FBA vs MFN: Which Fulfillment Type is Right for Your Business?

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FBA vs MFN: Which Fulfillment Type is Right for Your Business?

  • Posted by: Crossett

Fulfillment By Amazon (FBA) or Merchant Fulfillment Network (MFN) – which fulfillment type is right for your business? Amazon’s business model is centered around getting the right product to the customer at the lowest price with the fastest fulfillment method possible. As such they provide sellers with a couple of different methods for fulfilling your products, let’s look at each and breakdown the different benefits and drawbacks.

FBA (Fulfilled by Amazon)

FBA involves shipping your products to Amazon’s fulfillment network for quick distribution when you make sales. Amazon picks, packs and ships sales that come through while you have inventory, and manages all of the customer service for these products. Amazon has a huge fulfillment network throughout the US that is designed to provide products to the customer quickly and with as little hassle as possible. Selling your products FBA means that your products get to take advantage of the Prime Badge and gain visibility with the millions of Amazon prime members out there. The process is quite simple. Ship your products to Amazon, and Amazon takes care of the rest. Their fulfillment network will pick, pack and ship each order, guarantee 2-day shipping and take care of any customer service issues that arise.

What’s the downside?

In a word, fees. Depending on the size or sales velocity of your product, FBA can have a lot of fees associated with it. Fees go up as products increase in size, or in weight. They can also go up if your products don’t move very fast. This takes the form of long term storage fees. With our help we can advise on which of your products are ideal for FBA, and which are not so you allocate inventory accordingly and keep the fees down.

We recommended FBA for smaller, higher sales velocity products.

Pros:

  • Prime Eligible (2-day shipping)
  • Amazon handles customer service
  • You only need to worry about sales velocity and inventory

Cons:

  • Intimidating to get started
  • Can be costly if products aren’t right for FBA
  • Takes time to get inventory to Amazon to start selling

MFN (Merchant Fulfilled Network)

Merchant Fulfillment Network (MFN)

Fulfilled by Merchant or as Amazon calls MFN (Merchant Fulfillment Network) is a method for fulfillment where your products are shipped directly to the customers from your own warehouse, or home. You are responsible for on-time shipping, as well as all customer service issues that arise with your orders. For those products that don’t make sense to ship FBA, you have the option of fulfilling your order from your home or warehouse by using the Fulfilled by Merchant method. This is where most Amazon sellers start since the process is so easy. If you are reselling a product already on Amazon you can match to the existing listing, if it’s not, you can quickly create your own and get started selling within minutes. You can also specify your supported shipping methods but are responsible for shipping all your orders within the specified time.

What’s the downside?

There are a couple of major downsides with selling MFN. Your products will not have the Prime badge on the listing, this means if Prime members filter their searches for Prime eligible products, your product will no longer show up. This can have a significant effect on sales. You are also responsible for keeping up with the customer service and managing returns in a timely manner. And you lose some strength within the buy box on the product page. If you and an FBA seller are offering the same product at the same price the FBA seller will win the buy box unless you heavily discount your price. (somewhere between 15-20%)

We recommend MFN for infrequent sellers, or any large items that would incur large fees within FBA.

Pros:

  • Get started selling quickly
  • Control over best method to get products to customers

Cons:

  • MFN will always outpace this fulfillment method
  • You must maintain stock
  • You must maintain shipping metrics
  • You must handle customer service

 

Seller Fulfilled Prime (SFP)

Another option available is Seller Fulfilled Prime (SFP) – it’s a unique blend of the previous two fulfillment methods that gives your products all the benefits of the Prime badge while allowing you to retain control over the fulfillment process. 

We recommend SFP for businesses with their own network of warehouses or products that can’t easily be shipped and stored within Amazon’s warehouses.

Pros:

  • Benefits of FBA, while maintaining control of fulfillment
  • Take advantage of your fulfillment infrastructure

Cons:

  • Strict metrics to maintain to keep Seller Fulfilled Prime status
  • You must handle customer service
  • You have to pass a trial run to enter the program.

 

We’re here to help you figure out which fulfillment option makes the most sense for your business. Contact us today and start the conversation.

 

Author: Crossett