The Amazon Fulfillment Decision
One of the most important decisions Amazon sellers face is how to fulfill orders. Should you ship products yourself (Merchant Fulfilled) or let Amazon handle it (FBA)? The answer depends on your business model, product types, and growth goals.
Understanding FBA (Fulfillment by Amazon)
With FBA, you send inventory to Amazon’s warehouses. When customers order, Amazon picks, packs, and ships the products.
FBA Advantages
Prime Badge Benefits
- Access to Prime customers (over 200 million members)
- Higher visibility in search results
- Increased buy box win rate
- Customer trust in fast, reliable shipping
Operational Simplicity
- No packing or shipping required from you
- Amazon handles customer service for fulfillment issues
- Returns processing handled automatically
- Scale without increasing your labor
Multi-Channel Fulfillment
- Use FBA inventory to fulfill orders from other channels
- Consistent shipping experience across platforms
FBA Disadvantages
Cost Structure
- Fulfillment fees per item
- Monthly storage fees
- Long-term storage fees for slow-moving inventory
- Prep and labeling requirements
Loss of Control
- Cannot inspect products before shipping
- Commingled inventory risks
- Limited branding opportunities in packaging
Understanding Merchant Fulfilled
With Merchant Fulfilled (FBM), you store inventory and ship directly to customers.
FBM Advantages
Cost Control
- No FBA fees
- No storage fees
- Potential savings on high-volume or heavy items
Inventory Control
- Inspect each item before shipping
- Custom packaging and branding
- No commingling concerns
Flexibility
- Ship same-day for local customers
- Handle unique or fragile items personally
- Maintain inventory at your location
FBM Disadvantages
Competitive Disadvantages
- No Prime badge (unless Seller Fulfilled Prime qualified)
- Lower buy box win rate against FBA sellers
- Customer perception of slower shipping
Operational Burden
- Daily shipping requirements
- Customer service for shipping issues
- Storage space requirements
Cost Comparison Framework
FBA Cost Calculation
For each product, calculate:
- Fulfillment fee (based on size and weight)
- Monthly storage fee (cubic feet x rate)
- Estimated long-term storage fees
- Prep/labeling costs if needed
FBM Cost Calculation
Calculate:
- Shipping supplies (boxes, tape, labels)
- Carrier costs (USPS, UPS, FedEx)
- Your time (hourly rate x time per order)
- Storage space (rent/sq ft x space used)
The Break-Even Analysis
Compare total costs at different volume levels. Often:
- Low volume: FBM can be cheaper
- High volume: FBA economies of scale kick in
- Heavy/large items: FBM often wins
- Small/light items: FBA often wins
Category-Specific Recommendations
Best for FBA
- Small, lightweight items
- Fast-selling products
- Commodity goods with Prime-dependent sales
- Products where Prime badge significantly impacts conversion
Best for FBM
- Heavy or oversized items
- Slow-moving inventory
- High-value items requiring inspection
- Items with low margins where FBA fees eliminate profit
- Vintage or one-of-a-kind items
Hybrid Approach
Many successful sellers use both:
- FBA for high-velocity Prime-eligible items
- FBM for heavy, oversized, or slow-moving products
- Test new products FBM before committing to FBA
Making the Transition
Moving to FBA
- Select your best-selling, Prime-suitable products
- Calculate FBA profitability for each
- Create FBA shipment for profitable items
- Monitor performance and expand
Optimizing FBM
- Invest in shipping efficiency (thermal printers, supplies)
- Negotiate carrier rates based on volume
- Consider Seller Fulfilled Prime qualification
- Streamline your packing process
ListForge Integration
ListForge helps you make the FBA vs. FBM decision:
- Estimated profitability calculations for both options
- Size and weight-based fulfillment cost estimates
- Sell-through rate predictions
- Recommendations based on product characteristics
The Bottom Line
There’s no universal right answer. The best fulfillment strategy depends on:
- Your product mix
- Your operational capacity
- Your margin requirements
- Your growth goals
Start with data. Test both approaches. Let results guide your strategy.