What is the FBM Amazon sales model?

Kamil Kempisty
Updated: 26 April 2021

What is the FBM model?

FBM (short for Fulfillment by Merchant ) is a sales model in which the merchant is responsible for the entire sales process, including warehousing, packaging, shipping of goods, and handling complaints and returns.

How does the FBM model sales work?

  • Storage – The Seller must provide a storage area in which to store its goods.
  • Finding a shipping partner – In the FBM model, the seller does not have the option of using shipping companies under the contracts that Amazon has. It is necessary to negotiate the terms of cooperation individually or use different carriers.
  • Product sales – Once the product is sold, the seller is responsible for processing and handling shipping.
  • Handling Complaints and Returns – The Seller is also responsible for handling any returns and complaints related to the entire order process.

What are the advantages of the FBM model?

  • More control – Sellers in the FBM model have more control over their products and have access to them at all times. They also don’t incur the costs associated with potential pickup from Amazon warehouses for goods they want to withdraw from the sale.
  • Lower costs on some goods – Amazon’s FBA model makes fees dependent on the size of the goods in question. Therefore, the FBM model may be more beneficial for larger or heavier goods that sell on a low margin.

What are the disadvantages of the FBM model?

  • No room for errors – Amazon takes a very strict approach to customer service. Repeated errors or delays in shipments can result in a temporary suspension of the account or even a complete lockout. While providing the right level of service will be simpler for a small number of shipments, a seller with a large number of shipments has a lot more room for error.
  • High storage and handling costs – The FBM model requires the seller to maintain storage and handling space. This issue can be problematic when sales spikes or declines are difficult to predict. In the former case, the seller may need to increase warehouse space and costly product transportation. In the case of declining sales, the cost of maintaining space can significantly impact the profitability of the business.

What are the costs of the FBM model?

Although in this model the seller is responsible for every aspect of product management, Amazon does charge fees associated with using the platform. The “Professional” plan is a fixed monthly fee, independent of how many goods are sold. It is also possible to choose a payment system for each product purchased from us on Amazon.

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments

See also

12 May 2021

VAT-OSS – rules and impact on VAT settlements for Amazon sales

The VAT-OSS procedure is due to come into force as early as 1 July 2020, hopefully facilitating mail order sales of goods between EU countries. Will it really make it possible to remove the obligation to register for VAT purposes in other EU countries?

26 February 2021

VAT – what you should know when selling online

VAT, VAT registration, and VAT settlements are quite a problem for online sellers operating within the European Union. Differences between the rate depending on the country, the VAT sales limit for mail-order sales or issues of storage and place of shipping – all these can seriously discourage online retailers from doing business on a larger scale.

2 February 2021

What VAT applies in the UK?

VAT has been in force in the UK since 1973, when the UK joined the European Union. The basic VAT rate in the UK is 20% and covers all products and services which are not covered by the 5% and 0% reduced rates.

29 January 2021

What VAT applies in Sweden?

In Sweden, VAT has been in force since 1960. There are four VAT rates in Sweden. The basic rate of Swedish Mervärdeskatt (moms) (VAT) is 25% and applies to most goods for which no reduced rates apply.

26 January 2021

What VAT applies in Germany?

VAT (value-added tax) in the local language is “Mehrwertsteuer,” and the acronym VAT is translated as “MWSt.” Find out what are the VAT rates in Germany and when the obligation to register VAT in Germany arises. What to pay attention to? Are there lower VAT rates in Germany than in Poland?

22 January 2021

What VAT applies in Spain?

IVA, short for “Impuesto sobre el Valor Añadido,” is the equivalent of VAT in Poland. VAT has been in force in Spain since 1986, when Spain joined the European Union. The basic VAT rate in Spain is 21% and covers all products and services that are not covered by the reduced rates of 10% and 4% and the zero rate.
Podstawowa stawka VAT w Hiszpanii wynosi 21% i obejmuje wszystkie produkty i usługi, których nie obejmuje stawki zmniejszone równe 10% i 4% oraz stawka zerowa.

Amazon, Amazon Service Provider Network, Amazon SPN, and Amazon SPN logo are trademarks of Amazon.com, Inc. or its affiliates.

facebook-icon twitter-icon linkedin-icon comments-icon facebook