Amazon FBA VS FBM Fees: A Comprehensive Comparison

Amazon FBA vs FBM Fees

Amazon FBA vs FBM fees selling on Amazon is a lucrative business model, but one of the critical decisions sellers face is whether to use Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM). While both methods have their advantages, understanding their fee structures is essential for making an informed decision. This blog explores the differences between Amazon FBA vs FBM fees to help you choose the best option for your business.

What is Amazon FBA?

Amazon’s Fulfillment by Amazon (FBA) program permits sellers to store their products in Amazon’s fulfillment centers. Amazon handles storage, packing, shipping, customer service, & returns. This is a convenient option for sellers who want a hands-off approach to order fulfillment.

Amazon FBA Fees

FBA sellers pay various fees, which can impact their profitability. These fees include:

  1. Fulfillment Fees: Amazon charges per unit for picking, packing, and shipping orders. Fees vary based on items size & weight. For example:
    • Small standard-size item (<1 lb): $3.22 per unit
    • Large standard-size item (<3 lb): $5.40 per unit
    • Oversized item (10-20 lb): $9.39 per unit
  2. Storage Fees: Amazon charges for storing inventory in fulfillment centers. These fees vary based on the time of the year:
    • January – September: $0.87 per cubic foot
    • October – December: $2.40 per cubic foot (peak season)
  3. Long-Term Storage Fees: If inventory sits for over 365 days, Amazon charges $6.90 per cubic foot or $0.15 per unit, whichever is greater.
  4. Removal & Disposal Fees: If you need to remove unsold inventory, Amazon charges between $0.50 and $2.20 per unit for removals and $0.15 to $0.90 per unit for disposals.
  5. Returns Processing Fees: For items in categories where Amazon offers free returns (e.g., apparel), sellers pay a fee equivalent to the fulfillment cost per unit.

Pros of FBA

✔ Amazon handles fulfillment, reducing operational stress. ✔ Prime eligibility increases visibility and sales. ✔ Competitive shipping rates through Amazon’s logistics network. ✔ Customer service and returns handled by Amazon.

Cons of FBA

❌ Higher costs, especially for long-term storage. ❌ Less control over inventory and fulfillment. ❌ Risk of unexpected storage fee hikes.

What is Amazon FBM?

With Fulfillment by Merchant (FBM), sellers manage their own storage, packing, and shipping. This option allows sellers to maintain control over their logistics but requires more hands-on effort.

Amazon FBM Fees

FBM sellers avoid Amazon’s fulfillment and storage fees but still incur the following costs:

  1. Referral Fees: Amazon charges 8% to 15% of the product’s sale price, depending on the category.
    • Example: A $50 item with a 15% referral fee incurs a $7.50 fee.
  2. Shipping Costs: Since sellers ship items themselves, they must account for shipping costs. This varies based on carrier, location, and item weight.
  3. Amazon Professional Seller Subscription: If using a Professional Seller account, sellers pay $39.99 per month.
  4. Customer Service & Returns Handling: Sellers must manage customer service and return logistics, which can lead to additional costs.

Pros of FBM

✔ Lower overall fees compared to FBA. ✔ More control over inventory and fulfillment. ✔ Better suited for large, heavy, or slow-moving products. ✔ No long-term storage fees.

Cons of FBM

❌ No Prime eligibility unless using Seller Fulfilled Prime (SFP). ❌ Sellers must handle shipping, returns, and customer service. ❌ Shipping costs may be higher compared to Amazon’s negotiated rates.

FBA vs. FBM: Which One is More Cost-Effective?

The choice between Amazon FBA vs FBM fees depends on several factors, including product type, volume, storage needs, and business model.

CriteriaFBAFBM
Fulfillment CostsHigher, due to per-unit fulfillment feesLower, but seller handles shipping
Storage FeesCharged based on cubic feet & seasonalitySeller manages own storage costs
Shipping CostsIncluded in fulfillment feesVaries by carrier & location
Customer ServiceAmazon handles itSeller manages it
Prime EligibilityYesOnly with Seller Fulfilled Prime
Returns ProcessingAmazon handles (fees apply)Seller handles returns
Control Over InventoryLimitedFull control

When to Choose FBA

  • If you sell small, lightweight, and high-volume products.
  • If you want to qualify for Amazon Prime for better sales.
  • If you prefer a hands-off approach to fulfillment.

When to Choose FBM

  • If you sell large, heavy, or slow-moving items.
  • If you have an existing logistics setup and want more control.
  • If you want to avoid long-term storage fees.

Final Thoughts

Amazon FBA vs FBM fees, Both have their advantages and cost structures. FBA is great for scalability and Prime eligibility, but its fees can be high, especially for slow-moving inventory. FBM offers more control and lower fees but requires handling logistics yourself.

Amazon FBA vs FBM fees, to make the best decision, calculate your costs using Amazon’s FBA Revenue Calculator and compare it with your FBM costs. Choosing the right model will depend on your business goals, product characteristics, and operational capabilities. Whichever method you choose, understanding the associated fees will help you maximize profitability in your Amazon selling journey.

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