Comparing order fulfillment options: Amazon FBA vs. Seller Fulfilled Prime vs. Fulfillment by Merchant

If you’re planning to sell products on Amazon, there are a few options available to you in terms of shipping and order fulfillment – but which one is right for your business? We’ve created this comparison guide to help you decide.

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Amazon FBA (Fulfillment by Amazon)

In a nutshell, Amazon FBA handles all things picking, packing, and shipping for you – as well as customer service, order updates, and returns. If you don’t have the resources to handle increased customer demand or just don’t want the added responsibility, the FBA fulfillment option is probably the right choice for you. Likewise, if you’re running a small business and don’t have the warehouse space to hold stock, FBA is a no-brainer. However, unless you’re selling products with a high profit margin (which can be tricky to do given Amazon’s fiercely competitive marketplace), FBA can be pricey as you end up paying for order handling, picking and packing, weight handling, and inventory management.

Pros of Amazon FBA

  • Everything is handled for you, including picking and packing, shipping and handling, and customer service
  • Your products are eligible for Amazon Prime
  • You can use FBA with multiple channels
  • Integrates with TradeGecko

Cons of Amazon FBA

  • Can be costly
  • You have less control over warehousing and shipping

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Amazon SFP (Seller Fulfilled Prime) 

With Amazon SFP, you get access to Prime benefits just as you would with FBA, except you handle packing and shipping yourself. With this option, you can avoid the costs of paying Amazon to handle order fulfillment for you. 

So, what’s the catch? To be eligible for Amazon Seller Fulfilled Prime, you have to meet a strict set of requirements. This includes going through a trial period where you sell a minimum of 300 orders and: 

  • Maintain an on-time shipment record of at least 99%
  • Use Buy Shipping Services for at least 95% of orders
  • Maintain a cancellation rate of less than 1% 

For most smaller sellers, this means SFP probably won’t be a feasible option.

Pros of Amazon SFP

  • Access to Amazon Prime benefits
  • You don’t have to pay order fulfillment fees
  • More control over packing, shipping, and customer service

Cons of Amazon FBA

  • Strict eligibility requirements
  • The onus is on you to handle order fulfillment
  • You need to have your own warehouse space

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Amazon FBM (Fulfilled by Merchant)

With FBM, you are responsible for managing shipping, handling, and customer service. While this does equal added responsibility, FBM is a good choice for merchants who simply can’t justify the cost of paying for FBA.

Handling fulfillment yourself also means you can nurture and grow your customer base personally – and even encourage customers to visit your dedicated eCommerce store where you don’t face as much competition as on Amazon.

Pros of Amazon FBM

  • Lower cost than FBA
  • More control over your shipping and handling process
  • More control over your relationship with customers

Cons of Amazon FBM

  • It’s your responsibility to handle order fulfillment
  • You need to have your own warehouse space
  • More difficult to reach Prime customers

There’s no one-size-fits-all solution when it comes to order fulfillment on Amazon; it all comes down to knowing what’s right for your business and using demand forecasts to understand which option is going to meet your customers’ needs and result in the highest profits. 

As your needs change, you might find that a different Amazon fulfillment option is a better choice – so make sure to keep reviewing your strategy as your business grows. 

Managing fulfillments is a priority for any growing business.

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