With Amazon\u2019s ever-expanding global network encompassing over 175 fulfillment centers, the capabilities and advantages of its Fulfilled By Amazon (FBA) platform continue to grow.\n\nThat doesn\u2019t mean Amazon FBA is right for every brand, or in all circumstances. As you expand your eCommerce capabilities, the Amazon FBA vs. FBM debate can become difficult to resolve.<\/p>\n
This post will help by walking you through the details of both options, along with some tips on inventory management and additional automation opportunities you should consider.<\/p>\n
Amazon FBA (Fulfillment by Amazon) Inventory Management is a system that allows your business to\u00a0organize, track, and optimize your store product inventory<\/b>\u00a0in their fulfillment centers. When a customer places an order, Amazon handles the picking, packing, shipping, and customer service, providing sellers with a streamlined and efficient way to fulfill orders and reach a broader customer base.<\/p>\n Setting up an Amazon FBA account is the first step to leveraging the platform\u2019s fulfillment capabilities. Follow these simple steps and benefit from streamlined order fulfillment, access to Prime customers, and the means for providing excellent customer service.<\/p>\n Create your Amazon selling account and log in to Seller Central to set up FBA.<\/p>\n Add your products to the Amazon catalog and indicate them as FBA inventory.<\/p>\n Follow Amazon\u2019s packing guidelines and shipping requirements to ensure your products are prepared safely and securely for transportation to a fulfillment center.<\/p>\n Create a shipping plan, print Amazon shipment ID labels, and send your shipments to designated Amazon fulfillment centers.<\/p>\n Amazon FBA isn\u2019t the only way to manage the process of getting online orders shipped to consumers. The company also offers Amazon Fulfillment by Merchant (FBM), where sellers either manages or works with a third party to handle areas such as inventory placement, storage, shipping, processing returns and customer service issues.<\/p>\n Evaluating Amazon FBA vs. FBM requires thinking across a range of business factors, some of which will be more important than others depending on the size of your company, typical order volumes and your strategic goals.<\/p>\n Be prepared for a wide range of fees when you get started with Amazon FBA. These not only include per-unit fees but monthly charges for storing inventory, return fees for some product categories, package prep fees and more. In contrast, Amazon FBM only involves paying an annual subscription fee.<\/p>\n On the flip side, fulfilling your own orders means you\u2019ll have to have your own warehouse (or work with a partner with more cost-effective services than Amazon\u2019s) and other in-house resources for picking, packing and shipping your products.<\/p>\n Amazon FBA is akin to many traditional outsourcing services, which free up the companies that use them to concentrate on areas like developing better products, marketing and nurturing customer relationships.<\/p>\n In some cases, though, staying close to customer needs and expectations can become harder when you fulfill orders through intermediaries, which is where Amazon FBM might be the better approach. Amazon FBM also means you\u2019re not affected by sudden changes in fulfillment policies and support options that Amazon makes occasionally.<\/p>\n Unless you already have a background or experience in order fulfillment, option for Amazon FBM will require extensive learning and development across your company. This isn\u2019t as big of an issue for companies when they first launch, but the complexity can increase as your volume of orders goes up. Of course, handing off everything through Amazon FBA means you\u2019ll never master these areas, either.<\/p>\n Most brands want to continually add more customers, increase revenue and expand into international markets. Taking the Amazon FBA approach allows you to scale and grow without worrying about the impact on order fulfillment. If you decide to go the Amazon FBM route instead, you\u2019ll just have to develop a business plan that takes into account the potential need for more warehouses, staff and other resources.<\/p>\n There\u2019s a lot to be said for using Amazon FBA, but also a few tradeoffs:<\/p>\n The process of picking, packing and transporting products from a warehouse to a customer\u2019s doorstep can be highly complex, time-consuming and expense. Amazon FBA provides an option to completely outsource this area so brands can focus their attention entirely on marketing, selling and developing their products.<\/p>\n Selling your own products can require significant capital expense. Using Amazon FBA means you\u2019ll be responsible for a range of storage and fulfillment fees, as well as the costs of sitting on inventory if sales don\u2019t reach expected levels.<\/p>\n There\u2019s a reason Amazon has managed to develop one of the most popular loyalty programs of all time. Free shipping for Prime members can make all the difference with customers who aren\u2019t sure whether to go through with a purchase. Using Amazon FBA means your products can offer Prime shipping too, offering an immediate competitive advantage over brands that aren\u2019t.<\/p>\n Selling with Amazon FBA means agreeing you\u2019ll adhere to all its guidelines. These include the way products are added to its database, packaging and other specifications. It can take time to learn Amazon FBA policies and ensure you\u2019re maintaining compliance on an ongoing basis.<\/p>\n Customers will remember (and reward) brands that help them with customer service issues and process returns without a hassle. Brands that use Amazon FBA effectively outsource their customer service operation, and the company has a proven track record in bringing efficiency to product returns.<\/p>\n The flip side of Amazon\u2019s best-in-class returns process is that customers may send more of your products back than expected, in some cases buying multiple versions or styles to try them first. Having Amazon serve as a fulfillment partner can also make it difficult to maintain full visibility into what you have in stock.