Amazon FBA vs FBM: Which Fulfillment Method Should You Use?

When you’re selling on Amazon, the choice between FBA and FBM comes down to a simple trade-off: convenience versus control.

With Fulfillment by Amazon (FBA), you’re outsourcing your entire logistics operation. You pay Amazon to store your products, pick and pack them when an order comes in, ship them out, and even handle customer service and returns.

On the other hand, Fulfillment by Merchant (FBM) puts you in the driver’s seat. You manage everything from storage to shipping yourself, giving you complete command over your operations and your costs.

Choosing Your Amazon Fulfillment Strategy

This is one of the most important decisions you’ll make as an Amazon seller. It’s not just a logistics preference; it’s a core part of your business model that directly impacts your profit margins, day-to-day workload, and how fast you can grow.

Understanding this choice is also part of grasping the wider Amazon ecosystem, which includes distinct platforms like Vendor and Seller Central. If you want to dive deeper into those differences, you can explore our detailed guide on Amazon’s platforms.

To make the right call for your business, you need to look at a few key factors:

• Product Type: Are you selling small, fast-moving items or large, bulky products that sell less frequently?
• Sales Velocity: How quickly do your products fly off the shelves?
• Profit Margins: Can your pricing comfortably absorb Amazon’s various fulfillment fees?
• Operational Capacity: Do you have the warehouse space and the team to handle picking, packing, and shipping orders efficiently?

Most sellers end up leaning heavily toward one model. As of early 2024, 82% of top Amazon sellers use FBA in some capacity. Why? Because tapping into Amazon’s world-class logistics network and getting that Prime badge is an incredibly effective way to reach more customers and drive sales. The convenience factor is a massive draw. You can read more about current fulfillment trends over on Red Stag Fulfillment.

FBA vs FBM At a Glance

To give you a quick snapshot, here’s how the two fulfillment methods stack up against each other. This table breaks down the core differences, helping you see the immediate trade-offs at a high level.

Feature	Fulfillment by Amazon (FBA)	Fulfillment by Merchant (FBM)
Order Fulfillment	Amazon stores, picks, packs, and ships your products.	You are responsible for all storage, packing, and shipping.
Prime Eligibility	Automatic for most products, boosting visibility and sales.	Possible through Seller Fulfilled Prime (SFP), but with strict requirements.
Customer Service	Handled by Amazon’s 24/7 support team.	You manage all customer inquiries and support issues directly.
Inventory Control	Less direct control; subject to Amazon’s receiving times and policies.	Complete control over your stock levels and accessibility.
Branding	Standard Amazon packaging; limited branding opportunities.	Full control over packaging, allowing for custom boxes and inserts.
Fees	Includes fulfillment fees, monthly storage fees, and other charges.	No Amazon fulfillment fees (you pay only referral fee), but you cover all storage and shipping costs.

Ultimately, this table highlights the central dilemma: FBA offers scalability and the power of Prime at the cost of control and higher fees, while FBM gives you full control and potentially better margins if you have the operational muscle to back it up.

How Fulfillment by Amazon (FBA) Works

Think of Fulfillment by Amazon (FBA) less like a simple delivery service and more like plugging your business directly into Amazon’s huge global logistics network. When you sign up for FBA, you’re basically outsourcing the most tedious, time-consuming parts of ecommerce. This frees you up to focus on the things that actually grow your business, like sourcing great products and marketing them.

The core concept is simple: you sell it, Amazon ships it. But what does that actually look like in practice? It all starts with you, the seller, handling the initial prep work.

Your Role in the FBA Workflow

Your main responsibility in the FBA process is getting your inventory prepped and sent to Amazon. This is more than just tossing products into a box. Amazon has very specific guidelines for preparation, packaging, and labeling to make sure everything is tracked and handled properly the second it hits their fulfillment centers.

