FBA vs FBM for Amazon wholesale: which earns more?

With Fulfillment by Amazon (FBA), Amazon stores your stock and ships every order. With Fulfilled by Merchant (FBM), you do it yourself. Most wholesale sellers use FBA, but not for every product. Here is how FBA vs FBM compare for Amazon wholesale, and how to tell which earns more on a given product.

What each one costs you

• FBA: the referral fee, the FBA fulfillment fee per unit (set by the size and weight of the package), monthly storage, and the cost of shipping your stock into Amazon's warehouses.
• FBM: the referral fee, plus everything Amazon would have done: packaging, postage to the customer, your own storage space, and your time or staff to pick and pack every order. You also handle returns and customer service.

The referral fee is the same either way. The comparison comes down to the FBA fee and storage against your own cost of shipping one order.

The Buy Box matters more than the fees

On a shared wholesale listing, sales go to the seller who holds the Buy Box. FBA offers come with Prime and Amazon's delivery promise, so they often win the Buy Box at a slightly higher price than an FBM offer. If you go FBM on a listing full of FBA sellers, you may have to price below them to get any sales at all, which can wipe out the fee you saved.

A worked example

	FBA	FBM
Selling price	$24.99	$24.99
Referral fee (15%)	−$3.75	−$3.75
FBA fee	−$4.15	–
Postage and packaging	–	−$5.20
Landed cost	−$11.65	−$11.30
Profit	$5.44	$4.74

The FBM landed cost is a little lower because there is no inbound shipment to Amazon, but the postage is higher than the FBA fee, and this example has not even counted the time to pack the order. For a small, light product, FBA usually wins. For a large or heavy product, the FBA fee climbs steeply with size, and FBM can come out ahead.

When FBM makes sense

• Oversized or heavy products, where the FBA fee and storage are high and you can ship more cheaply.
• Slow sellers, where months of FBA storage eat the profit. See how to avoid dead stock.
• Listings with few or no FBA sellers, where you are not up against Prime offers for the Buy Box.
• Testing a product with a few units before you send a full shipment to Amazon.
• Products Amazon will not take into FBA, or only with restrictions, such as some dangerous goods.

Many sellers use both

You do not have to choose once for your whole business. A common setup is FBA for the fast, small sellers and FBM for the bulky or slow lines, decided product by product. Some sellers also keep an FBM offer as a backup when their FBA stock runs out.

See both on every product

Wholesale Analyzer shows FBA and FBM profit and ROI side by side for every product in a scan, and you can switch the results between FBA, FBM or both. The FBA figures use Amazon's fee estimate and your landed costs. The FBM figures are the Buy Box price minus your cost and the referral fee, so subtract your own postage and packing per order before you compare them. Combine that with the number of FBA sellers on the listing to decide which way to sell each product.