Interested in selling on Amazon, but not sure how it all works? Maybe you have heard of FBA and want to know more about what that means exactly. Private merchants who sell on Amazon are referred to as ‘3rd party merchants’ and among them there are two distinct methods of selling.
MF = Merchant Fulfilled, meaning sales listed and shipped direct from 3rd party merchants. These merchants handle and ship items individually, keeping them in their store until purchased, then shipping them to the buyer, a process very similar to eBay sellers. There is a usually a shipping fee involved, though some merchants choose to offer items with free shipping (same as eBay).
FBA = Fulfilled By Amazon, meaning the merchant ships quantities of inventory to Amazon warehouses regulatly to be stored until purchased. When sales come in, Amazon packs and ships the items to customers. These sales are always eligible for free Prime shipping and if returns or any customer service issues arise, they are dealt with directly by Amazon staff.
Some merchants choose to sell both FBA and MF. They might ship the majority of their inventory FBA and yet choose to hold certain items to sell MF.
Two reasons an FBA seller might opt for handling certain inventory as MF include:
1) The item is highly valuable or fragile. The merchant may not want to take the chance of having their valuable and/or fragile items being handled inside Amazon warehouses. Sometimes items do end up lost or damaged at the warehouses, and the merchant may not want to take that chance. Those warehouses are HUGE and busy places, with an avalanche of conveyor belts and handling by multiple workers.
2) Faster sales and availability. Say it is getting very close to a holiday and your item is seasonal or holiday related. You can create the listing MF and it goes live immediately, having the potential to sell that very same day. FBA sales will not become ‘active’ until they’ve been shipped to the warehouse, unpacked and through the entire process of receiving.
Shipping generally takes about a week to get to the warehouse, then when sold there’s another shipping delay and this may take just too long. So if the merchant wants that item available on Amazon today, then FBA is not the best option because the item may not be available to customers fast enough to meet demands for a particular season or event.
Pros and Cons: FBA and MF Selling on Amazon
MF sales incur lower merchant fees, as the merchant is responsible for their own storage, shipping and customer service. FBA sellers pay higher fees as they are basically contracting out a large part of the sales process to Amazon. They are using Amazon warehouses for storage of inventory and relying on Amazon staff for packing, shipping and customer support.
FBA sellers tend to prefer the convenience of relying on Amazon in the sales process. It works like a business inside of a business, with the merchant providing inventory while Amazon provides other related services. FBA merchants are free to do business on their OWN schedules, without interruption from the actual sales process.
FBA Sellers are able to sell a much higher volume of inventory. FBA allows freedom without being bogged down with as many tedious details as traditional sales. FBA has it’s own quirky frustrations, like the need to ship to multiple wareouses. However, once a shipment is on its way to Amazon warehouses, that job is done.
MF sales give more control to the merchant. Some merchants simply are not comfortable with letting Amazon handle so many parts of their business. They’d prefer keeping is smaller and simpler by handling all of their own transactions and customer support.
Learning to sell FBA properly can be a mammoth of a learning curve. Amazon has strict rules for all sellers, and even more for FBA. Some merchants are confused by the tedious process of preparing large shipments often directed to multiple Amazon warehouses. While many learning resources for FBA sellers are available, some smaller merchants find large inventory shipments and related procedures to be overwhelming and simply prefer not to enter that learning curve.
FBA sellers can offer free Prime shipping and Amazon customer service. Many Amazon buyers who have Prime accounts do not even LOOK at other listings, for they have no intention to pay for shipping. This gives FBA sellers the advantage of many more customers seeing their wares on Amazon. Many buyers simply want only Amazon service and do not want to deal with other merchants in any way. FBA sellers have access to these buyers directly.
FBA is perfect for outsourcing some of the business workload. Often small business owners and solopreneurs find they simply must outsource some tasks in order to build volume in business. They may work alone or with a partner or small staff, and find there are only so many hours in a day. Rather than taking the risk of outsourcing some of their workload to possibly questionable individuals, they’ll be glad to pay FBS seller fees to get support and selling perks direct from Amazon.
By the way, it’s common on some of the FBA seller forums to see a comment like “… and then some MF went and…” Smiles. This MF refers to a Merchant Fulfilled seller, not that other MF you may be thinking.
Do these differences between FBA and MF selling on Amazon make more sense to you now? What other aspects of these two types of amazon merchants might you want to learn about or get clarified? Do you have experience selling on Amazon, eBayor other online venues?
Please shout out below in the comments. Thanks.
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