As a long-time Amazon seller and FBA expert, I‘ve seen many ups and downs in the marketplace over the last decade. When COVID-19 hit, it quickly became clear just how vulnerable many sellers‘ businesses were to disruptions in Amazon‘s fulfillment capabilities. However, I also witnessed firsthand how Fulfillment By Merchant (FBM) shipping ended up being a lifeline for thousands of sellers when FBA simply couldn‘t meet expectations.
In this comprehensive guide, I‘ll share my insider knowledge on leveraging FBM to survive future crises based on what I learned during COVID-19. I‘ll provide expanded details, statistics, and real-world examples of how to effectively incorporate FBM alongside FBA. By using FBM‘s flexibility as a strategic advantage, you can confidently navigate any storm on the horizon.
A Deep Dive into Amazon FBM Shipping
Before we get into crisis preparation, let‘s quickly cover the core FBM capabilities:
- With FBM, you store inventory in your own warehouse facility and handle shipping products yourself when orders come in.
- Amazon offers two FBM shipping plan choices:
- The Individual Plan uses Amazon‘s default shipping rates and settings. This is best for simplicity and letting Amazon handle the details.
- The Professional Plan allows you to fully customize shipping charges, templates, and preferences. This optimizes shipping for profitability.
- As the merchant, FBM makes you responsible for complete customer service and handling returns.
- FBM listings do not qualify for Prime, so ensure competitive shipping times.
- With no fulfillment fees, FBM has lower overall costs than FBA. But you take on operational overhead.
The trade-off is more control over your business operations versus FBA‘s convenience and Prime eligibility. Most sizable sellers leverage both FBM and FBA to maximize advantages.
How FBM Became a Lifeline During COVID-19
When the pandemic hit in early 2020, even Amazon‘s exceptional fulfillment capabilities were strained to the brink. Sudden spikes in demand and workplace safety protocols severely impacted FBA:
- Non-essential items were completely restricted from warehouses between March 17 to April 5, bringing huge swaths of seller inventory to a standstill.
- Ongoing staff shortages at facilities reduced processing capacity, leading to shipment delays across the board.
- Prime member orders surged, exceeding FBA inventory reserves and leaving sellers perpetually out of stock.
- Rapid policy changes like requiring exact shipment dates caused chaos for sellers relying solely on FBA.
These factors left many FBA-only sellers simply unable to meet customer expectations. According to Jungle Scout‘s comprehensive report, over 40% of third-party sellers transitioned either partially or fully to FBM during the pandemic.
For myself and thousands of other sellers, having FBM capabilities became the only way to survive this unprecedented disruption:
1. Avoiding Warehouse Restrictions
Restrictions on FBA non-essential goods didn‘t impact sellers who could leverage their own FBM inventory and shipping operations. This flexibility kept the lights on for countless non-medical businesses.
2. Taking Control of Inventory and Delivery
Between unpredictable restrictions and skyrocketing demand, FBA inventory was continuously depleted. FBM provided assurance that products would be reliably available to ship to customers.
3. Utilizing Flexible Shipping Services
Amazon understandably prioritized essential FBA orders, limiting available shipping services. With FBM, sellers could use UPS, Fedex, USPS or any carrier to creatively meet buyer delivery expectations.
4. Managing Customer Service Directly
FBA restrictions meant sellers had limited visibility into order issues. Taking over customer service with FBM allowed better communication to resolve problems.
5. Lowering Costs to Improve Margins
Eliminating FBA fees positively impacted margins during a time of economic uncertainty. Every percentage point mattered for survival.
FBM provided much-needed control exactly when FBA faltered. Sellers who could nimbly incorporate FBM kept the lights on.
Using FBM Strategically to Handle Future Crises
While the pandemic was an extreme example, it exposed just how vulnerable over-reliance on FBA can be. However, FBM‘s flexibility provides an advantage in navigating many potential crises:
FBA Warehouse Disruptions
Amazon may issue restrictions around other products like we saw with non-essentials. Weather, technical issues or other problems can also temporarily limit FBA.
Prime Day and Holiday FBA Capacity
Huge seasonal spikes in demand can overwhelm Amazon‘s ability to meet orders. FBM can supplement inventory.
Economic and Buyer Behavior Shifts
A recession could increase buyer price sensitivity, making FBM‘s lower fees an advantage.
Your Own Facility Disruptions
Problems at your warehouse can make FBA‘s redundancy helpful. Natural disasters are an example.
Here are my recommended tips for leveraging FBM to manage future crises:
- Maintain a mixed FBA/FBM operation for maximum flexibility.
- Proactively test and optimize FBM well before you urgently need it.
- Have detailed contingency plans for activating FBM in different scenarios.
- Actively monitor key FBA performance metrics for early crisis signals.
- Initially launch new products FBA to qualify for Prime before expanding to FBM.
- Analyze and address potential weak spots across your supply chain.
The key is being strategic in combining both fulfillment methods to balance advantages based on market conditions.
The pandemic was a harsh wake-up call on over-reliance for any one fulfillment model. Maintaining flexible FBM and FBA capabilities better equips your business to smoothly ride out the next crisis.
With the right data-driven contingency plans in place, you can rapidly respond and adjust to whatever the marketplace throws your way next. Don‘t wait for the storm to arrive to implement an FBM backup. Be prepared well in advance and your business can confidently survive and thrive through any disruption.