Selling on Amazon can be a hazy task, but learning the difference between selling using Fulfillment By Amazon (FBA) versus their Merchant Fulfilled Network (MFN) is something you can’t put off.
They both come with their plus sides and down sides, mostly depending on the seller them-self, and their intention/use of Amazon’s selling platform.
With that being said here’s the Pro’s and Con’s of using Amazon FBA vs Merchant Fulfilled.
Note: For those of you not all that familiar I’ll be giving you a little run down before getting into the lists, so don’t worry.
Amazon FBA is the use of Amazon’s fulfillment centers for storing, shipping, and handling of your products.
This is commonly used by private label sellers who sell in large quantities and are utilizing Amazon’s services so they can focus on selling the products instead of storing and shipping each individual unit.
Of course there is a fees involved with doing this, Amazon will charge you a commission of your selling price (typically 15%) and additional fees for using their facilities such as:
- Order Handling
- Pick and Pack
- Weight Handling
- Monthly Storage
Now this might sound intimidating but the fees are usually no more than a $1 each with monthly storage sometimes being as low as 1c.
These fees are based off of the effort Amazon has to go through to package and ship your item, so if it’s something like a car charger it won’t be all that difficult resulting in low fees.
But if something like a bike mount or TV, Amazon will have to take extra precaution preparing the item resulting in higher fees.
If you want to see it for yourself, you can use Amazon’s FBA Revenue Calculator.
- Go to Amazon, click on a product, copy the number/letter sequence starting in BOO******* (typically 10 digits long) in the product URL.
- Get the product price that it’s selling for.
- Then past the 10 digit code into the search bar and click search.
- You’ll then type the selling price into the “Item Price” bar in the Amazon Fulfillment column and click calculate.
From here it should list all the fees for selling that product using FBA.
But their is one additional bonus that most people don’t realize.
You’ll get access to Amazon’s 50,000,000+ prime members!
Now this doesn’t mean that Merchant’s don’t have this privilege, but since these members paid for specialized shipping they will be more inclined to purchase from FBA sellers over Merchant.
The reason why is since FBA sellers are partnered with Amazon, Amazon will cover the shipping cost, while Merchants have to quote the shipping they get from their provider.
So if you’re selling one product and you’re a merchant seller, and a FBA seller is selling the same product at around the same price the customer is going to go with the seller with the least expensive shipping, being the FBA seller.
It’s just when it comes to business especially online, you never want your customers deterred for any reason, and if your shipping is higher then they’d like, that’s potential business lost. Not good.
Who is Amazon FBA best for?
Like I said earlier FBA is for sellers who are looking to be selling large quantities on Amazon.
The reason this is a vital choice for people doing this is that selling on Amazon for them isn’t just a hobby, it’s a business and most likely is their source of income.
Utilizing Amazon’s program allows them to have more time to work on their business such as marketing, customer service, managing employees, all the aspects of owning a business and making sales.
If they didn’t opt for FBA they would be stuck packaging and shipping items off individually with every sale eating away at their time they could be using to run their business.
Plus no one wants a garage jam packed full of inventory either.
People make massive sales doing this and can be very lucrative when done correctly.
If this sounds like this is something for you, check out this FBA Course that’s shaping the online business creation education, utilizing FBA and Amazon as the starting point.
They’ll teach you everything from finding hot product opportunities, getting your accounts set up, all the way to scaling your business to the European market.
They’re a great course created by Amazing.com and I wouldn’t recommend them if they weren’t.
Here’s the overall Pro’s and Con’s
- Can automate some aspect of your business.
- You don’t have to worry about storage, shipping, or returns as Amazon handles this for you.
- Additional fees will apply.
Even with what I said above I know of people that are making a very good living using Amazon’s merchant program as well.
What merchant fulfilled simply means is that you (the merchant) are responsible for handling the packaging, shipping, returns, customer service, and any other aspect of running your business.
The only way Amazon is included is that you are using their platform as a place to sell.
Now this can have some benefits, since you are the one who is in charge of sending the products to your employee you can add your personal touch to what you’re selling. For example:
- You can create personalized/custom packaging for your products.
- You can include a personal note or insert for your product.
- You can build your brand separate from Amazon.
- Provide personal customer service for your customers.
Now all this can be done even when using FBA, since most of this falls into the aspect of running a business instead of just utilizing their selling programs.
This would more benefit someone more who feels the need to have full control of every aspect of your business. Which to some might seem good but as the pace picks up it will become difficult to keep up.
There still is an additional plus on top of using Merchant instead of FBA, and that’s fees.
Since you are not using their center or services the only fee you will have to be would be a commission/referral fee for using their selling platform. (usually around 15% of product sale price)
But like I mentioned earlier there are some down sides to doing this, you will be responsible for:
- Fulfilling orders
- Packaging orders
- Shipping products
- Customer service
You’ll also be at your customers beckoning call, when they purchase Amazon expects you to fulfill the order, so getting away from your business for any extended period of time would be difficult.
Who is merchant fulfilled best for?
Merchant fulfilled can be best suited for two different types of people:
1 being those who want to build a business but want to be hands on with every aspect of it.
2 being what I have not yet mentioned, just the “here and there” seller:
This is somebody who sells on Amazon every once and a while for a quick buck here and there, if it’s old books, gadgets, toys, athletic gear, whatever it is it’s not something that would be considered a “business”. It’s not consistent.
So selling as a Merchant would be the perfect way for you to get the most out of your item by avoiding FBA fees.
Kind of like using something like Craigslist but on a larger store.
- You can be real hands on with your business.
- You can add your own personal touches to each of your orders.
- You don’t have additional FBA fees, meaning more profit! (never a bad thing)
- You are left handling storing, shipping, and packaging your products.
- You will be tied to your business, not allowing you that much freedom.
- You’ll be left handling customer service and customer returns. (not the best dept. to be in)
Wrapping Things Up…
If you’re still looking for something more or want to know more ways to make money with Amazon, check out this recent article I wrote specifically for that- How to make money online using Amazon
On top of that I wouldn’t recommend getting in over your head when it comes to selling on Amazon, starting a physical products is no cheap endeavor.
So if you’re a little tight on money, I would recommend holding out until you’re a little more financially stable.
Hopefully you found this article helpful and if you want to learn more about selling on Amazon feel free to check out the course I recommend to all my beginners starting out called Brand Genesis.
You can check it out by clicking that little link in blue above or the picture below to read up on what it’s all about.
Until next time,
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