Launching your business on Amazon through their Seller Central program is no easy feat, as you must choose between three different order fulfillment methods: Fulfillment by Amazon (FBA), Seller Fulfilled Prime (SFP), or Fulfilled by Merchant (FBM).

Each fulfillment method has its own pros and cons, which we will discuss later on, and selecting one depends on how your business operates as well as your product range.

What’s the difference between FBA, SFP, and FBM?

Fulfillment by Amazon (FBA)

With FBA, your business sends all of your inventory to Amazon’s warehouses to store, manage, ship, and fulfill on your behalf. In this scenario, Amazon acts as a third party logistics (3PL) fulfillment service provider. Fees associated with FBA include product fees based on size and weight as well as storage fees.

To begin using FBA:

1. Add FBA in Seller Central & select FBA when listing your products
2. Prepare, pack, and label your products
3. Ship your products to an Amazon fulfillment center
4. As customers place orders, Amazon will pick, pack, and ship your orders
5. Amazon handles all returns with their customer service team

Seller Fulfilled Prime (SFP)

With SFP, you keep your inventory in your own warehouse; however, Amazon manages and oversees the delivery by selecting their own preferred shipping carrier. Sellers will only qualify for SFP after passing an initial trial period.

To begin using SFP:

1. Accept your SFP invitation or join the waiting list in Seller Central
2. Complete the SFP trial with 99% on-time shipping rate, 98.5% use of Amazon Buy Shipping Services, and 0.5% or less cancellation rate
3. Store your inventory in your warehouse
4. Offer premium shipping either by fulfilling orders in-house or using an SFP 3PL
5. SFP prime carriers collect and deliver orders to your customers
6. Maintain reliable delivery and customer service standards

Fulfilled by Merchant (FBM)

With FBM, sellers have more control over the shipping and eCommerce fulfillment process. You manage and fulfill orders from your own warehouse and are not required to match FBA delivery times. However, FBM sellers do not enjoy the same benefits of being a Prime Seller through FBA or SFP.

To begin using FBM:

1. Select FBM when listing your products
2. Store your inventory in your warehouse
3. Process orders in your Seller Central account
4. Pick, pack and ship your orders
5. Manage your customer service and reverse logistics (returns)

Even with a quick rundown of each fulfillment option, it may be difficult to narrow it down to one. It’s vital to understand exactly what each option entails so that you know the cost and operational implications before committing to one option.

Pros and Cons of FBA, SFP, and FBM

FBA

Pros

• Offers next-day delivery

• Allows you to compete more effectively to win the buy box

• No need to invest in warehouse operations

• Option to outsource fulfillment to either Amazon or another 3PL provider

• Amazon handles all customer service issues and returns

• Available globally

• Can also be used to fulfill non-Amazon orders

Cons

• Product and storage fees, especially or heavier or larger items

• Less control over order fulfillment process

• Seller is required to monitor and replenish inventory

• No opportunity for custom branded packaging

SFP

Pros

• Offers guaranteed delivery date

• Allows you to compete more effectively to win the buy box

• Option to outsource fulfillment to either Amazon or another 3PL provider

• Gain access to Prime customers without losing control over fulfillment process

• Amazon handles all customer service issues and returns

• Full control of Amazon’s inventory and delivery

• Access to flash deals promotion opportunities

• Reduces fees paid to Amazon

• Easier to manage stock across multiple channels

Cons

• Requires some investment in warehouse and fulfillment operations

• Must maintain FBA equivalent service levels while managing fulfillment in-house or through a 3PL

• Product and storage fees, especially or heavier or larger items

• Shipping options are limited, as they are required to support weekend delivery

• Amazon doesn’t handle customer service issues or returns

FBM

Pros

• Full control of inventory and order fulfillment

• Reduces fees paid to Amazon

• Easier to manage stock across multiple channels

• Full control over packaging / more flexibility in offering custom branded packaging

Cons

• Products are not Prime eligible

• Likely to lose out on significant customer base who are looking for free Prime delivery or fast delivery options

• Customers are likely to be deterred from delivery fee

• Products are less likely to win the buy box

Which one is right for me?

Having reviewed the differences as well as pros and cons of each fulfillment option, you should have a clearer idea of which option is right for your business.

FBA is best-suited for sellers who have high order volume with fast moving goods, lower priced goods, smaller product weight and dimensions, and global customers.

SFP is best-suited for sellers who have slower moving goods, heavier or oversized goods, seasonal or perishable goods, personalized or customized goods, items that are shipped in multiple boxes, and are multichannel retailers.

FBM is best-suited for sellers who also have slower moving goods, smaller production runs, personalized or customized goods, items that are shipped in multiple boxes, but simply don’t have the infrastructure or resources to maintain FBA level services at the moment.

It is possible to choose multiple fulfillment options, but this has limitations. You can sell as both FBA and FBM but not for the same product in the same country at the same time. You can also sell as SFP in one country and FBA or FBM in others or as SFP and FBA in the same country by creating regional selling rules.

It goes without saying that regardless of which option you choose, the right one is the one that will reduce your fulfillment costs without sacrificing efficiency. One common solution to this is to sell on Amazon via FBA but instead of directly shipping to Amazon, you ship to a 3PL provider with the same capabilities as an Amazon fulfillment center who can provide FBA prep services for you.

How 3PLs like ShipBots can handle FBA Prep for you

ShipBots is a third party logistics 3PL fulfillment center that will store, label, and ship your products on your behalf. At ShipBots, we utilize our comprehensive inventory management software to maximize productivity and minimize errors. We integrate with Amazon to accurately fulfill your orders so that you can focus on scaling your business. Within 24 to 48 hours of receiving inventory, your products will be labeled, prepped and ready to be shipped to Amazon’s warehouses. We know it is important that your FBA prep work is done efficiently and accurately. Your inventory will be prepared according to Amazon FBA guidelines and we will ship it ASAP.

Interested in partnering with a 3PL to handle your FBA prep services? Contact us to start streamlining your Amazon sales today.