessive Amazon fees. ✅ No Commingling Inventory – Your stock won’t mix with others’.

Cons of FBM

❌ No Prime Badge – Fewer conversions compared to FBA listings. ❌ Time-Consuming – You handle all shipping and customer service. ❌ Scaling Challenges – More orders mean more fulfillment work. ❌ Higher Shipping Costs – You don’t benefit from Amazon’s discounted rates.

What Are the Pros and Cons of Amazon FBA?

Pros of FBA

✅ Prime Eligibility – Increases visibility and sales. ✅ Hands-Free Fulfillment – Amazon handles logistics. ✅ Higher Buy Box Chances – FBA sellers often win the Buy Box. ✅ Multi-Channel Fulfillment – Use Amazon’s services for other platforms. ✅ Scalable Growth – Expand your business without worrying about fulfillment.

Cons of FBA

❌ Higher Fees – FBA storage, fulfillment, and removal fees. ❌ Less Control – Amazon standardizes packaging and customer experience. ❌ Long-Term Storage Fees – Unsold inventory incurs extra costs. ❌ Return Process Complexity – Returns go through Amazon, not directly to you.

How Does Amazon FBM Affect Your Buy Box Eligibility?

Winning the Buy Box (the “Add to Cart” button) is crucial for maximizing sales. FBA sellers have an edge since Amazon trusts its fulfillment system, but FBM sellers can still compete by:

Maintaining excellent seller metrics (defect rate under 1%).
Offering competitive pricing (without necessarily being the cheapest).
Providing fast, reliable shipping options.
Keeping accurate stock levels to avoid cancellations.
Responding quickly to customer inquiries.

To improve Buy Box chances as an FBM seller, ensure you provide service that matches Amazon’s FBA standards.

What Is Seller-Fulfilled Prime (SFP) and How Does It Work?

Seller-Fulfilled Prime (SFP) allows FBM sellers to display the Prime badge while fulfilling orders themselves.

How to Qualify for SFP

To join SFP, sellers must:

Deliver orders within two business days consistently.
Use Amazon-approved shipping carriers.
Maintain a cancellation rate below 0.5%.
Ship orders on weekends and same-day.
Process 99% of orders on time.
Pass Amazon’s trial period.

SFP is ideal for experienced sellers with strong fulfillment capabilities. However, new applicants may face restrictions, so check Amazon’s current availability.

Which Amazon Fulfillment Option Is Best for Your Business?

Choose FBM If:

✔️ You have an existing warehouse & shipping infrastructure. ✔️ Your product margins would suffer from FBA fees. ✔️ You sell large, heavy, or oversized items with high storage costs. ✔️ You want full control over branding and customer experience. ✔️ You have slow-moving or seasonal inventory.

Choose FBA If:

✔️ You want to maximize sales with Prime eligibility. ✔️ You prefer a hands-off fulfillment process. ✔️ Your products are fast-moving with healthy margins. ✔️ You need scalability and automation in fulfillment. ✔️ You sell in competitive categories where Prime matters.

Hybrid Approach: The Best of Both Worlds?

Many sellers combine FBA and FBM to optimize costs and efficiency:

Use FBA for fast-moving, Prime-eligible products.
Use FBM for low-volume, high-margin, or custom-packaged items.

Final Thoughts: Making the Right Choice for Your Amazon Business

Your fulfillment strategy should align with your business model, product margins, and scalability goals. Many sellers start with FBM to test the market and transition some or all products to FBA as they scale.

🔹 Regularly reassess Amazon’s fees and policies to adjust your strategy. 🔹 Experiment with both models to find the right balance for profitability and growth. 🔹 Focus on quality products, competitive pricing, and reliable fulfillment for long-term success.

No matter your choice, the key to winning on Amazon is providing exceptional customer service, fast shipping, and a seamless buying experience.