Amazao FBA vs MFN: Which Fulfillment Option Is Better For Amazon Sellers?
On the Amazon platform, there are two ways of logistics, one is MFN self-delivery, and the other is FBA warehousing logistics. Amazon platform allows more sellers to choose FBA service by tilting traffic. However, before choosing FBA service, it is necessary to ensure the sales of products, otherwise, the unsalable cost will be higher. The most convenient thing about MFN is that it can be used to test new products, and its price and cost are lower. Next, let’s discuss which fulfillment option is better for amazon sellers.
What is FBA in Amazon?
FBA is called Fulfillment By Amazon(also called Amazon AFN), that is, Amazon Logistics. It means that the seller sends goods to Amazon’s FBA warehouse in large quantities, and then Amazon is responsible for warehousing. When the goods are sold, Amazon will sort, package, and deliver the orders, and provide customer services such as pre-sales consultation and after-sales treatment for these goods.
1. Advantages Of Using Amazon FBA
- Increase Exposure
Orders delivered by FBA can get higher product exposure and help to improve product ranking.
- Save manpower and logistics costs
After the customer places an order, Amazon FBA will automatically help the seller to deliver. At the same time, after FBA is used for delivery, the seller can reduce the labor cost of packing and delivering. Moreover, the cost of the first delivery of FBA is generally lower than the logistics cost such as postal parcels used for scattered orders.
- Improve product profit margin
Compared with the sellers who deliver goods by themselves, the price of products delivered by FBA is higher, but after deducting all the costs of FBA, the profit of the same product delivered by FBA will be higher than that delivered by themselves.
- Participate in various promotional activities
Amazon has many promotions every year, and sellers can help increase the sales of products by participating in these activities. One of the prerequisites for participating in these activities is the need to use FBA for distribution.
2. Disadvantages Of Using Amazon FBA
- FBA First Delivery
This is a problem that sellers using FBA need to solve themselves. FBA is only responsible for the logistics from the Amazon FBA warehouse to the customer’s receiving address. However, Amazon is not responsible for the process of products from various countries to Amazon FBA warehouse, so the seller can’t write the address of Amazon FBA warehouse directly, because Amazon FBA won’t help the seller to receive these products or clear them. Therefore, sellers need to choose the mainstream logistics provided by FBA to help them complete these tasks.
- Product Packaging
FBA has strict packaging requirements for warehousing products, including cartons, sizes, weights, labels, etc. If the requirements of the platform can’t be met, such as overweight but no corresponding labels, or damaged or invisible labels, these will lead to the products being rejected by FBA. Therefore, sellers should pay special attention to the packaging requirements when packaging products.
- Stock Control
Sellers need to pay close attention to their own inventory and replenish them when appropriate. If you need to manage many products, it is necessary to invest in an inventory management system that cooperates with FBA. Otherwise, you may be confused by all kinds of trivial things such as new orders and delivery, and it may also lead to insufficient or excess inventory.
3. FBA Charging Standard
The fee of FBA consists of two items: storage fee and delivery fee. In addition, FBA can also provide a variety of optional payment services to help reduce the operating pressure on sellers, such as commodity labeling services, etc. Sellers can choose according to their own needs.
3.1 Storage Fee
- Monthly Storage Fee
According to Amazon’s policy, the monthly storage fee is charged according to the daily average volume (in cubic feet, length x width x height (in inches)) of the space occupied by the seller’s inventory in the operation center.
Monthly storage fees are as follows:
January-September, standard size goods, $0.69 per cubic foot; Big items, $0.48 per cubic foot.
October-December, standard size goods, $2.40 per cubic foot; Big items, $1.20 per cubic foot.
- Long-term Storage Fee
On the inventory day, goods that have been stored in the operation center for 181 to 365 days will be charged 10 per cubic foot on the 15th day of each month. Goods that have been stored in the operation center for more than 365 days will be charged at 20 per cubic foot.
3.2 Delivery Fee
Amazon FBA’s delivery fee is calculated according to the weight and size of the product. In addition, it depends on whether the product is clothing or non-clothing, and then determine the product size segment (standard size or large size).
- General Commodity Distribution Fee
- Dangerous Goods Distribution Fee
For dangerous goods, Amazon has special logistics channels for special treatment and storage of dangerous goods.
3.3 Optional Service Fees:
- FBA pretreatment service
- FBA labeling service
- Manual processing service
- Inventory service
- FBA repackaging service and renovation service
What Is The Meaning Of MFN Amazon?
