Fulfilment is a significant factor on Amazon as it is a crucial factor in buy box ranking. Merchants can choose between Fulfilled by Amazon (FBA), Fulfilled by Merchant (FBM), and Seller Fulfilled Prime (SFP).
Fulfilled by Amazon
FBA is Amazon’s wildly popular fulfilment service. Items are stored in Amazon warehouses and shipped by Amazon to fulfil merchant orders. FBA has three main advantages:
- Easy. Ship the products to Amazon, and they do everything else. The merchant does not need their warehouse or customer service staff.
- Buy Box. FBA orders get preference over FBM orders.
- Prime eligible. FBA orders are eligible for Amazon Prime.
FBA is a great programme and makes a lot of sense for retailers and brands looking to sell to Amazon customers. It works best under the following circumstances:
- Fast moving product lines. You do not want to be paying storage for products that are not selling.
- Small catalogues. Managing many items in small quantities in FBA is a headache.
- Sturdy products. Breakable products will not survive the process.
There are four types of FBA fees:
- Carrier fees. Charged if you use one of Amazon’s carrier partners to collect and deliver inventory to an Amazon fulfilment centre.
- Storage fees. Charged based on the volume of inventory stored every month.
- Fulfilment fees. Each order incurs a fulfilment fee based on the size of the product.
- Optional fees. Amazon offers a range of product processing services that incur additional charges, e.g., re-barcoding, product furbishing.
The Pan-European FBA programme enables delivery of Prime eligible orders across the EU from a single inventory pool. Inventory is delivered into a single EU warehouse, and the fulfilment will be charged at the local rate. To be enrolled in Pan EU FBA, a product must have a live listing on Amazon DE, FR, IT, ES.
For example, a merchant has a listing for a product live on Amazon DE, IT, ES, FR and delivers the inventory into Germany. The inventory level displayed will be the same on each site (pooled inventory). When an order is placed, the fulfilment fee charged will be at the local rate of the site on which the order was placed.
The FBA programme is available in most countries where Amazon has operations and is available for international merchants. For example, a UK merchant can use FBA in the USA, but they will need to manage the importing process, including freight and customs clearance.
FBM and SFP
Fulfilled by Merchant is where the order is shipped directly from the merchant to the customer. This gives the seller complete control, but FBM orders will be ranked lower than FBA offers, all things being equal.
A hybrid option is Seller Fulfilled Prime. SFP enables merchants to ship Prime eligible orders from their warehouse. This option has the advantages of FBA (Prime eligibility) without managing stock in two warehouses.
Shipping order via SFP has the potential to boost sales but has the following disadvantages:
- Lack of control. Amazon gives itself full right to refund Prime customer’s orders for any reason. If you think that a refund is not justified, you need to put in a Safe-T claim to claw back the funds.
- More returns. Returns are automatically authorised for Prime members.