Amazon FBA vs FBM: Costs, Pros & How to Choose Your Best Fulfillment Strategy

The 2025 Fulfillment Shift Every Amazon Seller Should Know

In 2025, how you fulfilled orders on Amazon became as strategic as what you sold. Over the past two years, fulfillment costs, delivery expectations, and Prime eligibility rules have changed fast, reshaping how sellers choose between Fulfillment by Amazon (FBA) and Fulfilled by Merchant (FBM).

Recent data shows 34% of Amazon sellers use FBM, partly or entirely, for flexibility during peak seasons. This shift isn’t just about saving fees but also about control, margins, and scaling. FBA offers Prime visibility and Buy Box eligibility, while FBM provides freedom and brand control. The choice impacts profits, shipping, and scalability.

This guide simplifies that choice. You’ll find:

• A clear breakdown of FBA vs FBM costs, pros, and trade-offs
• How each model affects Prime eligibility, Featured Offered (Buy Box) Eligibility, profitability, and customer experience
• Why hybrid fulfillment is becoming the new growth lever for multi-channel sellers
• Actionable steps to choose or switch between models

If you’ve ever asked “Which is better, FBA or FBM?”, this data-backed comparison will help you find your answer, and possibly redefine your fulfillment strategy for the year 2026.

What Is Amazon FBA (Fulfillment by Amazon)?

At its core, Fulfillment by Amazon (FBA) lets sellers store inventory in Amazon’s fulfillment centers while Amazon handles picking, packing, delivery, and customer service. But in 2025, FBA is no longer just a logistics shortcut; it’s a profit and visibility lever tightly linked to Prime eligibility, Featured Offer (Buy Box) performance, and brand perception.

This way, Amazon controls the buyer experience from checkout to doorstep, making delivery speed and reliability nearly effortless for you.

What Changed: The New Reality of FBA in 2025 and 2026

Revised Fee Structures:

• Fulfillment fees now vary by size tier, distance zone, and delivery speed.
• “Inbound placement service” fees introduced in 2025 mean you pay based on where inventory is stored, not just how much.
• Expect around a 3–5% increase in average per-unit fulfillment cost for standard-size items.

Sustainability & Packaging Compliance:

• Amazon rolled out eco-optimized packaging standards, introducing small surcharges for non-compliant materials.
• You can now opt into Ships in Product Packaging (SIPP) programs to reduce costs and improve eco-badges on listings.

Prime Eligibility & Featured Offer Advantage:

• FBA listings automatically carry the Prime badge, giving higher conversion and visibility in search results.
• Because Amazon controls shipping SLAs (service level agreements), FBA listings are pre-qualified for Featured Offer (Buy Box) eligibility. This is an increasingly data-driven metric that weighs on-time delivery and defect rates.

Profitability Impact:

• Despite fee hikes, FBA remains profitable for sellers who prioritize volume + velocity.
• Fast turnover and Prime conversion rates often offset higher per-unit costs, especially in categories like electronics, apparel, and consumables.

Who Should Use FBA in 2025

Key Takeaway for FBA

FBA continues to be the default growth model for sellers who value convenience and conversion lift over logistics control. However, with new fee rules and sustainability surcharges, profitability now depends on smart inventory distribution.

Effective Oct 15, 2025 to Jan 14, 2026, holiday peak FBA fees apply. From Jan 15, 2026, non-peak rates return with updates: Standard-size items priced $10–$50 rise by an average $0.08, with small standard up $0.25 and large standard up $0.05. Items under $10 rise $0.05 on average, with small standard up $0.12 and large standard unchanged—maintaining an effective $0.86 low-price discount. Products above $50 increase $0.31 due to higher handling needs. Dimensional weight now applies to most large units. New surcharges include Overmax, SIPP-based packaging adjustments, and a Low-inventory-level fee for stock under 28 days.

What Is Amazon FBM (Fulfilled by Merchant)?

In 2025, Fulfilled by Merchant (FBM) has evolved from a budget-friendly alternative to a strategic control model for Amazon sellers. Sellers store, pack, and ship orders directly, or through a third-party logistics (3PL) partner. The payoff? More freedom, lower dependency on FBA, and greater control over branding, packaging, and margins.

Why FBM Could be The right Choice for you in 2025

New Cost Landscape:

• 2025 FBA fee updates—especially inbound placement and storage surcharges—have made FBM up to 18–25% cheaper for medium-size sellers handling their own logistics.
• FBM sellers avoid multi-warehouse placement costs and long-term storage fees entirely, thereby gaining greater expense predictability.

