The e-commerce industry, particularly Amazon, has largely been governed by two prevailing fulfillment models: Fulfillment by Amazon (FBA) and Fulfillment by Merchant (FBM). Each model offers its own unique advantages that have traditionally shaped a seller’s approach to managing their online store.
Sellers often lean toward FBA for the convenience it offers. By handing over their inventory to Amazon’s warehouses, they can tap into the platform’s extensive delivery network, benefit from Prime eligibility, and absolve themselves of most customer service responsibilities.
FBM, which includes a third-party supplier that ships purchased goods directly to the customer without requiring the original seller to handle the transaction, allows individuals to maintain control over their inventory and order fulfillment process.
Despite the apparent benefits of each model, Anis Serri, founder of Rise Up Automation, identifies inherent risks sellers face when adhering strictly to either model.
“While the FBA model offers broad reach and logistical ease, it can erode profit margins due to high storage fees. Essentially, though it offers unparalleled scalability, it demands substantial upfront capital and time,” he explains. “FBM, on the other hand, frequently runs into compliance issues and can even result in account termination.”
Considering this, it’s clear that a one-size-fits-all approach is vastly inadequate, leaving sellers vulnerable and jeopardizing their livelihood.
Recognizing the limitations of traditional fulfillment methods, Serri and his team saw an opportunity for a new approach. Their solution? A hybrid model that combines the strengths of both FBA and FBM, aiming to eliminate their respective weaknesses.
The hybrid fulfillment model developed by Rise Up Automation seeks to bring together the best of both worlds. By leveraging the convenience and wide reach of FBA along with the flexibility of FBM, the company has crafted a near-foolproof strategy that addresses the key pain points of Amazon sellers.
As Serri explains, the hybrid model starts with FBM to get the store up and running quickly. It’s a swift method that doesn’t require any upfront inventory investment, alleviating some of the sellers’ financial concerns in one sweep.
But, as Serri has cautioned, FBM can lead to account suspensions due to non-compliance concerns. To prevent this from happening, the Rise Up Automation team has made sure their hybrid model is fully compliant – all thanks to a critical intermediary step.
“We have our own warehouse where we ship products in plain boxes. We then repackage them for compliance, adding an extra layer of assurance,” Serri reveals. “This strategy allows us to comply with Amazon’s rules while still taking advantage of the margins and speed of results in the first few weeks and months.”
Once the stores are established and have gained momentum, the Rise Up Automation team helps them transition to FBA.
By operating within Amazon’s policy framework, this model has had a huge impact on reducing store terminations by avoiding the potential pitfalls that can lead up to the predicament.
In addition to its ability to achieve faster results, the hybrid model indeed offers better margins. As businesses grow and shift to FBA, they can use Amazon’s infrastructure for storage, packaging, and shipping. As a result, sellers enjoy lower operational costs and increased profitability.
Like with all boundary-pushing innovations, the hybrid fulfillment model has attracted some skepticism. But, while traditionalists may argue sellers could be overwhelmed by the need to constantly assess and reallocate inventory between FBA and FBM, Serri offers a different perspective.
“With the right tools and guidance, which we do offer to all our clients, sellers can manage their inventory in a more strategic way,” he shares. “Rather than being a burden, we believe this approach will empower e-commerce professionals and propel their business operations to even greater heights.”
As the e-commerce landscape evolves, shifting toward leveraging technology to overcome traditional operational hurdles, Rise Up Automation’s hybrid model is crucial for a more flexible and resilient future in online retail. It holds the potential to not just set new industry standards but to bring in a new era of increased efficiency and foster more sustainable business growth in today’s digital age.
As Serri says, “Innovation isn’t just about creating something new. It’s about improving existing systems, making them more efficient and adaptable. That’s exactly the goal with our hybrid model.”
