How to do FBM for someone who has only done FBA his whole life (aka me :)?

Hello fellow sellers,

Many of you already know me since I post here a bit frequent :slight_smile: I’ve been a 100% FBA white label seller on Amazon since late 2016. So I’m familiar with how FBA work. I’ve just decided to branch out to do FBM because of a few reasons
(1) Q4 storage fee is crazy expensive. Amazon also reduces the allotted storage space. FBM will allow the order fulfillment for items that aren’t in Amazon warehouses
(2) Adapting to do FBM allows me to participate in other marketplaces such as Tiktok where auto pick-and-pack service doesn’t exists

When it comes to FBM, I’m a complete newbie. That’s why I’m here to ask you guys :slight_smile: I believe there are 2 ways to do it
(1) Do it myself. I guess this would be in the beginning for me to understand the process: carriers/service selection, getting orders from Amazon/Tiktok, learning how to pick-and-pack, etc. Do you have a good links to websites that have good info on how to go through this process?
(2) After doing it myself (#1) for a while, I would like to work with a 3PL to have them do all the FBM/Tiktok fulfillments. Do you have a good 3PL companies to recommend?

I’m guessing that I would do maybe 90/10 (90% FBA, 10% FBM) in the beginning, then gradually increase the FBA/FBM ratio to 60/40. Maybe more maybe less depending on how well it goes. A few things that I’m worry about FBM are:
(1) More Amazon metrics to track: ship quickly, etc which means more hoops to jump through and higher chance of have bad performance from shipping department
(2) Return management. FBM = sellers handle the return/refund process. How difficult is this? Do I need an additional tool to manage this or Seller Central is fairly adequate? Would 3PL handle the return/refund like FBA does?

I think I would start from fulfilling Tiktok orders first before adding Amazon. I will make mistakes and Tiktok isn’t going to be as strict as Amazon.

What do you guys think? Any advice is welcome :slight_smile: Thank you.

You need to learn more first so you can ask the appropriate questions (both here and when negotiating/interviewing a 3PL.) I’d assume there are a slew of videos and books available. Spend a few weeks researching and then come back with specific questions.

Edit: When I say ‘research’ this - I also mean research all the costs involved. Getting yourself up and running will involve a not-insignificant outlay of $$.

I don’t know what your volume is, and that makes a difference in how you handle your FBM orders. If you are getting 10 orders a day vs 100 or 1000, there are real differences in how you handle things. I’ll just give some general advice for FBM, and go from there.

  1. Pay a lot of attention to things like handling times on your listings. I recommend setting the handling time for each SKU and not relying on the account default handling time, as Amazon has been known to arbitrarily change it at their discretion. Especially as you are just starting out in the FBM world, you should leave yourself some lead time on your orders(at least 2-3 days), and then you can reduce the handling time as you get more confident and work out the kinks, or extend it as you need to.

  2. Make sure you know the FBM specific policies. These include, but are not limited to, AtoZ policies, return policies, and SAFE-T claims. Depending on what you sell and your volume, you will need to deal with all of this at some point.

  3. Regarding your concerns about additional metrics to track, yes this is a thing, but if you are a serious seller and you know what you are doing, this is not really an issue. Valid tracking rate, for example, is a metric I never even look at because I either use Amazon’s shipping or am careful to import the tracking numbers on time for every order. I ship on time and I use reliable shipping carriers.
    It might seem like a lot when you start, especially compared to FBA, but these metrics are not as daunting as they may seem. Most of them are just there to make sure you aren’t pulling any shenanigans with your orders.

  4. Regarding your specific question re: returns, it depends on your volume. If you get 1 return a day, handing it manually is very easy, albeit annoying. If you sell 1000 items per day, your returns will be much higher, possibly more than 1 person can handle while also running their company. It is important to have someone you trust handling the returns though, as you will be responsible for withholding restocking fees for damaged/used/stolen items, filing SAFE-T claims, and generally making sure that buyers aren’t abusing your business. This is not an area of FBM that I would advise overlooking.