Revised Seller Fulfilled Prime (SFP) Program:

• Reopened in 2024 and expanded globally in early 2025, SFP now accepts more regional carriers who meet Amazon’s 1–2-day delivery SLA.
• Sellers meeting the SFP performance bar can now display the Prime badge on FBM listings, removing one of the biggest limitations of traditional FBM.
• This has driven a 14% YoY increase in hybrid FBA–FBM setups among top-performing sellers.

Branding and Packaging Freedom:

• FBM lets sellers use custom packaging, inserts, and eco-labels, reinforcing brand identity.
• With Amazon’s 2025 sustainability packaging policy, many sellers prefer FBM to maintain brand control while staying compliant.

Operational Flexibility:

• Sellers can integrate multi-carrier automation tools (e.g., Buy Shipping, MCF) to print labels, track shipments, and auto-sync delivery updates to Amazon, maintaining A-to-Z claim coverage and ODR protection.
• This hybrid tech stack lets FBM sellers deliver faster, even without Amazon warehousing.

Profitability Outlook: FBM in Numbers (2025)

(Source: Amazon Seller Central)

Who Should Use FBM in 2025

Key Takeaway for FBM

In 2025, FBM is no longer just for small sellers, it’s a scalable model for those who want autonomy, brand consistency, and cost predictability. With the rise of Seller Fulfilled Prime and better logistics automation, FBM sellers can now achieve near-FBA delivery performance while protecting their margins.

CedCommerce’s Amazon Channel supports FBM sellers through built-in Buy Shipping, enabling label generation, tracking sync, and performance compliance, without FBA’s overhead.

2025 and 2026 FBM Quick Facts

• Valid Tracking Rate (VTR) Requirement:
  FBM sellers must maintain a ≥95% Valid Tracking Rate every 30 days. Amazon now enforces stricter penalties for non-compliance.
• Delivery Promise Accuracy:
  Amazon measures whether your stated delivery window matches your actual performance. Overstated or missed promises now directly reduce Featured Offer (Buy Box) eligibility.
• Returns Policy Changes (2025):
  More categories now fall under Prepaid Return Label and Returnless Refund programs, increasing responsibility for FBM accuracy.
• SFP Expansion:
  Seller Fulfilled Prime (SFP) expanded globally in 2025 with more regional carriers approved for 1–2-day delivery. FBM sellers meeting SFP SLAs can display the Prime badge.
• Multi-Channel Inventory Advantage:
  Because FBM sellers store inventory in their own warehouse or 3PL, they can fulfill Amazon, Shopify, WooCommerce, and Walmart orders from the same stock. This eliminates the need for Amazon’s multi-location FBA placement and keeps all channels synced from one centralized inventory source.
• Performance-Based Ranking:
  Since mid-2025, Amazon compares FBM delivery speed to competitors. Faster FBM delivery = higher visibility and Buy Box potential.
• CedCommerce Support:
  FBM sellers can generate Amazon Buy Shipping labels inside the CedCommerce app, and auto-sync orders, tracking, and inventory to maintain Amazon performance metrics without FBA overhead.

Amazon FBA vs FBM vs SFP: Comparison + Pros & Cons

Amazon’s fulfillment landscape in 2026 will look very different from previous years. Seller Fulfilled Prime (SFP) now bridges the gap between FBA and FBM by allowing sellers to keep fulfillment in-house while still earning the Prime badge. With expanded carrier support and stricter SLAs, SFP has become a high-performance alternative for sellers seeking Prime-level visibility without FBA’s rising fees.

Hence, you must evaluate all three models, not just FBA vs FBM. The table below compares how each method performs across the factors that drive visibility, cost, profitability, and operational control.

What This Comparison Actually Means: The Context You Need to navigate FBA, FBM and SFP

1. Prime was once exclusive to FBA — now SFP brings real competition
   In 2025, SFP allowed high-performing FBM sellers to earn the Prime badge without moving inventory into FBA. This has shifted the long-standing “conversion advantage” dynamic for the first time in years.
2. Performance standards matter more than the fulfillment method
   Amazon’s updated rules (VTR ≥95%, stricter delivery promises, expanded returnless refunds) mean fast, reliable FBM can now compete directly with FBA in ranking and Featured Offer (Buy Box).
3. FBA is still the fastest path to Prime speed — but also the most expensive
   Placement fees, sustainability surcharges, and peak-season costs make FBA increasingly cost-heavy for oversized, seasonal, or slow-moving inventory.
4. FBM + one centralized warehouse now wins for multi-channel brands
   D2C brands selling on Shopify, WooCommerce, and Walmart benefit from keeping all inventory in a single warehouse rather than splitting stock across Amazon nodes — lowering cost and simplifying replenishment.
5. SFP is the “power move” — if a seller can meet strict SLAs
   SFP combines Prime-level conversion with FBM control, but the performance bar is extremely high, making it suitable only for the most operationally efficient sellers.