Here’s what your part of the job looks like:

• Product Preparation: You need to make sure every product meets Amazon’s prep requirements. This could mean poly-bagging certain items, bubble-wrapping anything fragile, or putting “sold as a set” labels on bundled products.
• Labeling: Every single unit you send needs its own unique, scannable barcode. You’ll be the one printing and sticking on these FNSKU (Fulfillment Network Stock Keeping Unit) labels.
• Creating a Shipment Plan: Inside Seller Central, you’ll create a shipping plan. This tells Amazon exactly what products you’re sending, how many units of each, and how they’re all packed.
• Shipping to Amazon: Amazon uses your shipment plan to tell you which of their fulfillment centers to ship your inventory to. From there, you pack your products into larger shipping boxes, label them, and get them picked up by a carrier like UPS or FedEx.

Once your shipment is out the door, your hands-on work is pretty much finished. You’ve officially passed the baton to Amazon. For a deeper dive into the nitty-gritty of getting FBA set up, check out our complete guide on what is Amazon FBA.

What Amazon Handles for You

This is where the real value of FBA kicks in. As soon as your inventory arrives and gets checked in at the fulfillment center, Amazon’s well-oiled machine takes over every part of the order-to-delivery cycle.

The biggest perk of FBA isn’t just the shipping; it’s the instant eligibility for the Prime badge. Data consistently shows that Prime products have a wildly higher chance of winning the Buy Box, which is where over 80% of Amazon sales happen.

The moment a customer clicks “buy” on your product, Amazon’s system kicks into high gear.

Here’s the breakdown of what Amazon manages for you:

1. Storage: Your products are stored safely in their massive warehouses, ready to go as soon as an order comes in.
2. Picking and Packing: When an order is placed, Amazon’s warehouse team finds your product, packs it neatly into an Amazon-branded box, and gets it ready for shipping.
3. Shipping: Amazon handles the entire shipping process through its own logistics network, sending the package directly to the customer and providing them with tracking info automatically.
4. Customer Service: All customer questions about shipping, delivery, or the order itself are handled by Amazon’s 24/7 support team. You don’t have to deal with it.
5. Returns Processing: If a customer needs to make a return, they coordinate directly with Amazon. Amazon manages the return, inspects the item, and determines if it can be put back into your sellable inventory.

This hands-off approach is exactly why so many sellers choose FBA. It removes the need for your own warehouse space, employees, and shipping logistics, making it an incredibly scalable solution. You’re trading a bit of control (and paying fees) for massive convenience and direct access to millions of Prime members.

Understanding Fulfillment by Merchant (FBM)

If Fulfillment by Amazon (FBA) is all about handing over the reins for convenience, then Fulfillment by Merchant (FBM) is about taking them back. Choosing FBM means you own your entire logistics process, from the second a customer clicks “buy” until the package lands on their doorstep. You’re in the driver’s seat for everything.

This path is for sellers who already have their fulfillment figured out or sell products that just aren’t a good fit for the FBA model, like oversized, heavy, or slow-moving items. Instead of palletizing your inventory and shipping it off to Amazon, you store it yourself. That could be in a third-party warehouse, a storage unit, or even your garage.

The Day-to-Day Life of an FBM Seller

As an FBM seller, your daily routine looks completely different from an FBA seller’s. You essentially become the fulfillment center.

Your core responsibilities boil down to:

• Inventory Management: You’re responsible for storing all your products safely and keeping a perfectly accurate count of what you have in stock.
• Picking and Packing: An order comes in, and you (or your team) have to find the item, pack it up securely, and put a shipping label on it.
• Shipping Orders: It’s up to you to work directly with carriers like UPS, FedEx, or USPS to get that package out the door and on its way within Amazon’s strict timeframes.
• Customer Service: You handle every single customer question, from “Where’s my order?” to managing returns and processing refunds.

It’s a hands-on approach that demands more work, for sure. But it also gives you a degree of control that FBA simply can’t match.

The Power of Control and Customization

One of the biggest draws of FBM is the freedom to create a unique brand experience. With FBA, every single order arrives in a generic, Amazon-branded brown box. With FBM, you get to control the unboxing experience from start to finish.

This opens up a ton of possibilities:

• Use custom-branded packaging that makes your brand pop.
• Tuck in marketing inserts, thank-you notes, or coupons for future buys.
• Build a more direct relationship with the people buying your products.