As a general rule I would suggest trying to keep your operation in house, as I have little trust for 3PL operations, and you will be on the hook for any decisions or screw ups they make. If you do decide to go that route, I strongly suggest doing everything yourself first so you know what needs to be done, and so you can recognize when the 3PL isn’t doing something right. You would also be better aware of what you are getting into and what you actually need when shopping for a 3PL provider.

If you have any specific questions, I/we would be glad to answer them, and of course this forum is full of good advice.

I know nothing about Tiktok.

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Thanks for your reply. Agree.

Thank you so much for your very informative reply. My volume is about 100 orders a day, plus and minus 20 orders for busy and slow days.

To make thing simple, all SKU should have the same handling time, right? Let say 3 business days.

Aren’t Amazon’s shipping partners the cheapest? That’s been my experience when shipping FBA inventory to Amazon warehouses.

I believe my return rate is below 5% (otherwise Amazon would have problems with me already). Some customers email me through the support email listed in the package when they have issues. Even though annoying, I’m quite happy to service them before they return products (and possibly leave a bad review). I’ve made 95% of them happy through the support email :slight_smile:

That’s what I’m afraid of and I agree with everything you said. Do you thinking working with a 3PL within the driving distance (no more than 3 hours) is a good idea? In case if they screw up, I could drive there to bring the inventory back and take over.

Definitely! Thank you again for such a wonderful reply. I appreciate it.

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If you’re doing 3 day handling time your sales will probably tank.

It’ll show a shipping time range of at least 4 - 8 days which is terrible. You’ll never win the buy box vs FBA offers, and if it’s exclusively you on the ASIN your search rankings will probably go down because of excessive shipping time.

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Wow, thank you for this crucial info. I guess I need to practice FBM with a low volume low rank item first.

What would be the norm handling time? 1 day? Does that mean the order has to be shipped within 24 hours?

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Not necessarily. It depends on your ability to get items shipped out when an order comes in. For items I have on my shelf, a shorter handling time is fine. For items that need to be shipped LTL from the manufacturer I need a longer handling time.

It depends on your negotiated rates with a carrier. If you don’t have your own rates then yes, usually Amazon rates are cheaper or the same. However, I don’t ship every item directly from my warehouse, so for those orders I can’t use Amazon’s shipping. This may not be an issue for you.

It’s more an issue when you have to open every return to make sure they sent back what they ordered, and they didn’t break it or use it first before you decide how much to refund. This is a worthwhile use of time, in my opinion.

This is somewhat true, but overstated. I have 5 day handling time on some SKUs and I still have the BB. Admittedly these are not usually high volume listings, but a shorter handling time wouldn’t change that, there just isn’t that much demand for a 150LB $2500 compressor unit.

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Make sure you read up on the Refund at First Scan, A to Z claims, and SAFE-T claims programs/policies. They are key to managing your returns process.

Like riding a motorcycle/bicycle there are those that have fallen off and those that will. A to Z and SAFE-T are the same way, so it’s better to operate knowing those expectations and adjusting your process’ to ensure you meet all those requirements.

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Let’s look at a different angle here since you say it can be 100 plus orders a day.

Do you have staff to do the basic grunt work – pick, pack, label, and ship part?

I am a one man shop. During the Covid Bull I was getting lots of orders since Amazon was in their ‘necessities only’ mode.

I had three or four consecutive Mondays with over 100 orders – up to 130 or so. It was a stretch to handle all those over the weekend because I had/have over 4500 SKUs that I had to handle.

IF you have a limited number of items it makes it a lot easier. For most of mine it can be about 3 to 5 minutes from printing the packing slips, grabbing the order, putting the item and packing slip in the box/envelope, weighing it, and printing the label.

If everything is organized, easy to find, within reach (NOT my case) at 3 minutes from start to finish that would be a solid 5 hours with no breaks. Not reading SAS, NSFE, news stories, bathroom breaks, eating, or, basically enjoying some semblance of having an actual life.

I have converted to padded envelopes for most things since they are much faster than taping boxes together and then taping them shut.

