What are the differences between the different Amazon fulfilment methods?

1. Amazon Fulfilment by Merchant (FBM)

First up is the Fulfilment by Merchant (FBM) option – here, the brand is completely responsible for storing products in its own warehouse or with a 3rd party fulfilment provider (3PL).

This includes storage, picking, packing and labelling, which can be taken care of in-house or with the assistance of a third-party logistics partner. You will record your products on Amazon, where buyers can purchase, but that’s the end of Amazon’s involvement.

Sellers that use this method without having prime eligibility, won’t show the Prime badge on product pages. If you want Prime Access, you can choose the Seller Fulfilled Prime (SFP) method, which we will talk about in the next section.

What a customer sees on Amazon:

Screenshot of what customer sees on Amazon

As the seller, you need to carry out the vast majority of the process, which includes fees you’ll need to pay when deciding on the price for a product. Sellers on the professional selling plan who choose FBM can set their own shipping rates through a customised shipping template.
Pro tip: ensure you stay within reach of Amazon’s standard shipping fees so you don’t turn off customers from purchasing!

Great for:

• Customizable products as they cannot be sold through FBA
• Low sales volume as FBM can be a cost-effective option
• Large or Bulky Items: as they may incur higher storage fees in FBA
• Brands that want to provide a personalised customer experience as this option allows brands to send personalised packaging, branded cards and a more tailored experience.

Benefits of Amazon Fulfilment by Merchant:

• Sellers have complete control over inventory storage and fulfilment process, which could potentially result in lower costs.
• Brands also control the complete delivery experience for Amazon customers so you can include branded packaging instead of Amazon’s own packaging.
• By using this method sellers are not affected by changes in Amazon policies, they are usually not punished as strictly as FBA sellers for failing to comply with the rules.

The downside of Amazon Fulfilment by Merchant

• Sellers using FBM do not have access to Prime shipping options unless they meet the eligibility criteria.
• FBM offers, and especially those with shipping fees, are deprioritised for the Buy Box.
• Sellers need to take care of all the returns and handle customer service which can be time consuming.
• Customers are less likely to purchase FBM offers, due to slower shipping speeds and delivery fees.
  In general, sellers will have to invest more time ensuring the whole process is carried out correctly, increasing the time spent on fulfilling orders and handling returns.

2. Amazon Seller Fulfilled Prime (SFP)

As we mentioned above, Seller Fulfilled Prime (SFP) takes FBM one step further and allows sellers to take care of all fulfilment and shipping processes as well as 24/7 customer service and maintain Prime status too. The only catch is that you need to use Amazon’s preferred carrier.

To be eligible for this option you must be able to fulfil the order quickly – same-day shipping with a 2-day delivery guarantee – and meet the high seller standards of Amazon. This includes strong performance metrics and having an established seller account.

Great for:

• Brands that require strict control over their inventory and fulfilment process
• Brands offering unique, personalized, or customized products
• Brands capable of providing fast and reliable shipping
• Brands offering seasonal or limited-time products as they can easily control their inventory and fulfilment
• Brands that want to provide a personalised customer experience as this option allows brands to send personalised packaging, branded cards and a more tailored experience.
• Brands with optimized fulfilment operations as they may save on fulfilment fees compared to using Fulfilled by Amazon
• Brands that want to maintain control over the entire fulfilment process

Benefits of Seller Fulfilled Prime:

Products will display the Prime badge without having to use FBA, therefore gaining a lot of visibility on Amazon.

You have more control over your inventory and storage fees as you can control the inventory that is sent.
For any changes needed in packaging, SFP allows you to make these changes quickly and easily as you hold the inventory.

Downside of Seller Fulfilled Prime:

• Not available to all sellers, brands must meet strict eligibility requirements.
  Before being able to use SPF sellers must pass a trial period to prove to Amazon they can maintain their criteria.
• Must maintain shipping consistency which can be difficult when there are market changes.
• While you have some control over exchanges and returns you do need to adhere to Amazon’s returns policies.

3. Fulfilment by Amazon (FBA)

This is the opposite of Fulfilment by Merchant, as with the Fulfilment by Amazon (FBA) option, Amazon manages the complete customer delivery experience.

