This may be an unpopular opinion and something that isn’t discussed enough. The standard approach is to start selling on Amazon and immediately jump into FBA to get that coveted Prime badge. While this makes sense and is essential for some products and markets, competition is intensifying, and in my view, it’s time to start innovating and leveraging the advantages of FBM. With the influx of low-cost competitors from China and new threats like Temu, it’s become crucial for sellers to adapt their strategies. One effective way to stay competitive—especially for Amazon sellers—is by transitioning to Fulfilled By Merchant (FBM). Doing so allows businesses to cut down on the costs associated with FBA, while also expanding their ability to offer a wider range of products to customers.
FBM and Its Benefits
FBM allows sellers to handle their own inventory and shipping processes. This method significantly lowers fulfillment costs, enabling merchants to send larger and heavier items that might not be cost-effective through FBA. In addition to reducing shipping expenses, FBM offers the flexibility to create bundles, kits, and combinations of products that would be challenging or impossible with FBA. Chinese competitors often struggle to offer such combinations due to shipping space limitations, giving FBM sellers a competitive edge.
We know this approach works because it’s exactly what we—and some of our customers—had to do to stay competitive and improve our margins. At the same time, it allowed our offerings to stand out from other competitors on Amazon.
Avoiding Amazon’s Pricing Pressures
One key advantage of using FBM is the ability to avoid being subject to Amazon’s frequent price increases. Sellers using FBA often face unexpected hikes in fees that can erode profit margins. FBM, on the other hand, provides more transparent costs, allowing businesses to plan their expenses effectively. This predictability in pricing helps sellers maintain control over their profit margins, ultimately benefiting their bottom line. Are you tired of Amazon raising costs? This is the solution.
Expanding to Multiple Sales Channels
Transitioning to FBM also opens the door to expanding your sales channels. By establishing a partnership with a good 3PL, you can not only handle FBM but also gradually set up your own Shopify store. This means you can start fulfilling orders directly from your online shop, further diversifying your revenue streams. Additionally, a good local partner can facilitate access to other local marketplaces like eBay and Etsy, broadening your reach and customer base.
The Customer’s Perspective – Does it matter if may offer is not Prime?
When it comes to purchasing decisions, customers prioritize value over the “Prime” label. In Germany, consumers are savvy shoppers who seek out good deals, often preferring not to pay for shipping if possible. This demand for value aligns perfectly with the advantages of FBM. By reducing fulfillment costs, sellers can pass those savings on to consumers, enhancing the perceived value of their offerings.
Moreover, the ability to create product bundles can elevate customer satisfaction. For instance, a customer looking for a specific combination of items, or buying 3 for the price of 2 will find greater satisfaction when they can purchase them together at a competitive price. This approach not only increases the average order value but also enhances the overall shopping experience, leaving other offers, unable to compete because they are unable to combine kits.
Economic Advantages of FBM
Adopting FBM not only meets customer needs but also benefits sellers financially. With FBM, the cost per customer rises, which is favorable regarding revenue. Since shipping expenses remain manageable, businesses can implement more flexible promotional strategies, such as discounts or limited-time offers, without impacting their bottom line. This flexibility allows sellers to test different marketing approaches and optimize their strategies based on customer feedback and purchasing behavior.
Conclusion
In conclusion, transitioning to FBM is not just a trend; it’s a necessary evolution for sellers in Germany to remain competitive against the likes of Chinese vendors and new market entrants. By embracing this fulfillment method, businesses can reduce costs, offer more diverse product combinations, and ultimately enhance customer satisfaction. Moreover, FBM enables sellers to escape the unpredictability of Amazon’s pricing model, provides clearer logistics costs, and paves the way for expanding into new sales channels. As the market evolves, those who adapt will thrive, while those who cling to outdated models risk falling behind. The time to act is now—start implementing FBM to secure your position in the competitive German market.