This level of personalization can be a huge competitive advantage, especially for premium brands or anyone trying to stand out in a crowded niche.

FBM isn’t just about saving on fees; it’s a strategic choice for sellers who want to own the customer experience from end to end. It’s how you turn a simple transaction into a memorable brand interaction.

Beyond branding, FBM puts you firmly in control of your finances. You aren’t chained to Amazon’s storage fees, which can get painful for slow-selling or bulky items. Instead, you can shop around and negotiate your own shipping rates with carriers, often finding cheaper solutions than what FBA offers.

For some high-performing sellers, there’s even a way to get the Prime badge without using FBA through the Seller Fulfilled Prime (SFP) program. This hybrid approach gives you the visibility of Prime with the control of FBM, but it’s not for the faint of heart. The performance metrics are incredibly demanding, requiring near-perfect fulfillment and two-day shipping across the country. If you’re considering this high-stakes game, you can learn more about the challenges and benefits in our guide to Amazon Seller Fulfilled Prime.

At the end of the day, choosing FBM means you’re running your own mini-logistics company. It’s more work, no doubt, but for the right seller with the right products, the control you gain over costs and the customer experience is well worth the effort.

Breaking Down the Costs: FBA vs. FBM Fees

Let’s get down to the numbers, because this is where the Amazon FBA vs. FBM debate really hits your bottom line. It’s way too easy to get lost in a sea of fees, but understanding the cost structure for each model is the only way to protect your profit margins.

The following infographic gives you a quick visual breakdown, showing the different logistical paths and where the costs pop up for FBA versus managing your own fulfillment.

The image cuts straight to the core difference: with FBA, your costs are bundled into Amazon’s fee structure. With FBM, you’re juggling multiple, separate expenses like warehouse space and shipping carriers.

The FBA Cost Structure

When you go with FBA, you’re paying for convenience and access to Amazon’s logistics powerhouse. The fees are predictable, which is great, but they can add up fast if you’re not paying close attention.

Here are the main FBA fees you need to have on your radar:

• Fulfillment Fees: This is the big one, the charge for the pick, pack, and ship service. It’s calculated based on your product’s size and weight. A small, lightweight item might only cost a few bucks to fulfill, but a large, heavy one will be significantly more.
• Monthly Storage Fees: Amazon charges you per cubic foot to store your inventory in their fulfillment centers. Heads up: these fees jump higher during the peak holiday season from October to December.
• Long-Term Storage Fees: If your inventory sits for more than 180 days, you’ll get hit with this penalty. It’s Amazon’s way of telling you to sell your products faster or get them out.
• Low-Inventory-Level Fees: A newer fee introduced in 2024, this penalizes sellers whose stock for popular products falls below a 28-day supply. Amazon wants its customers to avoid “out of stock” notices, so they’re pushing sellers to maintain healthier inventory levels.
• Other Fees: Don’t forget about smaller charges like returns processing fees and inventory placement service fees. Our complete guide to Amazon seller fees breaks these down even further.

Seller Takeaway: FBA fees are volume-based. The faster your products sell and the smaller they are, the more cost-effective FBA becomes. For slow-moving or oversized items, these fees can quickly eat through your profits.

The FBM Cost Structure

With Fulfillment by Merchant, you replace Amazon’s fees with your operational expenses, providing you with greater control over your business. However, you are responsible for all costs.

You only need to pay Amazon a referral fee, which varies by category, with most categories set at 15%. For a detailed breakdown of Amazon fees, please refer to this comprehensive guide: Amazon Fees for Sellers.

Your main FBM costs will include:

• Warehouse Rent: Whether you’re renting a dedicated space or just using a corner of your garage, storage isn’t free.
• Packing Supplies: You’ll need to buy your own boxes, tape, bubble wrap, and shipping labels. These small costs add up.
• Shipping Carrier Costs: This is your biggest variable expense. You’ll be paying carriers like USPS, UPS, or FedEx to deliver your orders, and rates depend entirely on package size, weight, and destination.
• Labor: Your time, or your employees’ time, spent picking, packing, and shipping orders has a real cost.
• Customer Service Software: You might need tools to manage customer inquiries and returns without letting anything fall through the cracks.