<\/p>\n Similarly, companies thinking about Amazon FBM should weigh the following risks and rewards:<\/p>\n If you\u2019re a brand selling high-value products (like luxury fashion and accessories) with relatively low order volumes, using Amazon FBM could potentially mean a wider profit margin than outsourcing your fulfillment processes.<\/p>\n Even a profitable company will have to ensure they offset the absence of Amazon resources to help manage order fulfillment, returns and related tasks. The amount of warehouse space you\u2019ll need to store products can also vary widely during periods like the holiday season, which makes planning how much time, effort and equipment you\u2019ll be investing in these areas even more difficult.<\/p>\n When you choose Amazon FBM you retain full control over how your products are packaged, which could allow you to personalize orders for your most valuable customers. You\u2019ll also be able to make judgment calls on whether to waive fees or other policies when a loyal customer needs to process a return.<\/p>\n In most cases products fulfilled via Amazon FBM are not eligible for Prime. This cuts your brand out from a large number of established Amazon customers who regularly make purchases in order to justify their monthly membership fees.<\/p>\n Managing fulfillment on your own could help deepen insights in customer shopping patterns, distribution channel preferences and more. This opens the door to creating customer segments and a more tailored approach to marketing and selling your products.<\/p>\n If orders arrive slowly, late or the wrong product is delivered, you\u2019ll only have your own fulfillment operation to blame. However those mistakes can add up, having an adverse affect on areas such as customer retention and customer lifetime value.<\/p>\n Many brands are not only selling their products on their own websites and online marketplaces like Amazon but via additional eCommerce channels. These channels can be highly proprietary and a lack of integration can cause problems in taking and fulfilling orders. If your company has reached this level of complexity, Amazon FBA might be the desired option due to factors such as:<\/p>\n Amazon FBA includes Multi Channel Fulfillment (MCF) services, whereby sellers can use API plug-ins to connect popular eCommerce channels such as WooCommerce and Magento. Amazon also offers multi-channel listing software so you can making listings from a single location.<\/p>\n If you go with Amazon FBM, you\u2019ll have to address this on your own or with a trusted third party with experience in multichannel eCommerce integration and product listing.<\/p>\n Regardless of the Amazon FBA vs. FBM question, all customers will want the same thing: to have the right product arrive in a timely manner without any damage or other quality control issues.<\/p>\n Beyond speed of order fulfillment, some of the most common quality control problems stem from a lack of poor inventory management. Here\u2019s how to address them:<\/p>\n > La\u00a0Amazon\u2019s re-stock guide<\/a>\u00a0helps to keep your stock up-to-date.<\/p>\n The\u00a0Manage Excess Inventory page\u00a0<\/a>in your Seller Central FBA account helps you maintain the right inventory levels.<\/p>\n Amazon's\u00a0Inventory Management Dashboard<\/a>\u00a0is an excellent way to track your orders and inventory.<\/b><\/p>\n Use a tool like\u00a0Amazon\u2019s re-stock<\/a>\u00a0guide to avoid these holdups.<\/p>\n The good news is that the right technology solutions can streamline and automate many core eCommerce processes, no matter how your Amazon FBA vs. Amazon FBM comparison turns out. When brands work with Highstreet.io, for instance, they gain access to capabilities such as:<\/p>\n Highstreet.io turns product data optimization and product feed development into a managed service. This means you can connect with popular eCommerce channels with ease and have full confidence in how orders are collected and processed for fulfillment.<\/p>\n The most successful eCommerce companies have a clear line of sight into what\u2019s in stock and what\u2019s not. Highstreet.io\u2019s platform acts like a hub between your products and key selling channels, allowing you to synchronize data between your product catalog and Amazon\u2019s warehouses.<\/p>\n Getting set up to sell on Amazon can take a lot of manual work, which increases the risk of errors. Highstreet.io\u2019s\u00a0marketplace integration services<\/a>\u00a0handle everything from product listings to category mappings. In fact, Amazon is just one of more than 50 marketplaces where Highstreet.io can help brands extend their reach.<\/p>\n
\nThe platform handles critical inventory and order management tasks like:<\/p>\n\n
How Amazon FBA Inventory Management Works<\/h2>\n
Amazon FBA Setup Steps:<\/h3>\n
Step 1: FBA Setup<\/h3>\n
Step 2: List Your Products<\/h3>\n
Step 3: Product Preparation<\/h3>\n
Step 4: Send to Amazon<\/h3>\n
What is Amazon FBM?<\/h2>\n
Key Differences Between Amazon FBA and FBM<\/h2>\n
Startup Costs and Fees<\/h3>\n
Control Over Shipping and Customer Interaction<\/h3>\n
Inventory Management and Logistics<\/h3>\n
Scalability and Growth Potential<\/h3>\n
Pros and Cons of Amazon FBA<\/h2>\n
Pro: Stress-free shipping<\/h3>\n
Con: Higher expenses<\/h3>\n
Pro: Prime shipping<\/h3>\n
Con: Policy compliance<\/h3>\n
Pro: Post-purchase journey management<\/h3>\n
Con: Inventory fluctuations<\/h3>\n
Pros and Cons of Amazon FBM<\/h2>\n
Pro: Increased profit<\/h3>\n
Con: Greater resource investment<\/h3>\n
Pro: Flexibility for personalized experiences<\/h3>\n
Con: The lack of Prime status<\/h3>\n
Pro: More opportunities to gather and analyze data<\/h3>\n
Con: Greater risk of negative outcomes<\/h3>\n
How the Amazon FBA vs. FBM Decision Can Affect Your Multichannel eCommerce<\/h3>\n
Managing Inventory Across Multiple Channels<\/h3>\n
Ensuring Fast Shipping and Quality Control<\/h3>\n
\n
\n
\n
\n
How Highstreet.io Can Help You to Simplify Product Inventory Management<\/h2>\n
Multichannel optimization solutions to ensure seamless order fulfillment<\/strong><\/h3>\n
Inventory management solutions for Amazon FBA sellers<\/strong><\/h3>\n
Integration with popular marketplaces like Amazon<\/strong><\/h3>\n