When it comes to selling on Amazon, one of the first big decisions sellers face is choosing
between FBA (Fulfillment by Amazon) and
FBM (Fulfillment by Merchant). While
FBA tends to grab
the spotlight, FBM has been steadily gaining ground as a smart option for sellers who want more
control, flexibility and cost savings.
But if you are new to Amazon selling, you may wonder: how does Amazon FBM work? This guide
breaks down the FBM process step by step, highlights its advantages and challenges and shows you
how to make it work for your business.
Let’s dive in.
Understanding the Basics of Amazon FBM
Amazon FBM, or Fulfillment by Merchant, means that sellers take care of storing, packing and
shipping their products directly to customers. Instead of relying on Amazon’s warehouses and
logistics, you run the show from start to finish.
For many sellers, FBM is appealing because it allows for greater independence. You decide where
to store your inventory, how to ship products and how to handle customer service. In other
words, you have full control over the customer experience.
This model can be especially valuable if your business already has warehousing and shipping
systems in place. Rather than paying Amazon fulfillment fees, you leverage your existing
infrastructure and keep your margins healthier.
Step-by-Step: How Amazon FBM Works
So, what exactly happens when you choose to sell via FBM? Here’s a closer look at the fulfillment process.
1. Customer Places an Order
When a shopper buys your product on Amazon, you will receive an order notification in your Seller Central dashboard. Unlike FBA, where Amazon automatically begins the fulfillment process, FBM requires you to take action right away.
2. You Pick and Pack the Item
Once the order comes in, you locate the product in your inventory. From there, you are responsible for packaging it securely. This step is critical because packaging affects both the delivery experience and customer satisfaction.
3. You Ship the Order
Next, you ship the order using your preferred carrier, such as UPS, FedEx, DHL or local couriers. You will need to enter the tracking information into Seller Central so the customer can track their package.
4. Customer Service and Returns
After shipping, your responsibilities don’t end. With FBM, you handle customer inquiries, returns and any delivery-related issues directly. This means you can offer a more personalized service but must also resolve complaints quickly.
In short, FBM puts the seller at the heart of the fulfillment process, offering both control and accountability.
5. Post-Sale Support
You handle any returns, exchanges or customer service issues directly with your buyers.
Why Sellers Choose Amazon FBM
You might wonder why so many sellers would willingly take on the responsibility of FBM. The truth is, FBM offers benefits that FBA simply can’t match.
Greater Control Over Costs
For many products, especially oversized or low-margin items, FBA fees can eat up profits quickly. With FBM, you are free to negotiate your own shipping rates, often saving money in the long run.
Freedom to Customize Packaging
FBM allows you to create branded packaging and add personal touches like thank-you notes or promotional inserts. This flexibility strengthens your brand identity and builds customer loyalty.
No Storage Restrictions
During busy shopping seasons like Q4, FBA sellers face strict storage limits. FBM sellers, however, aren’t tied to Amazon’s warehouse space. You can stock as much inventory as your own facilities allow.
Direct Customer Relationships
FBM gives you a closer connection to your buyers. Since you handle service and returns, you can respond personally and build trust more effectively.
For many sellers, these benefits make FBM a strategic choice rather than just an alternative.
The Challenges of FBM You Need to Know
Of course, FBM isn’t perfect. With greater freedom comes greater responsibility and that can be overwhelming for some sellers.
Meeting Amazon’s Performance Metrics
Amazon is serious about customer satisfaction. With FBM, you must meet strict performance standards such as:
Failing to meet these benchmarks can result in penalties or even account suspension.
Handling Logistics Alone
Unlike FBA, where Amazon manages warehouses and carriers, FBM sellers must juggle inventory, packing and shipping themselves. Without a reliable system, mistakes can add up quickly.
Missing Out on Prime Eligibility
Prime customers make up a huge percentage of Amazon’s buyers. Unfortunately, standard FBM listings don’t automatically qualify for Prime shipping. That means fewer eyes on your products unless you qualify for Seller Fulfilled Prime (SFP).
Increased Operational Costs
While FBM can cut FBA fees, you will face your own expenses: warehouse space, staff salaries, packing materials and carrier rates. For small sellers, these costs may outweigh the benefits.
Understanding these challenges upfront helps you decide whether FBM is the right fit for your business.
FBM vs. FBA: Which Fulfillment Model Works Best?
Choosing between FBA and FBM often comes down to your business goals, product type and resources.
Some sellers adopt a hybrid approach, using FBA for smaller, fast-moving products and FBM for larger or seasonal items. This balance allows them to maximize profits while minimizing risk.
At the end of the day, neither model is “better” overall; it is about which model best suits your business strategy.
Best Practices for Succeeding with Amazon FBM
If you decide FBM is the right fit, following best practices is essential for long-term success.
Optimize Your Shipping Process
Partner with reliable carriers and offer fast shipping options whenever possible. Always provide tracking details; customers expect it and Amazon requires it.
Stay on Top of Inventory
Use an inventory management system to avoid stockouts. Cancelled orders due to a lack of inventory hurt your seller rating and customer trust.
Provide Excellent Customer Service
Respond quickly to questions and complaints. Offering hassle-free returns and clear communication can turn a frustrated buyer into a repeat customer.
Monitor Key Metrics
Regularly check your account health in Seller Central. Stay proactive about improving your ODR, late shipment rate and customer feedback score.
Leverage Your Branding
Since FBM gives you packaging freedom, use it wisely. Add branded inserts, loyalty discounts, or QR codes leading to your website. These touches turn one-time buyers into long-term fans.
By sticking to these practices, you will build credibility on Amazon while keeping your operations running smoothly.
Seller Fulfilled Prime: The Best of Both Worlds?
One common drawback of FBM is missing out on Prime eligibility. However, Amazon offers a solution: Seller Fulfilled Prime (SFP).
With SFP, FBM sellers can offer Prime shipping while still fulfilling orders themselves. The catch? You must consistently meet Amazon’s strict performance metrics and prove that you can deliver orders at Prime speed.
For sellers who qualify, SFP combines the control of FBM with the visibility of Prime, making it an ideal option for businesses with strong logistics.
Is Amazon FBM Right for You?
The question isn’t whether FBM is better than FBA; it is whether it fits your specific needs.
If you:
then FBM may be your best option.
But if you:
then FBA could be the smarter choice.
For many businesses, the right approach is a combination of both models. That way, you get the convenience of FBA where it makes sense and the control of FBM where it matters most.
Final Thoughts
Amazon FBM is more than just a fulfillment model; it is a strategic opportunity for sellers who want independence, control and flexibility. While it comes with challenges like logistics management and performance requirements, it also allows you to cut costs, build a stronger brand and connect directly with customers.
At FBA Centre, we specialize in helping sellers understand their options and choose the right path for growth. Whether you are considering FBM, FBA or a hybrid model, our team can guide you with proven strategies and expert support.
So if you have been asking yourself, “How does Amazon FBM work?” the answer is clear: it works when you have the right systems, the right mindset and the right partner by your side.