Many new sellers in the Amazon Launchpad Discord get confused by all the acronyms, especially FBA and FBM. Here I go, explaining the difference between the two.
FBA: Fulfillment by Amazon
Just as the heading says, FBA stands for Fulfillment by Amazon. It basically means sellers ship their inventory to an Amazon fulfillment center (warehouse). Amazon stores the inventory until it sells. When it sells, Amazon ships the product to the customer. They also handle customer support such as returns and exchanges on behalf of the seller. Amazon charges an extra fee for shipping and customer service
FBM: Fulfillment by Merchant
FBM has some major differences from FBA. sellers ship the product directly to the customer. Customers also send returns directly to the seller instead of Amazon, and the sellers handles exchanges. Since sellers do this, Amazon charges less fees for FBM. Like FBA, however, customers initiate returns through their customer account, though they do have the option to contact the seller directly. FBM sellers can also purchase heavily discounted shipping from Amazon most of the time, which helps with any claims in the event the customer says they didn’t receive the shipment or the shipment was damaged.
FBA vs. FBM
Personally, I prefer FBA. In addition to Amazon handling customer service for me, I am much more likely to be the Featured Offer (Buy Box) over FBM sellers. This means my stuff sells faster. Many times, the extra FBA fees for shipping and customer service are actually less than the shipping costs for FBM sellers to send their product to the customer.
The downside to FBA is Amazon makes mistakes. They break or lose inventory, and send wrong things to customers. I look at my inventory daily to make sure it matches with what my records show I sent. At high enough sales volume even 1% error rate on Amazon’s part can add up. I am surprised at how often they get it right, though.
It also takes a little longer to sell things at the outset with FBA. I have to wait for my inventory to arrive at the FC and get checked in, whereas with FBM I can sell products I have in hand right away.
Overall, I still prefer FBA because I like Amazon handling customer service, I get the Buy Box, I don’t have to store inventory, and I make more money in the long run.