FBA allows products to be shipped to an Amazon fulfilment centre, where Amazon takes care of the rest – from storage to shipping and delivering to buyers.

Sellers that use this method will show the prime badge on their products.

What a customer sees on Amazon:

Example of Fulfilment by Amazon (FBA)

Great for:

• Brands that have high sales volume as it allows Amazon to streamline the fulfilment process, especially important during peak seasons or busy periods.
• Brands looking to tap into the Prime customer base as FBA products are eligible for Amazon Prime
• Brands looking to expand their reach to international markets, allowing efficient international shipping and handling of orders.
• Brands with limited warehouse space or those seeking to minimize their own fulfilment logistics and expenses.
• Brands fighting for the buy box

Benefits of Fulfilment by Amazon:

• Products automatically join the Prime programme. This means the product listings will show the prime badge which gives huge visibility on Amazon & is one of the first things customers look for. It offers free shipping within two days for subscribers which increases the attractiveness of the product.
• Amazon handles the customer shipping and customer service experience, so you don’t have this stress.
• Customers are far more likely to purchase from a seller with Prime shipping options.
• FBA offers are prioritised for the Buy Box and Amazon always displays FBA products higher in their ranking, therefore overall the sales rank will be better.
• Access to marketing features such as Lighting Deal and Deal of the Day, which helps attract customers!

Downside of Fulfilment by Amazon:

• Sellers need to forecast inventory effectively to ensure stock doesn’t run out, especially at key sales moments during the year.
• FBA fees can be quite expensive since they must cover the cost of storage, packaging, shipping and handling of returns – this can translate into potential negative margins.
• Brands lose control of the process since Amazon takes care of everything, which can lead to refunds made to customers without properly checking if their claim is valid or not.

4. Multi-Channel Fulfilment (MCF)

There is often some confusion around Multi-Channel Fulfilment and Fulfilment by Amazon, but they are two different things. MCF is where Amazon fulfils orders not just for the brands selling on the platform but for any brand selling through different e-commerce channels off-Amazon.

MCF cuts the need to use a third-party logistics (3PL) provider by allowing you to use one service to fulfil orders.

The fulfilment process for the MCF is quite straightforward, here’s how the process works:

1. Brands are responsible for sending merchandise to Amazon for storage.

2. When an MCF order comes in, they are forwarded to the Amazon fulfilment centre

3. Orders are then picked, packed and shipped according to Amazon’s own fulfilment process.

MCF fulfilment process

Great for:

• Brands expanding beyond their original country where they lack a streamlined operational process
• Brands aiming to explore new markets off Amazon without the need for physical operations in those regions.
• Brands starting their business and want to avoid upfront investments in operations like warehouses, delivery and customer service.

Benefits of Multi-channel fulfilment

• You can leverage Amazon’s vast fulfilment network and expertise even off-Amazon, and you can leverage the fast shipping that Amazon set the standard for, ensuring customer trust.
• Integration with other platforms is enabled like with Shopify, BigCommerce and WooCommerce and there is an option for custom-built integrations too.
• Low and predictable pricing structure. Sellers are only required to pay just one fee for fulfilment and shipping, with no sign-up fee required.

Downside of Amazon Multi-Channel Fulfilment:

• It’s only really cost-effective for brands that have a good turnover as the storage fees may be high.
• You don’t have control over where your stock is stored at the fulfilment centres.
• You have to use Amazon-branded packaging and cannot use custom-branded packaging.
• There is a big list of products that cannot be stored within Amazon warehouses like cosmetics, jewelry, subscriptions and food & beverage + more.

Our thoughts

There’s no one-size-fits-all approach to the fulfilment methods so when choosing an Amazon fulfilment method for your brand, the key is to ensure it aligns with your overall Amazon strategy. The right choice for your brand depends on the size of your business, your demand and your sales goals.

For example, if you are a large company seeking to leverage Amazon’s customer base without the need to dedicate operational efforts to fulfil orders from the marketplace, the Fulfilment by Amazon option may be the best fit.

Need our help?

Are you thinking “I’m still unsure what fulfilment method is best for me?” and don’t want to commit to one yet without knowing all there is to know? Then call us or send our experts a message and we will be happy to guide you through this decision – even if it’s advice on changing methods or any other Amazon-related query too!