FBA or FBM: Which logistics model to choose to sell on Amazon according to your costs?
- Sellers who choose the Amazon managed logistics model (FBA) will have to pay fees for logistics handling from Amazon’s warehouse to the end customer, the monthly storage fee and other optional services, such as labelling or preparation of products in certain categories subject to special treatment.
- Brands that prefer to take care of the entire logistics process (FBM) will assume their costs taking into account the rates they set for shipments to the customer and negotiate with a transport agency of their choice.
When starting to sell on Amazon, one of the main questions is how to manage logistics to optimise sales potential and customer service as much as possible.
Sellers who open an account on Amazon Seller Central to sell their products can choose to manage the logistics themselves or delegate it to Amazon itself, being clear about the advantages and disadvantages offered by each model, apart from the associated costs of each one.
In addition to the above, other variables must be taken into account, such as stock storage capacity, the shipping plan they require or the costs they are willing to assume given their profit margin in order to assess whether the FBM (Fulfillment by Merchant) or FBA (Fulfillment By Amazon) logistics management strategy is suitable for them.
What are the costs of the managed by Amazon (FBA) logistics model?
Sellers who choose to work with Amazon’s managed model will be charged a per-unit logistics management fee and a storage fee, which is related to the volumetric space they use within their warehouses. In addition, there are also fees for optional services including returns, drop-offs, labelling and packaging, which are charged on a per unit basis.
The logistics management fee has a fixed cost per unit depending on the size and weight of the product, so it is important to add this data correctly once the detail page is set up on the platform to avoid future errors or cost overruns. This shipping cost will also depend on whether it is a local or international shipment, or whether the product is eligible for the Small and Light products programme, which will reduce these costs.
On the other hand, the inventory storage fee depends on the cubic capacity of space occupied in Amazon’s warehouses.
What about costs in the FBM logistics model?
In the event that the seller decides to manage the orders with his own logistics, he can decide which shipping company he works with and take advantage of the costs they offer him, taking into account that, in this case, the seller can configure the shipping costs of each product from the Seller Central platform, deciding whether he will take charge of them so that they are free for the customer or if he will add them as a separate cost under this concept.
If you want to start selling on Amazon and have not yet decided on one of the two logistics models, we tell you all the advantages and disadvantages of the FBA model.