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When looking for how you want to do order fulfillment through Amazon there are two types that you can pick. FBA which is fulfillment by Amazon or FBM which is fulfillment by merchant. There are pros and cons to both of these and you have to know which will make the most sense when looking at which one works for your needs, or what mixture of the two would be the best for your company. Here are the pros to both the FBA and FBM.

Some of the pros for FBA is that,

Prime eligibility

When signing up for FBA your products are now eligible for Amazon two-day prime shipping. This is crucial in this day in age when people are now getting used to getting their items within that two days. Another benefit of this is that you look very reputable on the website and you are more likely to sell more products when customers see the amazon prime badge under your products. Amazon is a very reputable company so when customers do see that badge it makes them trust you more than a product that doesn't have that badge.

Set it and go

When you are setting up FBA  Amazon has a very good reputation of once a product is set up you no longer need to worry about that item that they are fulfilling. You can focus on the more important aspects of your business and not worry about if your fulfillment order is getting processed and going out at the right time. Amazon will also include warehousing so when your items are stocking up inside of your garage, they will take it off of your hand and make sure that they will safely store your products.

Lower shipping costs

Amazon is the biggest online retailer in the world, with this comes partnerships with shipping outlets to ensure that they are getting the best prices feasible. This will increase your margins and will be a great economic move.

Here are some of the pros when it comes to doing fulfillment by merchant.

Hands-on

When working with a third-party company you will have a more hands-on experience and will know exactly what is happening with your products. It may be a lot more personalized and will make sure that any program that you need will get done. While at FBA it is pretty cookie cutter and there is not much leeway when it comes to what a company really needs. 

Opportunity for Prime

You may think that because you are not doing FBA there is no chance for you to get an amazon prime badge under your product, but it is still possible. This will come with seller fulfilled prime. This is very hard to get and your company will need a long-standing relationship with Amazon. You need to have existing prime shipping order volume and have outstanding performance metrics for you to be considered. This is a tall task to achieve, but it is still possible.

Higher margins

Most of the time when doing business with an FBM you will be able to make slightly higher margins and make more money. This is because you will be paying fewer fees. The draw-off is that most of the time you will have fewer sales and may not have the peace of mind that your products are kept safe in warehousing.  Over half of the shoppers that are on Amazon will be prime members and if someone is paying annually they are more than likely going to use prime when buying a product.

There are pros and cons when it comes to choosing if you want to fulfill using Amazon or Merchant. I have listed some of the pros that may come along with using either, but the best for your company may be using a mixture of both. If you do want to compare and see if an FBM is for you, contact Complemar for a free quote and we will have an industry professional reach out to see if our company is a good fit for you.

Amazon dominates eCommerce. The selling platform makes up about 38 percent of online retail sales (eMarketer, May 2020). It allows companies of all sizes to reach customers while spending a fraction on marketing that they would otherwise need to spend to get that kind of traffic. But selling on Amazon does not come without serious challenges, as anyone who has sold on Amazon can tell you. The most important decisions to make involve:

• When to sell Fulfilled by Amazon and when to sell Fulfilled by Merchant
• Inventory management control
• Development of advertising campaign strategies and tactics

In this article, we will discuss these challenges and the solutions for creating profitable, manageable expansion of your business on Amazon with Complemar and Thor and Company (T&C). Selling on Amazon can be fun and rewarding, so don’t give up on your Amazon store!

1. When to sell Fulfilled by Amazon and when to sell Fulfilled by Merchant? Strategy Development.

Challenges

It is important to have a strategy for selling on Amazon and weigh the options. Selling FBA only can be very costly, especially for small businesses. Selling Fulfilled by Merchant is often overlooked because it is time-consuming to pack and ship orders in house.

Actual screenshot of an Amazon account, August 2020

Solution

An FBA, FBM hybrid strategy is possible for your business.

