Amazon FBA vs FBM: Which Fulfilment Method Is Right for You?
Amazon FBA and FBM offer very different trade-offs on cost, control, and Prime eligibility. This guide compares both models to help you decide which suits your product and business stage.
Amazon offers two fulfilment models: FBA (Fulfilled by Amazon) where Amazon warehouses and ships your products, and FBM (Fulfilled by Merchant) where you handle storage and shipping yourself. Both have distinct cost structures, Prime eligibility implications, and operational requirements.
FBA (Fulfilment by Amazon) vs FBM (Fulfilment by Merchant): The Definitions
With FBA, you ship your inventory to Amazon's fulfilment centres and Amazon handles all storage, picking, packing, shipping, and customer service for those orders. Products qualify for Prime automatically.
Formula
FBA cost per unit = Referral fee + FBA fulfilment fee + Monthly storage fee. Typical total fees: 20-30% of selling price depending on category and product size.
Example
A £25 kitchen item weighing 0.5kg: referral fee £3.75 (15%) + FBA fee ~£3.50 + storage £0.20 = £7.45 total fees. Net proceeds before COGS: £17.55.
With FBM, you store your own inventory and fulfil orders yourself (or through a 3PL). You pay only the referral fee to Amazon; all shipping and storage costs are yours to manage.
Formula
FBM cost per unit = Referral fee + Your actual shipping cost + Your storage/overhead cost. No FBA fulfilment fee. Total fees vary widely based on your fulfilment efficiency.
Example
The same £25 kitchen item via FBM: referral fee £3.75 (15%) + your shipping cost £3.50 + overhead £0.50 = £7.75 total costs. Similar to FBA but you manage fulfilment.
Key Differences
- 1Prime eligibility: FBA products automatically qualify for Prime; FBM requires Seller Fulfilled Prime (SFP) qualification, which has strict criteria
- 2Storage: FBA charges monthly storage fees that escalate for slow-moving stock; FBM lets you manage your own storage costs
- 3Returns: FBA handles returns automatically (convenient but can result in unsellable stock returned to you); FBM gives you more control over the returns process
- 4Capital: FBA requires sending inventory to Amazon upfront; FBM requires your own warehouse or 3PL investment
- 5Scalability: FBA scales easily as Amazon handles logistics; FBM requires building your own fulfilment infrastructure at volume
When to Use FBA (Fulfilment by Amazon) vs FBM (Fulfilment by Merchant)
FBA works best for standard-size, fast-moving products where the Prime badge pays for itself in increased conversion. FBM works better for large, heavy, or slow-moving products; for sellers with existing 3PL relationships; and when testing products before a larger FBA commitment. Many sellers use both: FBA for their core range, FBM for peripheral or oversized items.
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Common Mistakes to Avoid
Not calculating FBA long-term storage fees for slow-moving stock — these can exceed the product value for items older than 365 days
Assuming FBA is always more expensive — at high conversion rates, the Prime badge can more than offset the FBA fee premium
Not using the FBA Revenue Calculator in Seller Central to model specific products before committing
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Frequently Asked Questions
Can I use both FBA and FBM for the same product?↓
Yes. Many sellers create both an FBA and FBM listing for the same ASIN. This provides a backup if FBA stock runs out and allows you to compare performance. Amazon typically gives the Buy Box to the FBA listing if pricing and seller metrics are similar.
Do FBM sellers get the Buy Box?↓
FBM sellers can win the Buy Box but face more competition from FBA sellers who have the Prime advantage. FBM sellers with excellent metrics (fast dispatch, low defect rate) can compete effectively, particularly for unique ASINs with no FBA competition.