Originally posted June 10, 2022, updated July 31, 2025.
Amazon has proven to be one of the most complicated and competitive markets in the world; but one that’s worth it for ecommerce brands. In 2024, independent sellers in the US averaged more than $290,000 in annual sales through the Amazon Store. While this provides a strong revenue channel for many retailers, selling through Amazon Marketplace means figuring out not only how to compete with other retailers but also how to handle ecommerce fulfillment processes and the complexities of omnichannel fulfillment.
Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM) are two ways for sellers to take care of their Amazon orders. While there is no one-size-fits-all way to fulfill, brands benefit from a strong understanding of the variety of methods so they can determine what model(s) work best for their operations, product, and customers.
Today we’re exploring the Amazon FBM model, and how it fits within a broader ecommerce fulfillment strategy.
What is FBM on Amazon?
Fulfilled By Merchant, or FBM, is when a seller lists a product on Amazon but ships it to customers themselves. This is often done through existing ecommerce fulfillment operations, for example, either a dedicated facility or a 3PL partner. In the FBM model, sellers must take care of their own orders and can’t depend on Amazon (FBA) to do so.
While FBM is often used by brands selling low-margin items, it’s underutilized because FBA simplifies shipping, handling, and other operational tasks. That said, FBM can offer greater control over inventory, lower fulfillment fees, and more flexibility in branding and customer experience, making it a strategic option for the right sellers.
How does Amazon FBM work?
After setting up a seller account on Amazon and creating product listings, sellers have two options for getting their products to customers: they can use Amazon’s fulfillment network to ship orders on their behalf (FBA), or they can do it themselves (Amazon FBM).
Before making an impulsive decision to go with FBA because of the ease it offers, it’s important to recognize that Fulfillment by Amazon has its complexities as well. FBA has strict inventory requirements, high storage and long-term fees, limited control over the customer experience, and complicated forecasting.
With Amazon FBM, brands oversee order fulfillment using their existing warehouse operations (or wherever their products are) to send orders to the delivery address Amazon customers provide. The MFN (Merchant Fulfilled Network) seller is also in charge of customer service and returns management.
Sellers opting for FBM must carefully consider their shipping strategy. That means securing delivery partners who are reliable and cost-effective. If FBM shipping costs exceed FBA fees, self-fulfillment can quickly erode profit margins and defeat the purpose.
When to choose FBM to ship your product
FBM works best for certain types of products, and in the right fulfillment mix. FBM (Fulfilled by Merchant) is often a smarter option for items that are unique, lower in volume, or have tighter margins. It’s especially effective when paired with a hybrid fulfillment strategy, where FBA handles high-volume, fast-moving SKUs and FBM supports slower-moving or specialty items.
Use FBM when:
- Products are exclusive or sell infrequently. These items may not justify FBA storage fees and don’t benefit from rapid fulfillment.
- Order volumes are low. With fewer units, shipping costs can be managed more efficiently through the seller’s own network or 3PL.
- Profit margins are slim. FBM can reduce warehousing and fulfillment costs, helping sellers avoid the high fees tied to FBA.
- Items are oversized or heavy. FBA’s pricing model heavily penalizes large or bulky products; FBM may be more cost-effective with the right shipping partner.
- Custom packaging or branded experiences are essential. FBM allows for more control over the unboxing experience and customer engagement.
When does FBM beat FBA?
Because FBA fees are largely based on size, weight, and storage time, sellers can often improve margins by fulfilling directly, especially if they’ve secured competitive shipping rates or want to maintain flexibility in how products are delivered.
Using FBM in a hybrid model
A hybrid approach gives sellers the best of both worlds: the speed and Prime visibility of FBA for top sellers, and the flexibility and cost control of FBM for niche or margin-sensitive products. It also adds resilience to your operations: if FBA inventory limits tighten or delays occur, FBM can step in to keep orders moving.
The benefits of using Amazon FBM
FBM gives sellers more freedom, flexibility, and control. Brands can manage inventory on their own terms, avoid rising FBA fees, and create a more unified operation across channels by handling their own marketplace fulfillment. It’s an ideal path for sellers who want to grow their Amazon business while maintaining ownership of their brand, profits, and customer experience. The benefits include:
| FBM Benefit | Why it matters |
| More business control | Sellers manage their own inventory, fulfillment, and operations without relying on Amazon’s systems or schedules. |
| Unified inventory for multi-channel sales | Use the same stock to fulfill online orders and supply physical retail locations; no need for duplicate inventory or extra transfers. |
| Higher profit potential | Avoid FBA fees, choose more affordable warehouses, and reduce shipping costs. Which is especially useful for heavy or low-margin products. |
| Stronger brand connection | Sellers communicate directly with customers, gaining feedback, building loyalty, and offering a branded experience. |
| Less exposure to Amazon policy shifts | Avoid disruptions from changes in FBA pricing, storage limits, or other policy updates. |
| Simplified tax and paperwork | Fewer tax complexities and less administrative burden, particularly in states without sales tax. |
Amazon FBM fees broken down
The Amazon FBM fees are costs that sellers will pay to sell on Amazon. These fees are not simple and vary from one seller to the next, depending on the shipping and delivery options they offer. But, to start, they will have to pay some fixed costs.
