Are you selling through Amazon and curious about the various ways to handle your logistics processes? We are here to provide you with the necessary information to assist you in selecting the optimal Amazon fulfilment method for your webshop.
Amazon offers three main types of fulfilment services: Fulfilment by Merchant (FBM), Fulfilment by Amazon (FBA), and Seller Fulfilled Prime (SFP). Each of these fulfilment methods has its own advantages and disadvantages, and choosing the right method can have a significant impact on the success of your webshop and how you handle your logistics processes. In this article, we will discuss the following factors:
The main differences between FBA, SFP and FBM,
The advantages and disadvantages of each fulfilment method.
The considerations you need to make when choosing the right method.
This will help you make the choice that is most suitable for the unique needs of your business.
Monta can handle the logistics for you through SFP, so you don't have to worry about meeting Amazon's strict requirements and can sell on multiple platforms simultaneously.
Fulfilment by Merchant (FBM) is a fulfilment method that allows you to handle online orders yourself without utilising Amazon's fulfilment centres. With FBM, you bear sole responsibility for all aspects of the logistics process. This means you pack and ship the orders yourself and focus on customer service.
Benefits of FBM:
More control: With FBM, you have complete control over the entire fulfilment process, allowing you to customise it to specific needs. Want to include a handwritten note with each order? No problem, you can do that!
Flexibility: With greater control comes increased flexibility in the fulfilment process when you choose FBM. You can make changes to the fulfilment process as needed without being bound by Amazon's fulfilment requirements. Additionally, you are not obligated to meet the strict delivery timelines of FBA or SFP.
Cost savings: FBM can be a cost-effective option for webshops with low order volumes or those with their own warehouses. If you have your own warehouse, you can save on storage fees. Take a look at this resource if you're looking to optimise your warehouse processes!
No storage fees: With FBM, you don't have to pay storage fees as you are responsible for storing and shipping your own products.
Disadvantages of FBM:
Limited exposure: FBM products are not eligible for Amazon Prime* or the Buy Box**, which can significantly limit the exposure and sales potential of your product.
Amazon Prime*: Being an Amazon Prime seller means that your items are guaranteed to be delivered to Prime customers within 2 days. This can significantly increase the visibility and sales of your products. The Prime customer base provides access to over 100 million customers worldwide.
Buy Box**: By being eligible for the Buy Box, customers are more likely to choose to buy from you rather than a competitor. This can be due to factors such as later cut-off times, the best reviews for a product or having the best price-to-quality ratio. Being in the Buy Box means your products appear at the top of the product listing page, giving your visibility and sales a boost.
More work: FBM requires you to handle all aspects of the fulfilment process, which can be quite time-consuming. Compared to the other methods, FBM requires the most hands-on effort.
Longer delivery times: With a high volume of orders, it can be challenging to process and ship packages quickly, resulting in longer wait times for your customers. This can lead to customer dissatisfaction.
Self-managed customer service: With FBM, you are responsible for providing customer service, which can be challenging if you lack the resources or expertise to handle customer inquiries or complaints effectively.
Great! Let's move on to the next one: FBA (Fulfilment by Amazon).
Fulfilment by Amazon (FBA)
Fulfilment by Amazon (FBA) is a service offered by Amazon that allows you to store your products in Amazon's fulfilment centres. With FBA, Amazon takes care of order processing and customer service, allowing you to focus on other aspects of your business, such as marketing your webshop.
Benefits of FBA:
Access to Prime customers: As mentioned earlier, this can lead to a significant increase in your sales figures.
Increased exposure: FBA products are also eligible for the Amazon Buy Box, which can further boost your conversion rates.
Hassle-free shipping: With FBA, Amazon handles all order processing and takes care of returns on your behalf. This simplifies the shipping process for you.
Customer service: FBA also provides customer service for online orders, handling customer inquiries or complaints on your behalf. This takes the burden of customer support off your shoulders.
Disadvantages of FBA:
Costs: FBA fees can be higher compared to other fulfilment methods. Amazon charges fees based on factors such as product size, weight and storage. This can be a significant cost for some webshops. You will also incur additional costs for shipping your products to Amazon's fulfilment centres. On the other hand, you do not have to invest in your own warehouse operation.
Less control: With FBA, Amazon handles all aspects of the fulfilment process, including packaging, shipping and returns. This means you have limited control over the logistics process.
