What is the difference between Amazon Retail, Direct Fulfilment, FBA and FBM?

Amazon Retail, Direct Fulfilment, Fulfilment by Amazon and Fulfilled by Merchant describe different combinations of:

• Who sells the product to the customer
• Who owns the inventory before it is sold
• Where the inventory is stored
• Who packs and ships the customer’s order
• Whether the business operates as an Amazon Vendor or third-party Seller

The most important distinction is between the business model and the fulfilment method.

• Amazon Vendor is a first-party or 1P business model: the business sells products wholesale to Amazon, and Amazon sells them to the customer.
• Amazon Seller is a third-party or 3P business model: the business sells products directly to the customer through Amazon’s marketplace.
• Retail, Direct Fulfilment, FBA and FBM describe how inventory and customer orders are handled within those business models.

Amazon Retail

Amazon Retail is a traditional first-party or 1P Vendor model.

The vendor sells inventory wholesale to Amazon, usually through purchase orders issued by Amazon. Once Amazon purchases and receives the inventory, Amazon owns it and resells it to customers through the Amazon store.

Amazon generally:

• Issues purchase orders to the vendor
• Purchases and owns the inventory
• Stores the inventory within its fulfilment network
• Appears as the seller or retailer to the customer
• Sets the customer-facing retail offer
• Packs and ships customer orders
• Manages the customer transaction and fulfilment experience

The vendor generally:

• Accepts or rejects Amazon’s purchase-order quantities
• Supplies the agreed inventory to Amazon
• Ships products in bulk to Amazon’s nominated locations
• Receives wholesale revenue from Amazon rather than receiving the customer’s full retail sale amount

Example: Amazon issues a purchase order for 500 units. The vendor accepts the order and sends the stock to Amazon. Amazon then stores, sells and ships those units to individual customers.

Direct Fulfilment

Direct Fulfilment is also a first-party or 1P Vendor model, but the physical fulfilment process is different.

Amazon remains the retailer and sells the product to the customer. However, instead of purchasing and holding the inventory in an Amazon fulfilment centre before the customer places an order, Amazon sends the individual customer order to the vendor for fulfilment.

The vendor then packs and ships the order directly to the customer on Amazon’s behalf. This is sometimes described as a drop-ship model.

Amazon generally:

• Remains the customer-facing retailer
• Receives the customer’s order
• Sends the fulfilment request to the vendor
• Maintains the retail relationship with the customer
• Provides the required shipping and service standards

The vendor generally:

• Holds the inventory in its own warehouse or fulfilment location
• Maintains accurate inventory availability information
• Receives individual customer-order requests from Amazon
• Picks, packs and ships each order directly to the customer
• Meets Amazon’s packaging, dispatch, tracking and delivery requirements

Example: A customer places an order on Amazon. Amazon sends the order details to the vendor, and the vendor ships the product from its own warehouse directly to the customer. Amazon is still the retailer even though the vendor fulfils the shipment.

Direct Fulfilment can help Amazon offer products that are not currently stocked in its own fulfilment centres, but it places more operational responsibility on the vendor.

Fulfilment by Amazon

Fulfilment by Amazon, or FBA, is a third-party or 3P Seller fulfilment method.

The seller owns the inventory and sells the product directly to the customer through Amazon’s marketplace. The seller sends stock to Amazon in advance, and Amazon provides storage and fulfilment services when customer orders are placed.

Amazon generally:

• Stores the seller’s inventory
• Picks, packs and ships customer orders
• Manages much of the delivery and fulfilment experience
• Processes customer returns according to the applicable FBA arrangements
• Charges the seller fulfilment, storage and other applicable service fees

The seller generally:

• Owns the inventory until it is sold
• Creates and manages the marketplace offer
• Sets or manages the selling price
• Sends inventory to Amazon’s fulfilment network
• Monitors stock levels and replenishes Amazon-held inventory
• Receives the marketplace sale revenue after Amazon’s applicable fees and charges

Example: A seller sends 500 units to an Amazon fulfilment centre. The products remain the seller’s inventory. When a customer purchases a unit, Amazon picks, packs and ships it on the seller’s behalf.

Unlike Amazon Retail, Amazon has not purchased the inventory wholesale. Amazon is providing fulfilment services to the third-party seller.

