What is the difference between FBA and FBM?
There are two main models with Amazon you can utilize. FBM & FBA.
FBA - or, Fulfilled by Amazon, is when you have a product IN the Amazon warehouse. To utilize this effectively, you do need at least 100 units (if not more). Amazon will spread these units in their fulfilment canters all over the country, which is what allows them to give 1-2 day Prime shipping options. If you only have 20 units in Amazon, they would not be able to make this promise to customers.
Now let's say you have a big garage and you’ve ordered 2000 units from China. Perhaps, you will send 500 to Amazon, and then you will keep 1500 units in your garage to save on storage fees. This is a great tactic and also great if you make the product at home.
The issue however, with making products at home, is that it's not scalable. How will you be able to fulfil 10 orders a day? 50 orders a day? 100 orders a day? Eventually, you will need a supplier so that you are not tied to working at home 16 hours a day making products.
FBM - or fulfilled by Merchant, means that you can have an Amazon listing, and then send your products directly to the customer from your house. We do not advise this method within our course, as it's a completely different business model. It is however, a great alternative in emergency situations (like in Q4 if you run out of stock, and amazon is taking 3+ weeks to get your inventory into the warehouse & active to sell).
To summarize: With FBA, you store your products in Amazon's fulfillment centers, and they pick, pack, ship, and provide customer service for these products. On the other hand, with FBM, you handle the storage and all aspects of order fulfillment yourself.