After the success of our last interview where he revealed tips and advice on how to sell books on Amazon, we invited Amazon bookseller and playwright, James, to contribute another post — and the good news for you is that he agreed. In today’s post, he focuses on a common seller dilemma — what fulfillment option should I use to sell on Amazon, FBA or FBM?
Firstly, if you don’t know what those two Amazon acronyms mean, you’re probably not ready to answer the question yet. If you know exactly what they mean then you’re probably looking for a list of the pros and cons of using FBA v FBM.
Something to help you orient your business into a model that works best for you. And that’s the question you need to ask yourself. One that’s at the heart of whether you want to use FBA (Fulfillment by Amazon) or FBM (Fulfillment by Merchant) to sell and ship your Amazon inventory.
Get yourself a plain piece of paper and a pen and at the top of the page write, ‘What will work best for me?’ Then have a day off. You’ve earned it. Just kidding. You got a lot more things to do now.
There’s a whole bunch of additional things to consider.
- How much space do you have for storage?
- What sort of items are you going to be selling?
- How much profit do you want to make per item?
- How much time do you want to dedicate to your business?
- Is this a full-time job or a side hustle?
- Do you have children? Are they at the age where you can convince them to be low-key wage slaves?
- Do you have a nearby post office handy and a decent relationship with the man or woman behind the counter?
The answers to these questions might not be apparent at first, but as you begin taking your first tentative steps into selling on Amazon, the decisions you make will shape the business you create.
Everything about you, your life and your current situation will play into whether you decide to use FBA or FBM.
Benefits of Using FBA
For a fairly hefty chunk of your profits per sale, Amazon will take the hassle of ‘booking’ (my new verb) out of your hands.
You’re outsourcing almost everything but finding your stock to Amazon. They will store, coordinate, package and deliver your book whilst you sit in your own home and do whatever your little heart desires.
Now before you start printing labels and booking the UPS, it sounds far more relaxing than it is. You’ll still have to manage your inventory, deal with stranded inventory and occasionally Amazon will damage your books.
Once you start FBA you realise that there’s a whole bunch of additional things that you didn’t necessarily sign up for and these can be a hassle and a little daunting.
Whilst it’s relatively easy to FBA your stock, getting answers about what to do when things go wrong is about as easy as getting a PhD in Astrophysics.
Having said that, if you invest in some very good repricing software, sort out your lower pricing limits and keep a steady stream of books in, then it does turn out to be significantly less hassle than FBM.
Also… and this is pretty niche. If Amazon decides they don’t want to accept deliveries for some reason… say, global pandemic… there’s diddly squat you can do about it. They make the rules, you play the game.
FBM sellers have done very well under lockdown whilst FBA sellers like me and my business partner were unable to replenish existing stock. Make Amazon your God and be prepared to feel their wrath on occasion.
So are there are any alternatives to FBA?
I’m glad you asked. Let’s take a look at Fulfillment by Merchant.
Benefits of Using FBM
The main benefit of using FBM is an increase in your profit margins. You’ll get more of your profit and more direct control of your business.
You’re outsourcing less to Amazon and you’ll reap more of the rewards per book that you sell. This, in turn, means that you can price yourself competitively and you’ll be able to sell lower-priced books at higher volumes.
If you can rapidly scale up your business and get your hands on a lot of books at next to nothing then you’ll be retiring pretty damn fast on this side hustle of yours. Needless to say, I’m jealous.
If you’ve got a big empty space you’re dying to use and enjoy the cut and thrust of running your own business on a full-time basis then this might be the best option for you.
Cons of Using FBM
Is there a downside? Of course, there’s a downside. The buck does completely stop with you. The early days will be spent wrapping books, posting books and streamlining your systems until you’re damn good at it. Scale too fast and you’ll find yourself overwhelmed with orders and mired in angry customers.
If organisation isn’t your thing, then beware. When someone orders that copy of ‘Don’t Pee on My Leg and Tell Me Its Raining’ by Judge Judy, they want it when you said you could deliver it. Your store rating will plummet if you use the ‘I’m sure it’s around here somewhere…’ system.
I’m self-aware enough to know that left to my own devices, that is exactly the system I would implement after about three months. I’m not a details person, I’m a creative.
Can I Use FBA and FBM at the Same Time?
Glad you asked! This is the model that we chose for our Amazon business. We would send the vast bulk of our stock into Amazon, and retain only the super high priced books to FBM.
This is a fairly good way to do things and allows you to simultaneously build both sides of the business in a manageable way. You don’t get overrun with books but you won’t lose massive amounts of money on high priced books when Amazon takes its slice.
As time has gone on, we’ve found that eBay is a better place to sell niche books like first editions and signed copies. So we shifted focus to finding those books. Over the first year of trading, the FBM section of our business has dropped away to a single £600 book about Etruscan Pottery. Any takers?
We recently made the decision to send in a number of long-tail books ranked over six million *gasp* but only if they’re of a sufficient price to warrant being there. We’re confident with our repricing software that if anyone wants to actually buy the book, we will be the lowest and most competitively priced at the time that someone looks. That’s probably worth the storage fees we’ll inevitably pay. We’ll review after the second year they’re still hanging around.
Final Verdict: Should Amazon Sellers Use FBA or FBM?
I’d recommend that you sit down and think about the sort of business you want to run. My business partner and I both have other jobs. I spend the vast majority of my working week writing screenplays and scripts. Becoming a bookseller was a side hustle designed to cover the inevitable quiet patches in a creative career.
For that reason, I’m keen to keep it as much of a side hustle as possible. It obviously eats into my writing week, but I’m more than happy to outsource everything to Amazon. I’m sure our profit is lower than most FBM sellers, but our turnover continues to grow month after month. All with relatively little time investment on our part.
You might not be a writer like me, you might be super organised (I’m not) and you might be ready for the challenge and reward of FBM. The secret to running a successful business isn’t easily bought in an online seminar or blindly following the advice of some guy you read in a blog once. It’s done by carefully structuring the business around your skills, your temperament and your ability to commit time and energy. That means asking yourself the right sort of questions.
Start with ‘what works best for me?’ and take it from there.
Good luck and happy selling.
James
Related: What are the Advantages of Automated Repricing on Amazon?
