Choosing Between Amazon Marketplace FBA or FBM

When Amazon opened up Amazon Marketplace it allowed third party sellers to use its powerful B2B platform to facilitate global trade. Whilst Amazon carries its Amazon brands and products, Amazon Marketplace allows for products of different brands and companies to be sold with ease. In the last two decades since its inception Amazon Marketplace has grown to US$295 billion sales as of 2020, whereas Amazon sales stood at US$180 billion. One of the many reasons why Amazon Marketplace is winning is due to the various offerings on the multifaceted B2B platform which promotes a multitude of supply chain options to choose from.

Irrespective of the seller  variety, from 3P to 1P, to Private Label, Brands, On sellers, and Retailers, the logistics portion of the supply chain is extremely important which brings into question of choosing between Amazon marketplace FBA or FBM?

Fulfilment by Amazon

FBA or Fulfilment by Amazon, involves the process of a seller utilizing the Seller platform for sale of their products along with the use of Amazon warehousing services to hold the stocks. The warehouses are often termed as Fulfilment Centres, which are being held until the point of sale. Upon a sale, Amazon will not only select the correct product to be shipped, pack it appropriately and then ships those to your customers as part of the process which incurs an additional charge. In this scenario, Amazon will also act as the seller’s logistics provider and last-mile delivery partner. This is an ideal situation for Sellers who do not have their own infrastructure or their own logistics partner whereby it can utilize Amazon’s existing supply chain network.

Fulfilment by Merchant

Whereas FBA utilized Amazon’s supply chain infrastructure and logistics operations, Fulfilment by Merchant (FBM) allows the sellers to utilize their own logistical infrastructure when a sale is made. The Amazon Marketplace platform will inform the seller of the sale at which point, the seller can arrange for the final delivery to the customer through their own logistical infrastructure. Often this is cheaper than paying for the additional Amazon FBA charges. You can also partner up with a third-party logistics provider to undertake your FBM operations which can often be cheaper than opting for FBA. Partner with Transco Cargo for your Amazon Marketplace fulfilment operations.