Amazon fulfilled by merchant, known as Amazon FBM, is a fulfilment method where sellers list their products on Amazon but handle storage, packing and shipping themselves.
Instead of sending stock to Amazon’s fulfilment centres (Amazon FBA or fulfilment by Amazon), the merchant is responsible for getting every order to the customer within a promised time and managing returns, customer service related to delivery and overall logistics.
For brands that already have strong logistics in place, or those that want full control over their customer experience, FBM can be a strategic and cost-effective way to operate on Amazon.
Fluid Marketplaces helps brands to grow and expand on Amazon with strategies that include content optimisation, advertising, brand store creation and Amazon DSP on both Amazon Vendor Central and Seller Central. For specialist logistics advice, including areas such as Amazon FBM, we refer our clients to one of our logistics partners such as Lama Fulfilment.
In this guide we have put together an overview of Amazon FBM, its benefits and drawbacks, and a comparison with Amazon FBA (fulfilment by Amazon). For more in-depth advice, brands should seek assistance from a logistics company with specialist knowledge of Amazon FBM.
How Amazon FBM works
Below is an overview of the steps involved with using FBM for your Amazon brand.
1. List products on amazon
Create Amazon listings just as you would with any fulfilment method, selecting “fulfilment by merchant” during setup.
2. Store stock in your own warehouse or third party logistics (3pl)
Stock stays within your chosen location, whether that’s your brand’s private warehouse or a third-party fulfilment / logistics partner such as Lama.
3. Ship orders when they arrive
When a customer buys your product, Amazon sends you an order notification. Your warehouse team or fulfilment partner picks, packs and ships the order using your preferred carrier.
4. Provide delivery-related support
Your brand’s in-house team handles delivery queries, shipping delays, or return logistics, ensuring the customer receives consistent service aligned with your brand values.
Why Amazon FBM better for some brands than FBA
Some businesses benefit more from FBM than FBA because of their product type, logistics setup or brand strategy. FBM is often ideal when:
- Products are oversized or heavy where Amazon FBA storage and fulfilment fees can be disproportionately high.
- Inventory turnover is slower as FBA charges long-term storage fees that reduce margins for slow-moving items.
- Your brand wants to protect margin control by avoiding fluctuating Amazon fulfilment and storage costs.
- Your brand requires specialised handling like fragile goods, temperature-controlled items or products with custom packaging.
- Your brand wants consistent brand-first packaging which Amazon does not provide with FBA.
- Your brand already has an efficient fulfilment network, or uses a marketplace logistics / fulfilment partner
For these situations, FBM gives brands more flexibility and often better profitability.
Benefits of Amazon FBM
For many sellers, Amazon FBM provides benefits that directly impact profitability and brand presence:
- Greater control over fulfilment costs
You decide your storage and shipping setup, helping protect margins from fluctuating FBA fees.
- Flexibility in packaging and branding
You can use custom boxes, inserts and branded materials to create a cohesive customer experience.
- More predictable stock management
Stock stays in your environment, allowing faster replenishment decisions and lower risk of stranded stock.
- Better suited to unique or complex products
Items that are fragile, irregularly shaped or require compliance checks are often handled more safely under your own processes.
- Access to multiple marketplaces
With stock held in your warehouse or a 3pl, you can fulfil not only Amazon orders but also orders from your website, eBay, TikTok Shop and more, without splitting inventory across Amazon centres.
- Margin protection for oversized or low-volume items
FBM avoids costly FBA storage and fulfilment fees that disproportionately affect larger SKUs.
Drawbacks of Amazon FBM
While Amazon FBM gives brands more control and flexibility, it also introduces several challenges that sellers need to plan for. These drawbacks don’t make FBM a poor choice, but understanding them clearly helps brands decide whether they have the operational strength to support it.
Greater operational responsibility
With FBM, you are fully responsible for storage, packing, shipping, returns handling and delivery-related customer service. This can be demanding for brands without a strong warehouse setup or an experienced 3pl partner. Every error in picking, packing or dispatching directly affects your seller metrics.