Amazon’s MFN is called Merchant Fulfillment Network(also called Amazon FBM, Fulfillment By Merchant), which means that the seller delivers the goods from the seller to the buyer after receiving the buyer’s order, and the seller is also responsible for after-sales.
1. Advantages Of Using Amazon MFN
- Flexible Input Cost
Sellers can choose their own logistics carriers, distribution methods, customer service, etc., and can arrange input costs according to their own needs.
- Free Storage Mode
Sellers can freely decide to store goods in domestic warehouses or overseas warehouses and choose a more appropriate storage method according to different goods.
- Easy To Test The New Product
It is convenient to test the market popularity of new products, which can reduce the cost of trial and error, and prepare for the explosion in advance.
- Wide Selection Range
Sellers can choose products flexibly, sell goods at will in 17 sites, and receive massive orders.
- Freedom Of Distribution Mode
Sellers can choose Amazon’s official “Purchase and Distribution Service”, or they can contact third-party logistics carriers to meet the distribution needs of different products.
2. Disadvantages Of Using Amazon MFN
- Long Delivery Time
The buyer may be lost due to the long trading cycle.
- Complex Distribution, Consulting Services, And After-sales Problems
Sellers may have bad reviews or disputes due to imperfect logistics channels.
- Unable To Use Amazon Prime
If the product does not meet the Prime standard, it may become difficult to compete for Buy Box, and Amazon prefers FBA sellers.
3. MFN Charging Standard
- Special Line Freight
No matter air or ship, the cost is generally calculated according to the actual weight or volume weight of the product, and the higher cost of the two is finally selected.
Weight (KG)= cargo volume (CBM)/ 0.006
Weight (KG)= length (CM)X width (CM)X height (CM)/ 6000
Freight = freight rate× freight ton = basic freight rate× (the sum of 1+surcharge )× freight volume
- International Express Freight
International express freight is calculated by volume and weight; Generally, the cost is calculated as a unit of 0.5kg, and the first weight+continuous weight is charged. If it exceeds 21kg, it will be charged for every 1kg, regardless of the first weight and the continued weight.
General billing formula: freight = first weight+(total weight kg× 2-1 first weight )× continuous weight.
- Overseas Warehouse Freight
For overseas warehouses, it is also necessary for the seller to deliver the goods to the designated overseas warehouse first, which means that international logistics costs are also required. Besides, there are also storage fees, management fees, and labor costs. For freight, it is mainly the cost of the last delivery, and it is also determined according to the specific delivery company, as well as the weight and volume of the product.
Amazon FBA vs MFN: How To Decide Which One Is Right For You?
An excellent Amazon cross-border e-commerce operator can create a myth of explosive products and a miracle of explosive orders by no means relying on only one skill. If you want to be an excellent operator, you should not only be familiar with the efficient links of all links but also know the policies of the Amazon platform. One of the important but uncontrollable links is cross-border logistics.
For Amazon sellers, the platform has two delivery methods to choose from-FBA and MFN. Different methods are suitable for different sellers and different products. Novice sellers have a lot of doubts about these two delivery methods due to their lack of operational experience， now let’s talk about how to decide which one is right for Amazon sellers.
1. The Difference Between FBA And MFN
- Delivery Cycle
FBA: Fast delivery speed, usually the next day can be delivered.
MFN: Delivery period is 15-20 days.
FBA: Need to stock up, the investment is relatively large.
MFN: No need to stock up, you can release a large number of products.
- About SKU
FBA: There are relatively few SKUs, and the selection and product optimization are the key points.
MFN: There are more SKUs and more opportunities.
FBA: Pay attention to product quality and service efficiency.
MFN: Pay attention to product types, and you can copy many stores.
- Shop Effect
FBA: It takes a six-month growth cycle, which takes a long time.
MFN: It will take three months to stabilize, and you will see the benefits soon.
2. Sellers Suitable for FBA and MFN Respectively
2.1 Sellers Suitable For FBA:
- A well-funded seller.
- Have a professional operation team.
- Old brand sellers
2.2 Sellers Suitable For MFN:
- A starting individual seller or a starting seller team.
- Sellers who promote products through various channels.
- Sellers with large product weight and volume.
- Sellers who use the Amazon SFP program to deliver products to Prime buyers.
As an Amazon seller, Amazon FBA and FBM logistics models must be familiar. No matter which one we choose, we should be clear about its advantages and disadvantages. There is no difference between the two ways, only profit is the last word. As a professional cross-border e-commerce company in China, Honest FulPhilment can also help you contact more high-quality cross-border e-commerce resources. No matter where you are, we have very competitive prices, so please make your request and we will be very happy to serve you. Please contact us.
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