Fulfillment by Merchant (FBM)
Dealers have a choice of two shipping and storage models on Amazon. Fulfillment by Merchant (FBM) and Fulfillment by Amazon (FBA). In Fulfillment by Merchant, the retailer is responsible for the shipping, storage and customer service of its own goods. Depending on the product category, both variants have advantages and disadvantages. FBA is better suited for products with a high sales volume. The retailer uses the Europe-wide infrastructure of warehouses, logistics and dispatch. FBM is suitable for sellers of custom-made, unique and niche products.
Amazon has strict rules for merchants who do not participate in the FBA program to ensure the buyer a consistent shopping experience. Failure to meet these requirements may result in account suspension. Amazon usually grants the seller a grace period to improve performance.
The following performance benchmarks apply to sellers:
- Rate of order defects: less than 1%.
- Cancellation rate before fulfillment: less than 2.5%.
- Rate of delayed deliveries: less than 4%
- The requirements for premium shipping methods differ from these requirements.
- Authorization for premium shipping
- The following requirements must be met in order to be eligible for premium shipping:
- The seller account has been actively selling on Amazon for at least 90 days.
- In the last 30 days at least 10 orders with all shipping methods have been processed.
- The rate of shipments with a valid tracking number is at least 94%, with the following providers: DPD, DHL, FedEx & UPS
- Measurement of sales performance
Rate of Order Defects
The purchase order defect rate includes purchase orders that have received a negative evaluation, for which an A-to-Z request has been made, or for which a refund to a credit card has been made. These factors form the basis for an overall assessment of the rate of order defects. Ratings with one or two stars are negative.
Good customer support can prevent most A-to-Z requests.
Cancellation rate before fulfillment
The pre-fulfillment cancellation rate is the number of orders with shipping by sellers that were cancelled by the seller before shipping confirmation, divided by the number of orders with shipping by sellers in the relevant period. All cancellations are included in the calculation of this key figure, regardless of the reason.
Rate of late deliveries
The late delivery rate is the number of orders, shipped by the seller, for which confirmation of shipment was given after the expected shipment date, divided by the number of orders for the period in question. Late deliveries may adversely affect the customer’s purchase experience.
Prime through seller
A major advantage of using the FBA program is participation in the Prime program. By using Amazon FBA, the items qualify for Prime. Many customers appreciate “Prime items” due to the usual dispatch processing and the uncomplicated return. This is often a purchase criterion.
At the moment it is possible to apply for a test phase for “Prime by Merchant”. The retailer continues to send the goods himself, but after a successful test phase has the opportunity to advertise his assortment as “Prime products”. Amazon describes the requirements for the test phase as follows:
Before you qualify for Prime by Sellers, you must complete a trial period in which you demonstrate that you meet the high requirements for Prime shipping and customer satisfaction. Items shipped by sellers during the Prime trial period will not display the Prime logo. After you have successfully completed the test phase, you will be activated for Prime by sellers and the Prime logo will be visible to customers.
During the trial period, you must complete at least 50 valid Prime trial orders perfectly. The trial period lasts between 5 and 90 days, depending on when you meet the performance requirements. If you do not meet them within 90 days for Prime trial orders, the trial period will be automatically reset and you can try again.
After you have successfully completed the test phase, you will be activated for Prime by sellers. Your customers will then see the Prime logo on the products of your choice.
When participating in the Prime by Seller Program, the merchant is bound to Amazon’s fixed logistics partners. Apart from the costs for transport and sales fees, there are no other costs for participation.