No automatic Prime badge
FBM listings do not automatically receive the Amazon Prime badge. This can reduce conversion rates because many Amazon shoppers filter for Prime-eligible items. To regain Prime eligibility, sellers must qualify for seller-fulfilled prime, which requires strict delivery standards and high performance consistency.
Stricter performance pressure
Amazon holds FBM sellers to strict targets, including:
- On-time delivery rate
- Valid tracking rate
- Low order defect rate
Failing to meet these can reduce buy box share, or even threaten account health. Because you handle fulfilment yourself, there’s no buffer and any delays or carrier issues reflect directly on your brand’s Amazon performance.
Reliance on your carrier network
Your brand’s delivery speed and reliability depend entirely on your chosen couriers. If it doesn’t have optimised carrier contracts or a multi-carrier solution, shipping can be slower or more expensive than Amazon’s logistics network. Seasonal spikes, courier delays or staff shortages can all impact performance.
Potential for higher shipping costs
Amazon’s fulfilment network benefits from massive economies of scale. A single brand may not achieve the same shipping rates, especially for national next-day delivery. Without optimised rates or an experienced 3pl, costs can eat into margins.
More complex returns management
With FBM, your brand’s team handles the full returns process. This means receiving returns, inspecting them, processing refunds, restocking or disposing of items. It also requires customer support capacity to manage return queries promptly. FBA, by contrast, automates much of this work.
Risk of inconsistent delivery speeds
Unless your brand’s fulfilment operation is very well organised, delivery times may vary. Slow dispatching, manual processes or lack of warehouse automation can lead to delays. Amazon’s fulfilment centres, on the other hand, are optimised for speed and consistency.
Harder to scale during peak seasons
Managing Black Friday, Christmas or seasonal peaks can be challenging for FBM sellers without scalable warehouse labour or flexible courier arrangements. FBA absorbs peaks more smoothly because Amazon can allocate more warehouse staff and capacity as needed.
Greater admin load
FBM requires more administrative work, such as:
- Creating shipping labels
- Reconciling courier invoices
- Updating inventory levels
- Managing customer queries
This workload grows with order volume and can slow growth if not supported by good systems or a fulfilment partner.
Comparison of Amazon FBM and Amazon FBA
Factor | Fulfilment by merchant (FBM) | Fulfilment by Amazon (FBA) |
|---|---|---|
Storage | Merchant or 3pl | Amazon centres |
Shipping | Merchant or 3pl | Amazon |
Customer service | Merchant handles delivery issues | Amazon handles |
Returns | Merchant | Amazon |
Prime eligibility | Only via seller-fulfilled prime | Automatic |
Ideal products | Oversized, fragile, slow-moving, customised | Small, lightweight, fast-moving |
Costs | Controlled by merchant | Standard amazon fees |
Packaging | Fully customisable | Amazon branded |
FAQS about Amazon FBM
Is Amazon FBM cheaper than FBA?
It can be, especially for oversized, heavy or slow-moving products. For smaller and fast-moving items, FBA is often more cost-effective.
Can FBM sellers still get the prime badge?
Yes, but only through seller-fulfilled prime (SFP), which requires strict shipping performance and fast delivery capabilities.
Who handles customer service with FBM?
You do, but only for delivery-related issues. Product-related issues still follow Amazon’s standard customer service rules.
Is FBM slower than FBA?
Not necessarily. With the right warehouse setup or 3pl partner, FBM orders can be dispatched as quickly as FBA orders.
Does FBM affect my buy box chances?
Your fulfilment method is one factor, but pricing, delivery speed, stock availability and performance metrics are equally important. Strong FBM operations can still win the buy box consistently.
Can I use FBM and FBA at the same time?
Yes. Many brands use a hybrid model to maximise efficiency, for example, using FBA for fast-moving SKUs and FBM for specialised or bulky items.
Need support with Amazon growth?
While logistics and fulfilment is not a specialist area for Fluid Marketplaces, we are happy to refer any brands in need of more in-depth advice about Amazon FBM to our partner companies.
However if you would like expert advice about how your brand can grow profitably on Amazon with a targeted strategy for SEO, advertising (PPC) and content and brand store creation, contact us here for an informal chat.
