How to Successfully Manage Shipping & Returns with Fulfillment by Merchant

Instead of depending on Amazon’s warehouses, sellers who use Fulfilled by Merchant Amazon (FBM) store, pack, and ship goods straight to consumers. FBM sellers also take care of returns and customer service, which gives them more authority but also more responsibility.

What FBM means on Amazon:

Listing an item as Amazon FBM lets buyers know that the seller, not Amazon, is in charge of fulfillment. This covers packaging, shipping, returns, and inventory storage. While making sure the customer experience is on par with or better than FBA, the seller must adhere to Amazon’s performance standards.

Difference between FBA & FBM:

Fulfillment by Amazon (FBA): Amazon handles returns, shipping, and customer support while keeping your products in their fulfillment centers. Sellers cover fulfillment and storage costs.
Fulfillment by Merchant (FBM): Sellers handle shipping, storage, refunds, and customer support.

Why some sellers prefer FBM:

FBM is preferred by some sellers due to:
Reduced Fees: FBA fees can reduce profits for large or low-margin items.
Branding Control: Vendors have the option to add promotional inserts and alter packaging.
Inventory Flexibility: Managing products in-house may be more economical for those with low demand or seasonal fluctuations.
International Selling: Without depending on Amazon’s fulfillment infrastructure, FBM offers flexibility when entering new markets

Advantages of FBM

• Lower costs for certain products: For products with low margins, large dimensions, or a slow sales velocity, fulfillment by merchant (FBM) may be more economical. You can save a lot of money on products that might otherwise be costly to maintain in FBA because you don’t have to pay Amazon’s fulfillment or storage fees.
• Greater control over inventory & branding: FBM gives sellers complete control over packaging, shipping, and customer service by enabling them to handle their inventory directly. Additionally, this gives you more space to display your brand identity through unique inserts and packaging—something that FBA’s standardized system does not allow.

Disadvantages of FBM

• Higher seller responsibility: In contrast to FBA, where Amazon handles customer service, shipping, and storage, FBM places all of the responsibility on the seller. You are responsible for promptly fulfilling orders, managing returns, and answering customer inquiries; any mistakes in these areas could lower your Amazon seller rating.
• More time spent on logistics: Maintaining inventory, processing orders, and organizing shipping all take a lot of time and effort when managing FBM. Although FBA automates these procedures, FBM necessitates ongoing supervision, which may take attention away from growing your company.

Register/upgrade to a Professional Seller Account

You must have an Amazon Professional Seller Account in order to begin using FBM. Advanced selling features, such as bulk listing, advertising choices, and complete access to shipping and fulfillment settings, are unlocked with this account type. You cannot effectively manage FBM operations without it.

Configure shipping templates in Seller Central

Sellers can specify delivery areas, rates, and fees by creating personalized shipping templates within Seller Central. This adaptability guarantees that you can provide customized shipping prices for various regions and product kinds, controlling expenses while preserving your competitiveness.

Set competitive delivery speeds & pricing

Sellers who offer dependable and quick shipping are rewarded by Amazon. Since you control the shipping costs and delivery schedules with FBM, it’s critical to find a balance between increasing Buy Box chances and maintaining profitability by providing quick delivery at affordable prices.

Establish return policies aligned with Amazon requirements

FBM sellers must adhere to Amazon’s customer-friendly return policies. You’ll need to process returns promptly and provide clear instructions for buyers. In addition to avoiding account problems, adhering to Amazon’s return guidelines increases customer confidence.

Amazon’s return policy explained for FBM sellers

FBM sellers should comply with Amazon’s return policy, which is simply like FBA’s customer-friendly approach by allowing buyers to return items within a set window. Sellers are responsible for providing return labels, processing returns promptly and ensuring a hassle-free experience for customers.

Setting up a smooth return workflow

Streamlines return process helps build trust and reduces disputes. FBM sellers should establish clear internal steps for receiving returned items, inspecting their condition and updating order status quickly, while keeping communication transparent with buyers.

Handling refunds, replacements, and restocking

Once a return is fetched, sellers need to decide whether to issue a full refund, provide a replacement, or restock the item if it is in good condition. Quick and fair handling of these steps is important to maintain customer satisfaction and account health.

How to reduce return rates with accurate product listings

Many returns happen due to mismatched customer expectations. By providing detailed product descriptions, high-quality images, and accurate sizing or specifications, FBM sellers can reduce the likelihood of returns and improve buyer confidence.

Shipping software (ShipStation, ShipBob, etc.)

By automating label creation, tracking, and carrier selection, shipping software assists FBM sellers in streamlining order fulfillment. By integrating directly with Amazon, tools like ShipStation or ShipBob minimize human error and guarantee on-time delivery.

Inventory management tools for FBM

Real-time inventory tracking is essential for FBM sellers to prevent stockouts and overselling. Platforms like Skubana, Linnworks, or Zoho Inventory automate restocking alerts, maintain operational efficiency, and offer visibility across various sales channels.

Customer communication automation

Seller ratings depend on prompt responses to buyers. Order confirmations, shipping updates, and post-purchase emails can be automatically sent by automation tools like FeedbackWhiz or Helium 10’s Follow-Up, which will enhance the customer experience and save you time.

Overpromising delivery times

One of the biggest mistakes FBM sellers make is committing to unrealistic delivery windows just to attract new buyers. When orders arrive late, it will negatively impact customer trust and can lead to poor reviews or even account suspensions, so it is always better to get glued up to respective timelines.

Poor packaging leading to higher returns

Inadequate packaging often results in products arriving damaged, which increases returns and dissatisfaction. Investing in sturdy materials and secure packing methods not only protects items but also saves sellers money in the long run.

Ignoring performance metrics (Late Shipment Rate, Order Defect Rate)

Amazon closely monitors seller performance, and failing to keep an eye on key metrics like late shipment rate and order defect rate can put your account at risk. Regularly tracking these numbers helps FBM sellers maintain compliance and deliver a reliable customer experience.

When to outsource fulfillment to 3PLs

As order volumes grow, managing stores, packing and shipping in-house can become overwhelming. Outsourcing fulfillment to third-party logistics providers helps FBM sellers scale efficiently, reduce operational stress, and maintain fast delivery standards.

Mixing FBA + FBM for maximum flexibility

Many successful Amazon sellers use a hybrid approach, combining FBA for fast-moving or Prime-eligible products and FBM for oversized, slow-moving and seasonal items. This balance allows sellers to optimize costs while still meeting diverse customer expectations.

Strategies to stay competitive on Amazon

To thrive with FBM, sellers should focus on competitive pricing, efficient shipping, and excellent customer service. Leveraging techniques for inventory management, keeping listings accurate, and continuously monitoring Amazon competitor trends ensures long-term growth and visibility.

Sellers have control, flexibility, and the possibility of cost savings with Fulfillment by Merchant. Amazon FBM facilitates direct customer relationships and branding opportunities, while FBA offers convenience. Understanding logistics, including dependable shipping, customer-first returns, and technology-driven workflows, is essential for success.

FBM is more than just a fulfillment method; it’s a strategic advantage for sellers looking to scale sustainably. FBM sellers can maintain profitability and competitiveness in Amazon’s extremely dynamic marketplace by striking a balance between operational control, customer experience, and efficiency.