Vendor Central and Seller Central are two different platforms offered by Amazon for businesses to sell their products on the Amazon marketplace.

1.       Vendor Central: This platform is designed for manufacturers, wholesalers, and distributors. In Vendor Central, Amazon acts as the retailer, purchasing products directly from the vendors at wholesale prices and taking care of the inventory, marketing, and order fulfillment. Vendors have less control over pricing and product listings but benefit from Amazon’s massive customer base and logistical capabilities.

2.       Seller Central: Seller Central is intended for individual sellers, small businesses, and brand owners. It allows sellers to list their products on the Amazon marketplace and manage their own inventory, pricing, and shipping. Sellers have more control over their listings and pricing, but they are responsible for handling the fulfillment of orders, either by themselves (FBM) or using Amazon’s fulfillment services (Fulfillment by Amazon – FBA)

When it comes to selling products on Amazon via seller central, one of the key decisions you’ll need to make is how you want to handle fulfillment. Amazon offers two main options: FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant). Each option has its own advantages and considerations, and understanding the differences between them is crucial for making an informed decision. In this blog post, we’ll provide a comparative analysis of FBA and FBM to help you choose the right fulfillment method for your Amazon business.

Fulfillment by Amazon (FBA):

Fulfillment by Amazon (FBA) is a service provided by Amazon where sellers store their products in Amazon’s fulfillment centers. Amazon takes care of the entire fulfillment process, including picking, packing, shipping, and customer service.

Here are some of the benefits of using FBA:

1. Prime Eligibility: FBA products are eligible for Amazon Prime, which means they can qualify for Prime’s fast and free shipping options. Prime eligibility often leads to increased visibility and more potential sales.
2. Customer Trust: Amazon has built a reputation for reliable and efficient fulfillment. When customers see the “Fulfilled by Amazon” badge, they tend to trust the product and the delivery process more, leading to higher conversion rates.
3. Scalability and Efficiency: With FBA, you can leverage Amazon’s extensive fulfillment network, allowing you to quickly scale your business without worrying about logistics. Amazon handles storage, inventory management, and even returns, freeing up your time to focus on other aspects of your business.
4. Multi Channel Fulfillment: FBA enables you to fulfill orders from multiple channels, not just Amazon. This means you can use FBA to fulfill orders from your own website or other online marketplaces, expanding your reach and streamlining your operations.

However, there are some considerations to keep in mind when using FBA:

1. Fees: While FBA provides convenience, it comes at a cost. You’ll be responsible for fees related to storage, picking, packing, and shipping. It’s essential to carefully analyze your margins to ensure FBA is financially viable for your products.
2. Limited Control: With FBA, you give away some control over the fulfillment process. You won’t have direct access to your inventory, and Amazon’s policies and guidelines will dictate how your products are handled and shipped.
3. Inventory Management: Since your products will be stored in Amazon’s fulfillment centers, it’s crucial to manage your inventory effectively. You need to monitor stock levels to avoid running out of inventory or incurring unnecessary storage fees.

Fulfillment by Merchant (FBM):

Fulfillment by Merchant (FBM) is the alternative to FBA, where sellers handle all aspects of fulfillment themselves.

Here are the key aspects of FBM:

1. Cost Control: With FBM, you have full control over the fulfillment process, allowing you to minimize costs. You can choose your preferred shipping carriers and negotiate better rates, especially if you have a high volume of shipments.
2. Inventory Control: When using FBM, you have direct access to your inventory, enabling you to manage stock levels more closely. This control can be particularly valuable if you sell products with varying demand or limited shelf life.

However, FBM also has its considerations:

1. Prime Eligibility: Currently, FBM products are not eligible for Amazon Prime’s fast and free shipping, which may put you at a disadvantage compared to FBA sellers. Prime members often prioritize Prime-eligible products, so you might experience lower conversion rates. However, Amazon is planning to launch a seller fulfilled prime program that would give an additional advantage and perks of prime.  Sellers who qualify for seller fulfilled prime would be granted the Prime badge on their listings, which means their products become eligible for Prime’s fast and free two-day shipping for Prime members. This helps sellers attract more customers and boost sales. Seller Fulfilled Prime is an excellent option for sellers who have the capability to efficiently handle their own fulfillment while taking advantage of the benefits of Prime eligibility.As per the latest update, the acceptance of new applications for the program will commence later in 2023.
2. Operational Burden: Handling fulfillment in-house requires time, effort, and resources. You’ll need to manage inventory, packing, shipping, and customer service, which can be overwhelming, especially as your business grows.
3. Customer Perception: Some customers associate “Fulfilled by Amazon” with a higher level of service and reliability. Without the FBA badge, you may need to work harder to establish trust and credibility with potential buyers.

Choosing the Right Option:

The choice between FBA and FBM depends on various factors, including your business goals, product characteristics, and resources. Here are some considerations to help you decide:

1. Product Type: If you have small, lightweight, and fast-selling products, FBA might be more cost-effective and efficient. For larger or heavier items, FBM can save you on storage and fulfillment fees.
2. Sales Volume: If you have a high sales volume or plan to rapidly scale your business, FBA’s scalability and automated processes can be a significant advantage.
3. Financial Considerations: Analyze your margins, factoring in fees associated with both FBA and FBM. Calculate the impact on your profitability and determine which option aligns better with your financial goals.

Conclusion:

FBA and FBM are two distinct fulfillment options offered by Amazon, each with its own set of advantages and considerations. FBA provides convenience, scalability, and Prime eligibility, while FBM offers cost control, flexibility, and more direct control over the fulfillment process. Your decision should be based on factors such as product type, sales volume, control preferences, and financial considerations. Whichever option you choose, remember to regularly evaluate its performance, and adapt as your business evolves.

With ex-Amazon experts as staff, SalesDuo has the expertise that no other firm has to increase businesses’ visibility and revenues. SalesDuo is a one-stop solution to manage all aspects of the eCommerce business. This makes it easy for retail brands of all sizes to focus on what matters most while we help them set up, manage and grow their business on multiple marketplaces across various markets. For more information, visit www.salesduo.com.