Logistics options under Amazon’s no-source model: Detailed explanation of FBA and FBM

In the Amazon business process, the choice of logistics method is crucial for sellers. This article will introduce in detail the two main logistics methods in Amazon’s no-source model – FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant), to help you better understand the differences between them and their respective applicable scenarios.

1. What is FBA?

FBA is one of the logistics services provided by Amazon. Sellers need to purchase goods first and store these goods in Amazon’s warehouse. After that, Amazon will be responsible for the storage, management, inspection, packaging and final delivery of the goods to customers. In addition, FBA also provides return and exchange services. However, choosing FBA means higher upfront investment costs, including product purchase fees and warehouse storage fees. If a store does not generate enough orders for a long time, it may face greater financial pressure.

2. What is FBM?

FBM means that the seller completes the shipping process by himself. After the store receives the order, the seller needs to purchase the corresponding products from the supplier and send them to Amazon’s designated transit warehouse for quality inspection. After completing this series of steps, the seller is also responsible for affixing the international logistics label and sending the goods to overseas customers. Compared with FBA, the operation process of FBM is simpler and more direct, especially suitable for novice sellers who are just starting out.

Difference comparison

1. Capital investment

• FBA: Requires higher initial investment, covering product procurement and warehousing costs.
• FBM: The funds required are relatively small, mainly focusing on product procurement and logistics costs.

2. Operational complexity

• FBA: It involves multiple links such as product procurement, transportation, and storage, and is relatively complex.
• FBM: The process is simplified, more suitable for beginners, and there is no need to worry about complex warehousing issues.

3. Risk Management

• FBA: Higher capital occupancy may lead to higher operating risks.
• FBM: Increased flexibility helps reduce the risk of overstocked inventory.

4. Applicable objects

• FBA: Applicable to sellers with a certain scale and capital strength, emphasizing fast delivery and high-quality customer service experience.
• FBM: More suitable for small shops or start-ups, especially those operators who are sensitive to cash flow.

In summary, both FBA and FBM have their unique advantages and limitations. For large sellers who pursue efficient shipping and customer satisfaction, FBA is undoubtedly a better choice; while for novice sellers who want to start a cross-border e-commerce business at a lower cost, FBM is more friendly and easy to operate. Therefore, before deciding which logistics solution to adopt, it is recommended to make a reasonable judgment based on your own actual situation.