In “The Time to Switch From FBA to FBM with Flowspace is Now: Part I”, we discussed Amazon’s recent decision to suspend all shipments of “nonessential” products to its warehouses. We also recognized the desperate situation FBA sellers may face in the coming months if the situation doesn’t change. In this article, we’ll show you the steps you can take to insulate your e-commerce business from the COVID-19 outbreak by switching from Fulfillment By Amazon to Fulfillment By Merchant.
What is FBM (Fulfillment By Merchant)?
Fulfillment By Merchant, better known as FBM, is a fulfillment and distribution method available to Amazon sellers wherein the seller maintains full control over the purchasing, storage, fulfillment, and shipping process for the items they sell on the Amazon platform.
FBM differs from FBA (Fulfillment By Amazon) and SFP (Seller Fulfilled Prime), where sellers pay a number of fees to sell on the Amazon platform and access the retail-giant’s fulfillment and distribution network.
FBA vs. FBM
On the surface, the FBA and FBM methods are easy to understand – Amazon sellers either pay to access all of the resources and benefits associated with Amazon (FBA) or they choose to handle the purchasing, storage, fulfillment, and shipping process themselves (FBM).
The complications don’t truly arise until you delve into the fees charged to FBA and SFP Amazon sellers:
- Standard Seller Fees – Standard fees account for 15-18% of the seller’s fee when an item is sold on the Amazon platform. Standard seller fees also vary depending on the product and may also include hidden costs which can increase the overall charge to the seller.
- Fulfillment Fees – Fulfillment fees are charged per unit; vary depending on the size of the product and include pick/pack, shipping, handling, customer service, and product returns.
- Inventory Storage Fees – Entirely separate from FBA fulfillment fees, sellers accrue monthly inventory storage fees charged per cubic foot of inventory. Inventory storage fees vary based on size and also include additional long-term storage fees applied to units held at an Amazon fulfillment center for longer than 365 days.
Fulfillment By Merchant Sellers, on the other hand, maintain control over every aspect of their business; are not subject to fulfillment fees, inventory storage fees, or the unexpected losses and costs commonly associated with the frequent Fulfillment By Amazon policy changes.
When to Choose Fulfillment By Merchant
Several months ago, we may have recommended FBA to merchants looking to increase their exposure or rapidly grow a scaling Amazon startup and reach more customers. Now, however, in the midst of the COVID-19 outbreak, FBM is one of the few viable options left to sellers deemed “nonessential” by Amazon’s recent announcement.
The fact of the matter is, until April 5 – when Amazon has stated it will lift the prohibition on non-essential products – nearly 60% of Amazon sellers will be forced to manage all of their own storage, fulfillment, and shipping if they want to continue to sell and deliver merchandise over the coming months.
FBM: Stability During Disruption
Those who’ve read our article on How The Coronavirus Is Disrupting The Supply Chain Industry know that we will be dealing with the epidemic until Q3 and Q4, at least.
Sellers must also consider the future cost of Fulfillment By Amazon. The retail-giant is known to drop policy changes on its seller community with little notice, as it did with its COVID-19 policy announcement.
As Coronavirus spreads and quarantined consumers are forced to migrate their shopping to online channels, Amazon sellers should not underestimate the sustainability of FBM during times of crisis.
Fortunately, for those sellers deemed “nonessential”, it’s possible to register for FBA and FBM simultaneously, which will double your exposure and insulate your Amazon business from future epidemics.
Flowspace: The Alternative to Fulfillment By Amazon
As soon as you change your Amazon listing to FBM, it’s time to get your Amazon business back up and running.
As the premium On-Demand Warehousing and Fulfillment option in the United States, Flowspace is uniquely situated to help Amazon sellers on their feet during the Coronavirus epidemic.
With more than 1000+ warehouses and fulfillment centers and no COVID-19 product restrictions, Amazon sellers deemed “nonessential” can still sell their items on the Amazon platform and continue to deliver outstanding service to your customers when they need it most.
Contact Flowspace Today
The Coronavirus epidemic has left those of us in the e-commerce and supply chain industries with many questions but, as the virus spreads and our livelihoods become less certain, one fact remains true – we need to look after one another in this time of crisis.
If you’re one of the thousands of Amazon merchants affected by the Coronavirus and Amazon’s response to the epidemic, then, please, contact us today for more information. We’ll walk you through the FBA to FBM process and get your business back on its feet in no time.