Pros & Cons of Amazon FBA (2025 and 2026)

Amazon FBM Pros & Cons (2025 and 2026)

Pros & Cons: Seller Fulfilled Prime (SFP) — 2025 and 2026

Which fulfillment method to choose in 2026?

Cost Analysis: FBA Fees vs FBM Shipping vs SFP (2025 and 2026)

Choosing between FBA, FBM, and SFP in 2025 comes down to true per-unit costs, so you can evaluate all cost components, not just the surface-level “pick-pack-ship” rate. Below is the complete breakdown of every cost driver in 2025, including what’s new for the coming year.

FBA Cost Structure

1. Fulfillment Fees (2025 Increases)
   • Standard-size items priced $10–$50: + $0.08 per unit
   • Small standard-size: + $0.25 per unit
   • Large standard-size: + $0.05 per unit
   • Items under $10: + $0.05, but still qualify for the $0.86 Low-Price discount
   • Items above $50: + $0.31 per unit
2. Inbound Placement Fees (2025 Expansion)
   Based on distance, weight, and the number of nodes Amazon splits inventory across. This is one of the biggest 2025 cost changes.
3. Monthly Storage Fees
   Higher during peak (Oct–Dec). Long-term storage fees apply after 181+ days.
4. Peak Fulfillment Fees (Holiday 2025)
   Peak surcharge: Oct 15, 2025 – Jan 14, 2026
5. Returns & Disposal Fees
   • Return processing
   • Removal orders
   • Disposal fees
6. Sustainability / SIPP Fees (2025)
   • Surcharges for non-compliant packaging
   • Discounts for Ships in Product Packaging (SIPP) certified SKUs
7. Low-Inventory-Level Fee (2025)
   Triggered if stock falls below 28 days of supply.

FBM Cost Structure

It is cheaper for many categories but more operationally intensive.

FBM Cost Components (2025):

1. Shipping Costs
   Carrier rates depend on zone, weight, and speed. However, you may use Amazon Buy Shipping for lower rates and VTR protection.
2. Packaging & Materials
   Sellers cover boxes, tape, inserts, and protective materials.
3. Labor + Handling Costs
   Picking, packing, and warehouse staffing.
4. Returns (2025 Rules)
   Amazon expanded prepaid return label requirements and returnless refund categories.
5. Storage Costs
   Warehouse or 3PL storage (not Amazon).
6. VTR Penalties (2025 Updates)
   If Valid Tracking Rate falls below 95%, sellers risk Buy Box/Featured Offer loss, listing suppression, and account health warnings.
7. Delivery Promise Accuracy Penalties
   If the delivery window is overstated, ranking is negatively impacted.
8. Tools & Software
   FBM sellers often pay for WMS systems, carrier integrations, label printers, and multichannel syncing tools.
   (CedCommerce covers order/inventory syncing + Amazon Buy Shipping.)

SFP Cost Structure

SFP sits between FBA and FBM, with Prime visibility without FBA fees, but the strictest logistics requirements.

1. Shipping Costs (Prime-Fast)
   1–2 day delivery nationwide. Costs depend on carrier, service level, and zone penetration.
2. SFP Compliance Penalties
   If SLAs are not met, your Prime badge is removed instantly, listings lose rank, and SFP enrollment can be revoked.
3. Performance Requirements
   • VTR ≥ 99%
   • Late Shipment Rate < 1%
   • On-time delivery > 97%
4. Warehouse & Staffing Costs
   To hit Prime cutoffs, sellers need more labor, earlier pick–pack deadlines, and reliable carrier pickups.
5. Returns Handling
   Must match FBA-level returns experience.