2. Inventory management control. Seller Account Management and Logistics

Challenges

Most businesses have a hard time keeping up with the demands of managing an Amazon account.

Solution

There are dozens of companies out there who can help you manage your seller account, but not all of them are worth the high price. If you need help with your Brand Registry, don’t ever hand over control of it. Find out how they make their money. When choosing a seller account management service, make sure they do not have conflicts of interest.

3. Development of advertising campaign strategies and tactics. Branding and advertising plan.

Challenges

Coordinating campaigns with seasonal products, inventory levels, and Prime Day.

Solution

FBA works if you are comfortable letting Amazon handle your inventory. Selling FBM, you have the most control over your products. If your inventory is low, or you are not sure about inventory levels, you can prioritize where your products are shipped only with FBM. You can turn your FBM listings on and off whenever you want. Working with Complemar and T & C, you have control over your inventory and your promotions are managed for you.

The Amazon effect is nothing new for those of us who work in the world of logistics. This effect normally refers to the impact that the retail giant has had on traditional brick-and-mortar retail stores, along with the landscape of online shopping. In truth, the meaning of the Amazon effect could be different depending on your intended audience.

A traditional brick-and-mortar retail store may refer to the Amazon effect as the negative impact that online shopping has had on their business. With the millions of products available online, combined with competitive shopping and fast + discounted shipping, the traditional retailers continue to lose market shares at an increasing rate to online marketplaces like Amazon.

A more modern retailer that is eCommerce focused (or solely based online), may refer to the Amazon effect as the need for these small to mid-market companies to have a presence selling their products on Amazon. This new-found need may be due to the marketing vector that Amazon (specifically Amazon Prime) offers, and the increase in sales that this moniker yields. Inversely, they could be looking to offer their products on the site as a defensive posture to help protect against relevant competition currently selling ‘similar’ items on the site. The Amazon effect for some modern retailers is the quantifiable “need” to have your products available on the Amazon platform (either by FBA or FBM… which is another opportunity that deserves discussion).

The logistical arms of companies, parcel carriers, and 3PL’s may have a different view of the term ‘Amazon effect’. For this diverse group, the Amazon effect is the need to provide services that continually evolve, and improve, to remain competitive. This Amazon effect has forced providers to focus on faster order processing with later same day shipping cut-offs, with a decreased dependency on labor. These efforts are pushed forward with technology advancements, automation, and efforts in continuous improvement. The focus on customer service, business agility, and technology have forced these businesses to adapt and innovate.

Even as a consumer/ customer, the Amazon effect is tangible. How many times have you competitively shopped on Amazon to see what other, or similar, items are available for quicker delivery at a more economical price? Additionally, how many times have you gone straight to Amazon to look for your newly-needed item – without looking at a larger big-box store or the product company’s website? Amazon has created a position within the consumers' buying habits that companies strive for – to be the first option.

At Complemar, we can help you provide the best service offering to your end consumer. The strategic placement of our fulfillment centers allows us to offer you 2-day ground shipping for 98% of the population within the contiguous 48 states. Our proprietary software and technology can offer a unique solution for complex challenges (Serialization, Lot Tracking, Alternate item numbers, etc), and helps us drive for best in class on-time delivery. Additionally, our team of experts and business partners can assist you with the navigation of the Amazon effect – and how you can best position your product/ company for continued success with your customers. We pride ourselves in eCommerce fulfillment, Health Care fulfillment, packaging & co-packing opportunities, with a full-service print facility located in Buffalo, NY.

With Amazon's large network of distribution centers, investment capital, technology advancement, and obsession with customer service – the Amazon effect is a real thing that everyone needs to be aware of. It may mean different things to different people within a product's supply chain, but the Amazon effect is affecting the way we do business, whether it is the faster delivery concept that was adopted from Zappos or the quality assurance that Amazon demonstrates on a daily basis. The Amazon Effect is an innovative idea that is reforming and improving the landscape of fulfillment and e-commerce.