As a brand already selling or looking to sell on Amazon, you are probably aware that there are different types of fulfilment methods available to you. Many sellers find this confusing and aren’t sure which option aligns with their overall Amazon strategy.
In our previous post, understanding ACOS vs TACOs, we highlighted the importance of breaking down key Amazon jargon for sellers, so, in this guide, we’ll tell you everything you need to know about the difference between FBM, FBA and SFP to ensure your brand’s success on Amazon’s marketplaces.
So, what are the differences between FBM, FBA and SFP?
Amazon FBM (Fulfilled by Merchant)
With the fulfilment by merchant (FBM), the brand is responsible for storing products in their own warehouse or with a 3rd party fulfilment provider (3PL). This process includes storage, picking, packing and labelling, which can be taken care of in-house or with the assistance of a third-party logistics partner. Sellers that use this method won’t show the prime badge on their products.
What a customer sees on Amazon:
- Sellers have complete control over their inventory storage and fulfilment process, which would potentially result in lower costs
- Brands also control the complete delivery experience for their 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
- Sellers using FBM do not have access to Prime shipping options and the prime badge will not be displayed which will reduce the visibility of the products and is likely to result in lower sales as customers want fast shipping options.
- FBM offers, and especially those with shipping fees, are deprioritised for the Buy Box
- 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
Amazon FBA (Fulfilled by Amazon)
With the fulfilment by Amazon (FBA) option, a seller ships their products 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. Amazon manages the complete customer delivery experience.
What a customer sees on 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 thing customers look for. It offers free shipping within two days for subscribers which increases the attractiveness of the product.
- Amazon handles the to-customer shipping & customer service experience, so sellers don’t have to!
- 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
- Sellers need to forecast their inventory effectively to ensure they do not run out of stock, 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
Amazon SFP (Seller Fulfilled Prime)
The final option for Amazon sellers is SFP which essentially means brands have the best of both worlds. This program allows sellers to take care of all fulfilment and shipping processes as well as any interaction with the consumer. The main difference between SFP and FBM is that sellers enrolled in SFP have Prime status.
- In general, the pros for this option are the same as FBM, but the most important pro is that the products will display the Prime badge without having to use FBA, therefore gaining a lot of visibility on Amazon.
- Not available to all sellers, brands must meet 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
Make Amazon work for you, not the other way around
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. If you need some help on this topic, get in touch with us and one of our Amazon experts will help you explore further.