FBA vs. FBM
When selling on Amazon, you have two basic choices: FBA (Fulfillment by Amazon) or FBM, which is Fulfillment by Merchant. FBM simply means you are responsible for all tasks related to selling, including stocking, packing, shipping, and managing your orders. This is the default way of selling online, similar to the way mail order businesses operated for decades, even before the internet.
Many sellers find that FBM is cumbersome as you’re responsible for handling each order individually. Furthermore, it’s usually slower for Amazon’s increasingly impatient customers. With FBA, you still have some work to do as you have to send your products to Amazon. After that, however, everything is handled for you. The following is a basic rundown of how FBA works.
- You send your products to Amazon, who stores them in their warehouses.
- When customers order your products, Amazon handles the packing, shipping, and tracking.
- Amazon also processes returns and refunds.
FBA lets you avoid many of the most tedious aspects of running an online store. You don’t have to stock products, pack, ship, or deal directly with returns or refunds. It’s also beneficial for customers who can get items shipped more quickly and securely. While no packing and delivery service is perfect, Amazon has the experience and facilities to handle these tasks far more efficiently than the average seller.
Amazon strongly encourages sellers to use FBA by tying it to the massively popular Prime membership. Prime, of course, promises quick and free shipping. At first, prime orders were only available from brands that use FBA. Amazon, however, introduced Amazon Seller-Fulfilled Prime (SFP), which means you can offer buyers Prime deals with FBM. Along with all of the advantages, there are a few downsides to using FBA.
Drawbacks of FBA
- Amazon charges sellers to use FBA. You’ll earn slightly less profit on every sale for the convenience of using Amazon’s services.
- Storage fees. In addition to the percentage you pay for every sale, Amazon charges storage fees for products that don’t sell quickly.
- Amazon imposes strict guidelines for FBA. You have to package, label, and ship your items precisely as instructed.
- Not all items are eligible. Amazon has a long list of products that are not eligible for FBA.
- Returns might be higher. Why is this? Amazon makes Prime products extremely appealing with free shipping and quick delivery. This can mean more impulsive buying and customer regret, even if there’s nothing wrong with your product.
These points make FBA especially daunting for newer sellers and those with a limited budget. When you’re still experimenting with products, you could end up paying high storage fees when something doesn’t sell as well as you hoped. Now let’s look at some of the best FBA alternatives.
Deliverr is one of the fastest-growing FBA alternatives. Deliverr describes itself as “Amazon FBA-like” fulfillment. While Deliverr is technically an FBM solution, it can also be considered a third option actually: outsourced FBM. That is, sellers are technically handling packing and shipping themselves but are getting help from a third-party. Here are some of the features of Deliverr:
- It works with not only Amazon, but also with Walmart, eBay, Shopify, and Wish stores. This is a significant advantage if you want to sell on multiple platforms.
- Transparent pricing. Deliverr has a cost calculator that makes it easy to know exactly how much you’re paying for its services.
- Deliverr has warehouses all over the United States.
- Many integrations, including Shopify, GeekSeller, Ecomdash, SellerCloud, ChannelAdvisor, Sellbrite, ZenTail, and SellerActive.
- Display a Prime tag with your listings. This can help with SEO as well as making your listings more appealing to Prime members. You can fulfill Prime orders with Deliverr using Amazon Seller-Fulfilled Prime (note: as of this writing, Amazon is not accepting merchants for SFP, but you can join the waitlist).
Pricing for Deliverr
Pricing for Deliverr starts at $3.99 per unit. Fulfillment fees cover everything: account creation, warehouse receiving, packing, shipping, order fulfillment, and integrations. Storage pricing is based on cubic foot per month for each item. Storage fees start at $.072 per cubic foot per month. There are no long-term storage fees. Deliverr does say, however, that it will eventually charge these fees.
Deliverr vs. FBA
Here are some of the pros and cons of Deliverr compared to FBA.
- An easy onboarding process that is, in many ways, more straightforward than FBA.
- Lower costs in many cases, though this depends on the particular items and the quantity you ship.
- Supports multiple platforms so you can sell on eBay, Walmart, etc.
- It doesn’t support international shipping. The service is only set up for shipping within the U.S.
- No returns or refunds management.
- You can’t offer Amazon buyers Prime deals until Amazon reopens SFP.
Deliverr essentially acts as a middleman between sellers and Amazon, providing user-friendly services that make it easier to get set up and manage orders. There are, as we’ve seen, some limitations, especially when it comes to reaching those all-important Prime customers.
ShipMonk is another order fulfillment service that you can use as an alternative to FBA. They also offer some services you can’t get from either Amazon or Deliverr. ShipMonk offers sophisticated API integrations that sync with your shopping carts so that every aspect of an order is handled from start to finish. ShipMonk is also designed as highly customized service, so it’s equipped to handle the needs of just about anyone who is selling products online, regardless of platform. Here are some of the highlights of ShipMonk:
- No setup fees or order minimums. Flexible pricing lets you sell anyone from one to 10,000 items per month without having to pay for unused services.