- Professional Selling Plan: $39.99/month
- Individual Selling Plan: No monthly subscription fee
- Per-item fee (Professional Plan): No per-item fee
- Per-item fee (Individual Plan): $0.99 per item sold
Additional Amazon FBM fees explained
While FBM sellers avoid Amazon’s fulfillment and storage fees, they’re still responsible for several platform and operational costs. The most consistent charge is the referral fee, which Amazon takes as a percentage of each sale, typically between 8% and 15%, depending on the product category. Some categories, such as books or DVDs, also include a $1.80 closing fee per unit sold. If a customer returns an item, Amazon may also charge a refund administration fee, where they retain 20% of the original referral fee (up to a $5 maximum).
Outside of Amazon’s platform fees, FBM sellers manage their own fulfillment costs. That includes shipping fees, which vary based on carrier, destination, and product size. Sellers also need to account for packaging materials such as boxes, tape, inserts, and labels. If they use a third-party warehouse or 3PL, there may be storage fees based on volume or square footage, as well as handling charges for pick, pack, and ship services. For those fulfilling orders in-house, labor becomes a significant cost factor.
Other FBM responsibilities include returns management and covering the costs of restocking, inspecting, or disposing of returned items, and providing customer service. Unlike FBA sellers, who have Amazon handle post-purchase support, FBM sellers must respond to customer inquiries, complaints, and order issues directly.
Sellers participating in Seller Fulfilled Prime (SFP) face even tighter standards, including meeting Amazon’s 2-day delivery promise. To qualify and succeed, sellers often invest in shipping automation tools, build relationships with national and regional carriers, and maintain rigorous operational performance.
FBA vs. FBM: Quick comparison
| Category | FBA (Fulfilled by Amazon) | FBM (Fulfilled by Merchant) |
| Fulfillment and storage fees | Charged by Amazon based on product size, weight, and storage time | Seller pays own fulfillment, labor, and warehousing costs |
| Shipping costs | Included in FBA fees for Prime-eligible orders | Paid directly by the seller or 3PL |
| Referral fees | 8%–15% depending on product category | 8%–15% depending on product category |
| Per-item/closing fees | Additional fees for certain categories (e.g., $1.80 for media items) | Same as FBA for applicable categories |
| Refund admin fee | Simpler if seller fulfills from fewer or a single locations | Same |
| Prime eligibility | Automatic for FBA listings | Requires enrollment in Seller Fulfilled Prime and performance compliance |
| Customer service | Handled by Amazon | Handled by seller |
| Returns management | Managed by Amazon | Seller handles inspections, restocking, and customer communication |
| Brand control | Limited (Amazon packaging and communication) | Full control over packaging, messaging, and customer experience |
| Sales tax complexity | More paperwork due to Amazon’s fulfillment in multiple states | Simpler if seller fulfills from fewer or a single location |
| Flexibility and control | Less operational flexibility | Greater control over fulfillment, customer service, and inventory allocation |
When and how to use Amazon FBM
Anyone can choose to go the Amazon FBM route, but it’s often situational and depends on numerous factors, including product type and volume, 3PL vs FBA costs, the importance of having Prime eligibility, and more.
However, FBM adds flexibility to a hybrid fulfillment strategy by allowing sellers to manage select SKUs outside of Amazon’s system, which is ideal for low-volume, oversized, or branded items. While FBA handles fast-moving, high-demand products with Prime eligibility, FBM fills the gaps by offering more control and cost efficiency. This approach gives sellers operational resilience and the ability to adapt to shifting demand, policy changes, or peak season pressure.
When paired with a 3PL, FBM becomes even more powerful. A fulfillment partner like Kase can handle storage, picking, packing, and shipping for FBM orders without the overhead of building your own logistics operation. You get the benefits of Prime-like service with greater visibility, brand control, and the ability to scale across channels.
Want to see how FBM and 3PL can work together to grow your business? Connect with the team at Kase to explore flexible fulfillment solutions built for modern brands.
