FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant) are two primary fulfillment methods for e-commerce sellers using Amazon’s platform. Each method has its own advantages and disadvantages, depending on the specific needs of the seller.
FBA Refers to “Fulfillment by Amazon”
The products are stored in Amazon’s warehouse, where the service providers of Amazon handle packaging , 24/7 customer support, returns and shipping directly to the customer on receiving the order.
FBM Refers to “Fulfillment by Merchant”
The seller of the business is completely responsible for delivering the goods directly to the customers. It includes storage, packaging, 24/7 customer support, returns and shipping.
FC Refers to “Fufillment Center”
Fulfillment centre is a facility provided to store your inventories, which are packed and shipped to your respective customers upon receiving the orders.
Benefits of FBA
Signing up with an FBA program has certain benefits added, thereby allowing your business to focus on the core activities without having to worry about logistics and shipping.
Here are the benefits received:
- Shipping: FBA program ensures fast delivery of the products directly to the customer by offering prime members exclusive one day delivery and normally ships your products within two days, thereby increasing customer satisfaction.
- Trust: Signing up with the FBA program can result in higher conversion rates as it is the buyers most trusted website.
- Scaling: With an FBA program, your business can solely focus on the core activities without being concerned about the order fulfillment process.
- Storage: Inventory management is a task, especially when your e-commerce business is booming, therefore the FBA program is the perfect solution where it provides a facility to store your products, thereby managing the entire shipping process, saving you all the hassle of storage and logistics.
- Multi-channel fulfillment: Amazon FBA can handle all the orders simultaneously through all the channels, including the company’s website.
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Company Registration
✓ New Company Registration Address, etc.
✓ New GST Registration, GST Registration for APOB.
✓ Mailing Address for Mail & Courier Handing
GST Registration
✓ GST Registration for New GST Registration
✓ GST Registration for APOB, etc.
✓ Mailing Address for Mail & Courier Handing
Business Address
✓ Mailing Address for Mail & Courier Handing
✓ Address on Business Cards, Letter Heads, etc.
Benefits of FBM
The FBM program deliberately includes more cons than pros when compared. It’s a huge responsibility, as the entire process of order fulfillment along with the main activities of the business is completely handled by the seller of the business. An FBM program has its own benefits, such as:
- Control: With the FBM program, the sellers have the flexibility to exercise complete control over how the products are packaged, thereby allowing for customised packaging that enhances the customer experience.
- Cost effective: Sellers of the business can reduce costs by handling the fulfilment process, unlike signing up with an FBA program.
- Amazon storage: Since the fulfillment process is completely handled by the business, the sellers can avoid paying storage fees charged by FBA.
- Shipping: The FBM program allows the sellers to choose a method of shipping that is convenient for the customers, thereby optimizing cost based on product and location.
- Customer relationship management: The seller of the business has direct contact with the customers. This in turn can be an opportunity to build strong relationship with your customers, thereby increasing your brand credibility.
The FBA / FBM program has several benefits, but when compared, the FBA program has more advantages than FBM, but how?
- From the above benefits, we can keenly notice that with the FBA program,your business has the potential to outgrow the domestic market and go global with no necessary market knowledge, even though it can cost more than the FBM program.
- Opting for an FBM program can indeed be cost-effective, but don’t you think that’s the only major benefit your business can receive as compared to the FBA program.
- As we are all well aware of what an FBM program is, we certainly know that handling the entire business from management to the fulfillment process can be overwhelming, which is why we would highly recommend you to opt for an FBA program in order to gain a competitive edge in the market.
Benefits of having multiple FCs
- Improves customer satisfaction: Products that are stocked over multiple FCs with an established VPOB in different states facilitate faster regional fulfillment, ensuring goods are closer to customers, thereby reducing the shipping time, which improves customer satisfaction.
- Reduced shipping fees: Inventories in different FCs will improve the ranking in search results as your product gets a higher priority over the other set of items that are at a distant location or either out of stock. Having VPOBs registered in different states allows the seller to enjoy reduced shipping fees with the use of nearby FCs to fulfill the orders, eliminating long distance transportation costs.
- Demand: E-commerce businesses can optimise listings based on recent trends, thereby increasing product availability. With a registered VPOB in different states, the sellers can easily sell products of high demand complying with GST regulations, which increases the chances of ranking higher in search results.
- New market: Having multiple fulfillment centres with VPOB in different states enables sellers to tap into new markets without having to open a traditional office, resulting in the growth of your business.
- Cost efficient: With VPOB registered in different states and stocks in multiple fulfilment centres, your business can eliminate the cost of setting up a traditional office in different states, ensuring compliance with the rules and regulations.
Benefits of VPOB for Amazon
- Amazon prime badge: Sellers using VPOB can register for GST across different states, allowing them to leverage an exclusive one day delivery for all the prime members and normally ship your products within two days, all without having to own a physical office space.
- Business focus: With VPOB in different states, businesses can expand their operations in different markets with the Amazon FBA program, thereby allowing you to focus on the core activities of the business.
- Cost-efficient: Registering with VPOB in different states allows the sellers to manage their costs efficiently with the FBA program, as it provides a cost structure, where you only pay for the services used with no extra cost .
- Trust: Amazon is the most trusted platform by the buyers across the world. Hence, using the FBA program can be a leverage for your business, thereby building trust and credibility .
- Inventory space: As and when your business starts booming in the market, the sellers do not have to worry about the inventory space with the FBA program. Using a VPOB provides them the flexibility of operating in different states without having to own a traditional office space and meets their demands by using FBA programs across different states.
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Documents required for Amazon VPOB
Below are the necessary documents required for VPOB
- PAN
- Address proof
- Photograph
- Cancelled cheque
- MOA, AOA, COI
- Board Resolution
- Authorized Signatory letter
- Partnership deed
List of Amazon warehouse locations in India
- Ahmedabad
- Bangalore
- Delhi
- Chennai
- Guwahati
- Gurugram
- Hyderabad
- Kolkata
- Lucknow
- Mumbai
- Pune
- Visakhapatnam
FAQs on Amazon Fulfillment Center
What is VPOB and APOB?
VPOB “Virtual Place of Business” – A virtual place of business refers to a facility that allows businesses to have a professional address complying with GST registration across different states,thereby eliminating the time to set up a traditional office.
APOB “Additional Place of Business” – An additional place of business refers to a location where the activities of the business takes place other than the principal place. It includes warehouses, branch offices, etc,.
What is the difference between FBA and FBM?
FBA Refers to “Fulfillment by Amazon”
The products are stored in Amazon’s warehouse where the service providers of Amazon handle packaging , 24/7 customer support, returns and shipping directly to the customer on receiving the order.
FBM- Refers to “Fulfillment by merchant”
The seller of the business is completely responsible for delivering the goods directly to the customers. It includes storage, packaging, 24/7 customer support, returns and shipping.
What are the documents required for VPOB registration with Amazon?
PAN, address proof, photograph, cancelled cheque, MOA, AOA, COI, board resolution, authorized signatory letter, partnership deed, etc., are the documents required for VPOB registration with Amazon.
Can I use FBA and FBM simultaneously?
Yes, sellers can use FBA for certain products and FBM for the remaining products.
How do I track inventory in multiple fulfillment centers?
Amazon FBA program has an inventory management system that allows you to track your stock and movement across multiple fulfillment centers.