- A variety of flexible shipping options helps you and your customers save money on orders. ShipMonk has an advanced algorithm that identifies the most economical shipping method for every order.
- Seller-Fulfilled Prime services. Once again, for now, you must join a waiting list as Amazon has halted this. They also offer FBA prep services if you want to use FBA but want to simplify the process.
- Returns and refunds are managed by ShipMonk.
- Retail fulfillment. Sell your products wholesale to retailers.
- Subscription box fulfillment. Manage subscriptions, popular with products such as foods, supplements, beauty products, razors, and more.
- Crowdfunding fulfillment. This is for products you send out when people contribute to your crowdfunding campaigns. ShipMonk integrates with all major crowdfunding sites.
- Supports many platforms. In addition to Amazon FBA, Shipmonk works with eBay, Etsy, Walmart, Wish, and many others. They also support retailers such as Target, Walmart, QVC, and more.
- Integrations include PayPal, Shopify, Zencart, Magento, Prestashop, and many others.
Pricing for ShipMonk
Pricing for ShipMonk is based on the number of monthly orders, with prices going down as you ship more items. For up to 500 monthly orders, it’s $2.50 pick fee per order. Beyond this, it goes down to .50 per order. Prices include many extras such as all integrations, claims management, customer service, international order processing, freight management, and more.
Pricing for storage is based on the size bin or pallet you need for your products, with small, medium, large, and extra-large bins priced between $1 and $4 per month and pallets at $20/month.
ShipMonk FBA Prep Services
FBA prep services let you use Amazon FBA while outsourcing some of the more complicated tasks. Of course, there’s a fee for this, but it can save you quite a bit of time. For many sellers, the strict requirements of FBA are a stumbling block. If you fail to comply with every regulation, such as not providing the correct FNSKU number and packing each product correctly, you could be charged extra fees or have your items returned to you.
FBA prep services include quality control, repackaging, preparing boxed units and sets, photo documentation, and more. When you use this service, you don’t have to worry about Amazon compliance. You simply ship your items to ShipMonk, and they will repackage everything to meet Amazon’s requirements. Pricing for FBA prep services is customized, so you need to consult with them for an estimate.
Pros and Cons of ShipMonk
ShipMonk offers a wide variety of services, so it’s somewhat challenging to compare it directly to FBA (or Deliverr). However, we can identify some pros and cons.
- Covers even more platforms than Deliverr, such as Crowdfunding and retail. This, of course, isn’t important if you’re only interested in e-commerce, but if you use ShipMonk, it’s easy to expand into some of these other business models.
- Supports international orders.
- ShipMonk, unlike Deliverr, manages returns and refunds.
- Every client is assigned a “happiness engineer” who works to deliver the most customized service based on your needs.
- Fees can be more expensive than you realize, especially when it comes to storage and shipping.
- They have an above-average number of complaints about glitches, such as losing merchandise and shipping the wrong items.
ShipMonk offers one of the most comprehensive order fulfillment services found anywhere. At the same time, it may be experiencing inevitable growing pains, as is evidenced by some of the glitches mentioned above.
Should You Explore FBA Alternatives?
Here’s a summary of the services we looked at and how they compare.
Amazon FBA: If you sell exclusively or mainly on Amazon, it’s the most direct way to reach Prime members, especially while SFP is closed to new members. There is definitely a learning curve for using FBA. It’s easy to make mistakes such as not correctly following Amazon’s packing guidelines or providing the wrong number in the wrong box. Once you get accustomed to the system, though, it isn’t that complicated. Many sellers simply don’t want to invest so much time into the nuts and bolts of managing orders and would prefer a service that helps them simplify these tasks.
Deliverr: A reliable alternative to FBA, especially useful if you want to sell on platforms other than (or in addition to) Amazon. On the other hand, if your primary business model is to cater to Amazon Prime members, you may have to wait until Amazon opens up the doors to SFP once again.
ShipMonk: A company with far-reaching goals (i.e., they are designed to help you run almost any type of business that deals with physical products). INC lists it as one of the fastest-growing companies. However, if you’re looking for a fulfillment solution that works on many platforms and offers you many customizations, ShipMonk is worth trying.
Amazon FBA is one of the best ways to reach the vast Amazon Prime audience. Because Amazon is the proverbial 800-pound gorilla in the e-commerce space, it’s good that it has some competition
On the one hand, with Deliverr and ShipMonk, you can try competing stores such as Walmart, eBay, and Etsy. Even on Amazon, you can use Deliverr as an alternative. Using ShipMonk’s FBA prep service isn’t exactly an alternative to Amazon, but it can help you navigate the FBA waters more smoothly.
Choosing the right order fulfillment solution plays an important role in your profitability. Profit margins are often quite thin in today’s e-commerce markets. Even a small difference in shipping costs can be the difference between profit, loss, or breaking even. Whether you’re better off with Amazon FBA, Deliverr, ShipMonk, or handling everything on your own with FBM depends on factors such as your budget, schedule, products, and customers. Before making a decision, you need to research your options and perhaps experiment with one or more of these services.