Example Per-Unit Cost Scenario (2025)
Example SKU: Standard-size | 1 lb | Priced $19.99

FBA (2025 Non-Peak Fees)

• Fulfillment: $4.70
• Placement Fee: $0.27
• Storage (avg): $0.40
• Returns: $0.50
• Total: $5.87 per unit

FBM

• Shipping: $3.10
• Packaging: $0.40
• Labor: $0.35
• Returns: $0.30
• Total: $4.15 per unit

SFP

• Prime shipping: $5.20
• Packaging + labor: $0.75
• Returns: $0.30
• Total: $6.25 per unit

Bottom Line:

• FBA is predictable but fee-heavy.
• FBM is the most margin-friendly if logistics are efficient.
• SFP is powerful for visibility but often the costliest unless shipping zones are optimized.

Is Hybrid Fulfillment for Amazon Sellers?

Why Hybrid Works in 2025 and 2026

• Uses FBA only for high-velocity, Prime-dependent SKUs
• Uses FBM for bulky, fragile, custom, or low-margin products
• Uses SFP for Prime speed without FBA fees
• Reduces reliance on Amazon’s storage, placement, and peak surcharges
• Provides flexibility during inbound delays or seasonal surges

Ideal Hybrid Scenarios

• Small/medium fast movers → FBA
• Oversized or fragile items → FBM
• Key Prime SKUs with strong logistics → SFP
• Brands selling on Shopify/Woo/Walmart → FBM/SFP + selective FBA

Benefits of Going Hybrid

• Lower overall fulfillment cost
• Better Buy Box coverage across SKUs
• Centralized multi-channel inventory for FBM/SFP
• Reduced risk from FBA restock limits and storage fees
• Full branding control where needed

How CedCommerce Supports Hybrid Sellers

• Amazon Buy Shipping inside the app
• Real-time inventory sync across channels
• Order + tracking sync for Amazon performance compliance

FBA FBM Compliance & Regional Factors

Fulfillment choice also depends on where—and how—you plan to sell.
In 2025, Amazon’s regional compliance requirements differ significantly between the US, EU/UK, and India. Sellers must consider tax, documentation, packaging, and marketplace rules when deciding between FBA, FBM, SFP, or hybrid fulfillment.

EU & UK FBA FBM Compliance Considerations

1. VAT Registration Requirements
   • FBA: Requires VAT registration in every country where Amazon stores your inventory (DE, FR, IT, ES, PL, CZ).
   • FBM/SFP: VAT applies only in the country you ship from—unless you exceed distance-selling thresholds.
   • Hybrid Tip: Store limited SKUs in EU FBA nodes to reduce VAT overhead.
2. EPR (Extended Producer Responsibility) Regulations
   • Mandatory for packaging, electronics, textiles, and batteries.
   • FBA sellers: Must comply with local packaging and waste requirements.
   • FBM sellers: Handle EPR compliance through their own warehouse or 3PL.
3. Cross-Border Fulfillment Restrictions
   • Certain categories require a local returns address (especially in the UK).
   • SFP requires carriers approved for UK/EU Prime SLAs.

US FBA FBM Compliance Considerations

1. State-Level Sales Tax Nexus
   • FBA: Automatically triggers nexus in every state where Amazon stores your inventory.
   • FBM/SFP: Nexus only where you ship from or exceed state thresholds.
2. US Packaging & Sustainability Rules (2025)
   • FBA SKUs: Must meet Amazon SIPP packaging guidelines or face surcharges.
   • FBM/SFP: Allow full packaging freedom if marketplace-safe.
3. Regional Delivery Accuracy Enforcement
   • SFP and FBM must meet ZIP-level delivery promise accuracy, a 2025 rule affecting Buy Box eligibility.

India FBA FBM Compliance Considerations

1. GST & E-Way Bill Requirements
   • FBA: Triggers GST registration in the state where Amazon FCs store your goods.
   • FBM: Requires GST only for the ship-from location.
   • E-way bills required for inter-state movement above value thresholds.
2. Local Category-Specific Mandates
   • Beauty, health, and food items require BIS, FSSAI, or drug license—same for FBA and FBM.
3. Returns & Reverse Logistics
   • Return rates are higher in India; FBA handles reverse logistics, while FBM sellers must manage pickup partners and SLAs.

Global Requirements to Consider for FBA FBM (All Regions)

• Product Compliance: Country-specific standards (CE, UKCA, BIS).
• Battery & Hazmat Rules: FBA has stricter hazmat intake checks; FBM is more flexible.
• Restricted Products: Some categories (cosmetics, supplements) receive faster approval via FBA compared to FBM.

FBA FBM Compliance Summary