Amazon has long been the dominant force in e-commerce, offering sellers two primary fulfillment methods: FBA (Fulfillment by Amazon) and FBM (Fulfillment by Merchant). While FBA has traditionally been the preferred choice due to its scalability, Prime eligibility, and hands-off logistics, a growing number of sellers are now shifting toward FBM.

Why is this happening?

 From rising costs and operational risks to changes in customer expectations and Amazon’s own evolving policies, the FBM model is becoming increasingly attractive to savvy sellers seeking more control, profitability, and flexibility.

1. Rising FBA Fees Are Cutting Into Profit Margins

One of the biggest reasons for the migration to FBM is the consistent increase in FBA fees over the years.

Amazon has raised costs in several areas:

• Fulfillment fees based on size and weight

• Storage fees, especially during Q4 (October to December)

• Aged inventory surcharges for items stored longer than 180 days

• Returns processing fees

• Inventory disposal and removal fees

These cost increases can severely reduce profit margins, particularly for:

• Low-priced products

• Bulky or heavy items

• Slow-moving inventory

By switching to FBM, sellers can control shipping and storage expenses, often fulfilling orders more economically—especially if they already have warehousing capabilities.

2. Greater Control Over Fulfillment and Inventory

With FBA, Amazon owns the entire customer experience. This includes how your products are stored, packed, shipped, and even how returns are handled. While this convenience is valuable, it comes at the cost of control.

FBM gives sellers:

• Control over packaging and branding

• Freedom to set handling time

• Fewer issues with stranded inventory or lost items

• Better oversight of stock levels and inventory movement

Sellers who want to provide a unique customer experience, customize packaging, or retain full control over their logistics often find FBM far more appealing.

3. Increasing FBA Check-In Delays and Operational Risks

Over the past few years, Amazon’s fulfillment centers have become more congested, especially during peak seasons. As a result:

• Inventory check-in times can be delayed by weeks

• Stock-outs become more common, affecting Buy Box wins and revenue

• Restocking limits restrict how much inventory you can send to Amazon warehouses

FBM sellers avoid this bottleneck entirely, maintaining consistent availability and avoiding downtime due to inbound delays. This is especially critical for sellers who operate in competitive niches or rely on fast inventory turnover.

4. Returns Abuse and Product Damage

FBA returns are often automatic, and Amazon tends to side with customers, even in cases of fraud or abuse. Furthermore:

• Amazon may refund buyers immediately, then fail to return the product to the seller

• Items returned in damaged or unsellable condition are often labeled as unsellable, with no reimbursement

• FBA products are sometimes mishandled or improperly packaged, leading to damage in transit

In contrast, FBM sellers handle their own returns and inspections, giving them the ability to:

• Evaluate returned products

• Decide whether to restock or refurbish

• Minimize loss through better return policies

This control over the returns process can significantly reduce product losses and unnecessary costs.

5. FBM Is More Profitable for Certain Products

FBA works best for small, lightweight, high-turnover products. But for some products, FBA fees can be disproportionately high, making FBM the more profitable route. These include:

• Oversized products

• Low-margin goods

• Custom or made-to-order products

• Seasonal items

Sellers who use FBM can negotiate bulk shipping rates, choose slower or cheaper shipping methods, and manage their profit margins more strategically.

In many cases, FBM sellers use third-party logistics (3PL) providers to scale operations while maintaining lower costs than FBA.

6. Amazon’s Policy Shifts and Seller Restrictions

Amazon frequently updates its policies and fee structures—often with little notice. FBA sellers are vulnerable to these unpredictable changes, including:

• Storage limits that change based on IPI scores

• Fee surges during peak seasons or warehouse congestion

• Product restrictions or gating without warning

• Account suspensions due to FBA issues beyond the seller’s control

FBM sellers are less exposed to these risks. They retain full operational independence and are not affected by Amazon’s internal warehouse constraints.

This stability and autonomy are becoming more valuable in an increasingly complex selling environment.

7. Smoother Multichannel Selling

FBA limits your ability to sell on other platforms, like:

• Shopify

• eBay

• Walmart

• Etsy

While Amazon offers Multi-Channel Fulfillment (MCF), it often comes with:

• Higher fulfillment fees

• Slower shipping for non-Amazon orders

• Branded Amazon packaging (bad for brand identity)

FBM enables seamless integration with multiple sales channels, allowing sellers to:

• Build and protect their brand identity

• Diversify income sources

• Maintain consistent packaging and customer service across platforms

This flexibility is a major reason experienced e-commerce entrepreneurs favor FBM.

8. FBM Sellers Still Win the Buy Box

Contrary to popular belief, FBM sellers can still win the Buy Box, especially if:

• They offer competitive pricing

• Maintain strong performance metrics (shipping speed, order defect rate)

• Use Seller-Fulfilled Prime (SFP)

Seller-Fulfilled Prime allows FBM sellers to display the Prime badge on listings—without using FBA. While SFP has strict requirements, it gives high-performing sellers the best of both worlds: Prime eligibility and fulfillment control.

9. Better for Building a Brand

Amazon FBA is largely a white-label platform—the customer buys from “Amazon” in their eyes. With FBM, sellers have more room to differentiate their business and build loyalty by:

• Customizing packaging

• Including marketing inserts

• Providing personalized customer service

For long-term brand building, especially if the seller plans to expand outside of Amazon, FBM provides more visibility, brand recall, and customer data.

10. Shift Toward Hybrid Models

It’s worth noting that many successful sellers now use a hybrid fulfillment model:

• Use FBA for fast-moving, small items

• Use FBM for large, seasonal, or low-margin items

This approach provides maximum flexibility, cost control, and customer satisfaction.

Amazon FBA is still a powerful tool, especially for sellers who want scalability with minimal logistics. However, the growing shift toward FBM is driven by rising costs, reduced control, inventory restrictions, and the increasing need for fulfillment flexibility.

Sellers who prioritize profit margins, brand control, and multichannel strategies are realizing that FBM gives them the freedom and agility they need to thrive—especially in a fast-changing e-commerce landscape.

Whether FBM is right for you depends on your product type, business goals, and operational capacity. But there’s no doubt: FBM is no longer just a fallback option. It’s a strategic choice that’s becoming more popular—and more profitable—for a growing number of Amazon sellers.