FBM vs FBA: Which Is Best for New Sellers?

Overview

New sellers often face a pivotal decision: manage orders themselves using FBM (Fulfillment by Merchant) or hand off fulfillment to a marketplace program such as FBA (Fulfillment by Amazon). Both models have trade-offs involving cost, control, speed, and complexity. This article compares FBM and FBA in plain terms and gives practical guidance to help beginners decide.

Core differences at a glance

• FBM (Fulfillment by Merchant): Sellers store, pack, ship, and handle returns themselves or via a chosen third party. Ideal for control, customization, or restricted items.
• FBA (Fulfillment by Amazon): Sellers send inventory to Amazon fulfillment centers; Amazon handles storage, picking, packing, shipping, returns, and customer service for eligible orders.

Key factors to compare

Deciding between FBM and FBA means weighing these practical elements:

1. Cost structure:
2. FBM typically has lower platform fees but higher per-shipment variable costs if you pay retail carrier rates. FBA charges storage fees, fulfillment fees per unit, and long-term storage penalties; however, FBA can offer lower marginal shipping costs and free two-day delivery that increases conversions.
3. Control and branding:
4. FBM gives full control over packaging, inserts, and the unboxing experience. FBA standardizes packaging and often restricts custom inserts, which can dilute brand presence.
5. Speed and customer expectations:
6. FBA listings usually qualify for fast shipping (Prime) which buyers expect. FBM can match speed only if the seller uses fast carriers and reliable processes—the buyer experience can vary more widely.
7. Scalability:
8. FBA is highly scalable for high-volume SKUs—Amazon handles spikes in demand. FBM requires investment in space, people, or a 3PL when scaling.
9. Product suitability:
10. Large, heavy, hazardous, or highly customized items may be better suited to FBM. FBA has size and restriction rules and additional fees for heavy items.
11. Returns and customer service:
12. FBA handles customer service and returns on the seller’s behalf for many marketplaces. FBM sellers must manage these tasks themselves, which can be time-consuming but allows for bespoke service.

Typical scenarios and recommendations

Here are straightforward scenarios to guide beginners:

• When to prefer FBM: You sell fragile, customized, or regulated products; you value branded unboxing; you have low to moderate order volume that you can handle; you want to conserve cash and avoid FBA storage fees.
• When to prefer FBA: You sell lightweight, fast-moving items where Prime eligibility will boost conversion; you want to offload logistics and customer service; you plan rapid scaling and want to leverage Amazon’s distribution network.
• Hybrid approach: Many sellers use a hybrid model—FBM for slow-moving, fragile, or high-margin items and FBA for best-sellers. This balances control and scale while optimizing costs.

Example comparison

Consider two sellers: a handmade jewelry maker and a consumer electronics seller. The jewelry maker prefers FBM because each order includes personalized notes and delicate wrapping. The electronics seller chooses FBA to take advantage of Prime shipping and predictable delivery for high-volume, standard-sized items.

Practical steps to choose

Follow this simple decision checklist:

1. Estimate monthly sales volume and order growth for 6–12 months.
2. Calculate per-unit costs for FBM (packaging, labor, shipping) and FBA (storage + fulfillment fees + returns handling).
3. Assess the importance of branded packaging, personalization, or special handling.
4. Consider buyer expectations for shipping speed and whether Prime is necessary in your category.
5. Test with a few SKUs: try FBM for some items and FBA for others, then compare performance and margins.

Common beginner mistakes

Don’t assume one model fits all products. Avoid these pitfalls:

• Underestimating FBA storage fees for slow sellers—long-term storage can erode margins.
• Ignoring packing quality with FBM—poor packaging increases damage and returns.
• Failing to track total landed cost per unit when comparing options—include fees, labor, and time.

Conclusion



FBM and FBA both work—they’re tools to reach customers. For beginners, FBM is a great low-cost, low-risk way to start, especially if you need control over product presentation or sell unique items. FBA becomes attractive as volume grows and you want predictable logistics and the Prime advantage. Start with clear cost comparisons and small experiments; many successful sellers settle on a hybrid approach that uses the strengths of both models.