What is and how to use Fulfillment by Merchant

Amazon Fulfilled by Merchant (FbM) is currently one of the two most popular ways to ship products ordered on Amazon. The second option is called Fulfilled by Amazon (FbA), but currently, primarily due to COVID-19, more and more online sellers are interested in the FbM option. That’s why we decided to take a closer look at this option. Let’s get right to it.


First of all, if you are interested in selling on Amazon, we recommend you read this comprehensive article about sales on Amazon. Inside, we’ve gathered all the relevant information you need to become a professional seller. Additionally, that article has been recently updated. In this article, however, we are going to focus strictly on the Fulfillment by Merchant option.


On March 17, 2020, Amazon announced that they are temporarily suspending shipment for items they consider non-essential. As Amazon’s representative said: “We are prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and ship these products to customers.” As a result, many Amazon sellers are looking for different ways to ship products. And this is where Amazon Fulfilled by Merchant steps into play.


What is Amazon Fulfilled by Merchant?


In short, it’s a fulfillment method where you, as an Amazon seller, are responsible for shipping your Amazon orders. Obviously, this does not mean that you have to deal with logistics in house. You can easily work with a 3PL (Third-Party Logistics) company like Omnipack to fulfill these orders. Later in the text, we will show you what cooperation with us looks like when it comes to Amazon orders.


The FbM option means that you (or your logistics partner) are responsible for running a warehouse, shipping parcels, handling customer service, and dealing with returns and complaints. So, in essence, it works quite similar to your regular daily activity as an online store’s owner.


Mind you, when you’re using Amazon FbM, your products lose their Prime Status. However, if you work with a trusted and efficient partner, you can still achieve short delivery times and Amazon-grade customer service. All in all, there’s no harm done.


If you’re an Amazon freshman, FbM is your only option. Utilizing the FbA option entails Amazon’s approval and specific inventory turnover. Therefore, FbA is rather for larger and experienced Amazon users. However, this does not mean that the FbM option is in any way worse. In fact, many large online stores cooperate with external logistics partners who deal with all the logistics processes on their behalf.


How to set up Amazon Fulfilled by Merchant


The process is quite straightforward. Actually, you don’t have to do anything specific. If you’ve just started, it’s your default option anyway. On Amazon Seller Central, you have the option of switching listings from FbA to FbM. However, we advise you to use the “Add a Product” option to create a brand-new SKU (even in terms of items you already sell) and select Fulfilled By Merchant instead of FbA. You can read more about different fulfillment options here.


Now, all you have to think about is:


  1. Creating an Amazon account and start listing your products.
  2. Making sure you have at least one warehouse at your disposal. It will work as your own fulfillment center. If you decide to outsource logistics to us, Omnipack is your private order fulfillment center. Suppose you have more warehouses at your disposal (Omnipack offers two warehouses in Poland). In that case, you should think about distributing your products to strategic locations to shorten delivery time and lower shipping costs. For instance, if Germany is one of your markets, you can transfer some products to our warehouse in Gorzów Wielkopolski, located by the Polish-German border.
  3. Shipping orders on time. Bear in mind that you have to stick to the delivery timeframe indicated by your customer (Amazon provides an estimated delivery time). Also, you ought to provide the possibility of tracking orders for each one of your customers.
  4. Updating your account and input all relevant information concerning returns and complaints. When a customer sends a request to return a product, Amazon automatically sends them a ready-made return label with your address. Make sure it’s correct.


Moreover, keep in mind that products sold on Amazon have to be marked with the FNSKU code. You have to plan how to separate goods for Amazon from goods sold on other markets, which usually have different SKUs (even if they are still the same products!).


The pros and cons of Amazon Fulfilled by Merchant


As always, there are two sides to every story. On the upside, you:


  • Have full control over the shipping process. If you work with a trusted partner, everything runs like clockwork.
  • Pay less. If you operate on the FbM option, you’ll only need to pay a subscription fee (monthly), a small per-order fee, and a referral fee. That’s all.
  • Have fewer rules to follow. Amazon’s policy regarding Fulfilled by Amazon is much stricter than the one that refers to Fulfilled by Merchant.


On the downside, you:


  • Lose the Amazon Prime badge, which means that you can have fewer orders.
  • Have to cover the costs of the order fulfillment service provided by a 3PL company.
  • Are exclusively and fully responsible for the entire process.


Fulfilled by Merchant fees


When you opt for the Fulfilled by Merchant option, there are just three major fees you have to consider:


Monthly subscription fee and selling fees 


Every Professional account owner has to pay a monthly subscription fee, which is currently 39.99 USD, and the standard selling fee is 0.99 USD for each item sold. However, keep in mind that Amazon charges commissions on the gross price of each item sold, and they depend on the product category. This means they can be noticeably higher.


Read more about Amazon selling plans here


Referral fees


Most referral fees are between 8% and 15% (but they can be as high as 45%!). There is also a minimum sales fee of at least 30 cents per piece if the commission should be less than that according to the price list.


If you want to find out more about selling on Amazon, we advise you to see this article.


Fulfillment by Merchant: Work with Omnipack


If you are looking for a fulfillment center for your Amazon orders, try Omnipack. We have two modern warehouses and provide Amazon-grade customer service. With our help, you’ll be able to fulfill your orders quickly and effectively. We operate throughout all of Europe, so drop us a line for details.


What does the integration looks like? 


If the system you are operating on is not an Amazon recognized partner, we will guide you on what you need to do in order to integrate with Amazon and use the FbM option. For starters, you need to get access data from Amazon. You have to provide us with:


  • AWS Key ID
  • Client Secret


Mind you, obtaining these numbers can take up to two months! The rest of the work, on our side, takes about two weeks, so you have to be prepared to wait 2.5 months to get everything up and running.


If you have any further questions regarding Amazon-Omnipack integration–we are at your service.

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