I’m finally at the stage where 20 to 30 orders a day is enough to keep me busy and able to do other things – even take a couple days off every few weeks to keep my wife (kind of) happy.

It’s an adventure. It is slow (again) today so I’m off to get some things and maybe hit the casino for an hour. My wife gets home from the NYC Toy Fair tonight so she will have to fill me in on all the new stock they have coming into her store!

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The shipping/handling time does depend greatly on the item. There’s also not a lot of sellers for compressor units, and that’s the kind of item that people will shop around for and one of the considerations is not whether it arrives tomorrow or next week.

If you’re selling phone accessories and you got a 5 day handling time your listing will be so suppressed you won’t even have any views, let alone sales.

I would recommend two day.

Also know that if you allow automation anywhere Amazon has declared they may change the SKU-specific handling times you have set.

And any form of premium shipping will override your handling time.

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Thanks again for your reply. Don’t I have to be a high volume client (ship out thousands a day) for any carrier to want to negotiate with me?

Oh, I’ve never done that. I usually send them a replacement unit. Maybe that’s not a good practice. I just don’t want them to leave a bad review on my listing.

Thanks for looking into it deeper. I plan to do FBA/FBM ratio of about 60/40. Therefore at 100 orders a day, only about 40 orders would be FBM.
No, I’m a one man shop as well. Hmm… now I could see the problem. Packing 40 orders would take a number of hours (which I don’t have much in a day). Hmm… even after being familiar with FBM process, how many orders do you think one man could pack in an hour?

How long did it take you to pack 100 orders? So I could do the math to see how many I could do per hour when I’m at the most efficient.

What? What? 4500 SKUs! How could you remain a one man shop with that many SKU? I have a friend who also sells on Amazon FBA. She has about 500 SKUs and need to have a few VA to help her. I only have about 10 active SKUs and 10 non-active SKUs (dead listing with left inventory, waiting for a resurrection).

Ok, so it’s about 20 orders per hour at optimal (pack 100 orders in 5 hours)

That’s a great idea for a small item. Sadly most of my products are about half cubic foot which would need boxes and tapes.

Yep, breaks is always necessary and welcome :slight_smile: My next break is late October when my friend comes visiting me.

Sorry for my limited knowledge. What’s the “automation anywhere” that you mentioned?

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Just a thought: If you are/can use the same size box for most of your orders, why not create the boxes ahead of time, if you have room to spare? That way you can create the boxes anytime you have some extra time and it cuts down on the amount of time spent actually packaging/shipping orders with the result that you will get more orders out per hour. I did that back when I was FBM.

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What’s your COGS per unit?

If < $20 you should consider no returns, and giving returnless refunds/replacements.

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What can I say, insanity runs in the family!

But seriously, almost all of my items are small and light. The parts that are actually ‘organized’ occupy my basement/office. I have larger items that have overflowed into a portion of the garage. My average package is 2 ounces and depending on where it is going costs about $4 to ship.

Here is a picture of a very small portion of my stash. I would have to guess there are about 250 or more different products in there. Those are actually larger than the majority of my items from that company!

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Looks to me as though your business is a good fit for FBA. Packing and shipping is the most boring part of the job. Can you afford to hire someone to do this? Might there be more profitable ways to spend your time? I used FBA for about six years, but changes made by Amazon forced me out.

I can’t imagine packing more than about 10 items a day (although I have done as many as 30), but I sell single titles of out-of-print books. Each one needs to be examined, prepped, and packed in a box. I stock 3 sizes of boxes but occasionally have to scramble for larger sizes. I have a packer who also takes the boxes to the USPS which is about 1.5 blocks away. UPS is a five-minute walk on the rare occasion I use them

Would you need to rent local storage or can you keep your stock at home? I spent a small fortune on storage over the years but later decided to refine my offerings and keep everything at home. (Yes, it is crowded) All orders before 6 PM EST go out the same day.

Keeping everything in-house allows me to diversify venues, so Amazon is not the only source of sales. I get few returns, so just put them in a pile to go over every week or two.

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What do you sell? How do you find what has sold :open_mouth:?

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