While the basic cost of selling on Amazon (like referral fees) is similar for both models, the big difference is in those fulfillment expenses. Savvy FBM sellers can get creative here by working with third-party logistics (3PL) partners or negotiating better rates with couriers.

Sample Product Cost Analysis: FBA vs. FBM

To make this real, let’s look at a hypothetical cost breakdown for a standard-sized product. This table shows how the fees and expenses stack up differently between FBA and FBM for the same item.

Cost Component	FBA Example Cost	FBM Example Cost	Notes
Referral Fee (15%)	$4.50	$4.50	Assumes a $30.00 sale price. This fee is the same for both.
Fulfillment Fee	$3.77	$0.00	Based on a standard-size item under 1 lb. FBM sellers handle this themselves.
Monthly Storage	$0.25	$0.15	FBA fee is per cubic foot. FBM cost is an estimate for self-storage space.
Shipping Cost	$0.00	$5.50	FBM seller’s cost to ship via a carrier like USPS. FBA covers this in their fee.
Packing Supplies	$0.00	$0.50	Box, tape, label, etc. FBA includes this in their service.
Labor (per order)	$0.00	$1.00	Estimated cost of time to pick, pack, and ship one FBM order.
Total Fulfillment Cost	$8.52	$11.65	Excludes cost of goods.

As you can see, for a small, standard item, FBA’s bundled fees can come out ahead. But for a different product, say, something larger or heavier, the FBM column could easily look more attractive once you factor in Amazon’s higher fees. Always run the numbers for your specific products.

A Tale of Two Products: A Real-World Gut Check

To see how this plays out, let’s compare two totally different products.

Product 1: A Small Electronic Gadget

• Size: Small, standard-size. Easy to ship.
• Sales Velocity: High (sells 20 units per day).
• FBA: The fulfillment fee is low ($3.50 per unit), and storage costs are almost nothing because it sells so fast. The total FBA cost per unit is predictable and manageable.
• FBM: Shipping this small item yourself might cost $4.50 per unit. Once you factor in supplies and labor, your cost could easily be higher than FBA. Plus, you have to pack 20 orders every single day.
• Verdict: FBA is the clear winner here. It’s almost certainly more cost-effective and saves a massive amount of time.

Product 2: A Large Piece of Home Decor

• Size: Oversized and awkward.
• Sales Velocity: Low (sells 2 units per week).
• FBA: The fulfillment fee is high due to its size ($15+ per unit). Monthly storage fees will be painful, and you’re at high risk for long-term storage penalties if it doesn’t move.
• FBM: You can likely find a more affordable shipping option through freight or by negotiating rates. You completely avoid Amazon’s hefty storage fees by keeping it in your own space.
• Verdict: FBM is the smarter financial choice, giving you control over the high shipping and storage costs.

This side-by-side proves there’s no single “cheaper” option. The right choice is completely dependent on your product’s characteristics and how quickly it sells. Running your own numbers isn’t just a suggestion; it’s a non-negotiable for success on Amazon.

Which Fulfillment Model Fits Your Business

Deciding between FBA and FBM isn’t about which one is universally “better.” It’s about which one is better for you and your specific products. The right choice hinges entirely on your business model, the kinds of items you sell, and just how much control you want over your day-to-day operations.

To help you figure this out, let’s walk through a few real-world seller profiles. Find the one that sounds the most like you, and you’ll get a much clearer picture of whether FBA or FBM makes more sense.

The New Private Label Seller

If you’re launching your first private label product, especially if it’s a single, small, and lightweight item, FBA is almost always the best place to start. You’re already juggling a ton of tasks like product sourcing, creating your listing, and figuring out PPC ads. The last thing you need is the headache of running a mini-warehouse out of your garage.

FBA takes logistics completely off your plate, a huge advantage when you’re just getting started. More importantly, it puts that Prime badge on your brand-new product right out of the gate, which is a big factor in building trust with early customers. For an in-depth look at this strategy, our guide on launching a private label brand with FBA covers the whole process from A to Z.