Is it becoming clearer now? We hope so! It's time to zoom in on SFP, the last of the three options!
Seller Fulfilled Prime (SFP):
Seller Fulfilled Prime (SFP) is a program that allows you to offer Amazon Prime shipping to your customers (similar to FBA), meaning you can deliver your products to Prime customers within two days. However, unlike FBA, you are not required to use Amazon's fulfilment centres. With SFP, you have the option to take responsibility for order processing, returns and customer service yourself, or you can outsource these tasks to a fulfilment partner like Monta.
Amazon Prime seller badge: By using SFP, you receive an Amazon Prime seller badge with the Amazon Prime logo on your seller profile after a one-month trial period. This badge will attract Amazon Prime customers to make purchases from you.
Increased exposure: SFP products are eligible for the Amazon Buy Box, resulting in increased conversion rates.
More control than FBA: With SFP, you have more control over the fulfilment process as you are responsible for it either yourself or through a fulfilment partner. Services can be tailored to your specific needs, and there will be fewer Amazon logos on your packages compared to FBA.
Benefits of Amazon after-sale customer service: When you choose SFP, both you and your customers have access to Amazon's customer service for any post-order questions or inquiries after delivery. Amazon can assist with order tracking, returns and refund requests.
Cost-effective compared to FBA: Focusing on Amazon SFP is likely to be more cost-effective than using FBA. FBA entails high costs for storage, processing, packaging and delivery of your orders. By handling fulfilment yourself or through a different fulfilment partner, the costs are typically lower. Previously, the only way to achieve Prime status was through FBA, but now it can be obtained through SFP. This has led to a significant shift of sellers from FBA to SFP.
Simplified selling across multiple platforms: If you sell on other marketplaces or your own webshop in addition to Amazon, managing logistics through multiple providers can be challenging. FBA would require separate arrangements for each platform. However, by choosing one fulfilment partner, such as Monta, you can streamline your logistics for multiple sales channels. This eliminates the need for duplicate inventory and allows for better inventory management across different channels.
Disadvantages of SFP:
Stringent requirements: To qualify for SFP, you must meet stringent performance criteria, including high fulfilment rates and on-time delivery rates. Additionally, your warehouse must meet FBA service levels to be eligible, and you must be able to ship through Amazon's preferred carriers. Failure to meet these requirements can result in the loss of your SFP privileges. However, a fulfilment partner like Monta can handle these requirements on your behalf, relieving you of the responsibility.
No Amazon return processing: When using SFP, Amazon does not handle returns for you. However, another fulfilment partner can take care of return processing for you. (Hint, hint)
Choosing the best Amazon fulfilment method for your webshop:
When choosing the best Amazon fulfilment method for your webshop, it's important to consider the unique needs and goals of your business. Here are some factors to consider when deciding which fulfilment method is the best fit for your company:
Order volume: If you have a high order volume, FBA can be a good option as it can handle large volumes of orders and provide seamless shipping. Alternatively, you can choose SFP and outsource your fulfilment to a third party like Monta.
Costs: If you receive a relatively low number of online orders (e.g., less than 10 orders per day) and cost is a significant factor for you, FBM may be the best option. It allows you to process orders yourself without incurring additional costs.
Control: If your priority is to have more control over the fulfilment process, SFP or FBM would be the best options as they provide more flexibility and adaptability.
Amazon Prime: If you want your products to be eligible for Amazon Prime, then FBA or SFP are the best choices, as only these two fulfilment methods qualify for Prime.
Selling on multiple channels: If you plan to sell on channels other than Amazon, choosing SFP and managing your own order processing or outsourcing it to Monta would allow you to streamline your operations across multiple sales channels.
Conclusion:
Choosing the right Amazon fulfilment method for your webshop is a decision that can significantly impact your online success. By understanding the advantages and disadvantages of each fulfilment method and considering the unique needs and goals of your webshop, you can make an informed decision that will help your business grow.
If you have any further questions or would like to learn more about what we can offer in terms of fulfilment, including SFP through Monta in Germany, please feel free to contact us. We're here to assist you!
Martien Verhaar
I keep a keen eye on the ever-changing world of fulfilment solutions, integrations and analysis. I am passionate about sharing tips and insights that can help you streamline your e-commerce operations and boost your growth. Let's navigate the complexities of online retail together and turn them into opportunities for your business success
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