Fulfilled by Merchant

Fulfilled by Merchant, or FBM, is also a third-party or 3P Seller fulfilment method.

The seller owns the inventory, sells the product directly to the customer and manages fulfilment independently. Inventory may be stored and shipped from the seller’s own warehouse or through a logistics provider selected by the seller.

The seller generally:

• Owns the inventory until it is sold
• Creates and manages the marketplace offer
• Sets or manages the selling price
• Stores the inventory outside Amazon’s fulfilment network
• Receives customer orders through Amazon
• Picks, packs and ships each order
• Provides shipment tracking and meets Amazon’s delivery requirements
• Manages fulfilment-related customer service and returns in accordance with Amazon’s policies

Amazon generally:

• Provides the marketplace where the product is listed
• Processes the customer transaction
• Passes the order information to the seller
• Charges the applicable marketplace and referral fees
• Monitors the seller’s delivery and service performance

Example: A customer purchases the seller’s product on Amazon. The seller receives the order, packs the product in its own warehouse and ships it directly to the customer.

FBM gives the seller more control over inventory and fulfilment, but the seller is also responsible for meeting Amazon’s shipping and customer-service standards.

Comparison overview

Model	Amazon relationship	Who owns the inventory before the customer sale?	Where is stock stored?	Who sells to the customer?	Who ships the customer order?
Amazon Retail	Vendor or 1P	Amazon, after purchasing it from the vendor	Amazon’s fulfilment network	Amazon	Amazon
Direct Fulfilment	Vendor or 1P	Depends on the stage of the Direct Fulfilment arrangement; the vendor physically holds the stock before dispatch	Vendor’s warehouse or nominated fulfilment location	Amazon	The vendor, on Amazon’s behalf
FBA	Seller or 3P	The third-party seller	Amazon’s fulfilment network	The third-party seller	Amazon, as a fulfilment provider
FBM	Seller or 3P	The third-party seller	Seller’s warehouse or chosen logistics provider	The third-party seller	The seller or its logistics provider

The key differences

Amazon Retail vs Direct Fulfilment

Both operate within the Amazon Vendor or 1P model, and Amazon remains the customer-facing retailer.

The difference is where inventory is held and who physically fulfils the customer order:

• With Amazon Retail, the vendor supplies inventory to Amazon in bulk, and Amazon stores and ships it.
• With Direct Fulfilment, the vendor holds the stock and ships individual customer orders directly on Amazon’s behalf.

FBA vs FBM

Both operate within the Amazon Seller or 3P model. The third-party seller owns the inventory and sells directly to the customer.

The difference is who stores and fulfils the inventory:

• With FBA, the seller sends inventory to Amazon, and Amazon stores and ships it.
• With FBM, the seller or its logistics provider stores and ships the inventory.

Amazon Retail vs FBA

In both models, Amazon may physically store and ship the inventory, but Amazon’s commercial role is different:

• With Amazon Retail, Amazon purchases the inventory from a vendor and resells it as the retailer.
• With FBA, Amazon does not purchase the inventory wholesale. The third-party seller retains ownership and uses Amazon as a fulfilment service provider.

Direct Fulfilment vs FBM

In both models, the business may ship products from its own warehouse directly to the customer, but the seller of record is different:

• With Direct Fulfilment, Amazon remains the retailer and the vendor ships on Amazon’s behalf.
• With FBM, the third-party seller sells and fulfils the order itself.

Why this distinction matters in MerchantSpring

The applicable business model affects the reports, terminology and performance measures available in MerchantSpring.

Vendor accounts may focus on areas such as:

• Amazon purchase orders
• Submitted, accepted, rejected and received quantities
• Sell-In and Sell-Out performance
• Vendor terms, deductions and chargebacks
• Raw margin and net PPM
• Direct Fulfilment performance

Seller accounts may focus on areas such as:

• Marketplace sales
• FBA and FBM fulfilment
• Amazon fees
• Advertising costs
• Seller-owned inventory
• FBA inventory status and replenishment

A business may use more than one model at the same time. For example, it may supply some products to Amazon through a Vendor relationship while selling other products through Seller Central using FBA or FBM.

When reviewing information in MerchantSpring, confirm the relevant marketplace, account, store and business model before comparing results.

Need help?

Contact support@merchantspring.io and include the relevant company, marketplace, store, reporting period and any helpful screenshots or exports.