The Established Brand with Oversized Items

Imagine you sell high-end, oversized furniture or heavy home gym equipment. For this type of business, FBM is the clear financial winner. Trying to use FBA for large, bulky, and often slow-selling products is a recipe for razor-thin margins, or even losses. Amazon’s fulfillment and storage fees for oversized items can be very high.

By managing your own fulfillment, you can negotiate much better shipping rates with freight carriers and completely sidestep Amazon’s punishing long-term storage penalties. It’s more work, sure, but it’s often the only way to keep the business profitable.

The Dropshipper or Custom Product Seller

This one is simple. If you’re a dropshipper, you don’t actually hold any inventory yourself, so FBM is your only option. You’re just forwarding orders directly to your supplier, who then ships the product to the customer. FBA requires sending inventory to Amazon’s warehouses, which just doesn’t fit the dropshipping model at all.

Likewise, if you sell handmade or customizable items (like engraved jewelry or personalized gifts), FBM gives you the control you need. You have to create the product after the order is placed, making it impossible to pre-ship inventory to an FBA warehouse. FBM lets you manage your own production timelines and deliver a unique product directly.

The Strategic Hybrid Seller

For many established sellers, the most powerful approach isn’t choosing one or the other, it’s using both. The hybrid model is a smart strategy that gives you the best of both worlds.

Here’s how it typically works:

• Use FBA for your bestsellers: Put your fast-moving, standard-sized products into FBA to get that Prime badge and take advantage of Amazon’s fast shipping. This maximizes your sales velocity on your most popular items.
• Use FBM for everything else: For your long-tail products, seasonal items, or anything oversized, fulfill them yourself via FBM. This protects your margins by avoiding high storage fees on products that don’t sell as quickly.

This approach lets you use Amazon’s fulfillment network as a tool for growth on your hero products while maintaining tight cost control across your entire catalog. You’re not locked into one system.

The reality in 2024 and 2025 is that FBA’s cost-effectiveness is under more scrutiny than ever, thanks to Amazon’s rising fulfillment and storage fees. New penalties like low-inventory fees and stricter restock limits have squeezed margins, especially for sellers with slower-moving inventory. FBM, in contrast, offers a predictable cost structure that you control, making it a vital option for managing profitability on certain products. You can find more analysis on these fee structures from experts at Seller Labs.

By matching your fulfillment method to your product type and sales velocity, you stop asking “Which is better?” and start making strategic decisions that directly impact your bottom line.

FBA vs. FBM: Making the Final Call

So, where does that leave us? After breaking down the fees, workflows, and risks, the right choice isn’t about which one is universally “best.” It’s about what’s right for your business, right now.

The decision boils down to a simple trade-off: are you optimizing for rapid growth, or are you prioritizing hands-on control and higher margins?

Go with FBA to Fuel Growth and Scale Fast

For sellers who want to grow quickly, Fulfillment by Amazon (FBA) is the clear choice. If you’re dealing with standard-sized products that move pretty quickly, FBA is your engine.

Jump on the FBA train when:

• You need that Prime badge; it’s non-negotiable for winning the Buy Box and boosting visibility.
• Your products are small, lightweight, and have a healthy sales velocity, which keeps storage fees from eating your profits.
• You’d rather spend your time sourcing new products and marketing your brand than getting buried in bubble wrap and packing tape.
• You’re a newer seller and need to offload logistics so you don’t get overwhelmed from day one.

Handing fulfillment over to Amazon isn’t just about convenience; it’s about buying back your most valuable asset, time, and tapping into a logistics machine built for speed.

The Bottom Line: FBA is built for scale. Its biggest draws are the instant access to Prime customers and the hands-off fulfillment, which frees you up to focus on the parts of the business that actually make you more money.

Choose FBM for Maximum Control and Better Margins

Fulfillment by Merchant (FBM) is the strategic move for sellers who need to keep a tight grip on their operations, customer experience, and ultimately, their profit margins. It’s for the operators who care about the details.

