Watch my latest YouTube video below, then dive into this complete breakdown of Amazon's selling methods

If you're considering selling on Amazon, you've probably come across the terms FBM, FBA, and arbitrage. While these concepts are related to the Amazon marketplace, they serve different purposes and offer distinct advantages depending on your business goals and resources.

Let me break down each approach so you can determine which path might work best for your situation.

What is Amazon FBM (Fulfilled by Merchant)?

FBM stands for "Fulfilled by Merchant," meaning YOU handle every aspect of order fulfillment from start to finish.

How FBM Works:

When a customer places an order for your product on Amazon, you receive the notification and then:

• Pick the item from your inventory storage location
• Package the product according to Amazon's guidelines
• Print shipping labels and send the package
• Handle any customer service inquiries
• Process returns and refunds when necessary

FBM Advantages:

Complete Control: You maintain full control over inventory, packaging, and shipping timeline Lower Fees: Avoid Amazon's FBA storage and fulfillment fees Flexibility: Can store inventory at home, office, or third-party warehouse Custom Packaging: Opportunity to create branded unboxing experiences International Shipping: Can offer shipping options Amazon doesn't provide

FBM Challenges:

Time-Intensive: Requires hands-on involvement for every order No Prime Badge: Products typically don't qualify for Amazon Prime shipping Customer Service: You handle all inquiries, complaints, and returns Scalability Issues: Difficult to manage as order volume grows Shipping Costs: May be higher than Amazon's negotiated rates

Best for:

• New sellers testing the market
• High-value, low-volume products
• Sellers who want complete control over fulfillment
• Businesses with existing fulfillment infrastructure

What is Amazon FBA (Fulfilled by Amazon)?

FBA stands for "Fulfilled by Amazon," where Amazon handles storage, shipping, and customer service for your products.

How FBA Works:

You send your inventory to Amazon's fulfillment centers, and when orders come in:

• Amazon picks, packs, and ships your products
• Amazon handles customer service inquiries
• Amazon processes returns and refunds
• Amazon provides tracking information to customers
• Your products become eligible for Amazon Prime shipping

FBA Advantages:

Prime Eligibility: Products get the coveted Prime badge, increasing visibility and sales Hands-Off Fulfillment: Amazon handles the entire post-sale process Professional Service: Customers receive Amazon's reliable shipping and service Scalability: Can handle large order volumes without additional effort from you Multi-Channel: Can fulfill orders from other sales channels through Multi-Channel Fulfillment Better Buy Box: FBA products have better chances of winning the Buy Box

FBA Challenges:

Higher Fees: Storage fees, fulfillment fees, and long-term storage fees add up Less Control: Amazon controls packaging, shipping speed, and customer interactions Inventory Planning: Must forecast demand and send inventory in advance Storage Limits: Amazon may impose inventory limits, especially for new sellers Stranded Inventory: Risk of inventory becoming unsellable due to listing issues

Best for:

• Sellers wanting to scale quickly
• Products with consistent demand
• Sellers who prefer passive fulfillment
• Items that benefit from Prime shipping

What is Amazon Arbitrage?

Arbitrage involves buying products from one source and reselling them on Amazon for a profit, capitalizing on price differences between markets.

How Arbitrage Works:

Arbitrage sellers:

• Research products selling for higher prices on Amazon than elsewhere
• Purchase inventory from retail stores, clearance sales, or online marketplaces
• List products on Amazon at competitive but profitable prices
• Fulfill orders through either FBM or FBA methods

Types of Arbitrage:

Retail Arbitrage:

• Buying from physical stores (Walmart, Target, clearance sections)
• Scanning products with phone apps to check Amazon prices
• Limited by geographic location and time investment

Online Arbitrage:

• Sourcing products from online retailers and distributors
• Using software tools to find price discrepancies
• Can be done from anywhere with internet access

Arbitrage Advantages:

Low Barrier to Entry: Start with minimal investment and existing products No Product Development: Skip the complexity of creating new products Market Validation: Products already have proven demand on Amazon Quick Cash Flow: Can generate profits relatively quickly Learning Opportunity: Great way to understand Amazon's marketplace

Arbitrage Challenges:

Thin Margins: Competition often drives profits down over time Inconsistent Supply: Deals may not be repeatable or sustainable Brand Restrictions: Some brands require approval or prohibit third-party selling Time-Intensive Research: Finding profitable opportunities requires significant time investment Market Saturation: Popular arbitrage opportunities quickly become competitive

Best for:

• Beginners learning Amazon selling
• People with limited startup capital
• Sellers wanting quick market entry
• Those comfortable with constant product research

Combining These Approaches

Many successful Amazon sellers use combinations of these methods:

FBA + Arbitrage:

• Source products through arbitrage methods
• Send inventory to Amazon fulfillment centers
• Benefit from Prime eligibility and hands-off fulfillment
• Scale arbitrage operations without increasing fulfillment workload

FBM + Arbitrage:

• Source products through arbitrage
• Fulfill orders yourself to maximize profit margins
• Maintain control over customer experience
• Good for testing products before committing to FBA

Mixed Strategy:

• Use FBA for consistent, high-volume products
• Use FBM for seasonal or limited-quantity items
• Continue arbitrage sourcing while developing private label products

Choosing the Right Approach for You

Start with FBM if you:

• Have limited capital for inventory investment
• Want to test the market before committing to larger fees
• Have time to handle fulfillment personally
• Sell unique or specialized products

Choose FBA if you:

• Want to scale quickly and efficiently
• Can invest in larger inventory quantities
• Prefer passive income after setup
• Sell products that benefit from Prime shipping

Try Arbitrage if you:

• Want to start selling quickly with existing products
• Have limited capital for product development
• Enjoy hunting for deals and researching markets
• Want to learn Amazon selling with lower risk

Success Tips for Each Method

FBM Success Strategies:

• Invest in efficient packing and shipping processes
• Offer competitive shipping rates and fast handling times
• Provide exceptional customer service to build positive reviews
• Consider upgrading to FBA as volume increases

FBA Success Strategies:

• Research products thoroughly before sending to FBA
• Monitor inventory levels closely to avoid stockouts
• Understand all FBA fees and factor them into pricing
• Optimize listings for better Buy Box placement

Arbitrage Success Strategies:

• Use sourcing software to find opportunities efficiently
• Build relationships with suppliers for consistent deals
• Track profit margins carefully including all fees and costs
• Diversify product categories to reduce risk

FBM, FBA, and arbitrage aren't mutually exclusive - they're different tools in your Amazon selling toolkit. Many successful sellers start with one approach and evolve their strategy as they learn and grow.

For beginners: Start with FBM arbitrage to learn the basics with minimal investment For growth: Transition successful products to FBA for scalability For long-term success: Consider developing your own products while using these methods to fund growth

The key is understanding that each approach serves different purposes and can be combined strategically to build a successful Amazon business.