Amazon FBA vs FBM: Which Fulfillment Method is Right for You?

When selling on Amazon, one of your most important decisions is how to fulfill orders: Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). Each has distinct advantages and costs. This guide helps you choose the right approach.

Understanding the Options

Fulfillment by Amazon (FBA)

You send inventory to Amazon's warehouses. When customers order, Amazon handles:

• Storage
• Picking and packing
• Shipping
• Customer service
• Returns

Fulfillment by Merchant (FBM)

You store inventory and fulfill orders yourself (or through a 3PL). You handle:

• Inventory storage
• Order fulfillment
• Shipping
• Customer service
• Returns

Cost Comparison

FBA Fees

FBM Costs

Prime Eligibility

FBA = Automatic Prime

All FBA items are Prime-eligible, giving you:

• Prime badge visibility
• Higher conversion rates
• Buy Box advantage
• Customer trust

FBM Prime (Seller Fulfilled Prime)

Available if you qualify:

• Must meet performance metrics
• Must use approved carriers
• Must ship same-day
• Requires trial period

Most FBM sellers don't have Prime, which can impact sales velocity.

Buy Box Considerations

The Buy Box significantly impacts sales. FBA typically has an advantage:

FBA Buy Box factors:

• Automatic Prime status
• Amazon handles fulfillment metrics
• Generally higher trust score

FBM Buy Box factors:

• Price competitiveness crucial
• Perfect fulfillment metrics needed
• Shipping speed matters

When to Choose FBA

Ideal FBA Products

• Small and lightweight - Lower fulfillment fees
• Fast-selling - Avoid storage fees
• Standard sizes - Oversized fees are high
• Year-round demand - Consistent turnover
• High margins - Can absorb fees

FBA Benefits

Prime access - Huge conversion boost

Hands-off fulfillment - Amazon handles everything

Multi-channel - FBA can fulfill other channels too

Customer trust - Amazon's reputation

Returns handling - Amazon processes returns

FBA Drawbacks

Fees add up - Especially for large/slow items

Less control - Can't customize packaging

Long-term storage - Penalties for slow movers

Commingling risks - Potential counterfeit mixing

Inventory limits - Amazon restricts quantities

When to Choose FBM

Ideal FBM Products

• Large/heavy items - FBA fees would be prohibitive
• Slow-moving - Avoid storage fees
• Custom/fragile - Need special handling
• Low margins - Can't absorb FBA fees
• Exclusive inventory - Don't want commingling

FBM Benefits

Full control - Packaging, inserts, branding

Lower fees - For certain products

No storage limits - Scale freely

Flexibility - Change quickly

Multi-channel - One inventory pool

FBM Drawbacks

No Prime - Unless you qualify for SFP

You handle everything - Fulfillment, service, returns

Metric pressure - Must maintain performance

Infrastructure needed - Space, staff, systems

Hybrid Approach

Many successful sellers use both:

FBA for:

• Best sellers
• Prime-sensitive categories
• Q4 peak season

FBM for:

• Slow movers
• Large items
• New/testing products
• Overstock

Shipping for FBM Sellers

Carrier Selection

Compare rates across carriers for each shipment:

Using AtoShip for FBM

AtoShip helps FBM sellers:

• Rate shopping - Find cheapest option per order
• Bulk labels - Print hundreds of labels quickly
• Amazon integration - Import orders automatically
• Tracking sync - Update Amazon with tracking
• Discounted rates - Up to 89% off retail

Meeting Amazon's Shipping Standards

For FBM success:

• Ship within handling time (same/next day ideal)
• Use valid tracking on all orders
• Maintain on-time delivery rate
• Provide tracking to customers promptly

Financial Analysis Example

Product: $25 retail price

FBA Scenario:

• Amazon referral fee: $3.75 (15%)
• FBA fulfillment: $3.50
• Monthly storage: $0.25
• Product cost: $8.00
• Net profit: $9.50

FBM Scenario:

• Amazon referral fee: $3.75 (15%)
• Shipping cost: $4.50
• Labor/materials: $2.00
• Product cost: $8.00
• Net profit: $6.75

In this example, FBA is more profitable—but Prime badge might justify even higher costs through increased sales.

Making the Decision

Choose FBA if:

• Products are small/light
• High sales velocity
• Prime badge is crucial
• You want hands-off fulfillment
• Margins can absorb fees

Choose FBM if:

• Products are large/heavy
• Slow-moving inventory
• Custom packaging needed
• Tight margins
• You have fulfillment infrastructure

Consider Hybrid if:

• Diverse product catalog
• Variable sales velocity
• Want to optimize per-product

Transitioning Between Models

FBA to FBM

Create FBM listing for same ASIN

Build FBM infrastructure

Gradually shift inventory

Monitor performance closely

FBM to FBA

Prep inventory to FBA standards

Create shipment plan

Send to Amazon

Monitor inventory health

Conclusion

There's no universally correct answer—the best fulfillment method depends on your products, margins, and business goals. Many sellers find success with a hybrid approach, using FBA for Prime benefits on key products while maintaining FBM for items where it makes more financial sense.

For FBM sellers, efficient shipping is crucial for maintaining margins and meeting Amazon's delivery standards. AtoShip helps by comparing carrier rates instantly, ensuring you always get the best price on every FBM shipment.