Opt for FBM when:

• You sell oversized, heavy, or slow-moving items where FBA’s fees would be too high.
• You want to create a memorable unboxing experience with custom packaging, inserts, or thank-you notes.
• Your inventory serves multiple channels (like your Shopify store and Etsy), and you need one centralized stock to pull from.
• You already have the warehouse space and a team ready to pick, pack, and ship orders efficiently.

With FBM, you’re in the driver’s seat for every aspect of the customer journey. It’s more work, no question, but the reward is often significantly higher margins and a stronger brand identity.

For many experienced sellers, the smartest play isn’t choosing one or the other. It’s a hybrid approach: use FBA for your fast-moving bestsellers and handle the niche, bulky, or multi-channel products yourself with FBM.

Your next move: Stop guessing. Pick your single best-selling product and run the numbers. Use Amazon’s FBA Revenue Calculator or a simple spreadsheet to map out every single FBA fee versus every single FBM expense. The data will show you the way forward.

Common Questions About FBA vs FBM

When you’re weighing FBA against FBM, a lot of questions come up. Let’s tackle some of the most common ones that sellers think about, answering the key questions that often come up after you’ve learned the basics.

This handy table breaks down some of the top questions we hear from both new and experienced sellers trying to figure out the best fulfillment path for their business.

Question	Answer
Is FBA better for new sellers?	Almost always, yes. It removes the entire logistical headache of storing, packing, and shipping, letting you focus on sourcing products and learning how to market them on Amazon.
Can I switch between FBA and FBM?	Absolutely. You can change your fulfillment method for any product at any time. A smart strategy is running both an FBA and an FBM offer for the same ASIN to prevent stockouts.
Does FBM hurt my Buy Box chances?	It’s a disadvantage, but not a dealbreaker. FBA gives you a huge leg up with automatic Prime eligibility. To win the Buy Box with FBM, your pricing, shipping speed, and seller metrics must be nearly perfect.
What’s the biggest mistake sellers make when choosing?	Not doing a full cost analysis. Many sellers only look at the basic fulfillment fee and forget to add in all the other charges: monthly storage, long-term storage penalties, returns processing, and the new low-inventory fees. A detailed profit analysis is non-negotiable.

Hopefully, that quick-reference table cleared up a few things. Let’s dig a little deeper into each of those points to give you the full picture.

Is FBA Better for New Sellers?

For most people just starting out, the answer is a big yes. FBA takes the entire logistical puzzle of storing, packing, shipping, and customer service completely off your plate. It’s a massive shortcut.

This frees you up to concentrate on the things you really need to master first, like product sourcing, keyword research, and figuring out your first ad campaigns. It offers a much simpler on-ramp to getting your business running and instantly taps you into the power of Amazon Prime.

Can I Switch Between FBA and FBM?

You have total flexibility here. It’s not a permanent decision. You can change the fulfillment method for any of your listings at any time right from your Seller Central dashboard.

A common and very effective strategy is to create both an FBA and an FBM offer for the exact same product. This acts as a great safety net for stockouts. If your FBA inventory suddenly runs dry, your FBM offer can kick in automatically so you never lose the sale or your sales velocity.

Does FBM Hurt My Chances of Winning the Buy Box?

Let’s be honest: FBA gives you a powerful advantage for winning the Buy Box, primarily because you get that Prime badge automatically. However, it’s definitely not impossible for an FBM seller to win it. You just have to work harder for it.

To compete effectively with FBM, you need to be firing on all cylinders. This means your pricing must be very competitive, your shipping times need to be fast, and your seller metrics like order defect rate and late shipment rate have to be practically perfect.

The biggest mistake sellers make is not doing a full cost analysis. They often look at the basic FBA fulfillment fee and forget to add in all the other charges: monthly storage, potential long-term storage penalties, returns processing, and the new low-inventory fees.

What Is the Biggest Mistake Sellers Make When Choosing?

The most common pitfall, by far, is failing to calculate the total cost of fulfillment accurately. People glance at the main FBA fee and stop there, which is a recipe for losing money.

Running a detailed profit and loss analysis for your specific product isn’t just a suggestion; it’s essential. You have to account for every single fee to see which model truly protects your margins and makes sense for your bottom line.